comparison of brand loyalty in online vs offline...

COMPARISON OF BRAND LOYALTY IN

ONLINE VS OFFLINE CONSUMERS

Under the Guidance of

Prof. Ruppal Walia Sharma

Submitted By:

PALLAVI SAXENA

29A

MBA (IB) 2011-2013

Indian Institute of

Foreign Trade

2

DECLARATION

This Research Project is submitted by me to Indian Institute of Foreign Trade, New Delhi

in partial fulfillment of the requirements for the MBA(IB) degree. This is an original work. It is

neither copied (partially/fully) from any other scholastic work nor is it submitted to any other

institution for any degree or diploma. I remain fully responsible for any error and plagiarism

Pallavi Saxena

29A

MBA(IB) 2011-2013

IIFT

3

CONTENTS

I. INTRODUCTION ............................................................................................................................ 5

II. SCOPE OF THE PROJECT ............................................................................................................. 7

OBJECTIVES: .................................................................................................................... 8

III. BRAND LOYALTY ......................................................................................................................... 9

IMPORTANT PARAMETERS IN ONLINE ENVIRONMENT .................................... 11

BRAND LOYALTY IN APPAREL PURCHASE ........................................................... 14

LOYALTY FOR MOBILE PHONES .............................................................................. 15

COMPARISON OF ONLINE AND OF1FLINE BRAND LOYALTY........................... 15

IV. INDUSTRY ANALYSIS- ONLINE AND OFFLINE RETAIL .................................................... 17

RETAIL INDUSTRY IN INDIA ...................................................................................... 17

EMERGENCE OF ONLINE RETAILING (E-TAILING) IN INDIA: ............................ 20

V. INDUSTRY ANALYSIS- APPAREL AND MOBILE INDUSTRY ............................................. 23

APPAREL INDUSTRY IN INDIA: ................................................................................. 23

APPAREL ETAILING: ....................................................................................... 25

MOBILE INDUSTRY IN INDIA .................................................................................... 27

MOBILE ETAILING .......................................................................................... 28

VI. MARKET RESEARCH .................................................................................................................. 29

METHODOLOGY FOLLOWED: ................................................................................... 29

SAMPLE SELECTION: ................................................................................................... 29

SAMPLE SIZE: ................................................................................................................ 30

ANALYSIS:...................................................................................................................... 30

MOBILES- ONLINE/ OFFLINE ........................................................................ 30

APPARELS- ONLINE: ....................................................................................... 33

APPARELS- OFFLINE: ...................................................................................... 34

VII. RESULTS AND FINDINGS .......................................................................................................... 36

SURVEY RESPONSES (SNIPPETS):............................................................................. 36

SURVEY FINDINGS: APPARELS ................................................................................ 43

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SURVEY FINDINGS: MOBILES .................................................................................. 54

IN-DEPTH INTERVIEWS:.............................................................................................. 67

APPARELS: ........................................................................................................ 67

MOBILES: ........................................................................................................... 67

VIII. OVERALL FINDINGS OF THE RESEARCH .............................................................................. 69

X. LIMITATIONS OF THE STUDY .................................................................................................. 73

BIBLIOGRAPHY ....................................................................................................................................... 74

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I. INTRODUCTION

One of the most important factors that explain the brand choices of the consumers is the concept

of Brand Loyalty. It is an active or passive psychological process which guides the repurchase

of a particular brand by a customer. It can be both rational and irrational. The core of it is

formed by Trust, Perceived Value of Brand and Emotional Connection with customer.

With the advent of e-commerce practices, traditional way the customers purchase are changing.

In fact there exist two customer categories viz. online customer and offline customer now. The

way brand selection is made, filtering is carried out, purchase environment, buying patterns,

customer involvement, buying behavior and customer interaction all the factors undergo a sea

change when customer moves online from offline. Even the concept of brand loyalty gets

modified when it comes to online retailing. In online retail, the core values of trust are not

transmitted to the customers because of factors like online transactions are usually carried out via

credit/ debit card as the people are apprehensive of sharing their details with an unknown site and

lack of touch and feel because of which the perceived value of the product decreases.

In today’s era when the online shopping is gaining huge popularity, it has become a prerogative

for a marketer to understand nuances in the buying behavior of the consumer in online retail and

offline retail with respect to their research before buying, product decision, and purchase

behavior and payment options available.

At a micro-level brand loyalty and variety seeking behavior of customer changes with product

category. The level of product standardization, its usage, customer involvement level,

importance of touch and feel, existing brands and their strengths and customer innovations that

are put in place by the e-retailer decide how different the customer behavior is making the brand

choice of purchased product.

To find a sufficient and versatile customer sample and behavior insights in this regard two

categories have been chosen viz. Mobiles and Apparels. Mobiles as a product category are

already established in online sales. In fact it is clocking the highest sales after books for Indian

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online shopping market leader Flipkart. Customer buying behavior is complex due its high

involvement and huge perceived difference between brand offerings. On other hand Apparels as

a product category is the fastest growing category in this space. Also due to presence of private

labels and their growing sales indicate that customer is moving from established brands to new

brands for better perceived value. Therefore both of these categories are promising to deliver

insights that would be useful in understanding the brand loyalty and variety seeking behavior of

online customer

To compare the brand loyalty and variety seeking behavior of online and offline customers,

primary research will be conducted. Research intends to capture the decision making process

about the brand, major influencing factors, how the brand loyalty fits into picture for buying

process for both of these media. After the survey research findings, secondary research insights

and existing perception information would be collated to deliver the analysis regarding the brand

loyalty and the variety seeking behavior of the customers in online versus offline retail formats

for the selected categories.

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II. SCOPE OF THE PROJECT

Online shopping started from books and then moved onto music and services categories. These

were the product categories where standardization was high and “Touch and Feel” of the product

was not that important. However convenience, discounts, user reviews and huge variety started

overcoming standardization barriers and online shopping extended to other categories like

apparels, electronic goods, personal care and even groceries.

In India, online shopping is still in its nascent stages. The main reasons behind it are low key

broadband penetration and even meager plastic or internet money user base. But with the advent

of technologies like 3G and 4G and innovative measures like Cash on Delivery which were

never used except in a few countries like China, some online shopping categories have got a

considerable customer base. The most popular categories include electronic goods especially

mobile and laptops, books, CD’s, footwear and apparels.

To study brand loyalty behavior in online and offline retail this project gives special emphasis on

two categories viz. mobile phones and apparels in retail space.

Mobile phones: As the youth is becoming more and more tech-savvy, mobile handset

has taken a special place in their life. With mobile internet it’s not just a device to talk

anymore. Customer involvement is fairly high in this category. Product life cycle is

extremely short as the new innovation keep on happening. Repeat purchase time lies

between 3-18 months. In regard to this project, brand recognition is high. The degree of

difference in brands and products vary hugely. Brand recognition is very high; however

brand loyalty patterns shift rapidly. But this shift is not random or out of inertia rather it

is through continuous evaluation of brands through comparison of brand offerings. Thus

a complex buying behavior is observed in the case of mobiles. It’s topmost selling

product category on Flipkart- the online retail market leader in India. Main brands that

are sold in this in this category include Nokia, Apple, Samsung, HTC, Blackberry

Micromax, Motorola, Sony Ericsson. In India, Nokia still holds the market leader

position, however Samsung is the most growing brand in emerging smartphone category.

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Apple is the biggest brand in terms of brand loyalty followed by Blackberry, Nokia and

Samsung

Apparels: Due to growing reliance on online shopping, hectic work lives and increasing

traffic in urban population customers started taking online shopping seriously for

categories like apparels also where touch and feel factor is really important. Moreover

various innovations like trial on delivery zoom in feature on site, discounts, promotional

schemes and deals made this category in fact the fastest growing category in e-retail. A

lot of new players are coming into market like Jabong, yebhi, ebay etc. Now even

Flipkart has entered into Men’s apparels. Private labels also contribute heavily in online

retailing of apparel. Sher Singh and exclusively.in are among the popular private labels

that have gained wide recognition. Moreover lucrative margins and craze for “sale” make

this category a natural choice for e-retailers. Customer behavior and propensity to switch

brands in this category would be defining the future for our products category and

respective brands in future.

The above mentioned two categories are either established or growing aggressively in

India in the field of online retail, and hence the author expects to find sufficient sample

size for carrying out primary research in the above mentioned product categories

OBJECTIVES:

The objective of the dissertation will be to contrast the brand loyalty of the consumers between

online and offline retail by understanding the following factors:

The purchase pattern for various consumers on online as well as offline stores in terms of

repeat purchases and brand switching

The search pattern displayed by consumers i.e. whether they lookout for a brand and then

go for a store or the store forms a priority and they decided upon a brand

The effect of various promotional schemes available on online stores on the brand

switching behavior of a consumer

The effect of variety available on online stores as compared to offline stores on the brand

switching behavior of the consumer

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III. BRAND LOYALTY

One of the most important factors that explain the brand choices of the consumers is the concept

of Brand Loyalty.

According to Jan Møller Jensen and Torben Hansen (2006)1, there are 2 approaches to define

Brand Loyalty: stochastic and deterministic. From a purely stochastic approach, brand loyalty is

considered tantamount to repeat purchasing and grounded on no manifest factors determining

the behaviour. It is impossible to detect any antecedents of repeat purchases, and therefore

companies gain no direct insights on how to build brand loyalty. From a determinist approach

brand loyalty is conceptualized more like an attitude or intention to purchase and it is believed

that the researcher can investigate the factors producing brand loyalty.

The stochastic approach appears to be useful for explaining consumer purchase behaviour of low

involvement FMCG products but even for such frequently purchased consumer goods the

purchase decisions made are not purely random and hence the definition given by Day (1969) (as

cited by Jan Møller Jensen and Torben Hansen (2006)) appears to be more appropriate that

defines brand loyalty as repeat purchase but clearly points out that this behaviour is a function

of psychological processes.

On similar lines, Dick and Basu (1994), as cited by Jan Møller Jensen and Torben Hansen

(2006), say that even a relatively important repeat purchase might not reflect true loyalty to a

product but may merely result from situational conditions like brands stocked by the retailer. In

their framework, attitude is a major requirement for true loyalty to occur. Consequently, they

define repeat purchasing without a favourable attitude as spurious loyalty. Similar thoughts are

found in Assael (1998) who conceptualizes brand loyalty as repeat purchase under high

involvement and defines repeat purchase under low involvement as mere inertia.

1 Jan Møller Jensen, Torben Hansen, (2006),"An empirical examination of brand loyalty", Journal of Product &

Brand Management, Vol. 15 Iss: 7 pp. 442 – 449

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Customer loyalty can be classified into proactive loyalty and situational loyalty (Oliver, 1999).

Proactive loyalty occurs when a consumer is often bought the brand and settles for no other

substitute while situational loyalty exists when the buyer purchases a brand for a special

occasion. Some scholars classified customer loyalty into the behaviour loyalty and the attitude

loyalty (Fournier and Yao, 1997, Wong and Sohal, 2003, Mattila, 2004). Behaviour loyalty

focuses on the long-term choice probability for a brand, for example, repeat purchase probability.

