III

The Buying Behavior of Consumers

The retail buying process, and those involved, play an important role in the value chain as they
ultimately determine which products and brands are made available to the consumer. Historically role of
retail buying has been to make decisions about which products to buy and which suppliers to buy from,
but now the retail buying process is also increasingly involved in generating revenue from these
purchases. The ―modern‖ retail buyer is now involved in activities previously undertaken by the
commercial, operational and sales functions eg product development, market analysis, sales forecasting
and range, assortment, and brand management

Key stages of the buying process:

1. Problem Recognition:
The initial stage where a consumer identifies a need or want that needs to be fulfilled.
2. Information Search:
The consumer actively gathers information about potential solutions to their problem, including
researching online, reading reviews, or asking friends for recommendations.
3. Evaluation of Alternatives:
The consumer compares different options based on factors like price, quality, features, and brand
reputation.
4. Purchase Decision:
The consumer makes a final choice and decides to buy a specific product or service.
5. Purchase:
The actual act of buying the product.
6. Post-Purchase Evaluation:
The consumer assesses whether the product met their expectations and reflects on their overall
satisfaction with the purchase.
 There are three fundamental patterns which a consumer can follow and they could
be:

 1. Brand first, retail outlet second 2. Retail outlet first, brand second and 3. Brand
and retail outlet simultaneously
a. Retail outlet first and brand second
 When a number of consumers follow this sequence of decision-making, display of point-of
purchase material and building the image of the outlet becomes important. The manufacturer of the
brand may have to ensure that the brand (and the variants demanded) will be available at the key
outlets in a locality. Point-of-purchase materials which are to be used at the retail outlet may require
primary research - should visuals be used, should product features be used, should the POP material
be in the regional language.

b. Brand first and outlet second

The brand was probably thought of by the consumers because (i) the consumers may not have
developed a relationship with any retailer which is strong enough to get into the ‗evoked retail set‘ or
(ii) the brand has got into the evoked set because of advertising or positive word of mouth..

c. . Brand and retail outlet simultaneously

When consumers think of the brand and retail outlet together, it means that they have a certain
preference for the outlet and would like to check the evoked set of brands there. The marketer would
have to carry out primary research to find out specific markets where consumers have a very positive
relationship with retailers.

 Buying situations

Buying situations are the circumstances surrounding a purchase, such as the knowledge and
experience of the buyer, the effort required to make the purchase, and the level of involvement.
There are three main types of buying situations:

1. Straight rebuy: The buyer reorders the same product in the same quantity as the
2. Modified rebuy: The buyer reorders from the same supplier but makes slight
modifications, such as changing the quantity or upgrading the quality.
3. New buy: The buyer places an order with a supplier for the first time.

Buying Centers

7 The buying center includes all members of the organization who play any of seven roles in the
purchase decision process.
1. Initiators-Users or others in the organization who request that something be purchased.
2. Users-Those who will use the product or service. In many cases, the users initiate the
buying proposal and help define the product requirements.
3. Influencers-People who influence the buying decision, often by helping define
specifications and providing information for evaluating alternatives. Technical personnel
are particularly important influencers.

4. Deciders-People who decide on product requirements or on suppliers.

5. Approvers-People who authorize the proposed actions of deciders or buyers.
6. Buyers-People who have formal authority to select the supplier and arrange the purchase
terms. Buyers may help shape product specifications
7. Gatekeepers-People who have the power to prevent sellers or information from reaching
members of the buying center. For example, purchasing agents, receptionists, and
telephone operators may prevent salespersons from contacting users or deciders
 Buying Influences
Understanding consumer behavior is critical for a retail business in order to create and
develop effective marketing strategies and employ four Ps of marketing mix (Product,
Price, Place, and Promotion) to generate high revenue in the long run.
 Here are some factors which directly influence consumer buying behavior

 Market Conditions/Recession
 Cultural Background
 Social Status
 Income Levels
 Personal Elements Here is how the personal elements change buying behavior
 Occupation
 Nature
 Lifestyle
 Age
 gender

  Psychological Elements Psychological factors are a major influence in customer‘s buying
behavior. Some of them are:
 Motivation
 Perception
 Learning

IV
Organization Management:
Organizing and Staffing the Retail Firm
 Organizing a retail firm

 PROCESS OF SETTING UP A RETAIL ORGANIZATION

The process of setting up a retail organization is divided into five steps. These are discussed as
follows:

1. DETERMINATION OF TASKS TO BE PERFORMED

The general tasks in a retail organization vary from organization to organization and size to size
but these are some common retail activities that are usually applicable to all sorts of retail
distribution channel. These are:
 Arranging and buying merchandise for the retailer;

 Receiving merchandise and check for its quality;

 Determination of prices i.e., price setting/labeling;

 marketing the merchandise;

 Inventory management and control including stores;

 Classifying merchandise and window displays;

 HR management;

 Facilitating shopping

2. DIVISION OF TASKS AMONG CHANNEL MEMBERS AND CUSTOMERS

 3. GROUPING TASKS INTO RESPONSIBILITIES

After considering and finalizing various retail activities necessary to be performed in a store, a
retailer groups these activities into job profiles those will be handled by a particular
employee/group of employees. To make the retailing successful, various activities must be
defined and properly grouped.
 4. CLASSIFICATION OF JOBS:

After grouping tasks into jobs, next step in setting up a retail organization is to classify
the jobs under functional, products, geographical, or combination classification system.

Under functional classification, jobs are divided in terms of various retail functions, like
sales promotion, customer care, inventory management and store operations.

Under products classification, jobs are divided on the basis of nature of goods and
services. Thus a retail store recruits different employees for apparels, vegetables and fruits,
furniture, electronics, grocery food and so on. Product classification is based on the concept that
employees ‘requirement in terms of experience, age, look, qualification, etc. varies from product
to product.

Under Geographical classification, jobs are classified according to spread of the

organization in various cities and states. Therefore, job locations are assigned in such a way that
employee to the extent possible should work in or nearby home town.

5. DEVELOPING AN ORGANIZATIONAL CHART:

This is the last step of organizing a retail firm. For the purpose of understanding the concept,
various organizational patterns are given as under:

 Human Resource Aspects in Retailing

Human Resources Management is defined as managing (planning, organizing,

directing & controlling) the functions of employing, developing, and compensating human
resources resulting in the creation & development of human relations with a view to contribute
proportionately to the organizational, individual & social goals

Any typical retail organization would commonly need the following human resource
functions: Job analysis and job design, Recruitment and selection of retail employees,
Training and development, Performance management, Compensation and benefits, Labor
relations and Managerial relations

1. Job Analysis and Job Design

The job analysis involves a process of finalizing the job content and based on the findings
preparing a design for the job. It is the responsibility of the store to prepare the job design since,
it is necessary from the new employee point of view. A well-prepared job design and job
analysis helps in the recruitment process and thereon in training to achieve the required results.

2. Task Analysis This is one method of facilitating the listing of tasks. First the retailer or
HR manager identifies tasks which are essential for the achievement of organizational
goals. Thereon it‘s defined that which employee positions will be responsible for those
tasks.

Recruiting Store Personnel

Hiring an employee is an investment but for each new hire your retail business makes, valuable
resources like time, energy and money are dedicated to the effort. Examine your operating
budget. Is there room to pay an extra worker? Keep in mind that you‘ll need to pay at least the
minimum hourly wage and you‘ll also have payroll taxes and workers compensation to pay. An
extra employee may generate enough new sales to more than compensate the salary of the
employee. The additional help could give you a chance to produce more products or serve more
 STAFFING OPTIONS
There are many staffing options available and each has some pros and cons. Options
Full-time Employees: A person who works a set number of hours and generally receives
benefits like health, dental and life insurance along with a standard salary is considered full-time.
Having someone around full-time can provide a peace of mind knowing someone is minding the
store even when you can‘t be there. There are also many labor laws which govern the full-time
worker.
Part-time Employees: These workers may offer more flexibility in scheduling and cost less than
full-time employees, but you may spend extra time in training more people and if they have jobs
elsewhere, worker loyalty may be compromised.
Temporary Employees: Staffing agencies usually charge for the convenience of providing full
service, as they handle the payroll administration and fringe benefits. However, temporary help
may be useful for the short-term projects such as the busy holiday selling season.
 Independent Contractors: Contractors usually provide work on a project-by-project basis
where specialized training or certain skills are required. Fees for work performed are paid based
on results and negotiated in advance. Be sure to have a written contract in place before hiring
independent contractors. You should also be aware of the industry guidelines which determine a
workers independent contractor Notes status.

