Consumer Buying Behavior in Organized Retail Business
Neha Singhal
Assistant Professor, Department of Commerce, Sri Venkateswara College,
University of Delhi
Email.Id-nehasinghal.du@gmail.com
ABSTRACT
Organized retailing in departmental store format has caught up with the Indian public in a significant
manner. From the days of depending on traditional small retail stores, the buyers have moved to
organized retail department store and undergo different experience. The continued patronage to this
format of retail business has resulted in a number of corporate entering in to this segment of retail
business. With a number of players in the market, differentiation has turned out to be a compulsion rather
than the option for these retail stores. While on the one hand these stores adopt various strategies to offer
differentiated experience to the customers, how the customers have reacted to this experience is a
question warranting analytical study at different points of time. Success at one stage does not ensure
continued success, as customer’s expectations differ widely between two points of time.
KEYWORDS: Consumer buying behavior, Organized retail, Decision-making process
INTRODUCTION
After the economic reforms of the 90s, India revitalized itself in to a next big global phenomenon
exhibiting immense potential in all the sectors especially manufacturing, IT, Retail and steel. Retailing
has seen such a transformation over the past decade that its very definition has undergone a sea change. It
is one of the pillars of its economy and accounts for 14 to 15% of its GDP. Today, retailing is much more
than mere merchandising. It is about casting customers in a story, reflecting their desires and aspirations,
and forging long-lasting relationships. It has changed from selling a product or a service to selling a hope,
an aspiration and above all an experience that a consumer would like to repeat.
India is on the radar of Global Retailers and suppliers worldwide are willing to partner with retailers here.
Comprising of Organized and Unorganized sectors, Retail industry is one of the fastest growing industries
in India, especially over the last few years. With growing market demand, the industry is expected to
grow at a pace of 25-30% annually.
Traditionally, retailing in India has meant emergence of numerous kirana shops, which are well
distributed throughout the urban and rural landscapes. As the economy grew after Independence, the
number of such establishments grew.
Since 1956-57, the emergence of Khadi and Village industries Commission (KVIC) showed an era of
government support for an indigenous franchise model of store chains. This was first of its kind of so
called ‘Organized Retail’ format. Till 1990s however, the organization formats included company
owned single branded retail outlets.
The second half of 1990s saw a transformation in the Organized Retail Industry with the advent of the
multi brand and multi product organized retailing.
Retail Models in India: Current & Emerging
Evolution of Indian Retail
Historic/Rura
Traditional/Perva
Government
Modern Formats /
l Reach
sive Reach
Supported
International
Exclusive Brand Outlets
Hyper/Super Markets
PDS Outlets
Khadi Stores
Convenience Stores
Department Stores
Shopping Malls
Cooperatives
Mom and Pop/
Weekly Markets
Kiranas
Village Fairs
Melas
Source of
Entertainment
Neighborhood
Stores/Convenience
Availability/
Low Costs /
Distribution
Shopping
Experience/Efficiency
The Indian food retail market is characterized by several co-existing types and formats. These are:
Emerging the organized retailers
Within modern trade, we have:
1.
2.
3.
4.
5.
6.
The discounter (Subhiksha, Apna Bazaar, Margin Free, Reliance Fresh)
The value-for-money store (Nilgiris, Big Bazar, Cooperative Stores)
The experience shop (Foodworld, Trinethra)
The home delivery (Fabmart)
Super stores & wide reach stores (Reliance Fresh, Spencer, Food Mart)
Kirana/Grocers/ Provision Stores
Semi-organized retailers like kirana (Khandani stores), grocers and provision stores are characterized by
the more systematic buying from the mandis or the farmers and selling from fixed structures.These
stores have presented Indian companies with the challenge of servicing them, giving rise to distribution
and cash flow cycles as never seen elsewhere in Asia. The model is very antithesis of modern retail in
terms of the buyer (retailer)-seller (Fast Moving Consumer Goods) equations. It is not unknown for
MNC leaders to link the supply of one line of products to another slower moving line of products. These
retailers are not organized in the manner that they could challenge the power of the sellers, most protests
have been in the form of boycotts, which really haven't hit any company permanently.