Attitudinal loyalty focuses on brand recommendations, resistance to superior products,

repurchase intention, and so on.

Relative attitude and variety seeking

According to Van Trijp et al. (1996), as cited by Jensen & Hansen (2006), it is important to

distinguish “true” variety- seeking behavior from extrinsically motivated brand switching when

studying consumers’ variety-seeking behavior. Van Trijp et al. (1996) argue that brand switching

behaviour should only be attributed to true variety-seeking when variation is aimed at for its own

intrinsic value and for the stimulation it brings to the situation. Consumers’ need for something

to reduce boredom or a need for sensory stimulation by exploring new product variants (e.g. a

differently flavoured coffee) are examples of true variety seeking. Van Trijp et al. (1996) provide

empirical evidence for variety-seeking to be more likely when involvement is lower, when

smaller brand differences are perceived among choice alternatives and when consumers brand

preferences are lower.

Relative attitude and resistance to situational factors

In addition to the above mentioned motivation for brand switching, Van Trijp et al. (1996) also

derive attention to the extrinsically motivated or derived brand switching behavior caused by

situational factors like friends’ recommendation of an alternative brand, usual brand sold out or

not stored by the retailer, competitors’ brand on sale).

Variety-seeking and resistance to situational factors

Intuitive consumers intrinsically motivated for brand switching will more actively be in search

for alternative brands and therefore pay more attention to offers from the competition. Further

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they will be more likely to give up their usual brand in case of out of stock situations. Van Trijp

et al. (1996) find that variety-seeking tendency seems to influence consumers’ response to out of

stock situations. Jensen and Hansen, therefore, propose consumers with a higher level of true

variety-seeking will be less resistant to situational factors.

Jan Møller Jensen, Torben Hansen, (2006)’s conclusions finally support the above studies and

show that show that consumers with a high relative attitude are less prone of variety-seeking,

more resistant to out of stock situations and competitors offers, and consequently more likely to

keep loyal to their usual brand.

IMPORTANT PARAMETERS IN ONLINE ENVIRONMENT

Information

Searching for information is a key stage of a consumer’s decision-making process and

may include a search for both internal and external information.

o Internal information will be gathered by retrieving knowledge from memory

such as prior brand experience (e.g. brand familiarity), prior format experience

(e.g. shopping online vs in-store), or prior exposure to advertising.

o External information may also be collected from sources such as a reference

group (e.g. peers, family members) and/or the marketplace (e.g. product

description online) (Blackwell et al., 2001)2.

Perceived risk

Perceived risk is defined as the nature and amount of uncertainty or consequences

experienced by the consumer in contemplating a particular purchase decision (Cox and

Rich, 1964; Cox, 1967)2. Uncertainty is subjective and comes from identifying buying

goals and matching these goals with product or brand offering. Consequences may be in

regard to functional or performance goals (e.g. Will the product work as well as I

expected?), psychosocial goals (e.g. How will it affect what others think of me?), or the

2 Jihye Park, Leslie Stoel, (2005),"Effect of brand familiarity, experience and information on online apparel

purchase", International Journal of Retail & Distribution Management, Vol. 33 Iss: 2 pp. 148 – 160

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means such as money, time, and effort invested to attain those goals. As satisfaction of

buying goals and/or potential consequences become more important and perceived risk

increases, search for information is greater (Urbany et al., 1989).

Purchase intention

Both internal and external information can increase a person’s intention to shop or

repurchase for a brand. Kiel and Layton (1981)2 found that the degree of satisfaction with

prior purchase determined the consumer’s reliance on an internal search for the product

or the brand. People tended to search their memory to recall a previous product or brand

purchase, and the greater the satisfaction they associate with that purchase, the greater

their reliance on an internal search. Similarly, Yoh (1999) found that previous experience

with internet shopping positively influenced the consumer’s overall attitude and belief

about internet shopping

The core of customer loyalty

According to Dennis Pitta, Frank Franzak, Danielle Fowler, (2006), Consumer loyalty, especially

in the online retail is based on a collection of 3 factors3.

Trust: Trust is vital in situations in which informational cues are incomplete. In the real

world, it helps reduce perceived risk by lessening the likelihood that a customer will

suffer a loss. Essentially, trust bolsters the customer’s belief in the likelihood of a positive

outcome. Early in a relationship, elements such as company or brand name assume

increasing importance. They serve as surrogate indicators of probable performance.

Customers have to trust the vendor or product they are buying in order to create a sense

of loyalty for the product. In the online world, trust is still a major concern among online

consumer.

The literature notes that trust is the one element that must be established early and

nurtured throughout the lifetime of the customer relationship. Zeithaml et al. (2001)

3 Dennis Pitta, Frank Franzak, Danielle Fowler, (2006),"A strategic approach to building online customer loyalty:

integrating customer profitability tiers", Journal of Consumer Marketing, Vol. 23 Iss: 7 pp. 421 – 429

13

emphasize the lifetime customer value (LCV) concept as a means of increasing

profitability and success. They suggest that companies should evaluate each customer on

his or her LCV and court those with high scores and ignore those with low scores.

Positive Perceived Value:

The transaction or relationship must provide a positive perceived value which in turn

should be greater than that supplied by the competitors.

After trust in developing loyalty is the consumer’s perceived sense of value resulting

from a transaction or relationship. Perceived value has been defined as a customer’s

overall evaluation of the benefits versus the costs involved in a marketing context.

Specifically, perceived value can be viewed as a broad construct focusing on prices, costs

incurred and benefits delivered by a marketer versus competitors.

Customer Connect: If marketers work on the first 2 factors, they can create a level of

positive customer emotional connection. This emotional attachment can lead to

commitment towards their brands that is resistant to change.

While brand loyalty can be assessed by observing consistent purchases of a brand over a

period of time, it is really more than a set of repetitive discrete transactions between

consumers and brands. It is not only repeat purchase behavior but also a set of motives

that underlie that behavior. Those motives can help to distinguish between spurious

loyalty which can be described as inertia and true loyalty which signifies a commitment

to the brand or company. This differentiation helps to understand whether a given

consumer’s repeat purchased will continue (true loyalty) or may stop when a change in

the store assortment or the selling conditions occurs (inertia).

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BRAND LOYALTY IN APPAREL PURCHASE

Study by Jihye Park, Leslie Stoel, (2005)4 shows the following about the effect of brand

familiarity, experience and information on online apparel purchase:

Brands that are perceived to be familiar by consumers are more likely to be purchased.

Thus, domestic and global e-tailers who build brand familiarity among consumers will be

more likely to increase purchase intention

Prior experience in purchasing apparel online is an important internal information that

helps to reduce perceived risk and increase purchase intention.

Shoppers who have previous online purchasing experience may feel more confident

about buying apparel via the internet than those who do not have previous experience.

Therefore, it is essential that e-tailers retain existing online customers and increase

patronage by developing efficient and effective marketing communications (e.g. discount

offers via e-mails) and incenting frequent web site visits.

Offering a discount for the first online purchase may be helpful to reduce the higher

(economic) risk perceived by online browsers and to incent them to purchase over the

internet. This purchasing experience, if positive will generate greater confidence for

future repeat purchases.

The findings of this study suggest that the amount of information available on a web site

may not be an important determinant for online apparel purchase decisions.

For clothing, providing rich, sensory-oriented product information on the screen, which

may substitute for the tactile experience, may be useful in satisfying consumer

purchasing criteria. However, this research suggests that shoppers may use a brand as a

core internal source of information for judging and evaluating the quality of apparel sold

4

Jihye Park, Leslie Stoel, (2005),"Effect of brand familiarity, experience and information on online apparel

purchase", International Journal of Retail & Distribution Management, Vol. 33 Iss: 2 pp. 148 – 160

15

on the internet; the brand name rather than the amount of information reduces the amount

of perceived risk.

LOYALTY FOR MOBILE PHONES

Research was conducted by Mohd Shoki. Bin Md.Ariff5 in Malaysia to examine the relationship

between customers’ perceived values, satisfaction and loyalty amongst users of mobile phones.

The most dominant factor affecting customer satisfaction of the mobile phone services was

found to be customers’ perceived emotional value. This means that emotional value plays an

important role in determining customer satisfaction. Emotional value is the utility derived from

the feelings or affective states that a product/service generates (Sweeney and Soutar, 2001).

Social value is the utility derived from the product’s or service’s ability to enhance social

selfconcept (Sweeney and Soutar, 2001). The social value appeared to be the least affective

factor to influence customer satisfaction towards the mobile phone services. However, social

acceptance or social value plays a vital role in influencing teenagers to continuously use the

mobile phone service and stay loyal to the company.

COMPARISON OF ONLINE AND OF1FLINE BRAND LOYALTY

Several studies like Andrews and Currim (2000), Bakos and Brynjolfsson (2000), Brynjolfsson

and Smith (2000), Burke et al.(1992), Degeratu et al. (2000), Häubl and Trifts (2000), Lynch and

Ariely (2000), Pauwels and Dans (2001), Shankar et al. (2002, 2003), and Ward and Lee

(2000)focus on understanding difference between the information search processes in a

traditional and an online environment.

Degeratu et al. (2000) show that for some categories the brand name is more important online

than in a traditional shopping environment, but this might depend on the available attribute

information. Andrews and Currim (2000) shows that the online shoppers select from a smaller

consideration set of brands, thereby remaining loyal to a smaller number of brands.

5 Mohd Shoki. Bin Md.Arif, Hiew Sok Fen, Khalid Ismail , “Relationship Between Customers’ Perceived Values,

Satisfaction And Loyalty Of Mobile Phone Users”, Rev. Integr. Bus. Econ. Res. Vol 1(1) pp 126- 135

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Role of Brand in Online Environment

A research by Peter J. Danaher , Isaac W. Wilson and Robert A. Davis6 aims to compare the

brand loyalty of online and offline consumer for grocery items. Their findings reveal that high

share (and therefore better-known) brands have greater than expected loyalty when bought online

as compared to an offline environment, and the converse holds true for small share brands.

According to Danaher , Wilson and Davis; retail formats differ greatly in their capability to

provide information about attributes linked to consumption benefits. This means that if a

consumer purchasing a product in a traditional environment is able to evaluate the quality of the

product prior to purchase, the product can be categorized as a search good. However, if the same

product is sold in an online environment, the physical cues that are available in the traditional

environment are not present and the product could be reclassified as an experience good. The

brand name within a virtual environment, through the brand value process, converts experience

attributes to search attributes that are communicated visually (Alba et al. 1997). This reliance on

the brand is due to the increased information required to transform a good from an experience

into a search classification. Furthermore, the increased perceived risk of transacting in the online

medium heightens the effect of the product brand name (Ernst and Young 1999). Larger brands

are therefore capable of providing sufficient information for consumers to predict satisfaction

without experiencing the merchandise. In a study by Ernst and Young (1999), in which 82% of

respondents indicated that a product’s brand name is important in their decision to buy online.