Once your business becomes successful, you will obviously need help on a temporary or
permanent basis. Good employees can be a business‘s biggest asset but the legal and accounting
concerns that come with hiring can almost make it seem having employees is more trouble than
it‘s worth. Be sure you understand all the responsibilities before recruiting and hiring.
 Define Recruitment
 ―The process of searching for prospective employees and stimulating them to apply for jobs
in the organization‖

 OBJECTIVES OF RECRUITMENT
 To attract people with multi-dimensional skills & experiences that suit present & future
organizational strategies.
 To induct outsiders with a new perspective to lead the company.

 To infuse fresh blood at all levels of the organization.

 To develop organizational culture that attracts competent people to the company.

 To search/ head hunt people whose skills fit in the company

 METHODS OF RECRUITMENT
 The methods of recruitment is broadly classified as Internal & External
1. Internal
 Present Permanent Employees Organizations consider the present employees for high level
jobs due to availability of most suitable candidates for jobs or equally to the external source, to
meet the trade union demands and to motivate the existing employees.

 Present Temporary/ Casual Employees Organizations consider temporary or casual

employees for low level jobs or trade union pressures or in order to motivate them on the present
job.

 Retrenched/ Retired Employees the organization retrenches the employees due to lack of
work. The organization takes the candidates back due to lack of obligation and trade union
pressure. The organizations prefer to re-employ their retired employees as token of loyalty to the
organization.

 Dependents of Deceased, Disabled, Retired /employees Organizations provide employment

to the dependents/ family members of deceased, disabled to build brand image & develop
commitment.

 Employee Referral Present employees are aware of qualifications, attitude, experience and
emotions of their friends and relatives. They are aware of job requirements and organizational
culture of their company. Hence the HR Managers of the company depend on present employees
for reference of the candidates for various jobs. This reduces time and cost required for
recruitment.
2. External
 Campus Organizations get inexperienced candidates of different types from various
educational institutions like colleges and train candidates in different disciplines

 Private Employment Exchanges Consultants perform recruitment functions on behalf of the

client company by charging fees. The client company is relieved from recruitment functions.

 Public Employment Exchanges The Government setup Employment exchanges to provide

information about vacancies to candidates.

 Professional Organizations Associations maintain complete bio-data of their members and

provide the same to various organizations on requisition.
 Data Banks The management can collect the bio-data of the candidates from different sources
like Employment Exchange and feed them in computer and provide the details of candidates on
requisition.

 Casual Applicants Candidates apply casually through mail or hand over applications in HR
Dept. This is suitable for temporary or low level jobs.

 Trade Unions Employees seeking change in employment put a word to the trade union
leaders with a view to getting suitable candidate.

 Walk-in the busy organization and rapid changing companies do not find time to perform
various functions of recruitment, therefore they advise the potential candidates to attend
interview directly and without prior application on a specified date, time and place.

 Consult-In the busy and dynamic companies encourage potential job seekers to approach
them personally and consult those regarding jobs.

 Selecting Store Personnel

The selection procedure usually adopted by the retail store operators remains such that it
examines the Human Resource (HR) policies adopted by successful retail stores. It is evident that
two retail stores employ different HR policies in terms of recruitment and selection,
remuneration and welfare, and training and development for different groups of employees
within the same retail store operations. The implementation of the different HR policies for
different groups of employees is
attributable, first, to the influence of the parent company‘s environment – socio-economic
conditions, characteristics of the top management, corporate strategy and use of technology in
the parent company; and, second, to the different types of employee in the two stores. The male
and female expatriates among the Parent-Country Nationals (PCNs), and the professionals with
high levels of skill, full-time managers and employees with lower level skills, and part-time
employees among the Home-Country Nationals (HCNs

 Training Meaning & Definition:-

Training is the act of increasing the knowledge & skill of an employee for doing a particulars
job. [Link] defines the training as ―… the organized procedure by which people learn
knowledge &/or skill for a definite purpose‖.
 TRAINING METHODS:-
Training methods are broadly divided into two. They are on – the – job method AND Off – the –
job method
 On – the – Job Training Methods: - On the Job methods refers to methods that are
applied in the workplace, while the Employee is actually working.

 Job Rotation: - This type of training involves the movement of the trainee from one job
to another. The trainee receives job knowledge. & gains experience from his supervisor
or trainer in each of the
Different job assignments. This method gives an opportunity to the trainee to understand the
problems of employees on other jobs & respect them.
 Coaching:- The trainee is placed under a particular supervisor whose functions as a
coach in training the individual. The supervisor provides feedback to the trainee on his
performance &offers him some suggestions for improvement. A limitation of this method
of training is that the trainee may not have the freedom or opportunity to express his own
ideas.

