Buyer Behaviour of Small City Customers of Organised Retail Formats

Jamshedpur Research Review ISSN 2320-2750 Year I Vol I Issue 1
February 2013
BUYER BEHAVIOUR OF SMALL CITY CUSTOMERS OF ORGANISED

RETAIL FORMATS
Mithilesh Kumar Choubey
Research Scholar, Dept of Commerce & Business Management, Ranchi
University Ranchi
Abstract
Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who are
registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains,
and also the privately owned large retail businesses.
In India, organised retail was once considered as the
next sunrise industry after information technology. Between the years 2000- 2007, when Indian retail
industry witnessed the mammoth 25 percent annual growth rate, expectations were sky high and it was
expected that organised retail would capture the 16 percent Indian retail market by 2012. Sensing the huge
market opportunity in this field, many national and international retail chains planned to open organised
retail chains in the small cities of India.
According to a market report, more than 2000 organised retail stores were opened up in 100
small cities of India during the period of 2009-2009. But, retail revolution lost its momentum
in between when most of the organised retail chains began to incurring huge loses in their
small city stores.
Initially, organised retail companies blamed world wide- economic
recession for their decimal performance in the tier III cities of India and later FDI policy of
Indian government.
But what my study reveals is far different from the claims of organised retail companies. It is
not the economic recession or unfriendly economic policy of India only but the majority of
Dictionary of Retail Management, HBS Press, US-2007
February 2013
small city customers who remained unmeshed with the so called organised revolution. In this
connection I observed the following:
It was expected that organised retail would capture at least 16 percent of Indian retail
market by the end of 2012 But, latest reports suggest that market share of organised
retail is only 7 percent today. According to some reports, in the tier III cities of India
only 3 percent market share is captured by organised retail companies.2
Many organised retail companies have shut their retail chains in small cities due to
poor response from the customers. In Jamshedpur only, Sponsors has shut down four
of its organised retail outlets. Vishal Mega Market has also closed its only mall in the
city, being unable to meet its huge loses.
Small retailers are still ruling the small city retail sector with almost 97 percent market
share. So far, organised retail formats unable to compete with small retailers in the
small cities of India.
Most of the organised retail companies who once announced to expand their business
in tier III cities of India, have either postpone their expansion plan or they are working
on a strategy of GO SLOW. Future group has curtailed its expansion plan after
making huge loses between the years 2009-2010)
My study was aimed to reveal, how the organised retail revolution failed to read the minds of
tier III city customers and lost its momentum in the mid way.
Key Words: Organised retail formats, India, Tier III cities of India, Retail Jamshedpur,
Jharkhand.
Source 2011 AT.Keamey Global retail development index.
February 2013
Objectives of the study:

A. To study the buyer behavior of tier III city buyers of organised retail formats.
B. To study the impact of social, cultural, economical, psychological, & geographical factors on this
buying decision making process.
C. To suggest appropriate marketing strategy to organised retail companies for tier III city customer of
India.
Hypothesis:
1. Marketing strategy (product, price, place, and promotion and STP strategy) adopted by organised retail
companies for tier III cities of India is not much effective.
2. Tier III customers of organised retail store are not aware of benefits associated with organised retail
formats.
3. Buyers behavior of tier III city customers of organised retail formats are quite different from that of the
buyer behavior of tier I and tier II city customers of organised retail formats due to social, cultural,
economical, and psychological variations.
4. Insightful understanding of buyer behavior of tier III city customer of organised retail stores would help
organised companies to design appropriate marketing strategy ( product, price, place and distribution
strategy) fit for local needs.(tier III cities.)
Research Methodology:
Definition of tier I, II and tier III city of India: Tier I cities- Indian metro cities like Delhi, Mumbai
Chennai and Kolkata. Tier II city- emerging metro cities of India like Bangluru and Pune. Tier III city- Small
cities of India, with good middle class customer base with purchasing power. Indian cities, qualified as the
Tier III city are Agra, Amritsar, Jamshedpur, Ranchi etc. Primary Data Collection Methods: Face to
face interview with marketing officials of organised retail stores, local small retailers and customers was
conducted. To study the involuntary behavior of buyers in organised retail stores, direct observation method
was used. In order to study the buyer behavior of organised retail stores, customer survey was conducted in
the three cities of India. Jamshedpur was considered for the tier III city category, and Kolkata and Bangalore
for tier I and tier II city respectively. 200 respondents from Jamshedpur and 100 respondents from Bangalore
and Kolkata each, were picked randomly for the survey. Opinions of the respondents were registered with the
help of formally designed questionnaire comprised of closed and open ended questions. Respondents
belonged to different age groups like 13-18 years, 7-12 Years, 19-35 years, and age groups above 35years.
1. INTRODUCTION
Organised retailing refers to trading activities
undertaken by licensed retailers, that is, those who are
registered for sales tax, income tax, etc. These include
the corporate-backed hypermarkets and retail chains,
and also the privately owned large retail businesses. 3
2. ORGANISED RETAIL BUSINESS IN TIER III
CITIES OF INDIA
Present status of Indian retail industry: The retail

industry in India is of late often being hailed as one of
the sunrise sectors in the economy. AT Kearney, the
well-known international management consultancy firm,
annually ranks emerging market economies based on
more than 25 macroeconomic and retail-specific
variables through their Global Retail Development Index
(GRDI).In its 2011 edition, it has ranked India fourth
indicating that the country is one of the most attractive
market for global retailers to enter. It has made India the
cause of a good deal of excitement and the cynosure of
many foreign eyes.
Dictionary of Retail Management, HBS Press, US-2007
February 2013
2. EVOLUTION OF ORGANISED RETAIL IN