The study also showed that higher priced brands exhibit lower loyalty as compared to a lower

priced one. In all, their results showed that purchase behavior on the Internet tends to be more

conservative than in traditional stores. In terms of brand loyalty, already familiar brands, with a

strong offline presence, do even better in the Internet environment than offline.

Thus author learns that brand equity is an active or passive psychological process which guides

the repurchase of a particular brand by a customer. It can be both rational and irrational. The

core of it is formed by Trust, Perceived Value of Brand and Emotional Connection with

customer and it plays substantial and different roles for various product categories.

6 Peter J. Danaher, Isaac W. Wilson, Robert A. Davis, ”A Comparison of Online and Offline Consumer Brand

Loyalty “, Marketing Science/Vol. 22, No. 4, Fall 2003

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IV. INDUSTRY ANALYSIS- ONLINE AND OFFLINE RETAIL

RETAIL INDUSTRY IN INDIA

India has emerged as the fifth most favorable destination for international retailers, outpacing

UAE, Russia, Indonesia and Saudi Arabia, according to A T Kearney's Global Retail

Development Index (GRDI) 2012. "India remains a high potential market with accelerated retail

growth of 15-20 per cent expected over the next five years," highlighted in the report.

With a score of 63, India ranks fourth among the surveyed 30 countries in terms of global retail

development (IBEF)7. India’s strong growth fundamentals along with increased urbanisation and

consumerism opened immense scope for retail expansion for foreign players. Favourable

demographic conditions and higher per capita disposable income of young population boosts

demand for retail in India. Consumers in India are spending more money on non food purchases.

They are becoming more brand conscious

Source: IBEF

7 http://www.ibef.org/industry/retail.aspx [accessed on 20/10/2012]

71.5 65.5 64.7 63 61.3 61.2 59.5 58.2 58 57.8

0

10

20

30

40

50

60

70

80

18

India’s retail market is expected to cross 1.3 trillion USD by 2018 from the market size of 511

billion USD in 20098. Modern retail with a penetration of only 5% is expected to grow about six

times from the current 27 billion USD to 220 billion USD, across all categories and segments.

The growths for 3 major sectors of Indian Retail (FMCG, CDIT( Consumer Durables and IT)

and Apparels) has been as shown in the following figure:

Source: Technopak, 2010

The key drivers for the growth in Indian retail have been:

Increase in consumer class

Easy consumer credit

Brand Consciousness

Change in consumer mindset

Rise in income and Purchase Power

Some of the trends9 that are expected to be seen in the Indian retail industry are:

The total retail spend is estimated to double in the next five years, of which organised

retail growing at a CAGR of 22 percent is estimated to be 21 percent

8 “Overview of India’s Consumer and Retail Sectors”, Technopak, 2010

9 Indian retail market: Changing with the changing times”, Delloite, 2010

19

Retail in India from 2009 to 2015 ( in bn $)

Source: Delloite, 2010

Food and grocery with 60 % share forms a lion’s share of Indian household consumption,

followed by clothing and fashion, which stands at 10% of the total spending.


Penetration of modern retail varies widely across categories for e.g. clothing and fashion has

23% share of modern retail while sectors like food and grocery make up only 1 percent of their

total market size respectively.

210 243 246

452 8 31 45

122

0

100

200

300

400

500

600

700

2005 2009 2010 2015 e

Modern

Traditional

9.9 3.9

6.4

3.4

59.5

16.9 Clothing & Fashion

Beauty & Wellness

Electronics

Furniture & Fixtures

Food & Grocery

Others

CAGR 22%

20


EMERGENCE OF ONLINE RETAILING (E-TAILING) IN INDIA:

India’s e-Commerce market is at an early stage but is expected to see huge growth over the next

four to five years. Over the past 12 months, venture capitalists have invested heavily in India’s e-

Commerce market, new players have emerged, and the e-Commerce ecosystem has developed,

presenting a huge opportunity or companies willing to work through some of the logistics and

payments challenges in India.

The market dynamics in India show that in the ecommerce space, the overall advertising market

size in 2010 was $6 billion, travel was $19 billion and retail was $430 billion.10

Retail takes time to grow in the online medium due to two reasons –

The lack of touch and feel (resulting in a different user experience compared to physical

retail), and

The need to develop an ecosystem that helps build consumer comfort and trust.

10 Trends In India’s Ecommerce Market, Forrester and Assocham India, 2012

10%

11%

1%

12%

23%

4%

90%

89%

99%

88%

77%

96%

0% 20% 40% 60% 80% 100% 120%

Others

Furniture & Fixtures

Food & Grocery

Electronics

Clothing & Fashion

Beauty & Wellness

Modern

Traditional

21

The lack of touch and feel in online retail has been a universal problem, and e-tailers around the

world have been trying to address it effectively - the solutions being

Identification of categories where the need for product touch is minimal (and

standardization is high),

Incentivizing the consumer through other means such as discounts to compensate for the

perceived risk in ordering online.

The savings inherent to the e-tailing model – the reduction of inventory and high-cost retail

space - provides e-tailers the margins to enable such incentives for consumers.

India's e-retail industry is likely to touch 13.5 bn USD by 2017, up from I bn USD currently, as

per an industry body report.

Source: Assocham, 2012

The following factors are influencing this growth:

Venture capitalists are bullish on eCommerce growth

Online shopping is starting to appeal to the upper- and middle-class consumer

Young demographics and changing consumer lifestyles seeking the convenience e-tailing

offers- in terms of access (ease and time), decision making (information, ease of making

choice and time), transaction (ease and time) and timing (flexibility)

eCommerce is expanding into nonmetropolitan India

Large retailers are looking to build an online presence

Social media and mobile are helping accelerate eCommerce adoption

0.21 1

13.5

0

2

4

6

8

10

12

14

16

2007 2012 2017

22

The e-tailing market skew has been towards categories like consumer electronics (mobile

phones, cameras etc.) and books & music. These categories are the first ones to get offered as

well as adopted in the online space because of high standardization of products and less need of

touch, feel and fit factor involved while purchasing them. However, with more younger and

female consumers becoming active in the space, clubbed with highly discounted brand offers,

lifestyle categories are increasingly become popular. Also, unlike several organised retailers, e-

tailing is not limited to large cities.

As a result of increasing popularity and penetration of e-tailing, going forth, for brick and mortar

retailers, competition will not only be from the brick and mortar space but increasingly from e-

tailers. This makes the online channel a threat to brick and mortar retailers and is one of the

several reasons that have started to affect brick-and mortar retailer sales globally. Hence, it is fast

becoming imperative for brick and mortar retailers to integrate e-tailing channel in their sales

strategy.

Thus author learns that online shopping has the potential to transform Indian retail industry and

it’s spreading its reach very fast. On the other hand it’s also transforming customer behavior and

retail strategies. Its healthy growth indicates that it is not just a fad, but a thing that will stay and

change the industry forever

23

V. INDUSTRY ANALYSIS- APPAREL AND MOBILE

INDUSTRY

APPAREL INDUSTRY IN INDIA:

Rising fashion awareness and the desire to be perceived as ‘in vogue’ has led to the rapid growth

of apparel category. Brand conscious behaviour; initially restricted to men’s apparel with rapid

urbanisation has now caught on in the women’s apparel line as well. Gradual shift from the

traditional ‘buy and stitch’ to readymade wear, for convenience and larger choice prompted the

increase in purchase through departmental stores.

This category is considered to be the pioneer of modern/ departmental retailing and in its early

days witnessed many manufacturers venture into front-end retailing.

Over the years, these players have not only realigned their product offerings but have also moved

towards providing other value added services.

In the Global Apparel Index survey, India was ranked sixth after China, Russia and three Middle

East nations11.

Source: IBEF

11 http://www.atkearney.com/news-media/news-releases/news-release/-/asset_publisher/00OIL7Jc67KL/content/a-t-

%C2%A0kearney%E2%80%99s-2011-retail-apparel-index-finds-china-is-most-attractive-emerging-market-

followed-by-uae-and-kuwait/10192 [accessed on 08/10/12]

61.4 58.9

48.6 46.4 43.9 42 40.1 37.4 37.3 36.9

0

10

20

30

40

50

60

70

24

The drivers and opportunities for the growth of apparel market in India are12

:

Increasing incomes are enabling Indian consumers to spend more and experiment across

products, brands and categories.

Apparel is no longer a functional category but one that conveys appearance, prestige and

image. Consumers want to buy apparel that is both affordable and fashionable.

The growth of modern trade has helped increase the demand for both branded and value

apparel. This, coupled with the emergence of new sectors and professional job

opportunities, has also helped drive demand for office wear.

Over 50% of India’s population is under 25. Young Indians are aspirational, demanding

and focused on apparel that is both fashionable and affordable.

Current penetration of apparel in the organised retail category is 10%. This is expected to

increase to 30 to 35% by 2015.

According to a report titled ‘Winning in India’s retail sector’ by PWC, the critical factors that

can help create customer loyalty and emerge as a winner in this segment are13

:

Fashion and Pricing

Providing fashion at very competitive prices is a major driver of success. Generally firms

localize one-third of its product range sourced from its global headquarters, enabling it to

“be global and connect local.”

Customer Experience

o Availability of apparel: The consumer wants sharply priced, fashionable

apparel to expand their wardrobe both at the workplace and at home.

Customers no longer want to dress up just for work, they also want to look

good at home, implying access to choice and range.

o Store experience: From the time a customer enters the store to when she/he

leaves, she/he must have a good experience across several touchpoints that

include: Trial room | Interacting with staff | After-sales experience | Billing at

the POS | Store ambience

12

Retail, November 2011, Indian Brand equity Foundation (IBEF) 13

‘Winning in India’s retail sector: Factors for Success’ by PWC

25

Freshness of category

Freshness takes into account new product promotions, new designs, new colours, new

styling, etc. Keeping fashion exciting helps engage and retain customers, results in sales,

generates repeat traffic, etc

Long Term Business model

Sustainable product pricing, offering products that imply longevity, expanding operations

in a calibrated but determined manner, etc. are some of the ways in which retailers can

convey their commitment to building a long-term presence

APPAREL ETAILING:

Only 9% of clothing is sold on internet. In comparison 50% of computers are sold online; 40% of

books are sold online. Apparel is one the most difficult categories to be sold on internet.

Yet, computers sold on internet represents $30bn, while 9% of apparel equals $31bn. Apparel is

already the biggest selling category on internet.

E-commerce conversion rates have been hovering around 2-3.5% while brick-and-mortar

conversion rates for fashion retailers have been around 20-25%. But as online sellers become

better, their internet conversion rates increase. Amazon.com boasts almost 8% conversion rate.14

Apparel e-tailers can be classified into 3 different categories based on their product sourcing

strategies15

–

o multi-brand retail,

o single brand retail and

o private labels.

Private sales (also referred to as flash sales) are really a sub-category of multi-brand retail and

are used to sell high end luxury products online. In private sales, products are deep discounted

and targeted at a specific set of people. The time given for customers to make the purchase is

limited in most cases.