Evolution of Organized Retailing in India
1.
2.
3.
4.
Initiation
- Pre 1990s
Conceptualization
- 1990-2005
Retail Expansion
- 2005 through 2010
Consolidation and growth - 2010 onwards
1. Retail Initiation- This phase was essentially dominated by manufacturers establishing their
presence in retail. For instance-Bombay dyeing, the Raymond group.
2. Retail Conceptualization- In this phase, pure-play retailers entered the retail market, to expand panIndia, e.g. Shoppers’ stop, Pantaloons.
3. Retail Expansion- This is perhaps the most active phase of Indian Retail Industry-entry of new
players and development of new formats such as Reliance, Tata etc.
4. Consolidation and growth- We are currently in this phase considering the challenges faced by the
industries at present, retail chains are likely to focus on consolidation to cut costs and survive in the
market.
With such a format gaining pace in the market, marketer needs to gain insight into consumer buying
behavior.
CONSUMER BUYING BEHAVIOUR
Consumer is the king and hence it is the consumer who determines what a business is, therefore a sound
marketing program must be undertaken with a careful analysis of the habits, attitudes, motives and needs
of consumers.
In today’s world purchases made by a customer is to satisfy his or her needs. All the behavioral activities
carried out by a customer during and after the purchase of a product is termed so as “buyer behavior”. In
this article we will come across the origin of buying ideas, what is buyer behavior, how consumer buy,
why consumer buy, types, Decision process and what motives them.
WHAT IS BUYER BEHAVIOUR?
Our economy gets stronger depending upon the wealth of goods and services produced within the
country. A huge number of alternative suppliers are present for almost all the products today: substitute
products are available to consumers, who make decision to buy products. Therefore the main objective of
the seller is to please the consumer at all times. In order to be successful, a seller need to identify the
customer, what they buy, when they buy, why they buy and how they buy.
A buyer making a purchase of a particular product or a particular brand can be termed as “product buying
motives” and the reason behind the purchase from a particular seller is known as “patronage motives”
When a person gets his pay packet, and if he is educated, along with his wife he prepares a family budget,
by appropriating the amount to different needs. It may happen that after a trip to the market, they could
have purchased some items, which were not in the budget, and thus there arises a deviation from the
budgeted items and expenditure. All these behavioral changes within human beings during the period of
purchasing can be termed as “buyer behavior
Consumer Behavior Model in Changing Retail Scenario
Consumer Buying Decision Process
“Nothing is more difficult and therefore, more precious, than to be able to decide is” quoted to be the
words of Napoleon. This is amply true in the case of consumer too. It is for this reason that the marketers
are bound to have a full knowledge of the consumer – buying decision process.
However the actual act of purchasing is only one stage in this process and the process is initiated at
several stages prior to the actual purchase. Secondly even though we find that purchase is one of the final
links in the chain of process, not all decision processes lead to purchase. The individual consumer may
terminate the process during any stage. Finally not all consumer decisions always include all stages.
Persons engaged in extensive decision making usually employ all stages of this decision process. Whereas
those engaged in limited decisions making and routine response behavior may skip some stages. The
consumer decision process is composed of two parts, the process itself and the factors affecting the
process.
Customer’s decision making process
Consumer buys according to his/her needs (Devi & Ravilochanan, 2011):
1. Consumer desire is recognized
The first step the consumer determines that he is not satisfied (i.e., consumer’s perceived actual condition)
and would be keen in improve his/her situation (i.e., consumer’s perceived desired condition). For
instance, internal triggers, such as hunger or thirst, may tell the consumer that food or drink is needed.
External factors can also trigger consumer’s needs. Marketers are particularly good at this through
advertising; in-store displays and even the intentional use of scent (e.g., perfume counters).
2. Information to be searched
The next step is to undertake a search for information on possible solutions. The sources used to acquire
the information may be minimized to the maximum like remembering the information from previous
experiences (i.e., memory) or the consumer may extend considerable effort to collect information from
outside sources (e.g., Internet, friends, other buyers etc.). How much amount of effort each consumer
directs toward searching depends on factors such as: the importance of satisfying the need, similarity with
available solutions, and the time available to collect the information.