INDIA
Ref: Table 4.6 A.T. Kearney
Development Index, 20114
Country
Brazil
Uruguay
Chile
India
Kuwait
China
Saudi Arabia
Peru
U.A.E.
Turkey
2011
Rank
1
2
3
4
5
6
7
8
9
10
2010
Rank
5
8
6
3
2
1
4
9
7
18
Global
Retail
Change
+4
+6
+3
-1
-3
-5
-3
+1
-2
+8
According to the GRDI published by AT Kearney,

"India's strong growth fundamentals9 percent real
GDP growth in 2010; forecasted yearly growth of 8.7
percent through 2016; high saving and investment rates;
fast labor force growth; and increased consumer
spendingmake for a very favorable retail environment
and the 4th spot in the GRDI. As has been the case for
several years, Indian consumers continue to urbanize,
have more money to spend on non-food purchases, and
have more exposure to brands. The result is a powerful,
more discerning consumer class. India's population of
nearly 1.2 billionforecast eventually to overtake
China'salso is an attractive target." The total retail
sales in India will grow from US$ 395.9 billion in 2011
to US$ 785.1 billion by 2015, according to the BMI
India Retail report for the third quarter of 2011. The
greater availability of personal credit and a growing
vehicle population providing improved mobility also
contribute to a trend towards annual retail sales growth
of 12.2 per cent. Indian retail sector accounts for 22 per
cent of the country's gross domestic product (GDP) and
contributes to 8 per cent of the total employment.
Indian retail remained unchanged for quite a long time

since 1900. But some small changes could be noticed
form government part. At village level, weekly Haats
remained an important feature of Indian rural retail.
These weekly Haats were not only a point of sales and
purchase but also a great place for village level
entertainment. Cases of community shopping could be
well visible here when entire village come together for
shopping in a weekly Haat. In the rural areas of tribal
Jharkhand we can see such community shopping in
prominence. Primarily weekly Haats were created for
meeting the daily needs of villagers. Village Melas were
of large sizes and wide variety of foods and other goods
like clothings, cosmetics and small consumer durables.
With the emergence of larger towns and cities,
neighborhood kirna store, which cater to the
convenience of the Indian customers, became popular.
To provide equal opportunity of employment and
earning to the rural craftsmen, khadi & village industries
Commission setup a countrywide chain of 7000 plus
stores in India. In big cities government encouraged
setting up of super Bazaars and cooperative stores to
make available all essential items at reasonable price.
Since 1990s: There has been tremendous metamorphosis
in the retailing environment in India in last 15 years, and
the beginning of this evolution can be traced from the
early years of the liberalization process in the country. In
developed countries retailing business was developed as
full fledged industry, where over75 percent trade is
handled by the organised sector. Large retail formats,
with high quality ambience and courteous, well trained
staffs are regular features of these retailers. The later half
of 1990s show a fresh wave of new entrants in the
retailing business. This time, it was not a manufacturer
looking for an alternative sales chain. There were pure
retailers with no serious plan of getting into
manufacturing. The fields they enter into ware diverse:
Food World, Subhiksha and Nilgiries in food and
FMCG, Planet M and Music World in music, crossworld
and fountainhead in books. In India, the first organised
retail format was introduced by Future group. It was the
time when more than over 12 million small retailers
were operating their business all over the country.
Organised retail was estimated at Rs 18, 000 in the year
www.atkearney.com/index.php/Publications/global-retaildevelopment-index.html
2002-3 with the phenomenal growth rate of 40 %

between the years 1999 to 20025. According to a report
published in Times of India, the Indian retail sector will
continue to expand at a fast clip, with the number of
malls in the country likely to swell to 280 in 2011-12
from 190 in 209-10. India has added around 5 million
sq ft of retail space in 2010 and approximately 15
million sq ft of space is lined up to get operational in
2011-20126
February 2013
c. As a result, private consumption would jump from

$795 billion, at present, to $1,800 billion in ten
years.
d. The contribution of organized retail to the overall
retail space would also grow from the current 5%
to 24%. At present, modern retail is of the order of
$21 billion.
e. Food and grocery is expected to grow from $303
billion to $495 billion in ten years with a growth in
consumption and a rise in the number of
households from 225 million to 330 million in ten
years.
f. The growth in organized retail is expected to
trigger investments to the tune of $50 billion in the
sector in the next ten years.
Ref: Table 4.1 Evolution of Indian retail environment
The big change would be food and grocery emerging as

the largest contributor to modern retail. Today, modern
retail is primarily driven by apparel. Modern retail of
2020 would thus mirror actual consumer spending.
3. DRIVERS OF ORGANISED RETAIL BOOM IN
TIER III CITIES OF INDIA:
a. Per capital income: During 2010-11 an Indian on an
average earned Rs 53,331 or Rs 4,444.25 a month. This
is the first time Indias per capita income has crossed the
Rs 50,000-mark. Per capita income in India has nearly
doubled from Rs 2,728.16 in 2004-05 and 2010-11 to
touch Rs 53,331 in 2010-11.
3 Key Trends in modern retailing
a. Following are the some of the key trends,
challenges and investment opportunities in
organized retail to investors.7
b. At least 25-30 modern retail formats would have
turnovers in excess of $1 billion by 2020, while
other 60-70 retail formats would attain a size of
$500 million and cross $3 trillion by then.
Ref Table: 6.1: Annual income of an average Indian in the year

2010-118
Annual income of an average Indian (2010-11) :

Rs. 53.331
Monthly income
Rs. 4,444.25
Year 2004-5
Rs.2728.16
Year 20010-11
Rs.53, 331
b. Great Indian Middle Class: National Council for

Applied Economic Research's (NCAER) Centre for
Macro Consumer Research report 20119
5
Block -1, An overview of retail Environment( MS-62- retail

Management/ ISBN-81-266-2061-7/Indira Gandhi National Open
University, 2005, Pp-23-24
6
PTI, Times of India, Number of malls in India to touch 280

in 2011-12, Dec 19, 2010, 01
7
Technopack advisors Report 2010
c. Media revolution
8
Per capita income crosses Rs 50,000, Times of India, Feb 1