14 “Online Apparel Retail - And What The Future Brings”, Fits.me ( Virtual Fitting Room), 20-8-2012

15 ‘India Goes Digital’, Avendus Capital

26

Double digit market share of single brand retail indicates the potential which exists for

incumbents in the online space. Many of these brands are beginning to put together their Internet

strategy. Despite a slow start, the strength of their brands and control over merchandise will

enable them to garner significant market share. The prevalence of multi-brand retail shows that

pure-play apparel e-tailers like Myntra also have huge potential in this market.

Although it is smaller in reach, compared to the comparison shopping sites (as shown in graph

below), it grew 362 per cent in the past one year16

.

Source: techcircle.vccircle.com

16

http://techcircle.vccircle.com/500/apparel-e-com-fastest-growing-category-one-in-10-indians-logged-online-in-

july-comscore/ [accessed on 08/11/12]

27

MOBILE INDUSTRY IN INDIA

CyberMedia Research expects the India telecom services and mobile handsets market to grow at

16.7% in 2012 (over 2011)17

to touch revenues of Rs 288,832 crore or USD 63 billion. Of this,

the telecom services (including mobile and fixed line services) will contribute Rs .2,05,454 Crore

(USD 45 billion) in 2012. The India mobile handsets market, that includes feature phones and

smartphones, will grow at a CAGR of over 30 percent during 2012 to touch revenues of Rs

83,377 crore (USD 18 billion).

The growth in the India domestic mobile handsets market will be fuelled by a more than 150%

increment in the value of featurephones and smartphones shipped, from Rs 50,714 Crore in

2010 to Rs 1,28,729 Crore in 2014 ( CAGR 26.2%).

India mobile phone sales cross 50 million in the first quarter of 2012, representing a 9.1 percent

year on year growth. Nokia retained leadership position with 23% share, followed by Samsung at

second position with 14.1% and Micromax at third position with 5.8%, in terms of sales (unit

shipments) during January-March 2012.

Smartphone sales touched 2.7 million units during this period and Samsung emerged as the

leader in the smartphone segment with a 40.4% share, followed at No. 2 and No. 3 by Nokia with

25.5% and RIM with 12.3% share respectively.

“The Indian mobile phone market is competitive with more than 150 device manufacturers

selling devices to consumers. Most of these manufacturers remain focussed on the low-cost,

feature phone market, which still constitutes over 91 per cent of overall mobile phone sales,

offering a huge market to compete in.

17“ India Telecom services, mobile handsets market to touch Rs 2,88,832 Crore or USD 63 billion by 2012”, Cyber

Media Research, 14 June 2011

28

MOBILE ETAILING

The e-tailing market skew has been towards categories like consumer electronics (mobile

phones, cameras etc.) and books & music. These categories are the first ones to get offered as

well as adopted in the online space because of high standardization of products and less need of

touch, feel and fit factor involved while purchasing them.

The biggest etailing giant in India- Flipkart.com has mobiles as the 3rd

largest selling category

after books and computer accessories. About 25% of the customers who buy books from Flipkart

also buy mobile handsets and accessories.

Thus author learns that be it apparel or mobile, online shopping is increasingly becoming popular

in both the categories. Also due to increasing disposable incomes in India, these categories are

increasingly becoming relevant to understand consumer behavior. Also strong brands are there in

both the categories with ubiquitous presence both offline and online.

29

VI. MARKET RESEARCH

METHODOLOGY FOLLOWED:

The methodology followed during the course of this project was as follows:

i. Performing Secondary research by studying various papers and publications related to

brand loyalty, especially pertaining to online and offline retail in the 2 chosen categories

i.e. mobiles and apparels.

ii. Listing the key findings from each of the papers

iii. Conducting a primary research to understand the consumer behavior and brand loyalty in

online and offline retail: surveys and in-depth interviews

iv. Qualitative and quantitative analysis of the findings obtained in order to get a deeper

understanding of the loyalty and brand switching behavior of the consumers

v. Listing the analysis and inferences obtained from the above process

vi. Relating the key findings of primary/ secondary research with the general perception

SAMPLE SELECTION:

Selection of Product categories:

The aim was to select the categories that fulfill the following criteria:

Have a strong presence in offline as well as online formats in India

Have high penetration and shorter purchase cycles

Prominent brands should be available in the chosen categories

On the basis of the above mentioned criteria, 2 categories were shortlisted: Apparels and Mobile

Handsets

Selection of Respondents:

Surveys and interviews were conducted in the Tier1-Tier2 cities with the people who had made

ample amount of purchases in the specified format (online / offline) and in the respective product

category.

30

SAMPLE SIZE:

Mobile Handsets: Responses of people for mobile handsets were recorded in the same survey

as there were very few people who had made 3 or more purchases in the online format

Sample size : 115

Apparels: 2 different surveys were conducted for online as well as online purchase were

conducted with people having similar demographic profiles.

Sample size: Online purchase: 45

Offline purchase: 48

In-depth Interviews:

Indepth interviews were conducted with 5 people in each of the shopping formats in both the

categories. Therefore, total number of interviews conducted= 5x4=20

ANALYSIS:

The responses obtained were analyzed using MS Excel and SPSS.

QUESTIONNAIRE:

MOBILES- ONLINE/ OFFLINE

1. Have you shopped for mobile phones online?? (Y/N)

2. Please in the following details for your last 3 purchases of mobiles:

Brand Online /

Offline

Year Price No. of brands

evaluated before

the final

purchase

Reason to switch

brand from previous

one ( if any )

Purchase 1

Purchase 2

Purchase 3

31

3. Rate the following on a scale of 1 to 5 according to the influence they have on you for

finalizing a brand or switching to another brand while making a mobile purchase :

a. Brand of mobile

b. The online/offline store you buy from

c. Best price available

d. Customer reviews / reviews on sites like gsmarena

e. Varieties available on the store ( especially online)

f. Features/ specification of the phone

g. Promotional schemes/discounts / freebies

h. Availability on the store

i. TV advertisements

j. Celebrity endorsements

k. Salesman’s referral

l. Peer review

4. If you purchase online, how many websites do you visit for information before making a

purchase?

None, rely on information given on the store I am buying from

1-2

3-5

More than 5

b. What kind of websites do you visit??

Company website ( Samsung, nokia, etc)

A common website having all brands ( gsmarena, flipkart etc)

Both

5. If you purchase offline, how many stores do you visit for information before making a

purchase?

None, rely on information given in the store I am buying from

1-2

3-5

More than 5

32

b. What kind of stores do you visit??

Company outlet ( Samsung, Nokia, etc)

A common website having all brands ( The Mobile Store etc)

Both

6. When you purchase online, do you visit an offline store to get a ‘touch n feel’ of the

product before purchasing it online? (y/n)

7. When you purchase offline, do you visit sites like Flipkart/ gsmarena to check out the

features and ratings of the product? (y/n)

8. Do you actively seek reviews from peers before finalizing on a brand??

Never

Sometimes

Often

Always

9. Rate the impact of others’ review on your purchase decision.

Very High

High

Neutral

Low

Very Low

10. Are you ready to switch brands if the same features are provided to you at a better price?

(Y/N) why/ Why not?

11. Have you switched brands because of the huge variety available on online store? (Y/N)

12. Age group

13. Gender

14. City

15. Income ( groups specified)

16. Profession ( Student/ working professional/ housewife)

33

APPARELS- ONLINE:

1. How many times have you shopped online for apparels? (1/2/3 or more)

2. Are you willing to try out new brands ?

3. Please fill in the following details regarding the most purchased brand(s) in the last 1

year:


finalizing a brand or switching to another brand while making an online apparel purchase

:

a. Brand

b. The online store you buy from

c. Best price available

d. Customer reviews

e. Online Promotional schemes

f. Availability on the store

g. TV advertisements

h. Celebrity endorsements

i. Specifications/ details mentioned like size fabric etc

j. Variety available

5. Have you shopped for brands online that you generally don’t purchase offline?? (Y/N)

a. If yes, why?


Never

No. of

purchases

No. of brands

evaluated

before the

final purchase

Reason to switch

brand from

previous one ( if

any )

Brand 1

Brand 2

Brand 3

34

Sometimes

Often

Always


Very High

High

Neutral

Low

Very Low

8. Age group

9. Gender

10. City



APPARELS- OFFLINE:

1. Are you willing to try out new brands ??

2. Please fill in the following details regarding the most purchased brand(s) in the last 1

year:


finalizing a brand or switching to another brand while making an apparel purchase :

a. Brand

b. The store you buy from

No. of

purchases

No. of brands

evaluated

before the

final purchase

Reason to switch

brand from

previous one ( if

any )

Brand 1

Brand 2

Brand 3

35

c. Price available

d. Peer reviews

e. Promotional schemes




i. Salesman’s referral



Never

Sometimes

Often

Always


Very High

High

Neutral

Low

Very Low

6. Age group

7. Gender

8. City



36

VII. RESULTS AND FINDINGS

SURVEY RESPONSES (SNIPPETS): For the following question

Rate the following on a scale of 1 to 5 according to the influence they have on you for finalizing

a brand or switching to another brand while making an apparel purchase :

a. Brand


c. Price available

d. Peer reviews

e. Promotional schemes




i. Salesman’s referral


Apparels Offline:

S.No

.

Q3_1 Q3_2 Q3_3 Q3_4 Q3_5 Q3_6 Q3_7 Q3_8 Q3_9 Q3_10

a.

Bran

d

b.

The

store

you

buy

from

c.

Availabilit

y of better

price

d. Peer

review

s

e.

Promotion

al schemes

f.

Availabilit

y on the

store

g. TV

advertisement

s

h. Celebrity

endorsement

s

i.

Salesman'

s referral

j.