3. Options are evaluated after use
Consumers’ efforts may result in a set of options from which a choice has to be made. It should be noted
that there may be two levels to this stage. At level one the consumer may create a set of possible
solutions to their needs (i.e., product types) while at level two, the consumer may be evaluating the
particular product or service (i.e., brands) within each solution. For example, if a consumer wants to
replace his 100cc bike with a 150-200cc bike he has got plenty of options like PULSAR, KARIZMA,
APPACHE etc.
4. Purchase
In most of the cases the solution chosen by the consumer will match with the product. However, this may
change at the actual time of purchase. The “intended” purchase may be altered at the time of purchase for
many reasons such as: the product is out-of-stock, a competitor offers an incentive at the point-ofpurchase (e.g., store salesperson mentions a competitor’s offer), the customer lacks the necessary funds
(e.g., credit card not working), or members of the consumer’s reference group take a negative view of the
purchase (e.g., friend is critical of purchase).
5. Evaluation after-purchase
Once the purchase is over an evaluation of the decision is made. If the product performs below the
consumer’s expectation then he/she will re-evaluate the satisfaction with the decision, which at its
extreme and it may result in the consumer returning back the product. While in less extreme situations the
consumer will retain the purchased product but may take a negative view of the product. Such evaluations
are more likely to occur in cases of expensive or highly branded products. To help the consumers to ease
the concerns with their purchase evaluation, marketers need to be receptive and also take initiative steps
to encourage consumer contact. Customer service centers and follow-up market research are useful tools
in helping to address the purchasers’ concerns.
FACTORS AFFECTING CONSUMER BEHAVIOR (Gajjar, 2013)
Consumer behavior refers to the selection, purchase and consumption of goods and services for the
satisfaction of their wants. There are different processes involved in the consumer behavior.
Initially the consumer tries to find what commodities he would like to consume, then he selects only those
commodities that promise greater utility. After selecting the commodities, the consumer makes an
estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices
of commodities and takes the decision about the commodities he should consume. Meanwhile, there are
various other factors influencing the purchases of consumer such as social, economic, cultural, personal
and psychological (Loudon, 1988). The explanation of these factors is given below.
1. Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social
class
 Culture-Basically, culture is the part of every society and is the important cause of person wants
and behavior. The influence of culture on buying behavior varies from country to country
therefore marketers have to be very careful in analyzing the culture of different groups, regions or
even countries.
 Subculture-Each culture contains different subcultures such as religions, nationalities, geographic
regions, racial groups etc. Marketers can use these groups by segmenting the market into various
small portions. For example marketers can design products according to the needs of a particular
geographic group.
 Social Class-Every society possesses some form of social class which is important to the
marketers because the buying behavior of people in a given social class is similar. In this way
marketing activities could be tailored according to different social classes. Here we should note
that social class is not only determined by income but there are various other factors as well such
as: wealth, education, occupation etc.
2. Social Factors
Social factors also impact the buying behavior of consumers. The important social factors are: reference
groups, family, role and status.
 Reference Groups-Reference groups have potential in forming a person attitude or behavior. The
impact of reference groups varies across products and brands. For example if the product is
visible such as dress, shoes, car etc then the influence of reference groups will be high.
 Family-Buyer behavior is strongly influenced by the member of a family. Therefore marketers
are trying to find the roles and influence of the husband, wife and children. If the buying decision
of a particular product is influenced by wife then the marketers will try to target the women in
their advertisement. Here we should note that buying roles change with change in consumer
lifestyles.
 Roles and Status-Each person possesses different roles and status in the society depending upon
the groups, clubs, family, organization etc. to which he belongs. For example a woman is working
in an organization as finance manager. Now she is playing two roles, one of finance manager and
other of mother. Therefore her buying decisions will be influenced by her role and status.
3. Personal Factors
Personal factors can also affect the consumer behavior. Some of the important personal factors that
influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self
concept..
