Study of Factor Affecting Customer Retention

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Study of Factor Affecting Customer Retention 1 “Study of Factors Affecting Customer Retention” Market Research In SUBMITTED TO Prof. Sameer Phanse VPM’s Dr V.N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES, THANE MMS III VPM’s Dr.V.N Bedekar Institute of Management Studies

Transcript of Study of Factor Affecting Customer Retention

Page 1: Study of Factor Affecting Customer Retention

Study of Factor Affecting Customer Retention1

“Study of Factors Affecting Customer Retention”

Market Research

In

SUBMITTED TO

Prof. Sameer Phanse

VPM’s Dr V.N. BEDEKAR INSTITUTE OF

MANAGEMENT STUDIES, THANE

MMS III

Chanakya-15

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INDEX

Genesis of the Report…………………………………………………………….3

Globus …………………………………………………………….……...….......4

Customer Retention………………………………………………………………5

Objectives of Project……………………………………….……………....….....6

Research Details……………………………………….…………………...…….7

Analysis of the main research ………………………………………..……..…...9

Hypothesis Formulation …………………………………….……….….………14

Testing of Hypothesis and Result………………………….…………..………...15

Conclusion……………………………………………….……………..………..16

Limitations of the Project…………………………………………….….……....18

Recommendation and Suggestions…………………………….…….….……….19

Appendix………………………………………………………….……….…….20

Bibliography………………………………………………………..……….…...22

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Genesis of the Report

Retail Industry is booming sector in India. This sector is growing at the rate of 11.4% (acc. BMI

India Retail Report2009). It is divided in to organized and unorganized retail sector. Organized

retail constitutes about 3% of total retail market whereas remaining 97% is of unorganized.

Apparel and food sector are major sector in organized sector.

Globus of R. Raheja group is the first Indian brand to enter into the fashion clothes. The

company focus is to provide fashionable clothes to changing India. The company was successful

to achieve good growth and build itself as brand in minds of customer at initial stage. Company

suffered higher losses in the recession period and even fails to meet its profit target after

completion of that period. The company finds out that the earlier customer of globus are not

coming back to repurchase its clothes. So to retain the customer is big challenge faced by

company

The purpose of this report is to find out which are the factor affecting the customer retention and

the areas where globus should improve itself to provide better service to customers. The

methodology used in the project was interrogation study, observation techniques, and study of

graphs, charts and questionnaires. Statistical tools such as Chi Square Test were used to

determine the grey area where preventive actions need to be taken.

This report not only identifies the problematic area but also provides suggestions and

recommendation to take corrective measures.

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globus

History:

globus is part of Rajan Raheja group. The company launched in January 1998. This

company deals with the apparels and clothing. The store is of Department Stores type in

retailing. The company opened its first store in 1999 at Indore followed by launch of second

store in Chennai. The flagship store in Mumbai was opened on 1st November 2001. There are 24

stores of globus all over India.

Mission:

Achieve customer delight by offering quality product and service through a process of

continuous innovation and adaptation.

Build a dynamic team of committed and passionate employee through sustained learning

and grooming

Develop mutually beneficial relationship with our business partners

Employ cost effective process and thereby create strong organization

Customer Loyalty Program of GLOBUS "PRIVILEGE CLUB"

The customer reward program followed at Globus is called the 'Globus Privilege Club'.

This is the first of its kind program in India where the members are rewarded immediately for

their purchase at any of the stores.  

Three types of membership cards:

Privilege Card

Gold Card

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Customer Retention

Many Companies are looking for growing their business and profit, for that they are

ready to spend their time, money and resources in the search of the new customers. Companies

are using all possible channels, tools and skills for acquisition of new customer. Though it is not

sufficient to acquire only new customer, company must keep the existing one. Many companies

suffer from high customer churn. Customer retention is always economical than customer

acquisition as acquisition costs 5times more than customer retention. Traditionally companies

emphasis on making sales instead of relationships building or caring for customer after sales.

Benefits of Customer Retention:

Retained customer buys company product new and existing one.

Talks In favor of company and its product.

Easily accept new product and innovation in product of company.

Cost less to serve than new customer due to familiarity with process.

Offer product and services to others, giving mouth publicity.

Ignores competitive brand, product and advertisements.

Less sensitive to price.

Customer Satisfaction: Whether the buyer is satisfy after purchase depend upon the offer’s

performance in relation to buyer’s expectation. If performance falls short of expectation

customer became dissatisfied.