Variety

availabl

e

1 3 4 4 3 5 4 2 1 3 4

2 5 3 5 5 4 4 1 1 2 5

3 4 4 5 4 4 4 2 2 2 4

4 3 3 4 4 4 4 3 3 3 4

5 5 5 5 5 5 5 5 5 5 5

6 4 4 4 4 4 5 2 1 2 5

7 3 2 4 4 3 3 2 2 2 3

8 4 3 5 3 4 4 2 2 2 4

9 5 2 4 4 4 4 4 3 3 4

10 5 5 5 2 2 5 3 3 3 5

11 4 3 4 2 4 4 2 2 3 4

12 5 3 2 3 4 3 4 4 3 4

13 4 2 4 3 3 4 2 2 3 5

37

14 3 1 4 3 4 2 2 2 2 4

15 1 2 1 4 2 1 3 4 4 1

16 4 4 5 5 5 4 3 3 2 4

17 4 4 4 3 4 3 4 2 2 4

18 5 5 4 4 4 3 2 2 4 4

19 5 3 4 5 4 3 2 3 1 2

20 5 3 4 4 4 4 3 3 4 4

21 4 3 5 4 4 3 4 4 3 4

22 4 2 4 2 5 3 2 1 1 1

23 4 1 3 2 3 4 2 2 2 4

24 4 2 5 4 5 4 2 1 2 5

25 3 2 4 4 3 4 2 1 1 3

26 3 3 2 3 2 3 3 3 3 3

27 4 2 5 4 3 4 3 3 2 4

28 3 4 4 4 5 3 2 2 2 5

29 5 5 3 2 5 4 2 3 4 5

30 4 3 2 3 4 3 2 3 4

31 4 2 4 2 1 5 2 3 1 5

32 3 4 5 2 5 2 1 1 1 4

33 4 2 5 3 4 4 3 2 2 4

34 4 3 5 3 4 4 2 2 2 4

35 4 3 5 4 4 2 1 2 1 2

36 4 4 5 5 3 3 1 2 1 4

37 5 3 5 1 4 4 5 5 1 3

38 5 5 5 5 4 4 3 2 2 3

39 5 2 1 2 4 5 1 1 4 5

40 4 2 5 3 4 4 3 1 2 4

41 5 3 3 1 3 3 1 1 2 4

42 5 3 5 3 3 3 3 3 3 4

43 4 2 3 4 4 4 2 1 3 5

44 3 2 4 1 2 5 1 1 1 4

45 4 4 4 3 4 3 2 2 1 5

46 4 4 5 5 3 3 1 2 1 4

47 5 5 3 2 5 4 2 3 4 5

48 5 5 5 5 4 4 3 2 2 3

38

Apparels Online:

S.N

o.

Q3_

1

Q3_

2 Q3_3 Q3_4 Q3_5 Q3_6 Q3_7 Q3_8 Q3_9 Q3_10 Q3_11

a.

Bran

d

b.

The

onli

ne

store

you

buy

from

c.

Availabil

ity of

better

price

d.

Custom

er

reviews

e. Online

Promotio

nal

schemes

f.

Availabil

ity on the

store

g. TV

advertiseme

nts

h.

Celebrity

endorseme

nts

i.

Specificatio

ns/ details

mentioned

like size

fabric etc

j.

Variet

y

availab

le

k.Peer

Revie

ws

1 4 4 5 3 3 4 3 3 5 5 4

2 4 3 4 3 3 3 2 2 3 3 4

3 3 4 5 2 5 4 1 1 4 4 1

4 4 4 4 4 4 4 3 3 4 4 4

5 5 3 4 4 4 4 2 2 4 4 4

6 5 4 4 4 4 4 3 3 4 4 4

7 5 5 5 3 4 4 3 3 5 5 3

8 3 3 4 2 4 4 2 2 4 4 3

9 3 4 2 1 1 3 2 1 4 4 2

10 3 3 5 5 5 5 3 3 5 5 4

11 4 3 4 3 4 3 4 2 4 4 4

12 5 3 3 3 2 4 3 1 4 4 5

13 5 1 5 3 3 3 2 2 2 3 4

14 4 3 4 4 4 4 2 2 5 4 4

15 4 5 4 4 4 5 4 4 5 4 4

16 4 3 4 1 5 1 1 1 5 5 1

17 3 5 4 4 4 3 2 2 4 4 4

18 3 4 4 4 3 3 1 1 4 3 4

19 4 5 5 5 5 4 1 1 4 4 4

20 4 4 5 5 5 4 3 3 4 4 4

21 3 4 5 4 4 4 3 2 3 4 3

22 4 1 4 4 4 5 2 2 4 4 4

23 3 4 5 4 5 2 1 1 5 5 1

24 5 2 5 3 5 5 2 2 4 4 2

25 4 4 5 4 5 5 3 3 4 4 3

26 3 3 5 4 5 2 1 4 5 4 4

27 4 4 5 5 3 3 2 2 2 3 3

28 5 5 4 5 3 3 3 2 4 4 5

29 5 5 4 4 4 5 2 2 5 5 4

30 3 5 5 4 5 5 2 2 5 5 3

31 4 2 5 4 4 4 4 1 5 5 3

32 4 5 4 3 3 3 3 1 4 4 2

33 5 3 5 5 3 3 3 3 3 3 4

34 4 5 5 3 4 5 4 3 4 5 4

39

35 5 2 4 2 2 2 2 2 5 5 3

36 4 3 4 3 4 5 2 2 4 4 3

37 5 5 3 3 3 5 1 1 5 3 5

38 4 5 4 4 4 4 1 1 4 4 4

39 4 4 4 4 4 4 2 2 5 5 4

40 5 5 5 5 5 4 1 1 1 5 4

41 4 3 4 4 2 3 3 3 2 4 4

42 5 5 5 5 5 5 5 5 5 5 5

43 3 3 5 5 5 5 3 3 5 5 4

44 4 3 4 3 4 3 4 2 4 4 4

45 3 5 5 3 3 3 3 3 3 4 5

Mobiles offline:

S.no.

Brand

of

mobile

The

store

you

buy

from

Availabi

lity of

better

price

Custo

mer

review

s /

review

s on

sites

like

gsmare

na

Varieti

es

availab

le on

the

store

Featur

es/

specifi

cation

of the

phone

Promoti

onal

schemes

/discoun

ts /

freebies

Avail

abilit

y on

the

store

TV

adverti

sement

s

Celebrit

y

endorse

ments

Salesman’s

referral

Peer

review

1 4 4 4 4 3 3 3 3 3 2 4 4

2 5 4 5 4 5 5 4 4 3 3 3 4

3 3 1 3 3 3 4 3 3 2 2 2 4

4 3 4 5 4 2 4 5 2 2 2 1 5

5 4 3 5 5 5 5 4 4 4 4 4 5

6 5 3 5 3 3 5 4 2 1 1 4 5

7 4 4 4 4 4 4 4 4 2 2 4 2

8 5 4 4 4 4 4 4 4 3 3 3 3

9 5 5 5 3 5 5 3 5 4 3 3 3

10 5 3 4 4 4 4 4 4 2 2 3 3

11 5 3 4 3 4 5 4 3 2 2 3 4

12 4 4 4 3 2 2 4 4 1 1 1 5

13 5 4 5 5 5 5 5 5 4 3 3 5

14 4 3 4 4 3 4 4 3 4 2 2 3

15 5 5 5 5 5 5 5 5 5 5 5 5

16 5 3 3 4 4 5 5 5 3 3 4 5

17 5 2 3 4 3 5 3 5 2 2 1 4

18 4 4 4 4 4 4 4 4 2 2 3 5

19 3 4 4 4 3 4 4 4 3 4 4 4

20 4 3 4 3 4 5 3 4 2 2 4 4

21 5 2 3 2 3 5 4 3 2 2 2 3

40

22 5 3 4 5 5 5 5 5 5 2 2 3

23 5 3 4 4 4 4 4 2 2 2 3 3

24 4 3 5 5 3 5 5 4 1 1 1 4

25 4 2 4 4 4 4 3 3 1 1 1 4

26 5 5 5 5 4 5 5 4 1 1 4 5

27 4 2 4 4 4 5 5 4 3 3 3 4

28 5 4 5 4 4 5 4 4 4 4 4 4

29 3 3 4 3 2 3 4 3 4 4 3 2

30 5 2 4 4 1 5 3 2 2 2 2 4

31 2 3 4 4 3 4 5 5 4 4 4 4

32 4 3 4 4 4 4 3 3 3 2 2 4

33 5 4 5 5 5 5 5 4 2 1 1 3

34 5 2 5 5 5 5 5 4 2 2 2 3

35 5 3 4 5 3 5 4 1 3 1 2 5

36 5 4 5 4 3 3 2 2 2 2 2 2

37 4 4 4 4 3 3 4 4 4 3 3 3

38 5 3 5 5 4 5 3 3 5 2 2 4

39 5 5 5 5 5 5 5 5 2 2 4 5

40 4 2 5 4 2 5 3 3 2 1 2 3

41 5 5 4 3 4 5 5 5 5 5 3 4

42 3 2 4 5 4 5 3 4 2 1 1 4

43 5 3 3 3 3 4 3 3 3 1 4 4

44 5 4 5 5 5 5 4 5 2 1 1 3

45 4 2 4 4 3 4 4 3 2 2 2 3

46 5 3 3 3 3 4 3 4 2 2 2 3

47 5 3 4 4 4 5 4 3 2 1 1 5

48 4 1 4 3 2 5 3 2 2 2 2 4

49 5 1 5 1 1 5 3 1 1 1 1 5

50 5 4 5 4 2 5 4 3 2 1 1 4

51 1 2 1 3 5 1 1 5 3 5 1 1

52 4 4 4 4 3 4 4 4 3 4 4 4

53 3 2 3 4 3 4 2 2 2 2 3 5

54 3 1 4 4 3 5 4 3 3 3 2 3

55 5 2 5 4 4 5 5 4 3 3 3 4

56 4 4 5 5 3 4 5 5 4 3 4 5

57 5 2 5 2 3 4 4 3 3 2 2 2

58 5 1 2 3 4 5 1 3 3 3 3 5

59 4 3 5 4 4 5 3 2 1 1 4 4

60 4 4 3 2 4 5 2 3 3 3 3 5

61 3 2 4 5 4 5 4 4 1 1 2 3

62 4 3 4 3 3 5 3 4 3 2 3 3

41

63 1 1 1 1 1 1 1 1 5 5 1 2

64 5 4 4 3 4 5 5 5 2 2 4 5

65 4 3 4 4 4 4 3 4 3 3 4 4

66 4 3 4 2 2 3 2 3 1 1 2 3

67 5 1 4 2 5 5 3 5 2 1 1 5

68 4 2 5 4 3 5 5 4 2 2 3 4

69 2 4 4 4 4 4 3 4 1 1 4 3

70 5 4 3 4 4 5 4 5 2 1 1 3

71 5 4 4 4 4 4 4 4 4 4 3 4

72 5 4 4 4 4 5 4 4 1 1 2 2

73 5 2 2 2 2 4 3 2 4 2 2 4

74 5 1 5 5 5 5 5 5 2 2 2 5

75 5 4 5 5 4 5 5 2 2 2 2 5

76 1 4 4 3 3 1 2 2 2 3 3 2

77 1 2 3 4 5 4 3 2 1 3 2

78 5 4 5 4 4 4 5 4 4 2 4 5

79 5 4 3 3 3 5 4 4 1 1 1 5

80 5 5 5 5 5 3 5 3 3 1 1 5

81 5 3 4 4 2 4 3 1 1 1 3 3

82 4 1 5 4 2 4 4 3 1 1 1 4

83 4 4 3 5 2 5 2 5 1 1 1 3

84 4 3 4 4 4 5 3 3 2 1 1 4

85 4 1 5 4 3 5 5 3 2 1 3 3

86 4 2 3 3 2 5 2 2 3 2 1 4

87 5 1 3 3 4 5 4 4 1 1 4 5

88 5 5 5 5 5 5 5 5 4 4 4 5

89 4 3 4 5 5 5 4 4 3 3 4 4

90 5 4 4 5 2 2 4 4 4 4 3 2

91 5 2 4 4 3 5 4 3 3 3 4 4

92 2 4 5 5 5 5 4 5 4 4 3 4

93 5 5 4 4 4 4 4 4 4 4 3 4

94 5 2 5 4 4 5 5 5 3 2 4 4

95 5 5 4 5 4 4 4 3 4 5 5 4

96 5 1 1 3 1 5 1 2 4 5 3 2

97 4 4 5 4 5 5 3 4 2 2 3 3

98 4 5 4 4 4 4 4 4 2 2 5 4

99 4.3 3.1 4.1 3.9 3.5 4.4 3.7 3.5 2.6 2.3 2.7 3.8

100 5 3 4 4 4 5 4 4 2 2 3 4

42

Mobiles online:

S.No.