2012
Ref: Table 6.2:Size of Indian Middle class household

Number of Middle class households and Individuals in
2011-12
o Current size of Middle class households in India: - 31.4
million
o Current size of Middle class individuals:160 Million
2015-16( Estd.)
o Size of Indian middle class households by 2015-16: 53.3 Million
o Size of Middle class individuals by 2015-16- 267
Million
o Percentage Increase from 2011-11- 67%
2015-16( Estd.)
o Size of Indian middle class households by 2025-26 113.8 Million
o Size of Middle class individuals by 2025-26- 547
Million
o Percentage Increase from 2015-16- 100%
February 2013
biggest markets and the top eight cities will remain the
dominant locations for upper-income global consumers,
it is estimated that almost two-thirds of Indias middleclass opportunities will lie outside those top-Tier urban
areas. Not surprising as half of Indias 26 million
households with an annual income of up to $26,000 in
the year 2010 were living in smaller cities such as
Vadodara, Nagpur, Ahmedabad and Vijayawada,
according to the National Council for Applied Economic
Research (NCAER).
The current small-town boom is also a reflection of
Indias free-market prosperity, powered by healthy
economic growth. Between the years of 2000-10,
disposable incomes across India have been rising. This
has fuelled the purchasing power of the 31.4 -million
strong middle class. The spending binge has already
taken Indias total consumption to $380 billion, and is
expected to touch $1.5 trillion in 2025. This is good
news for the organised Indian retail market, which is
expected to touch $30 billion by the end of 2012.
Table 6.3: Indian Middle class as a consumer 11
c. Growth of third rung cities of India:

Opportunities for Organised Retail Business
INDIAS third rung cities are coming of age. Given
their historical importance, many of these cities are
gearing up to compete with the metros and tier II cities.
Tier III cities are the new growth centers of resurgent
India. Indeed, nearly 35 Indian cities with a million-plus
population are proving to be as lucrative a market as the
Tier I cities or metros. A recent report released by the
economic research group at Mac Kinsey Global
Institute (MGI) titled The Bird of Gold: The Rise of
Indias Consumer Market10 notes: While Indias two
largest conurbations (an extended urban area, where
several towns merge with the suburbs of a central city),
Delhi and Mumbai, will continue to be the countrys
Middle class as a consumer

o
Middle class represents 13.1 per cent of India's population.
Middle Class owns 49 per cent of total number of cars in

India,
Middle Class owns 21 per cent of TVs,
Middle Class owns 53.2 per cent of computers,
Middle Class owns 52.9 per cent of ACs,
Middle Class owns 37.8 per cent of microwaves
Middle Class owns 45.7 per cent of credit cards.
A typical Indian middle class household spends about 50

per cent of the total income on daily expenses with the
remaining goes into savings. Which means, a middle class
family has strong purchasing power to spend on durables
and other items?
India's middle class population to touch 267 million in 5 yrs,

articles.economictimes.indiatimes.com/2011-0206/news/28424975_1_middle-class-households-applied-economicresearch
10
http://www.mckinsey.com/locations/india/mckinseyonindia/pdf/Ind
ia_Consumer_Market.pdf
11India's middle class population to touch 267 million in 5 yrs,

articles.economictimes.indiatimes.com/2011-0206/news/28424975_1_middle-class-households-applied-economicresearch
d. IT revolution: Internet and mobile phones have also

paved the way for organised retail revolution in small
cities of India, following table has the details
Internet Users In
India
Internet
world Stats
Internet Penetration
(As on Dec 2011
Number of Users ( As
on Dec 2011
10.2%
Internet Subscribers ( as
on March 2011)
Yearly Growth Rate
(Internet Subscribers)
with respect to March
2010
12.1 crore
19.67
million
21.59%
Indian Research
Council 2014
estimates
700 Million internet

users
Until 2011, Indian central government denied foreign

direct investment (FDI) in multi-brand Indian retail,
forbidding foreign groups from any ownership in
supermarkets, convenience stores or any retail outlets,
to sell multiple products from different brands directly
to Indian consumers.
5. BUYER BEHAVIOUR OF ORGANISED RETAIL:
Philip Kotler, Keller, Koshi and Jha (2004) defined

consumer Behaviour as a study of how individuals,
groups, and organizations select, buy use and dispose of
goods, services, ideas, or experiences to satisfy their
needs and wants. 12 Following table presents a simple
model of consumer behaviour. 13
There are 5 important stages in consumer buying
decision making process:
i. Problem Recognition: An awareness of the need
for action to satisfy a want or need.
ii. Search: seeking information to help make a
decision.
iii. Alternative Evaluation: Evaluating the choices
available.
iv. Choice: Deciding among the alternatives.
v. Post purchase Evaluation:
Satisfaction or
dissatisfaction with the decision
The government of India announced following reforms

in retail sector in September 2012
towns and cities in India. It is expected that these

stores will now have full access to over 200 million
urban consumers in India;
multi-brand retailers must have a minimum
investment of US$100 million with at least half of
the amount invested in back end infrastructure,
including cold chains, refrigeration, transportation,
packing, sorting and processing to considerably
reduce the post harvest losses and bring remunerative
prices to farmers;
the opening of retail competition will be within
India's federal structure of government. In other
words, the policy is an enabling legal framework for
India. The states of India have the prerogative to
accept it and implement it, or they can decide to not
implement it if they so choose. Actual
implementation of policy will be within the
parameters of state laws and regulations.
175 million by 2014
4. RECENT RETAIL REFORMS IN INDIA
February 2013
India will allow foreign groups to own up to 51 per

cent in "multi-brand retailers", as supermarkets are
known in India, in the most radical pro-liberalisation
reform passed by an Indian cabinet in years;
single brand retailers, such as Apple and Ikea, can
own 100 percent of their Indian stores, up from the
previous cap of 51 percent;
both multi-brand and single brand stores in India
will have to source nearly a third of their goods
from small and medium-sized Indian suppliers;
all multi-brand and single brand stores in India must
confine their operations to 53-odd cities with a
population over one million, out of some 7935
Philip Kotler, ,Keller, Koshy and Jha, Analyzing Consumer