 Job Instruction:- This method is also known as training through step by step. Under this
method the trainer explains to the trainee.

 Apprenticeship training:- It is meant to give the trainee sufficient knowledge & skill in
those shades & crafts in which a long period of training required for gaining complete
proficiency. The way of doing the jobs, job knowledge & skills & allows him to do the
job. The trainer appraises the performance of the trainee, provides feedback information
& corrects the trainer.

 Internship:- In internship training, educational institutions & business firms have a joint
programme of training. Selected candidates carry on regular. Studies for the prescribed
period. They also work in some factory or office to acquire practical knowledge & skills.
This method helps to provide a good balance between theory & practice.

 Off – the – Job Training Methods:- off the job training refers to training imported away
from the Employee‘s immediate work area. The employee is separated from the job
situation & his attention Is focused exclusively on learning which can later lead to
improved job performance.

 Off the job training methods are a follows:-

 Vestibule Training: - This is a training method where the actual work conditions are
simulated & the equipment used by the trainees is similar to what is used on the job. In
this way, the trainees gain experience of using the equipment without any pressures of
work or cost involved.
  Role Playing:- It is described as a method of human interaction involving realistic
behaviour is imaginary situations. The trainees as sum the roles of different characters is
the organizational context. It basically helps in improving the communication, people-
management & relationship management skills of the trainees.

 Case Exercises:- A real life problem encountered in the organization is presented to the
trainees in the form of case study. They are then asked to analyse the case & present their
views & recommendations for solving the problem.
 Training Store Personnel
New developments are always taking place in the retail scenario. With the growth in retail the
consumers are maturing by the passing of everyday. Whatever you experienced as a customer 10
years back is very different now. Retailing is the most dynamic field of business management.
With such changes in the field employees of any retail store ought to learn and train themselves
to meet the new challenges. This is one of the most important profiles of any HR department.
Training and development can take place in various ways. An organization may like to give on-
the-job training to the fresh incumbent whereas, the oldies may be sent for some advanced
training to back up the vast experience which they already have.
 Objectives of training
Training is an essential part of the orientation program for new recruits in an organization.
The main objectives of training are:-
 Improving Employee Performance: When an employee is recruited by an organization, he
might not have all the skills required to carry out his job. Training the employee at this stage
helps him learn his job faster & excuses better performance. Training also helps in bridging the
gap between the actual & the expected performance of the employees by enhancing their
knowledge & skills.

 Updating Employee Skills:-Technological changes may result in job changes in terms of the
tasks & activities involved. Training enables employees to update their skills & helps integrate
the technological changes successfully into organizational systems & processes.

 Avoiding Managerial Obsolescence:- Managerial obsolescence is the failure to adopt new

methods & processes that can improve employee & organizational performance. Rapid changes
in technical, legal & social environments have an impact on the way managers perform their
jobs, & those who do not adopt to these change become absolute & ineffective.
 Preparing for Promotion & Managerial Succession:- Training helps an employee acquire
the skills required to assume greater responsibilities. It makes the transition from an employee‘s
present job to the next one, easier & smoother.

 Retaining & Motivating Employees:- One way to motivate & retain employee is through a
systematic program of career planning & development.

 Creating an Efficient & Effective Organization:- A manager who has well trained & well
equipped employees need to spend less time supervising them. Accidents at the workplace can
also be reduced by effective training of the employees.
 Evaluating Store Personnel
Once our job descriptions are ready we must fix the standards of performance for performance
appraisals and evaluation. This is the final step in task analysis where performance standards are
to be developed for the different tasks which have been mentioned in the job description.
Whenever we are fixing standards we must indicate the level of proficiency required to meet the
quality and quantity expectations. This in turn helps us to identify as to what can be the training
needs for a new employee or an existing employee. At the same time it guides the human
resource management department in giving reasonably logical feedbacks to the employees.
 PERFORMANCE APPRAISAL Performance appraisal can be defined as the process of
evaluating the performance of an employee & communicating the results of the evaluation to him
for the purpose or rewarding or developing the employee. According to Edward Flippo
―Performance appraisal is the systematic, periodic & an impartial rating of an employee‘s
excellence in matters pertaining to his present job & his potential for a better job.‖

 Objectives of Performance Appraisal

Work – Related Objectives:-
 To access the work of employees in relation to job requirements

 To improve efficiency

 To help management is fixing employees according to their capacity, interest, aptitude &
qualifications.
  To carry out job evaluation.