Brand

of

mobile

The

online

store

you

buy

from

Availabi

lity of

better

price

Customer

reviews /

reviews

on sites

like

gsmarena

Varieties

available

on the

store (

especially

online)

Features/

specificati

on of the

phone

Promoti

onal

schemes

/discoun

ts /

freebies

Availabili

ty on the

store

TV

advertis

ements

Celebrit

y

endorse

ments

Peer

Reviews

1 2 2 5 4 5 4 4 4 2 2 5

2 5 3 4 4 4 4 4 4 2 2 3

3 5 3 4 4 4 4 4 4 2 2 3

4 4 4 3 4 4 4 4 4 4 4 4

5 5 3 4 4 4 5 4 3 2 2 4

6 3 4 4 4 2 5 4 4 2 1 5

7 3 4 4 4 2 5 4 4 2 1 5

8 4 2 4 4 3 4 4 3 4 2 3

9 5 5 5 5 5 5 5 3 5 1 4

10 4 4 4 3 4 5 5 5 4 2 4

11 4 3 4 4 4 5 4 3 2 2 4

12 5 5 5 5 4 5 4 2 2 2 4

13 4 3 5 5 4 5 5 4 1 1 4

14 4 3 4 4 4 4 4 4 1 1 4

15 5 5 5 5 4 5 5 5 1 1 5

16 4 5 4 3 4 5 4 4 5 3 5

17 5 2 5 5 5 5 5 3 2 2 3

18 5 3 4 5 2 3 2 2 3 2 4

19 5 5 5 5 4 5 5 5 2 2 5

20 5 5 4 3 4 5 5 5 5 1 4

21 3 3 5 4 4 5 5 5 3 2 5

22 3 3 4 3 4 4 4 2 2 2 3

23 4 3 5 4 4 5 3 2 1 1 4

24 1 1 1 1 1 1 1 1 5 5 1

25 5 4 4 3 4 5 5 5 2 2 5

26 4 3 4 4 3 4 3 4 3 3 4

27 3 3 4 5 3 4 5 2 1 1 5

28 5 5 4 4 4 5 4 4 1 1 2

29 5 4 5 5 5 5 5 5 1 1 5

30 5 4 5 5 5 5 5 5 1 1 5

31 5 5 5 5 5 3 4 3 2 2 5

32 5 5 5 5 5 3 4 3 2 2 5

33 5 3 3 3 3 4 3 1 1 1 4

34 4 1 5 4 2 4 3 2 2 1 5

43

35 4 1 5 4 2 4 3 2 2 1 5

36 5 1 3 4 3 5 4 4 2 1 5

37 5 4 3 4 3 5 5 4 2 1 5

38 5 5 5 5 5 5 5 5 4 4 5

39 5 5 5 5 5 5 5 5 4 4 5

40 5 4 4 4 4 4 2 3 4 4 4

41 4 4 5 4 4 5 5 4 3 3 4

42 4 4 5 4 4 5 5 4 3 3 4

43 5 2 1 1 2 5 2 1 4 5 2

44 4 4 5 3 4 4 4 3 2 2 4

45 5 4 3 4 3 5 5 4 2 1 5

SURVEY FINDINGS: APPARELS

1. The mean and median scores across all the dimensions was as given below:

Brand

The store you

buy from

Availability of

better price

Promoti

onal

schemes Reviews

Online

Mean 4.07 3.74 4.36 3.86 3.52

Median 4 4 4 4 4

Offline

Mean 4.04 3.02 4.04 3.76 3.29

Median 4 3 4 4 3

Availability

on the store

TV

advertisements

Celebrity

endorsements

Variety

available

Online

Mean 3.79 2.36 2.12 4.17

Median 4 2 2 4

Offline

Mean 3.64 2.42 2.24 3.93

Median 4 2 2 4

The influence of all the factors was found to be similar on both online as well as offline

shopping behavior except for 2 factors: The store where the purchase is made and the

Reviews. The importance or influence of both these factors is found to be more in the

case of online purchase (both in terms of median and mean of the values)

2. The primary reasons to switch from one brand to another in case of online as well as

offline purchase was as follows:

44

Offline Purchase Online Purchase

1. Variety Price

2. Price Variety

3. Quality

While in the offline purchase, switching between brands was found to be influenced by

Variety, price and quality in that order, in the online purchase , switching was found to be

primarily governed by Price and Variety only.

3. On an average, the number of brands considered before making a final purchase was

found to be higher in the case of online purchase, which shows that lower

prices/discounts and the variety available on the online stores increases the consideration

set of people.

4. Chi square test was performed to find if any association exists between the different

factors that influence purchase / switching of a brand of mobile and the fact that the

purchase was made online or offline

The test was found to be significant only for 2 factors: Peer Reviews and The Store one

buys from. The results were as follows:

a. Association between’ The influence of The Reviews ‘ and whether the purchase

has been made online or offline

The hypothesis was as follows:

H0: There exists no association between ‘The influence of The reviews‘ and

whether the purchase has been made online or offline

H1: There exists an association between ‘The influence of The reviews ‘ and


For getting sufficient count in the cells of cross tabulation, the lower influence

points (1 and 2) were clubbed to form point 2, the higher influence points (4 and

5) were clubbed at 4. Therefore, the rating of influence now becomes:

45

2: Low Influence

3: Moderate influence

4: High influence

The results obtained in SPSS were as follows

Cross tabulation:

V1 * Influence of reviews Crosstabulation

Influence of reviews

Total 2 3 4

V1 offline Count 21 10 17 48

Expected Count 15.3 12.7 20.0 48.0

online Count 8 14 21 43

Expected Count 13.7 11.3 18.0 43.0

Total Count 29 24 38 91

Expected Count 29.0 24.0 38.0 91.0

Chi Square

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Pearson Chi-Square 6.661a 2 .036

Likelihood Ratio 6.857 2 .032

N of Valid Cases 91

a. 0 cells (.0%) have expected count less than 5. The minimum

expected count is 11.34.

The Chi square value 6.661 is above the threshold value of 5.99 for the given degrees of

freedom (2) . And thus the null hypothesis of there being no association between the 2

factors is rejected.

Hence, there is an association between the influence of reviews and whether the purchase

is made online or offline.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Phi .371 .036

Cramer's V .371 .036

N of Valid Cases 91

However, the value of Cramer V .371 says that the association is not very strong.

46

b. Association between’ The influence of The Store you Buy from ‘ and whether the

purchase has been made online or offline


H0: There exists no association between ‘The influence of The Store you Buy

from ‘and whether the purchase has been made online or offline

H1: There exists an association between ‘The influence of The Store you Buy

from ‘ and whether the purchase has been made online or offline

Cross Tabulation:

V1 * The store you buy from Crosstabulation

The store you buy from

Total 1 2 3 4 5

V1 offline Count 2 14 15 9 5 45

Expected Count 2.1 8.8 14.0 10.9 9.3 45.0

online Count 2 3 12 12 13 42

Expected Count 1.9 8.2 13.0 10.1 8.7 42.0

Total Count 4 17 27 21 18 87

Expected Count 4.0 17.0 27.0 21.0 18.0 87.0

Chi Square:

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)



N of Valid Cases 87

a. 2 cells (20.0%) have expected count less than 5. The minimum


The Chi square value 11.345 is above the threshold value of 9.49 for the given degrees of

freedom (4). And thus the null hypothesis of there being no association between the 2

factors is rejected.

47

Hence, there is an association between the influence of the store from where the purchase

is made and whether the purchase is made online or offline.

Cramer’s V:

Symmetric Measures

Value Approx. Sig.



N of Valid Cases 87

Also, the value of Cramer V .561 says that the association is quite strong.

5. Mann Whitney U test was run on all the parameters to check the differences between

the variances of the influence of factors responsible for switching of brands in online and

offline purchase. The test was again found to be significant only for Reviews and the

Store from where the Purchase is made.

(In the Ranks Table: Group 1 – online, Group 2– offline)

a. The Store you buy from


H0: There is no difference in the influence of the Store from where the purchase

is made in case of online and offline buyers

H1: There is a difference in the influence of the Store from where the purchase is

made in case of online and offline buyers

The SPSS results were as follows:

Ranks

VAR00001 N Mean Rank Sum of Ranks

The store you buy from

dimension1

1.00 42 52.20 2192.50

2.00 45 36.34 1635.50

Total 87

48

Test Statisticsa

The store you

buy from

Mann-Whitney U 600.500

Wilcoxon W 1635.500

Z -3.019

Asymp. Sig. (2-tailed) .003

a. Grouping Variable: VAR00001

As z= -3.019 and p<.05, the result is significant, we reject the null hypothesis and

hence, from this data it can be concluded that there is a statistically significant

difference between the importance associated with the Store from where the

purchase is made in case of online and offline buyers

From the ranks table, it can be seen that The Influence of the Store from where

the purchase is made in terms of finalizing a brand is found to be higher for online

(1) than offline (2).

b. Reviews


H0: There is no difference in the influence of Reviews in case of online and

offline buyers

H1: There is a difference in the influence of the Reviews in case of online and

offline buyers


Ranks


Influence of reviews

dimension1

1.00 43 48.33 2078.00

2.00 45 40.84 1838.00

Total 88

49

Test Statisticsa

Influence of

reviews


Wilcoxon W 1838.000

Z -2.472





difference between the importance associated with the Reviews in case of online

and offline buyers

From the ranks table, it can be seen that The Influence of the Customer Reviews

in terms of finalizing a brand is found to be higher for online (1) than offline (2).

Thus, the Mann Whitney U test was found to be in sync with the Chi square test of

association that was applied.

6. On comparing the past brand switching behavior on the basis of reviews, it was found

that 79% of the respondents (who purchased online ) had switched their brands in the past

and 58% of the respondents ( who purchased offline )had switched their brands due to the

reviews.

Applying the Mann Whitney U test for the Mean number of brand switches between the

online and offline consumers due to the reviews:

H0: There is no difference in the Brand Switching behavior due to influence of

reviews in case of online and offline buyers

H1: There is difference in the Brand Switching behavior due to influence of

reviews in case of online and offline buyers

50

The SPSS results were as follows

Ranks


Switched

brands due

to reviews

dimension1

1.00 42 46.02 2071.00

2.00 45 37.64 1415.00

Total 87

As z= -3.399 and p<.05, the result is significant, we reject the null hypothesis and hence,

from this data it can be concluded that there is a statistically significant difference

between the brand switching behavior of an online and an offline buyer.