Market, Marketing Management: A South Asian perspective,13 th
edition, Pearson, Prentice Hall. India, p.144
13
MS-6, marketing for managers. Block -3, Determinants of
Consumer Behaviour, ISBN No 81-7091-033-1 Feb-2004- p.5
12
February 2013
6. BUYER BEHAVIOUR OF TIER III CITY

CUSTOMERS OF ORGANISED RETAIL
Understanding the mindset of contemporary buyers is a

big challenge. Buying is not always what it appears to
be, and the modern day shopper buys products and
services for multitude of reasons on the surface, are not
all that clear. Understanding the modern consumer
behaviour
involves
the
appreciation
of
a
psychologically complex process that exists at a number
of mental levels for the shopper. 14
I found Tier III city customers were not well aware of

organised retail stores and their important features. I
found that more than 87 percent tier III city customers of
organised retail stores were are not well y aware of
organised retail stores. I found that tier III city customers
were aware of only those organized retail chains which
had presence in their respective cities. Retail chains like,
Reliance Fresh, Big Bazaar, Vishal Mega Mart etc. had
have considerable presence in tier III cities. Hence, tier
III city customers are well aware of these retail chains. I
found that low Degree of awareness about organised
retail stores among tier III city customers led to deelop
wrong perceptions among tier III city customers of
organised retail about the organised retail stores and
their important attributes
Tier III city customers had negative attitude towards
organised retail stores.
One-Sample Test
Test Value = 3.5
Views of tier III city
customers.
t
df
Sig. (2tailed)
Organised retail stores offer

-4.926 199 .000
excellent quality of products
products at a very
-7.807 199 .000
competitive price
pleasurable shopping
-9.046 199 .000
experience
Shopping in organised retail
3.183 199 .002
stores in quite convenient
They update customers with
17.315 199 .000
latest fashion trends
Ref: Table 7.9: One samples test to study the
attitude of tier III city customers towards organised
retail stores (II)
*Test Value -3.5 on the five point scale.
14
Jim Poler, Retail Strategies, JAICO publishing house, Firs

edition, ISBN- 978-81-7992-925-4 Pp- 194
Observations:
8
1. Observed value oft is -4.92 that does not come

under the acceptance region, hence null
hypothesis is rejected that tier III city customers
believe that organised retail stores offer
excellent quality of products.
2. Observed value oft is -7.807 that does not
come under the acceptance region. Hence null
hypothesis is rejected that tier III city
customers believe that organised retail stores
offer products at a very competitive price and
alternative.
3. Observed value oft is -9.046, that does not
come under the acceptance region. Hence null
hypothesis is rejected that tier III city customers
believe that organised retail stores offer
pleasurable shopping experience.
4. Observed value oft is 3.01that comes under
the acceptance region. Hence null hypothesis is
accepted that tier III city customers believe that
shopping in organised retail stores in quite
convenient.
5. Observed value oft is 17.315 that comes under
the acceptance region. Hence null hypothesis is
accepted that tier III city customers believe that
organised retail update tier III city customers
with latest fashion trends.
February 2013
Reasons for not shopping regularly in organised

retail stores in tier III cities:
There are plenty of reasons that prevent a tier III city
customer to visit organised retail stores on regular basis.
There could be more than one reason for NOT shopping
in malls on regular basis. 20.5 percent respondents do
not like to visit organised retail store of their cities
because they believe that products are very costly
there,20 percent respondents do not shop like to visit
organised retail stores regularly because ORFs are far
distant from their residents.
20 percent respondents dont visit organised retail stores
on regular basis because they do not get products on
credit there. I found that 21.5 percent respondents
strongly believe that their neighborhood Kirana stores
offer them excellent services. My study shows that 17.5
percent respondents believe that quality of services being
offered by organised retail stores in Tier III cities is far
inferior to the services being offered in metro cities of
India by organised retail stores. That means, they are not
satisfied with the products and services offered in tier III
city malls and other organised retail formats.
Evaluation criteria used by tier III city customers for
the retail store section
Tier III city customers preference towards shopping

in organised retail stores:
How often tier III city customers prefer

to shop in ORFs in tier III coties?
60
50
40
30
20
10
0
53.5
25.5
14
1
Never
Rarely
Sometimes
Mostly
6
Always
In tier III cities, most of the customers (80%) do not

prefer to shop in organised retail formats. There must
be some strong reasons for such a negative attitude
towards regular shopping in organised retail stores.
9
One-Sample t Test
Reasons
Test Value = 3.5
df
Sig. (2tailed)
95% Confidence
Interval of the
Difference
Lower
Upper
Fun, delight &

refreshment
12.50 199
.000
.5644
.7756
Purely for shopping

purpose
199
4.359
.000
-.5737
-.2163
For Kids and spouse

pleasure
11.89 199
.000
.5589
.7811
Getting update with

latest products&
brands
.000
199
1.000
-.1630
.1630
Because other
members of my
society prefer to visit
-.455 199
.650
-.2134
.1334
In search of price
discount and other
incentives
6.945 199
.000
.3115
.5585
February 2013
Facility to see and touch the product is the most

important store attribute, followed by pollution free air
conditioned shopping area, after-sales services, product
quality, convenience in billing etc. above table clearly
shows that propriety of tier III shoppers are changed a
lot in recent past. Now convenience, ease and other instore facilities are becoming more and more important.
Issues like, price discount, location, are less important
for them. Now they are ready to spend some extra
money and drive couple of extra mile for their preferred
products and shopping destinations.
Why does tier III city customer shop in organised