Customer satisfaction is needed for customer retention. A Satisfy Customer bring customer back

for purchasing in company.

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Objectives of Project

In Retail Industry customer retention is extremely important. It is something which can make

or break a business as customers are what make the business operate. If there are no customers,

then there is no business.

Generally for retaining one customer company required 1% amount & for acquiring same

customer required 5times of the amount.

So to reduce this expenditure store is focusing on customer retention.

To understand the factor affecting on customer retention.

To analyze reasons for customers brand switching.

To analyze the current perception about Globus in minds of customer

To identify the company’s position among competitors.

To understand retail industry.

The market research is based on the basis of above parameters so that reasons behind

customer research can be successfully find out.

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Research Details

Research methodology:- “A system of model, procedures and techniques used to find the results of a

research problem.”

This study is simultaneously investigating multiple direct links between service, quality,

and behavioral intentions of customer retention.

This research is study of consumer buying behavior, their perception, satisfaction, need and

wants. It explores the factors which are necessary to retain customers by the retailer, because

customer retention has a more powerful effect on profits than market share.

Research Type:-

Type used in research is Descriptive type. The objective of descriptive studies is to answer the

WHO, WHAT, WHEN, WHERE AND HOW of the subject under investigation

Research problem:

Globus is located at Teen haat Naka’s Eternity Mall, Thane. When store was established it

was doing excellent revenues to the company but now sale has decreased. In the year 2008-09 it

was 7,13,60,570 and now it has decreased up to 4,99,87,799 which is about 29.99%. The

recession period was the worst time for globus and it had incurred tremendous losses. Even after

the end of this recession store become failure to achieve its target. By studying customer

database it was observed that the earlier customers who were shopping at globus are not coming

back for shopping specially after the opening of Korum mall. These customers are the gold card

holder customers who were contributing major part in the profit of globus.

To identify why the customers are switching from globus to other brand this research was

conducted.

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Information Required.

Primary data

Survey of consumers though questionnaire

Observation : Observation made on the competitor malls and competitor stores/brands in this

mall. This observation was based on different parameters like their collection of apparel, quality,

prices, staff and service, visual merchandising and arrangement in mall, total environment of

mall and stores, also different other stores and things which attracts the consumers to come in

these malls.

Secondary data

Customer database that have been not purchase from last 6th months.

Existing Customer database

Sales report before & after starting competitors store/mall.

Sample area:-

The area covered for the research is Thane especially Ghod Bander Road as most of the target

customer of globus resides at Ghod Bander Road .

Sample size:-

The sample size for the research is of 100 candidates.

Type of sampling:- Convenient Sampling

The sampling method used for this research is Convenient Sampling as customer who have not

purchased were selected and from them some of the customer were not ready to give their

opinion

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Analysis of the Research

16

20

34

104

79

Q1.Which things you consider while going to shop your apparels?

PriceBrandCollection of apparelServiceBrand ambassadorAdvertiseRecommendation

Options were asked to know which

factors influence there buying decisions. From

above graph it can be seen that 32 respondent

prefer the collection of apparel of the shop i.e.

they prefer shop which will give them nice

collection of apparel. While 20 respondents go

for brand they will only buy the branded product

and 16 respondents lookouts for prize of the

clothes. Out of remaining respondent 10 look for

what kind of service they get, 9 took

recommendations, 7 go for advertisement and 4

look at the Brand ambassador.

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17

3238

13

Q2. Which mall do you prefer for shopping?

EternityR mall Korum Others

27

1911

28

15

Q3. Which things do you like about mall you mentioned in previous

Question?

Variety of brandsAccessiblityEnvironmentEvery thing undder one roofPrices

Options were given to customer for

choosing a mall they prefer for shopping. The

option of the mall given are from thane. This is

because sample population is from thane and

customer usualy prefer to go in nearest mall for

day to day shopping. Objective of the question is

to know wheather the globus’s location is one of

the reason for customer switching or not. 38 out

of 100 prefer Korum mall for shopping 32

respondent prefer R-mall and only 17 prefer

Eternity mall for shopping while remaining 13

having no preferance or they prefer some other

mall/shops for shopping.

In this question respondent has to choose

the possible factors for which they prefer the

mall they mentioned above. 28 customer prefer

the mall which is having the product for every

segment i.e. product required by every member

in the house, from child to adult. This is

followed by 27 respondents who opt for variety

of brands available in the mall. From remaining

respondent 19 prefers accessibility i.e. easy to

reach place, 15 look out for price and 11for

environment.