From the ranks table it can be seen that switching has been more in case of online buyers.

7. About 69% of the respondents (who had purchased online) have gone ahead and shopped

for brands that they usually do not shop online, the reason being that these brands had

attractive offers and price points and hence, they bought them for experimentation and

they also form a good deal for casual wear.

8. FACTOR ANALYSIS:

Factor Analysis was performed on the parameters that are important for finalizing a brand

before making a purchase to understand the broad factors that a customer looks out for

before going for a brand in apparels. The SPSS results were as follows:

Test Statisticsa

VAR00004


Wilcoxon W 1415.000

Z -2.039



51

For Online Purchase of apparels:

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy.

.553

Bartlett's Test of Sphericity Approx. Chi-

Square

146.831

df 55

Sig. .000

As KMO >0.5, the sample size is sufficient

As the scree starts after the 4th

factor, 4 factors were taken to be important.

Rotated Component Matrixa

Component

1 2 3 4

g. TV advertisements .826

h. Celebrity endorsements .751

k. .Peer Reviews .628

a. Brand .536

c. Availability of better price .930

e. Online Promotional schemes .811

d. Customer reviews .531 .517

i. Specifications/ details mentioned like size

fabric etc

.830

j. Variety available .768

b. The online store you buy from .806

f. Availability on the store .540

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 5 iterations

52

On the basis of the grouping obtained, the following 4 factors can be said to be important for an

online Purchase of a brand:

Factor 1: Brand/ Store Awareness (Celebrity endorsement, TV advertisements, Brand and Peer

reviews)

Factor 2: Value for Money (Online promotional schemes, customer reviews, Better price

available)

Factor 3: Product details and variety (Specifications mentioned and variety available)

Factor 4: Store Loyalty/ Reputation (The store you buy from, Availability on the store,

Customer Reviews)

For Offline Purchase of apparels:



Adequacy.

.515

Bartlett's Test of

Sphericity

Approx. Chi-

Square

126.888

df 45

Sig. .000

As KMO >0.5, the sample size is sufficient.

As the scree starts after the 4th

factor, 4 factors were taken to be important.

53


Component

1 2 3 4

f. Availability on the store .853

j. Variety available .811

a. Brand .670

h. Celebrity endorsements .937

g. TV advertisements .908

e. Promotional schemes .778

d. Peer reviews .661

b. The store you buy from .654


i. Salesman's referral .808



a. Rotation converged in 5 iterations.

On the basis of the grouping obtained, the following 4 factors can be said to be important for an

offline Purchase of a brand:

Factor 1: Brand variety and availability (Availability on the Store, Variety available, brand)

Factor 2: Brand Awareness (Celebrity endorsements, TV advertisements)

Factor 3: Impulse Purchase (Promotional Scheme, Peer Review, The Store you buy from)

Factor 4: Value for Money (Availability of better price, Salesman referral)

As can be seen from the results while some factors are found to be common in both online and

offline environments, Store loyalty and Product details become important in an online medium

whereas impulse purchase becomes important in offline environment for apparels.

54

SURVEY FINDINGS: MOBILES

1. The mean and median scores across all the dimensions was as given below:

Brand of

mobile

Store you

buy from

Availability

of better

price

Customer

reviews /

reviews on

sites like

gsmarena

Varieties

available on

the store (

especially

online)

Peer

Review

s

ONLINE

Mean 4.32 4.21 4.18 3.98 3.70 4.09

Median 5 4 4 4 4 4

OFFLINE

Mean 4.265306 3.071429 4.081633 3.857142857 3.540816327

3.78571

4286

Median 5.00 3 4.00 4.00 4.00 4.00

Features/

specificati

on of the

phone

Promotional

schemes/disc

ounts /

freebies

Availability

on the store

TV

advertiseme

nts

Celebrity

endorsements

ONLINE

Mean 4.45 4.02 3.43 2.52 2.02

Median 5 4 4 2 2

OFFLINE

Mean 4.387755 3.72449 3.525773 2.597938144 2.265306122

Median 5.00 4.00 4.00 2.00 2.00

On the basis of mean and median score, the influence of all the factors was found to be

similar on both online as well as offline shopping behavior except for the Store from

where the purchase is made. The influence of the store is found to be higher in the case

of online purchase.

2. On the basis of the responses received, on an average, the number of brands considered

before making a final purchase was found to be higher in the case of online purchase,

which shows that lower prices/discounts, variety and the readily available reviews of the

product on the online stores increases the consideration set of people and hence, the

loyalty level might decrease.

3. It was also observed that switching of brands in all the scenarios ( online to online

purchase, online to offline purchase, offline to online purchase and offline to offline

purchase) was majorly driven by the features/ specification of the phone and the user

55

requirements. However, when trying out new brands in an online purchase, the most cited

reasons were ‘ Value for money, Desired features in better price, Good option in the

budget limit‘ thus showing that the ease of accessing information about the models and

the readily available reviews facilitate switching of brands in an online scenario.

4. Chi square test was performed to find if any association exists between the different

factors that influence purchase / switching of a brand of mobile and the fact that the

purchase was made online or offline.

The test was found to be significant only for 3 factors: Customer reviews on websites like

gsmarena, Peer Reviews and The Store one buys from. The results were as follows:

a. Association between’ The influence of The Store you Buy from ‘ and whether the



H0: There exists no association between ‘The influence of The Store you Buy


H1: There exists an association between ‘The influence of The Store you Buy


The results obtained in SPSS were as follows:

Cross tabulation:

V1 * b. The store you buy from Crosstabulation

Count

b. The online store you buy from

Total 1 2 3 4 5

V1 offline 15 25 25 27 6 98

online 3 5 14 12 10 44

Total 18 30 39 39 16 142

56

Chi Square Test:

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)



N of Valid Cases 142



The obtained Chi square value 12.474 is above the threshold value of 9.49 for the given

degrees of freedom (4). And thus the null hypothesis of there being no association

between the 2 factors is rejected.

Hence, it can be statistically said that there is an association between the influence of the

store from where the purchase is made and whether the purchase is made online or

offline.

Cramer’s V :

Symmetric Measures

Value Approx. Sig.




However, the value of Cramer V, .396 says that the association is not very strong.

b. Association between’ The influence of The Customer Reviews ‘ and whether the



H0: There exists no association between ‘The influence of The Customer

Reviews ‘ and whether the purchase has been made online or offline

H1: There exists an association between ‘The influence of The Customer

Reviews ‘ and whether the purchase has been made online or offline

57


Cross Tabulation:

V1 * d. Customer reviews / reviews on sites like gsmarena Crosstabulation

Count

d. Customer reviews / reviews on sites like gsmarena

Total 1 2 3 4 5

V1 offline 7 9 25 46 11 98

online 2 0 8 21 13 44

Total 9 9 33 67 24 142

Chi Square Test:

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






The obtained Chi square value 11.1 is above the threshold value of 9.49 for the given

degrees of freedom (4). And thus the null hypothesis of there being no association


Hence, it can be statistically said that there is an association between the influence of the

‘Customer reviews on websites like gsmarena’ and whether the purchase is made online

or offline.

Cramer’s V

Symmetric Measures

Value Approx. Sig.




However, the value of Cramer V, .380 says that the association is not very strong.

58

c. Association between ’The influence of The Peer Reviews ‘ and whether the purchase

has been made online or offline


H0: There exists no association between ’The influence of The Peer Reviews‘ and


H1: There exists an association between ’The influence of The Peer Reviews‘ and



Cross Tabulation:

V1 * k.Peer Reviews Crosstabulation

Count

k.Peer Reviews

Total 1 2 3 4 5

V1 offline 7 12 24 37 18 98

online 1 2 5 18 18 44

Total 8 14 29 55 36 142

Chi Square Test:

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)






The obtained Chi square value 11.830 is above the threshold value of 9.49 at given

degree of freedom (4). And thus the null hypothesis of there being no association


Hence, there is an association between the influence of the peer reviews and whether the

purchase is made online or offline.

59

Cramer’s V

Symmetric Measures

Value Approx. Sig.





5. Mann Whitney U test was run on all the parameters to check the differences between

the variances of the influence of factors responsible for switching of brands in online and

offline purchase. The test was again found to be significant only for Peer Reviews,

Customer Reviews and the Store from where the Purchase is made.

a. The Store you buy from


H0: There is no difference in the influence of the Store from where the purchase

is made in case of online and offline buyers

H1: There is a difference in the influence of the Store from where the purchase is

made in case of online and offline buyers


Ranks



dimension1

1.00 44 85.84 3777.00

2.00 98 65.06 6376.00

Total 142

Test Statisticsa

b. The store you

buy from


Wilcoxon W 6376.000

Z -2.862



60



difference between the importance associated with the Store from where the

purchase is made in case of online and offline buyers

From the ranks table, it can be seen that The Influence of the Store from where

the purchase is made in terms of finalizing a brand is found to be higher for online

(1) than offline (2).

b. Customer Reviews


H0: There is no difference in the influence of Customer reviews in case of online

and offline buyers

H1: There is a difference in the influence of the Customer reviews in case of

online and offline buyers


Ranks


d. Customer reviews /

reviews on sites like

gsmarena

dimension1

1.00 44 85.72 3771.50

2.00 98 65.12 6381.50

Total 142

Test Statisticsa

d. Customer reviews /

reviews on sites like

gsmarena


Wilcoxon W 6381.500

Z -2.946



61



difference between the importance associated with the Customer reviews in case

of online and offline buyers



c. Peer reviews


H0: There is no difference in the influence of Peer reviews in case of online and

offline buyers

H1: There is a difference in the influence of the Peer reviews in case of online

and offline buyers


Ranks


k.Peer Reviews

dimension1

1.00 44 88.26 3883.50

2.00 98 63.97 6269.50

Total 142

Test Statisticsa

k.Peer Reviews


Wilcoxon W 6269.500

Z -3.399





difference between the importance associated with the Customer reviews in case

of online and offline buyers

62



Thus, the Mann Whitney U test was found to be in sync with the Chi square test of

association that was applied.

6. Difference in variance was also computed for the ‘Number of stores that are visited

before making a final purchase’ between the online and offline scenario. The result was

as follows:

The hypothesis is as follows:

H0: There is no difference in the ‘Number of Stores that are visited before making a final

purchase’ in the case of online and offline buyers

H1: There is a difference in the ‘Number of Stores that are visited before making a final

purchase’ in the case of online and offline buyers

Ranks


Numberofwebsitesorstoresvi

sited dimension1

1 44 96.57 4249.00

2 99 61.08 6047.00

Total 143

Test Statisticsa

Numberofwebsit

esorstoresvisite

d


Wilcoxon W 6047.000

Z -5.175



As z=-5.175 and p<.05, the test was found to be significant and hence we reject the Null

hypothesis. From the mean rank, it can be seen that the number of stores visited by an

online buyer is more than an offline one.