retail store?
On the basis of above mentioned observations, it can

be said that tier III city customers of organised retail
stores visit organised retail stores for fun delight and
refreshment. Sample data indicate that tier III city
customers of organised retail stores do not visit
organised retail stores purely for shopping. It is also
observed that tier III city customers of organised retail
stores visit organised retail stores for their kids, spouse
and other close ones pleasure. I also found that Tier III
city customers of organised retail stores visit organised
retail stores for getting update with latest products&
brands. tier III city customers of organised retail stores
also visit organised retail stores because other members
of their society prefer to visit organised retail stores. I
found that that tier III city customers of organised retail
stores visit organised retail stores in search of price
discount and other incentives.
Source Of Preliminary Information :Newspaper is the
biggest preliminary source of information for tier III city
customers about the organized retail stores. As per my
survey findings, 34 percent tier III city customers of
organised retail stores get preliminary information about
the organised retail stores and their features from the
newspapers. 19 percent tier III city customers of
organised retail stores get preliminary information about
the organised retail stores from local Cable TV channels.
18 percent tier III city customers of organised retail
stores get preliminary information about the organised
retail stores and their important attributes, from their
10
friends, relatives and other close ones. 15 percent tier III

city customers of organised retail stores get preliminary
information about the organised retail stores and their
important features, from outdoor media. 10 percent tier
III city customers of organised retail stores get
preliminary information about the organised retail
stores, their products, price, discount offers from FM
radio. I found that only 2 percent tier III city customers
of organised retail stores get preliminary information
about the organised retail stores, their products, price,
discount offers from internet and mobile phones.
Tier III city customers are not a planned shopper.
My study reveals the fickle behaviour of tier III city
customers of organised retail stores. Most of the tier III
city shoppers of organised retail stores do not make
purchases according to their earlier plan. According to
my survey findings, 31 percent respondents, often return
back from organised retail stores without making any
purchase.19 percent respondents opine that they
purchase less than they planned earlier. 13 percent
respondents opine that they purchase exactly what they
had planned earlier. 20 percent respondents opine that
they purchase more than they planned earlier, and 16
percent respondents opined that they always deviate
from their earlier shopping plan. That means, most of
the tier III city customers often change their previous
shopping plan. There might be plenty of reasons.
Sometimes when, tier III city customers of organised
retail, find a product price too high, or beyond their
budget limits, they postpone their buying plan. Similar
when they see a product surprisingly underpriced, and
they immediately decide to buy the product.
Sometimes, when they see a product, their close ones
have been be looking for long; they buy it to gift them.
Instant /impulse shopping is now an important
characteristic of tier III city customers of organised
retail stores.
Reference Group: My study shows that there are so
many persons who motivate the tier III city customers
of organised retail stores to visit an organised retail
store. I found that 70 percent tier III shoppers of
organised retail stores are motivated by others. Though,
there are some customers who are totally selfmotivated. In 24 percent cases, it is spouse (wife/
husband) who motivates a tier III city shopper to visit a
mall or hypermarket. In 22 percent cases, friends motive
tier III city shoppers to visit a mall or organised retail
February 2013
store. In 9 percent cases, children are the key motivators.

And, in 14 percent cases, colleagues are the key
motivators. My study shows that 31 percent respondents
are self motivators. As per my study, many of them are
young chaps having huge exposure to new media.
People who accompany the Tier III city customer in
Malls: My study shows that 93 percent respondents do
not like to shop alone. Rather, they prefer to have a
company of someone at the time of shopping. There are
only 7 percent respondents who prefer to shop alone in
an organised retail store.
24.5 percent respondents prefer to have the company of
their spouse at the time of shopping in malls or any other
organised retail store. 24 percent respondents prefer to
have the company of their children at the time of
shopping in a mall. My study shows that 11.5 percent
respondents prefer a company of their parents. That
means, almost 62 percent respondents prefer to shop in
organised retail store with their family members. 16
percent respondents love to visit a malls and
departmental stores along with their friends. And, 9
percent respondents prefer their colleagues to company
them when they are shopping in a mall. Shopping in
malls is more a family affair anything else to celebrate
weekends, family shopping and much more.
Brand Preferences: Tier III city customers of organised
retail prefer to purchase reputed brands. I observed that
68 percent respondents are more inclined towards
reputed national and international brands. I found that 40
respondents prefer to purchase reputed brands only. 28
percent respondents mostly prefer to buy reputed brands.
However, 11 percent respondents prefer to purchase
private levels only. 6 percent respondents prefer to
purchase private levels most of the time.
Most Preferred Time For Shopping: My study shows
that 27 percent respondents prefer to visit organised
retail stores during the mega discount offers. 23 percent
respondents prefer to visit organised retail stores during
the weekends and holydays. 22.5 percent of the
respondents prefer to visit orgnaised retail stores during
the festive season. 16 percent prefer to visit organised
retail stores without any specific occasion, .and 10
percent of the respondents prefer to visit organised retail
stores when they feel happy and want to celebrate their
happy mood with delightful shopping experience.
11
That means, 73 percent tier III city customers are nonfrequent and occasional shoppers of organised retail
stores.
Attitude Towards Discount Offers: My study shows
that 40.5 percent tier III city customers of organised
retail stores, rarely or never wait for mega discount
offers. 24 percent tier III city customers of organised
retail stores, sometimes wait for mega discount offers,
and 32 percent tier III city customers of organised retail
stores always wait for mega discount offers. That
means, tier III city customers have great urge for mega
discount offers.
Products That Tier Iii City Customers Often
Purchase From Organised Retail Formats:
Highly purchased products:
1. Dress Martial
Gents dress material. My study shows that 69
percent of the total respondents prefer to buy
Gents Dress Materials from the organised retail
stores of their cities.
Ladies garments According to my survey report,
61 percent respondents purchase ladies garments
from the organised retail stores.
Kids wear: It is a very interesting finding that
68 percent respondents buy kids wear from
That means, majority of tier III city customers visit
organised retail stores for dress materials. It is visible
too. Almost 50 percent area of mall floors in
Jamshedpur is occupied with gents, kids and ladies
wear. In India, customers love to purchase apparel quite
often. But, they are not bulk buyers. They may go to a
mall just for a single piece of t-shirt or a baby suit for a
newly born baby.
Since, a mall provides wide range of dress materials
with varied price range, and also, convenience for
picking and selecting them, it is quite natural that
largest percentage of customers prefers to visit
organised retail stores in search of dress materials.
As, my study has revealed earlier that organised retail
networks offer apparels comprised of latest fashion due
to their national and international network of retail
February 2013
chains, many customers prefer malls over traditional

