Mohit Sewak

Factors affecting Impulse Buying in a Retail Store

The article “The Interplay Among Category Characteristics, Customer Characteristics, and Customer Activities on In-Store Decision Making” by J. Jeffrey Inman, Russell S. Winer, & Rosellina Ferraro, gives some intuitive insights about the effect of various factors on the unplanned behavior of the consumer.

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It proves that where factors like effect of display, inter purchase cycle and category Hedonicity, gender of the consumer, household size, store familiarity, number of aisles being shopped at, amount of time spent in the store, paying by check or by credit card instead of cash increases the unplanned behavior of the consumer, factors like use of shopping coupon, use of list, and greater shopping frequency, reduces the unplanned shopping behavior of the consumer.

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The study has significant learning lessons for both the customers and for the managers. Where customers can avoid all such steps that increases his unplanned shopping tendency, the manager has to be more creative and innovative in terms of store/ aisle design, and planning his marketing and sales activities to further enhance the customers unplanned shopping behavior at his store.

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The study also gives a very interesting insight that the consumer’s unplanned buying behavior is not affected by his being accompanied by anyone.  Here we think that measuring the age of the companion would have been very handy. Because we think that although while accompanied by an companion should decrease the tendency of  unplanned purchase, owing to rational decision making with the discussion with the companion, or due to fear of social shame arising out of unplanned purchase. Also we think that while accompanied by children, the tendency of unplanned purchase must increase due to pester effect, especially for hedonic category products (positive interaction effect). But as the age of the companion has not been taken into consideration, any effect because of it might have been averaged out, and hence the significance of being accompanied by someone id low in the result.

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Also the negative interaction between display and category hedonicity is an interesting finding, but we think other explanations for the phenomenon are possible than the one given.

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Overall, despite the limitation of being constrained to the data given in the POPAI data set, the finding is very useful as it goes a long way in educating the consumer how to safeguard them against the tendency of impulse buying.

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Making Better Investments at the

Base of the Pyramid

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The article “Making Better Investments at the Base of the Pyramid“, by Ted London, illustrates with example, how better investments can be made at the Bottom/ Base of the Pyramid (BoP), and how to do the impact assessment of such an assessment. It explains the following: -

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Who is being affected?

Any BoP venture potentially affects three groups of local stakeholders:

1. the sellers,
2. the buyers, and
3. the communities in which it operates.

How are they being affected?

Consumers may get cheaper prices and greater access to needed products and services; producers may enjoy expanded markets and higher productivity. On the flip side, however, an entrepreneur who decides to invest his own hard-earned capital in a new business may open up himself and his family to unanticipated shocks, such as those generated by health- or crop- related crises. Even when local entrepreneurs do succeed, their actions can still negatively affect the community’s economic well-being – for instance, when indigenous businesses suffer because of increased competition.

The strategic analysis: Understanding the Impact.

It does require, however, that the venture’s assessment team rigorously and collaboratively fill in the cells of the framework. List all the expected effects of the venture – both positive and negative – on local stakeholders. To avoid double counting, teams should log only direct effects in the framework – noting an increase in, say, buyers’ incomes but not how the additional income will or could be spent to improve other aspects of well-being. Listen to and respect the opinions of a variety of stakeholders – field staff, development professionals, academics, and local community members. The team should use a variety of methods to collect data – such as semi-structured surveys, focus groups, in-depth discussions, and group forums. It probably makes sense for venture managers to pay close attention to potentially high-magnitude outcomes even when the likelihood that they will happen is relatively small.

For instance, using the framework, the management team was able to recognize the potential for strife and jealousy in families and communities that weren’t used to seeing women in non-traditional roles – such as that of an entrepreneur selling wares outside the home and village.

The performance analysis:  Tracking the Impact

The process isn’t as complicated or expensive as one might think. It involves identifying and collecting baseline as well as post-intervention data on the local buyers, sellers, and communities most affected by the venture’s  activities, and, whenever possible, on a comparable unaffected group to better account for what would have happened had the venture never launched.

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Sellers:

The team members agreed that changes in the sellers’ economic situations, capabilities, and relationships could be effectively captured by measuring their incomes (a positive effect), income instability (a negative effect), and opportunity costs of not pursuing other livelihoods (a negative effect); their skills development, self-efficacy, and contentment with life; their perceptions of respect and conflict within the family; and their interactions with individuals and organizations outside their local communities.

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Buyers:

Their savings due to product affordability and convenience, and the effect that eyeglasses and vision care had on work productivity.

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Community:

The team recognized the importance of changing communities’ attitudes toward women who worked as entrepreneurs and took on non-traditional roles outside the home and village.

Case of PEACE and Du Pont’s Pioneer Hi Breed International

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The partners knew it would take time for the seeds to be accepted and had figured the pilot would be more of a learning experience than a profit-making one. If the partners had undertaken a strategic analysis of the venture’s effects on poverty alleviation, specifically looking at economics, capabilities, and relationships, they might have gained the following insights about its initial business model.

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Doing business with the venture put them at greater economic risk, given the larger initial investment required. Pioneer’s seeds at first were an unknown in the eyes of the local community; the farmers weren’t sure how best to use them to maximize their yields. Getting their seeds from PEACE instead of the local traders, for instance – they could find themselves cut off , unable to procure the rest of their farming supplies from traders bearing grudges.

The primary purpose of the BoP Impact Assessment Framework is to give managers a standardized approach for understanding the whole story. For managers, development groups, and funders, it can also generate some important insights into the types of organizational designs that are most likely to succeed with the base of the pyramid.

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