63

7. Chi square test was also run to see if there is any association between the types of store

visited ( company stores or common stores) and the kind of purchase made ( online /

offline)


H0: There exists no association between ‘The type of store visited ‘ and whether the


H1: There exists an association between ‘The type of store visited ‘ and whether the



Cross tabulation:

VAR00001 * storesvisitedbeforepurchase Crosstabulation

Count

storesvisitedbeforepurchase

Total 1 2 3

VAR00001 offline 19 19 61 99

online 1 20 23 44

Total 20 39 84 143

Chi Square:

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)




a. 0 cells (.0%) have expected count less than 5. The minimum


The obtained Chi square value 14.391 is above the threshold value of 5.99 at given

degree of freedom (2). And thus the null hypothesis of there being no association


64

Hence, there is an association between the types of stores visited and whether the

purchase is made online or offline

Cramer’s V:

Symmetric Measures

Value Approx. Sig.





9. FACTOR ANALYSIS:

Factor Analysis was performed on the parameters that are important for finalizing a brand

before making a purchase to understand the broad factors that a customer looks out for

before going for a brand in mobile handsets. The SPSS results were as follows:

For Online Purchase of Mobiles:


Kaiser-Meyer-Olkin Measure of

Sampling Adequacy.

.760

Bartlett's Test of

Sphericity

Approx. Chi-Square 198.699

df 55

Sig. .000


As the scree starts after the 2nd factor, 2 factors were taken to be important.

65


Component

1 2

b. The online store you buy from .785

h. Availability on the store .778

e. Varieties available on the store ( especially online) .772

g. Promotional schemes/discounts / freebies .766

f. Features/ specification of the phone .681

a. Brand of mobile .509

i. TV advertisements -.847

j. Celebrity endorsements -.844

d. Customer reviews / reviews on sites like gsmarena .664

c. Availability of better price .587 .632

k. Peer Reviews .504



a. Rotation converged in 3 iterations.

On the basis of the grouping obtained, the following 2 factors can be said to be important

for an online Purchase of a brand:

FACTOR 1: Brand and Store offering ( Store you buy from, availability on the store,

Variety, discount, Features, brand, price)

FACTOR 2: Value Assurance ( Peer Review, Customer Review, Better Price, Less of

Tv advertisements and Celebrity endorsements)

For Offline Purchase of Mobiles:



Adequacy.

.677

Bartlett's Test of Sphericity Approx. Chi-

Square

423.807

df 66

Sig. .000


66

As the scree starts after the 2nd factor, 2 factors were taken to be important.


Component

1 2


g. Promotional schemes/discounts / freebies .726

f. Features/ specification of the phone .689

a. Brand of mobile .588

d. Customer reviews / reviews on sites like gsmarena .568

l. Peer review .550

e. Varieties available on the store .513 .502

j. Celebrity endorsements .778

i. TV advertisements .753

k. Salesman’s referral .614

h. Availability on the store .578

b. The store you buy from .562

On the basis of the grouping obtained, the following 2 factors can be said to be important

for an online Purchase of a brand:

FACTOR 1: Brand offering (Variety, discount, Features, brand, price, reviews)

FACTOR 2: Brand Recall and presence (TV advertisements, Celebrity endorsements,

Salesman’s referral, availability on the store, the store you buy from, variety on the store)

As can be seen from the results while some factors are found to be common in both

online and offline environments, Value assurance becomes important in an online

medium whereas brand recall becomes important in offline environment.

67

IN-DEPTH INTERVIEWS:

Apart from the findings observed from the survey, some of the insights received from in-depth

interviews conducted were as follows:

APPARELS:

The primary reason to shop online for apparels is the convenience factor.

The problem of trials and fitting is eliminated by initiatives by sites like Myntra

which provide free trial at home and hence, consumers feel assured of the

product. In cases like these, the Store loyalty comes into picture and supersedes

brand loyalty at times.

People try experimenting with newer brands that are available on the online

medium as the cost associated is not much and they have full faith in the Store

they are buying from that it will not keep substandard merchandise.

The phenomenon of impulse buying, which is very common in the offline format,

seems to be missing in the case of online purchase of apparels as even if a

customer likes a product, he is hesitant to purchase it unless he is very sure of

delivered value. This can be explained by the following example: When a

customer likes a product in an offline store, he might buy it in an impulse as he

might not come back to the same store again in near future. However, in the

online format the convenience of shopping any time prevents that impulse

purchase and the customer tends to procrastinate buying decision to buy it at a

later stage.

MOBILES:

The primary reason to shop online for mobiles is the discounts/offers available

online.

In case of an offline purchase, Advice becomes more important that Customer

gets from peers and salesman at POS. For example : when shopping online ,while

a customer tends to read through the customer reviews and experiences with the

product before making the final purchase, in case of an offline purchase he

generally goes by what the salesman and his friends guide him to do

68

The primary reason for switching brands in case of mobiles was more related to

the features of the phone or the changing requirements of the customer.

People usually trust the customer reviews printed on the websites

Customer actively search for feedback containing consumer experience to check

consumer satisfaction and product performance in long term and compares with

other brands under consideration to make the final selection

Negative feedback about mobile brand is considered even more seriously

69

VIII. OVERALL FINDINGS OF THE RESEARCH

1. The primary insight that was obtained in the exercise was that the Store assumes a great

importance in case of online buying and Store reputation and loyalty becomes an

important deciding factor in a brand purchase. However, the store from where the

purchase is made is not a very important factor when making an offline purchase. The

reason is that when a customer is loyal to a brand, he buys the same from any outlet as he

is also assured by the touch and feel of the product. However, in case of an online

purchase, the store from where the purchase is being made also becomes very important

because of the Trust factor attached to the online medium, not only in terms of the

transaction but also the quality and reliability of the store which acts as a substitute for

the ‘Touch and Feel’ absent on such medium. Thus, to retain its customers, it becomes an

utmost priority of a Brand to maintain its stock in the leading online stores, absence of

which might lead to a customer moving on to some other brand.

2. The primary reason for switching brands in case of offline customers was found to be

‘Non availability of variety or fit/comfort’ in their present brand, whereas in the case of

online purchase, the primary reason for switching brands was found to be ‘Availability of

better price for another brand’. This fact states the importance of price in an online

shopping environment.

3. Another difference observed between the buying behavior of an online and an offline

buyer was in terms of the impact of peer and Customer review. While its importance was

rated much higher in the case of online purchase, the effect was not that pronounced for

the offline purchase. The same can be understood by the fact that when a product cannot

be touched and felt by a customer and neither he has a salesman to convince him, he goes

by what the users of the product have to say about it and takes it as a rating of the quality

of the product. This importance of Reviews was also observed as a reason of brand

switching in an online scenario after getting the reviews as compared to an offline

scenario.

4. The number of brands in the consideration set of people before finalizing on a brand was

found to be higher in the case of online purchase. This can be explained by the easy

comparison of price and features available on the internet. Also, the customer and user

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reviews provide the customer with ample amount of information about the quality of the

product and thus he can make a more informed decision in the case of online medium.

Thus brand loyalty suffers again.

5. In the case of mobile phones, it was observed that the number of Stores visited before

making a final purchase was found to be higher in an online medium. This can be

explained by the criticality with which a buyer evaluates his options when shopping

online. He critically analyses the price and features of the phone before making a final

purchase. This can be seen as a substitute for the touch and feel factor which is absent in

online buying. Also, this increases the chances of a buyer switching to another brand

because of better features/ price available for some other brand.

6. Also for mobile phones, it was observed that there is an association between the type of

stores (company stores or common stores) visited for purchasing and whether the person

is shopping offline or online. It was observed that people who shopped offline preferred

visiting both kinds of stores whereas a large chunk of people shopping online just visited

the common stores like Flipkart/ Homeshop18 etc and did not go to the company

websites for information. The reason can again be the best price and reviews availability

on such common stores.

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IX. CONCLUSION

Study by Pitta, Franzak and Fowler(2006) says that there is a stronger evidence of brand loyalty

in an online environment as compared to an offline environment as buying a well known brand

implies lesser risk.

Study conducted by the author, however, gave different result and it was observed that Brand

loyalty starts dwindling in the online scenario. The plausible reason for the same can be as

follows:

The markets in which the above mentioned study was conducted have a strong presence

of ecommerce. However, in India ecommerce is still in a nascent stage in India and the

trust for online shopping is gradually increasing. Also, the importance attached by

Indians to touch and feel in product categories like apparels is quite high. Thus, people

are still skeptical of making an expensive investment and hence, go for better priced

items rather than sticking to a particular brand

Also, the assurance of quality and risk is more associated with the Online store as

compared to a brand. Therefore, while making a purchase, the decision for brand follows

the decision of the store. Hence, if a brand is not available on a store, the customer goes

ahead and chooses another brand that offers similar benefits at same price.

In high involvement product categories like mobiles, the online store provides the

customer access to a large variety of products and brands (depending upon your

requirements). Also, comparison of features and price is easily available along with

customer reviews and experiences. This provides a customer an opportunity to make a

more informed decision as compared to an offline scenario where a customer usually

goes to a store with a predefined set of brands and models in mind and he is shown either

those or 1-2 other products that are the best sellers in the given range. Thus the

consideration set of people gets very limited.

Pitta, Franzak and Fowler (2006) have described a customer value pyramid which includes 4

tiers- Platinum, Gold, Iron and Lead. The Platinum tier describes the company’s most profitable

customers. They are often heavy users of a product or service and not overly price sensitive. The

Gold tier differs from the platinum tier with lower but still good profitability levels. Iron tier

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customers are valuable in that they provide the volume needed to utilize the firm’s capacity.

Lead tier customers represent losses to the company. They tend to cost more than they generate.

They may demand more service than they are merit given their spending and profitability.

Most of the Indian customers are still in the Lead and Iron tier. They seek the online medium

majorly to avail better discounts and value for money. Thus to build loyalty in an online medium,

it becomes necessary to offer discounts and schemes basically in order to increase the perceived

value of the product. Once the online medium gets more matured and common, the platinum and

gold tier customers will emerge and price will not be a big issue to them. To build loyalty among

them initiatives like alerting them about some purchase opportunities before anybody else can be

taken.

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X. LIMITATIONS OF THE STUDY

The study conducted had a number of limitations:

The sample for the survey was not uniformly distributed and was confined to 20-30 years of

age group, and in the Tier1-Tier2 cities. The primary reason for the same was that E-

commerce is at a nascent stage in India and hence the TG was found to be easily available in

the above age group and cities. Because people with similar demographic backgrounds were

chosen for both online and offline customers, the sample for the offline purchase was also

restricted to the above mentioned TG.

Mobile phone is a product that is purchased once in 1-2 years and the online channel for

mobiles became popular in India around 2-3 years back and hence, the number of purchases

made in the category was not enough to bring out a clear cut comparison between online and

offline purchases.

Many of the surveyed people follow mixed model of offline and online purchase. Thus, it

was not possible to segregate the effect of factors impacting brand loyalty in any particular

case.

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