stores. It may be a reason for such fondness.
2. Ice cream and snacks: It quite interesting finding that
61 percent respondents surveyed by me purchase
products like; snacks and ice-creams from tier III city
Malls. Even teenagers and young adults love to eat icecreams in malls. Eating as well as shopping both goes
together. Even in traditional Indian market places,
people love to indulge something yummy after having a
long tiring shopping exercise.
3. Items like bedsits, pillow cover and curtails & other
household items: Indian housewives are great shoppers.
My study shows that as much as 64 percent respondents
purchase daily usages items from organised retail stores.
Malls are gradually getting popularity among female
customers.
Moderately purchased products:
1. Ready-to-eat food: Sealed, packed and branded
ready- to -eat food was not very popular in small cities
of India, sometime ago. But, companies like Maggie and
Top Raman can be credited for gradually changing the
taste habits of Indian tier III city customers. Knorrs
soup is an another product that has developed a
significant customer base in small cities of India. Today
leading FMCG companies like; Procter & Gamble, GSK
and Hindustan Unilever have also introduced wide range
of noodles, soups, and sea foods for Indian customers.
Organised retail stores have also launched their private
brands in ready- to-eat food category. As per my study
findings, it can be said that these products are gradually
penetrating the tier III city market. Ready-to-eat food is
a busy life phenomenon. In tier III cities of India,
percentage of working couples is gradually increasing;
demand for this type of product is likely to increase in
future.
2. Amusement related products: My study shows that
demand for the amusement and entertainment related
products are growing in the tier III cities of India. As per
my survey finding, 47 percent respondents opine that
they purchase amusement & entertainment products
from organised retail formats. Today malls offer plenty
of entertainment and amusement facilities like movies,
electronic toys, videogames, and many other innovative
amusement products.
12
3. Vegetables: My study shows that only 31 percent

respondents purchase vegetable from the organised
retail stores. In small cities of India, customers usually
buy fresh vegetables from local vegetable sellers. Most
of the tier III city customers believe that vegetables
available in organised retail stores can not match the
small vegetable sellers in terms of price and freshness.
Moreover, it is quite convenient for a tier III city
customer to purchase his daily use vegetable from his
neighboring vegetable sellers. Many customers of Tier
IIII cities opine that they can not spare time for visiting
mall everyday for green vegetable only. Highly price
sensitive tier III city customer is not satisfied with the
price of the vegetables, available in organised retail
stores. So, it is quite obvious that buying vegetables
from organised retail stores is good for only few.
4. Consumer Durables: It is also a very interesting

finding that only 23 percent tier III city customers prefer
to buy consumer durables from organised retail stores.
Reason is quite obvious. For the better after sales
services, wide product range, customers prefer to deal
directly with the manufacturing company. In the
exclusive showrooms of consumer durables, latest
models as wells the entire product range both are
available. Exclusive outlets of reputed consumer
durable companies give 5- 10 percent discount on MRP
through out the year. It is also found that customers
who go to buy consumer durables in Mall often come
dissatisfied. It is so because; non-technical sales staffs
fail to give them full information about the products. On
the other hand, customer gets over flooded with
information, because he gets too much information
about too many products simultaneously. In both the
cases, he makes his buying decision wrongly.
February 2013
organised retail stores. In the tier III cities of India,

wooden furniture is manufactured by local carpenters.
Demand for ready -made furniture is yet to be picked up
in India.
Test Value = 3.5
FACTORS
Quality of the customers in the
shopping area
Parking facilities
Fun and entertainment facilities
Shopping Ambience
df
5.055
2.324
-0.948
199
199
199
Pollution free shopping area

Quality of the products
Pricing
Billing facility
Product range
Picking and selecting products
Credit -Facility
-2.005
-3.091
-3.195
-4.629
-6.092
-6.441
-6.685
-7.476
199
199
199
199
199
199
199
199
Facility to see and touch the

products
Non disturbing selling staffs
Skilled and trained staffs
Convenience(Location)
After -sales -services
-10.18
-10.29
-10.76
-11.84
-12.4
199
199
199
199
199
3. Mobile Phones: My study shows that only 32 percent

respondents love to purchase mobile phones from the
Actually, mobile phone
companies have already their showrooms even in the
small cities of the country. So, customers prefer to
purchase mobile phone from the exclusive outlets of
their preferred company to ensure warranty benefits and
After Sales Services. I found that customers had very
limited choices available in malls, and sales staffs were
also not well trained to give the customers detail
information about the
Sparsely purchased products

1. Computer Accessories: My study shows that only 24
percent respondents prefer to purchase computer
accessories from organised retail stores. That means, 36
percent tier III city customers believe that organised
retail store is not an appropriate place for buying
computer accessories.
2. Furniture: My study shows that only 11 percent tier
III city customers think of buying furniture from
DEGREE OF CUSTOMER SATISFACTION: TIER