 Age-Age and life-cycle have potential impact on the consumer buying behavior. It is obvious that
the consumers change the purchase of goods and services with the passage of time. Family lifecycle consists of different stages such young singles, married couples, unmarried couples etc
which help marketers to develop appropriate products for each stage.
 Occupation-The occupation of a person has significant impact on his buying behavior. For
example a marketing manager of an organization will try to purchase business suits, whereas a
low level worker in the same organization will purchase rugged work clothes.
 Economic Situation-Consumer economic situation has great influence on his buying behavior. If
the income and savings of a customer is high then he will purchase more expensive products. On
the other hand, a person with low income and savings will purchase inexpensive products.
 Lifestyle-Lifestyle of customers is another import factor affecting the consumer buying behavior.
Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her
surroundings. It is determined by customer interests, opinions, activities etc and shapes his whole
pattern of acting and interacting in the world.
 Personality-Personality changes from person to person, time to time and place to place. Therefore
it can greatly influence the buying behavior of customers. Actually, Personality is not what one
wears; rather it is the totality of behavior of a man in different circumstances. It has different
characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to
determine the consumer behavior for particular product or service.
4. Economic Factors
 Disposal personal income-The economists made attempts to establish a relationship between
income and spending. Disposal personal income represents potential purchasing power that a
buyer has. The change in income has a direct relation on buying habits.
 Size of family income-The size of family and size of family income affect the spending
and saving patterns. Generally large families spend more and short families spend less, in
comparison.



Income expectations-The expected income to receive in future has a direct relation with the
buying behavior. The expectation of higher or lower income has a direct effect on spending plans.
Propensity to consume and to save-This goes to the habit of spending or saving with the
disposal income of buyers. If the buyers give importance to present needs, then they dispose of
their income. And buyers spend less if they give importance to future needs.
Liquidity of Fund-The present buying plans are influenced greatly by liquidity of assets i.e.,
cash and assets readily convertible into cash, e.g. bonds, bank balances etc.
Consumer Credit-“Buy now and pay later” plays its role effectively in the rapid growth of
markets for car, scooter radio, furniture and the like
5. Psychological Factors (Khosla, 2010)
There are four important psychological factors affecting the consumer buying behavior. These are:
perception, motivation, learning, beliefs and attitudes.
 Motivation-The level of motivation also affects the buying behavior of customers. Every person
has different needs such as physiological needs, biological needs, social needs etc. The nature of
the needs is that, some of them are most pressing while others are least pressing. Therefore a need
becomes a motive when it is more pressing to direct the person to seek satisfaction.
 Perception-Selecting, organizing and interpreting information in a way to produce a meaningful
experience of the world is called perception. There are three different perceptual processes which
are selective attention, selective distortion and selective retention.
 Beliefs and Attitudes-Customer possesses specific belief and attitude towards various products.
Since such beliefs and attitudes make up brand image and affect consumer buying behavior
therefore marketers are interested in them. Marketers can change the beliefs and attitudes of
customers by launching special campaigns in this regard.
6. Social Factors
Social Factors influencing consumer buying decision can be classified as under.

Reference Groups-Every individual has some people around who influence him/her in any way.
Reference groups comprise of people that individuals compare themselves with. Every individual
knows some people in the society who become their idols in due course of time. Co workers,
family members, relatives, neighbours, friends, seniors at workplace often form reference groups.

Role in the Society-Each individual plays a dual role in the society depending on the group he
belongs to. An individual working as Chief Executive Officer with a reputed firm is also
someone’s husband and father at home. The buying tendency of individuals depends on the role
he plays in the society.
Social Status-An individual from an upper middle class would spend on luxurious items whereas
an individual from middle to lower income group would buy items required for his/her survival.

Emerging Patterns in Organized Retailing in Relation to Consumer Behavior
The patterns of organized retailing in India and their consequential reciprocal relationship with consumer
behavior can be observed through a deeper insight into the Indian market there exists two type of
shopping which analyses the consumer behavior as mentioned below:
1) The hedonic shopping value differs across product categories and also in case of consumables and
durables.