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24

35

17

14

10

Q4. Rate the collection of apparels of globus

Very BadBadAverageGoodVery Good

26

21

8

39

6

Q5. How do you find the collection of apparel in globus?

FashionableAffordableVariety givingRepetitiveother

Options were given from very bad to

very good to know the customers perception

about the collection of apparels. Above graph is

showing that 35 out of 100 customers are

having bad perception about the collection of

apparel in the minds of costumers while 24

customers are having very bad impression

about collection of apparel in globus where as

17 think it is average, 14 think it is good and

remaining 10 thinks its very good.

Respondents were told to mark the

various options according to their preference.

Here customer has to choose option to

describe collection of apparel in globus or

what is their opinion about it. 39 among the

respondent said globus collection is

repetitive, while 26 opt for trendiness. 21 out

or remaining said it is affordable while only

8 respondent said it is variety giving.

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28

1920

15

126

Q6. Which brands other than globus you prefer to shop?

Life StylePantaloonsShopper's StopWest SideReliance Trendothers

28

10

16

32

9 5

Q7. Which things do you like about other brands/Shops you mentioned

earlier?

Collection of apparelPriceQualityVarietyServiceOthers

In this question options were given on

the basis of Pilot study to know which

competitive brand respondent prefer most for

shopping/ where the customer had switched

most. Response of the customer shows that

customer preference for Life Style is most and

28 customer prefer this brand while 20 prefer

Shopper’s Stop Followed by 19 people who

prefer pantaloons, 15 West Side and 12 go for

Reliance Trend and remaining prefer others.

Respondents were told mark the

various options according to their preference

for the specialty or features for which they

prefer brand they mentioned in earlier

question. 32 respondents prefer the brand

which gives variety to them, 28 look for the

brand which will give them nice collection

of apparel of particular brand. While 16 look

at the quality of brand, 10 go for the price

followed by 9 respondents prefer service

given by brand and 5 opt for other things

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Q8. Should globus include variety of brands? If any other pleases Suggest.

This was an open ended question in that customer has to answer that if globus include

more brands, would they come to globus for shopping again or not? Many of the customers give

positive response to this question i.e. they are ready to come back to globus if they keeps variety

of brands. Suggestion for the brand from them are like Me, And, BIBA, Peter England, Levi’s,

Park Avenue, Mufti, Pepe, Lee, variety in Spykars etc.

Q9. Can you recall any recent adv/promotion of globus? Where?

This was an open ended question. Very few of the respondents were able to recall the

advertisement/promotions of globus, mostly the customer remembers advertise did by earlier

brand ambassador KAREENA KAPOOR which was in media last year but not now. Some of the

respondent recall advertises in Hoardings of thane road and some customer gets the SMSs from

about sale in the globus and some recall ads in news paper. Except these no any other

advertise/promotion are noticed by customers.

Q10. Suggestions for globus

In this question customers have to give suggestion for improvement in globus. Customers

give suggestion regarding the type of the collection they keep in their shop. Mostly they want the

variety in the collection of apparel. Also they wanted to see some new sections in the globus in

feature like the traditional section in Men’s ware, more clothes in Kid section with toys and

stationary, lingerie, Foot ware, cosmetics and perfumes. Some of the respondents make

complaint about size unavailability and unawareness about the sale season and some makes

complaint about offers given by globus. Some of the respondents suggest improving section like

Panjabi Suits, Women and Men Formal ware, Kurti Section etc.

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Hypothesis Formulation

The data compiled through the questionnaire is of qualitative nature and so Chi- Square

Test can be applied on the Null (H0) and Alternate (H1) Hypothesis

The results are obtained by considering the Parameter used to rate the collection of

apparel in globus

The results are shown below: -

The hypothesis for the study is defined as below:

Null Hypothesis (H0) : There is no significant effect of the Collection of apparel on the

customer retention (in globus).

Alternate Hypothesis (H1) : There is significant effect of the Collection of apparel on the

customer retention (in globus)

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Testing of Hypothesis

Out Put:

WEIGHT BY frequency.NPAR TEST/CHISQUARE= Lable/EXPECTED= EQUAL

/MISSING ANALYSIS.

Chi-Square   Test:

Frequencies

Lable

Observed N Expected N Residual

Very Bad 24 20.0 4.0

Bad 35 20.0 15.0

Average 17 20.0 -3.0

Good 14 20.0 -6.0

very good 10 20.0 -10.0

Total 100

Test Statistics

Lable

Chi-Square 19.300a

DF 4

Asymp. Sig. .001

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 20.0.