Career Development objectives:-

 To access the strong & weak points in the working of the employees & finding remedies for
weak points through training.

 To plan career goal

 To guide the job change with the help of continuous ranking.
Communication:-
 To provide feedback to employee‘s so that they come to know where they stand & can
improve their job performance.

 To clearly establish goals i.e what is expected of the employee in terms of performance &
future work assignment.

 To develop positive superior – subordinated relations & thereby reduce grievances.

Organizational Objectives:-
 To serve as a basis for promote or demotion

 To serve as a basis for wage & salary administration & considering pay increases & increments.

 To serve as a basis for planning suitable training & development programme

 To serve as a basis for

 METHODS OF PERFORMANCE APPRAISAL
Performance appraisal methods can be
 Graphic Rating Scale:- This method of appraisal requires the rater to rate the employee on
factors like quantity & quality of work, job knowledge, dependability, punctuality, attendance,

 Ranking Method:- It is otherwise called as Straight ranking method. It is the simplest & old
method of merit rating. Every employee is judges as a whole without distinguishing the rates
from his performance. A list is then prepared for ranking the workers in order of their
performance on the job so that an excellent employee is at the top & the poor at bottom.
Advantages:- It permits comparison of all employees in any single rating group regardless of the
types of work It is suitable only when there are limited persons organization. Disadvantages:-
This method only tells us about & not the actual difference among them.

 Paired Comparison method:- Under this method, the appraiser compares each employee
with every other employee, one at a time.

 Forced Distribution method:- It is developed to prevent the raters from too high or too low.
Under this method, the rate after assigning the points to the performance of each employee has to
distribute his ratings in a pattern to conform to normal frequency distribution.

 Checklist Methods:- The checklist is a simple rating technique in which the supervisor is
given a list of statements or words & asked to check statements representing the characteristics
& performance of each employee.
 Critical Incident Method: - The appraiser makes a note of all the critical incidents that
reflect

 Human Resources accounting: - It deals with cost of & contribution of human

resources to the organization. Cost & Contribution of human resources to the
organization. Cost of the employee includes cost of manpower planning, recruitment,
selection, placement, induction, training, development wages & benefits, etc. Employee
contribution is the money value of employee service which can be measured by labour
productivity or value added by human resource. Cost of human resources may be taken as
standard. Employee performance can be measured in terms of employee contribution to
the organization.

 Compensating Store Personnel

The HR department of any retail business needs to have policy guidelines regarding
compensation and miscellaneous benefits to be given to the employees. For this the HR
department needs to know similar policies and guidelines in similar organizations.
Benchmarking is very essential as far as compensation and benefits are concerned.
Compensation and benefits at any point of time are the best way to satisfy the employees at the
lower and middle level of management.
Compensation Compensation is the remuneration paid by the management to the employee for
his/her contribution to the organization. Compensation includes Wages/Salary, incentives, bonus
& social security measures or fringe benefits.
 Wage & Salary administration:- is essentially the application of systematic approach to the
problem of ensuring that the employee are paid in a logical, equitable & fair manner.

 Wage:- ―the remuneration paid by the employer for the services of hourly, daily, weekly &
fortnightly employees.

 Salary: - The term salary is defined as the remuneration paid to the clerical & managerial
personnel employed on monthly or annual basis. It is also known as Basic Pay.

 Earnings:- Earnings are the total amount of remuneration received by an employee during a
given period. These include salary, dearness allowance, House rent allowance, city
compensatory allowance, other allowances, over time payments, etc. terms Nominal/Money
 Objectives of compensation
 To acquire qualified competent personnel:- Candidates decide upon their career in a
particular organization mostly on the basis of the amount of remuneration the organization offers
qualified & competent people join the best paid organization.
 To retain the Present Employees:- If the salary level does not compare favorably with that
of other similar organizations, employees quit the present one & join other organizations.

 To secure Internal & External Equity:- Internal equity does mean payment of similar wages
for similar jobs within the organization External equity implies payment of similar wages to
similar jobs in comparable organizations.

 To Ensure Desired Behavior:- Good rewards performance loyalty, accepting new

responsibilities & changes.

 To Keep Labor & Administrative Costs:- In line with the ability of the organization to pay.