III CITIES
My study shows that most of the tier III city customers
were are not satisfied with organised retail stores
situated in the tier III cities of India . On the basis of t
test findings I concluded that customers were are not
satisfied with the organised retail stores mostly because,
fun and entertainment related facilities and services
were not sufficient in tier III city mall; overall shopping
13
ambience is not of world class; shopping areas are not

fully air conditioned and pollution free; quality of the
products, available in the malls was not of excellent
quality; products were overpriced, customers had to
wait long for paying their bills during the pick hours;
product range was narrow and outdated, shoppers had
difficulty in picking and selecting products in, credit
facility was absent; shoppers had difficulty in seeing
and touching the products(physically examine) the
products; sales personnel were found too much
impulsive & and untrained to facilitate the good
shopping experience; since, malls were lactated in
outskirts of the cities, they had poor accessibility, and
after sales-services was also found too ordinary.
Following table has the details.
February 2013
14 percent of the total female shoppers of tier III

city organised retail stores are working women.
As much as 50 percent of adult female customers
of organised retail stores in tier III cities are
working women( age <60 years)
Working women of tier III cities of India are mostly
private company employees and government
servants.
Earlier young adults female and teenage girls were
not allowed to shop in small cities due to social
taboos and safety reasons. But it is very interesting
to see at 44 percent of female customers of
organised retail store are teenagers and young
adults. It is an indication of new found liberty and
empowerments among tier III city women.
A large percentage of female shoppers of tier III
city organised retail formats are senior citizens.
Perhaps, convenience and shopping ease motivate
them to shop in organised retail stores.
Following graph shows the age wise segmentation of tier
III female shoppers of organised retail stores.
Ref: Graph7.2 (Graph): Age group segmentation of
male and female customers of organised retail stores of
tier III cities
Age group segmentaion of Male and

female customers of organised retail
stores in tier III cities of India
*Ref: Table No- 7.73: t test Customer satisfaction of tier III city
5. IMPACT OF SOCIO ECONOMIC AND
DEMOGRAPHIC PROFILE ON THE BUYING
BEHAVIOUR OF TIER III CITY CUSTOMERS
OF ORGANISED RETAIL STORES
Women are over 50 percent of organised retail shoppers
of tier III city organised retail. Traditionally men were
the wage earners and women had to stay at home with
children. Increasing work load and growing financial
needs have encouraged women to come out and provide
their husbands financial support and also help them in
other activities like day today shopping. Shopping
opportunity is a new found liberty and indicator of
rising power of small city women in the society. I
found that:
Percentage
customers of Organised Retail Stores
35
30
25
20
15
10
5
0
29
21
Children
30
29
28
20
Teenagers
Male
22
Adults
21
Senior
citizens
Female
Following graph shows how the needs and expectations

of female customers of organised retail stores are
14
changed now. There are many reasons that many

encourage tier III city women to visit an organised retail
stores. But the most important reason is, fun and
shopping delight. Indian women prefer to shop with
their family members. Husband, children and other
family members like are important part of their
shopping behaviour. Tier III city women customers
shop in organised retail stores because her family
members feel happy and delighted, they share the
burden of busy life style of their husband and also
celebrate the new found liberty & independence. Many
tier III city women customers of organised retail stores
are fond of price discounts and other customer
incentive. It is not surprising that as much as 81 percent
tier III women look for price discounts in organised
retail stores. Bargain on price is more than just a fun for
Indian female shoppers. This is a way they justify their
suppressed wisdom in a male dominating Indian
society. Social needs of tier III city women customers
are quite acute. My study shows that 60 percent tier III
city women shop in organised retail stores because other
women of their society also shop in organised retail
stores. Shopping in malls satisfies their esteem needs as
well as societal needs and gives them acceptance in the
society. What ease could be the better example of
changing aspiration level of tier III city women that
only 39 percent tier III city women shoppers visit
organised retail formats purely for buying products.
Ref: Graph7.3 (Graph): Age group segmentation of
male and female customers of organised retail stores
of tier III cities
February 2013
Understanding why Tier III city women

shop in organised retail stores
100
90
80
70
60
50
40
30
20
10
0
Percentage
Purely
New For Kids
Discount Fun &
for
fashion
and
offers delight
buying & trends spouse
39
58
86
81
91
Social
needs
60
Percentage
Indian woman like shopping because, it gives them the

decision making power. But shopping has become
unavoidable for them too. She knows if she does not do
it, it will not be done. It is believed that tier III male
customers do not like to shop for ladies garments,
grocery items, kids dress material, gift items, ladies
cosmetics etc. and they simply handover the shopping
responsibility to their wives. But, when big decisions
need to be made, then husbands involve themselves in
the decision making. But my findings show that role of
tier III city female customers is increased in all kinds of
shopping decisions. A tier III city female customer of
organised retail stores may buy plenty of products for
her family members and other close one. That means,
she may buy gents dress martial for her growing
children, or for her husband. A working young girl may
buy a t -shirt to gift her father, or may gift ready- made
furniture to her sister as a bridal gift. Similarly a male
customer may purchase cosmetics for his wife, or may
be for himself. It is a new trend of shopping where a
customer not shops for himself only but for others as
well. Following table has the details. In tier III cities
role of women is increased in buying decision of all
types of consumer goods.
15
Ref: Table No.7.74: Product purchased by tier III

city male and female customers of organised retail
stores: A comparison
Products
Male
Female
Gents Dress materials
Kids wear
Household items like
bed- sheets, curtails, etc
Ladies Garments
Ice creams and other
snacks
Ready to eat food
Amusement products.
Grocery Item
Ladies cosmetics
Mobile phones
Vegetables & fruits
Computer accessories
Consumer Durables
Furniture
N=200
87%
66%
62%
51%
71%
66%
17%
54%
75%
68%
54%
47%
43%
39%
33%
34%
23%
23%
54%
47%
48%
42%
31%
28%
25%
23%
51%
58%
CHILDREN OF TIER III CITIES OF INDIA