2) Utilitarian shopping has started giving way to hedonic shopping'! With the emergence of
organized retailing. Yet, the majority still prefers utilitarian shopping.
3) Add-on features in modem retail stores have an insignificant impact on actual sales conversion, as
majority of the consumers still prefer 'value for money' while shopping.
4) Retail service quality has assumed the central role in shaping the consumers' perception, sales
conversion rate, and repeat sales and overall shopping satisfaction.
5) Socio-cultural differences, coupled with other demographic and psychographic factors, are
influencing buying behavior and choice of the store even after the emergence of egalitarian
shopping malls.
Review of Literature
Determining consumer behavior is the most difficult task for the marketers as consumers’ demands keep
changing over time. Many Researchers have tried to gain an insight into consumer behavior.
Like, Alhadeff & David, (1982) has defined consumer’s decision making process which includes
problem identification, information search, and evaluation of alternatives, outlet selection, and
purchases/post purchase action. Bryunina & Safaei, (2011) however concentrated on the environmental
concerns of the consumers and has explored that ecological labels do influence buyer behavior, however
it is difficult to make this statement about Organic bread because of lack of supply and advertisement that
makes it hard for people to get information about existence of such bread.
Batra & Karmi, (2004) has identified that consumer behavior is highly influenced by the demographic
factors. Consumers around the world are different in various factors such as age, income, education level
and preferences which may affect the way they avail of goods and services. Consumer behavior
influences namely: cultural, social, personal and psychological factors. Similar results were found in the
study conducted by Devi & Ravilochanan, (2011) where he defined consumer behavior as "the mental
and emotional processes and the observable behavior of consumers during searching purchasing and post
consumption of a product and service
According to Kotler & Armstrong, (2001) consumers have more objective view of the nature of the
attributes (e.g. food, cosmetics) because they are constantly being advertised and promoted. Similarly,
consumer evaluation of a product can be broken into evaluation related to product (tangible or physical
attributes) and brand name. Beck, (1975) has explored the relationship between human values and
consumer purchases and empirically found that there was a significant association between human values
(e.g. .achievement, self-direction, security etc.,).product preference and tangible attribute importance with
how consumers perceive the product and how they evaluate the product.
Price is another form of attribute used by consumers to evaluate a product. Price can sometimes be an
indicating of quality, with a higher price indicating higher quality. Consumers perceive that a higher price
can be attributed to the higher cost of quality control; some consumers are highly price sensitive, whereby
a high price may shift consumers to competitive brands. Therefore price can have positive or negative
influences (Schiffman & Kanuk, 2004).
Doyle &Fenwick (1975), propose that price, product variety, one-stop shopping, quality, location of
the store, advertisement, general appearance of the store and convenience are some major attributes
looked upon by the consumers while evaluating a grocery store.
Shaw et al (1992) in their opinion on the retailers and customer purchases stated that buyers use only
a subset of product requirements to decide among many retailers when making an actual purchasing
decision. Retailing is the one of the most dynamic and rapidly changing sectors of Indian industry.
Multiple retail companies now dominate the unorganized retail sector and threatening their existence.
Brennan & Lundsten (2000), in their study on the consumer shopping habits identified that
consumers shop at discounts for low prices and large variety and stores for the unique items they
cannot find elsewhere
The closure of a small shop with a super store nearly would affect the residents of a local
neighborhood differently compared to the closure of only shop in a small locality without a super
store nearby and the decline in the number of small shops has different implications to the existing
customers depending upon the locations and alternative options to shop (Smith & Sparks, 1997).
Brennan(1991), in his view on strategies adopted by the retailers opined that providing specialized
services, offering better quality products and improved customer services were the most successful
strategies
CONCLUSION
The study of Consumer behavior is quite complex, because of many variables involved and their tendency
to interact with & influence each other.
Also, with numerous forms of retailing formats coming day by day, one cannot judge which all factors
will influence the buying behavior of the consumers. The marketer has to be very careful while designing
the marketing program for their products as there are various factors involved which influences
consumer’s buying behavior and to gain an edge over other competitors in the market, a marketer must
aim to develop such strategies that fit their retailing format and consumer’s need.
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