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Result

Parameter Table Value

Chi Square Value

(5 % significance)

Contractor Compliance 18.47 19.300

Chi square value is greater than Table value thus null hypothesis is rejected

Therefore the Collection of apparel shows significant effect of on the customer retention in

globus and as the most of the customer opt for bad option it can be concluded that poor

collection of apparel affecting the customer retention.

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Conclusion

In retail sector the product is combination of goods and services. From the data analysis

it can be seen that very few customers are satisfied with the collection of apparel in the globus.

Product offered by globus is trendy, having good quality but repetitive. Globus always offers

something different than other to customers but over the period of time the collection of globus

has got saturated therefore the consumers are not coming back to buy its clothes.

This analysis also states that brand which offers variety in clothes are preferred by customer and

customer would like to see such variety in globus also.

From the above graphs and data it can be concluded that place at which globus is having its

outlet i.e. at Thane Eternity mall is not preferable by respondent for shopping resulting in to less

foot fall which intern resulted into less customer coming to globus. Also it is observed that other

competitive mall like R mall and Korum is having more brands and different type of things under

one roof i.e. products for everyone in house, which may be the reason for not choosing the mall

by customers.

While going for shopping many of the customers take variety and type of the collection of

clothes in mind also brand name, price etc

From the above graph it can also be concluded that globus is lacking in the promotion/

advertisement or the promotion/ advertisement done by globus so they are not recognized by the

people. This is resulting in to the less visibility of the globus.

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Limitations of the Project

Time Constrain:

There are many aspects within this research area but this study is focusing on some of them.

It is believed that more amount of data give higher accurate results. But due to time

limitation it was difficult to get high amount of data so a complete picture of topic will not

provided.

Cost constraint:

Research is a costly process. Different costs are involved in the research. As it was academic

research cost is one of the limitation

Restriction in sample selection:

There was a restriction in sample selection as many of the customers were based at thane

Ghod Bunder road and also the survey has to done on the switched customer only so it was

not possible to get response from everyone.

Respondent Bias:

This thesis will be based on more on primary data which get collected from the customer.

There may be some biased customer which will affect final result.

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Recommendation and Suggestions

Product: Globus should offers a wide range in Own Brand and also include product of others

brands to provide variety to consumer.

Should include other product which varies from men’s traditional wares, Accessories, Foot

Wares, Cosmetics etc.

Price: Can introduce new segment pricing lesser than existing

Place: Can open new outlet in nearby area of target customer as its strong competitors are at

nearby area.

Promotion: Sponsoring events

Advertisement:- TV Commercials, Effective print ads, Internet ads, other out door ad media.

Branding:- Branding can be done through Brand Endorsement by Celebrity. They should change the perception of customer for brand from ‘Globus Fashion for changing World’ to ‘fashion is equal to globus / fashion only at the globus’

Relationship Marketing: Globus can use customer relationships strategies to retain their

customers. It will help to hold the customer. Globus can take the ideas and suggestion from their

sales executive because they are the one who are in continuously contact with the customers.

Competitor’s analysis is very important to study competitors plan and move to modify

company’s strategy accordingly to that. So it should be done on regular basis.

Continues research should be done to know which are the current trends in the market also ti

helps to bring innovations in product and to deal with customer’s changing tests and wants which

is required to be in market

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Appendix

Questionnaire

Name:

Tel No: Age :

Which things you consider while going to shop your apparels?

Brand Collection Price Quality Service

Recommendations Brand Ambassador Advertise

Which mall do you prefer for shopping?

Eternity R mall Korum Others

Which things do you like about mall you mentioned in previous Question?

Diff Brands Accessibility Environment Everything under one roof

Rate the collection of globus

Very good Good Average Bad Very Bad

How do you find the collection of globus?

Fashionable Affordable Repetitive Variety giving

Which brands/Shops other than globus you prefer to shop?

Life style Pantaloons Shopper’s Stop West Side Others

Which things do you like about other brands/Shops you mentioned earlier?

Collection Price Variety Service Others

Should globus include variety of brands? If any other please Suggest

Can you recall any recent adv/promotion of globus? Where?

Suggestion for globus

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Chi-square Table

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Bibliography

Retail Marketing Management, Gilbert, Pearson

R. Paneerselvam,’ Research Methodology’, Prentice Hall of India, New Delhi, 2008

Webliography

www.globus.in

www.wikipedia .com

www.businessmapsofindia.com

www.ibef.org

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