Infants and Kids: Shopping for infants and children is
very much an effort at trying to define personality.
In childhood, self- definition comes through ones
parents. Primarily by the clothing they buy for their
kids. When a child is just few days old parents start to
define kids life through the manner in which they dress
them. Even, low income group tier III city customers
spend lavishly on their new born kids dress material in
organised retail stores. Organised retail stores provide
tier III city customers an opportunity to dress their kids
with the latest & fashionable dress materials without
much ado, and fulfils their strong desire to keep their
children updated with children of their aspiration
groups. My study shows as much as 68 percent
orgnaised retail shoppers of their III cities, prefer to
purchase their kids dress martial from organised retail
stores. Now esteem needs of tier III city customers is
very active. Many of tier III city customers, who come
from lower income groups, non- urban or semi-urban
background, desire to dress up their kids in the new
trend & fashion. It may be due to their very active
desire for becoming a part of urban society.
February 2013
Ref: Graph7.6 (Graph): Percentage of tier III city

customers who refer to buy kids wear from organised
retail stores.
Percenatge of Tier III city Customers
who refer to buy kids wear from
organised retail stores
No
32%
Yes
68%
No
Yes
Children cloths can carry messages, and reflect the

desires and goals of parents. Shopping of these products
in tier III city is gradually becoming more than an
exercise in wishful thinking on the part of mother and
father. So, it also sends a message to other people about
how the infants are seen in the eyes of their parents.
Beyond clothing, tier III city childrens lives are most
certainly defined by the other things that their parents
buy for them. By their purchases, tier III city customers
take conscious and unconscious decisions about their
children that they hope their childrens life will follow.
A new trend fast picking up in tier III cities is that
parents want their children to study in English medium
schools. They feel proud when their children speak in
English and get dressed up in modern way. This way
they prepare kids for becoming a part of modern society.
A middle class mother is very conscious about her
babys dress because she aspires to get her admission in
a good English medium school, and also a part of
modern society. She builds up her kids life style as such
they appear to be smart during the school admission
interview. Once the kids gets admission in a good
English medium public school, parents keep spending
lavishly on their clothes and other accessories, so that
the child does not look mediocre in the company of other
classmates. In tier III cities more and more families are
becoming nuclear families. And therefore, family sizes
are turning out to be smaller. As a result, tier III city
parents are in position to spend more on their kids dress
and education. A few years ago, parents were unable to
pay the monthly school fees of their kids, now they
willingly purchase computers for their 7 year old child.
While shopping in malls, tier III parents find latest
dress materials and other products easily. They purchase
16
February 2013
computer game, CDs, educational toys and other

products for their kids that some how define their
personality in the desired manner. Therefore, shopping
for kids and children is very much an effort at trying to
define personality.It is not that parents influence their
kids life style but kids do the same thing- indirectly. A
tier III city young mother of a 7 year old baby may turn
out to be more dress conscious when she goes to drop
her 6 year old kid in his play school. Now she desires to
follow the dressing style of the mothers of other kids in
the play school. Interestingly, children are too young to
understand the consequences of their clothing, so in
addition to the obvious message of ostentatiousness,
such tier III city parents also be endeavoring to put a
sense of their own fashion awareness. It is an extension
of self- it is dressing the children for ones own self
definition, rather than for children themselves. My study
shows that tier III city parents take their children to the
organised retail stores. Here, they not only providing
their children fun and amusement facilities available in
the mall or hypermarket but also giving them the
experience of the shopping mall. In is very interesting to
see that many tier III city parents buy comics and
children movies for the kids, not even able to read
properly. In tier III cities, many parents take their kids
to shopping malls. Purpose is to give the child all the
possible experience of life by exposing them to as
entertainment as possible. These experiences also seem
to shape and mold the childs development as a
person.Sellers of such childrens entertainment
emphasise the educational and experimental values of
the event rather than the amusement aspect of it.With
young childrens shopping, parents are also competing
with other parents. They do not want their children to be
the only once on the streets, which have not been to
Big Bazaar. Just like themselves with other parents,
they want their children to compete successfully with
other children in every field of life.
children challenging their buying decisions. They use

pester power to influence the buying decisions of their
parents in almost every product category. They may
softly insist their father to buy a motorbike of a specific
colour or paint their bedroom with a particular colour.
Pre teen children start to want clothing that is in style.
In fact, they fear that other children at school will
literally make fun of them if their clothing is not in tune
with current fashion. This helps to explain why even
young children seem so desperate to have particular
clothing. For a tier III city parent, the premium price to
be paid for brand-name clothing can look absurd, but to
the young tier III city child, such clothing can mean the
difference between being accepted at school or being a
social outcast.In tier III cities of India young children are
gradually becoming brand conscious. Companies like
Jenny and Jonnie, and kids World have set up many
organised apparel stores for children in tier III cities.
Tier III city children are very style conscious now. They
insist their parents to visit organised retail stores to get
cloths of the latest fashion. My findings show that as
much as 92 percent pre-teen children believe that
organised retail stores offer cloths of latest fashion and
style
Pre- teen shoppers: Pre teens come age group between

8 to13 years. They are also called tweens by modern
marketers. They are very important customers
segments. Unlike older generations, new generation of
tweens is more aware, demanding and mentally grown
up. Not surprising that many sociologists call them
In the tier III cities of India, parents are under huge

pressure to accept the new fashion norms of their
growing kids. This is the area where, one can see the
conflict between new age children and tier III city
parents. In tier III cities, quality, value and price become
secondary to style and fashion. Shopping to define the
self, even at a young age, implies that perception is more
important than substance.
adult children. Unlike kids, tier III city preteens have
greater role in the buying decision making. This is the
age group, when tier III city parents first see their
Ref: Graph 7.7 (Graph):

Statement- Organised Retail Formats update us with
latest fashion trends & style
(Pre-teen children-tier III cities)
60%
Agree, 52%
50%
40%
Fully Agree, 40%
30%
20%
10%
Fully disagree,
0%
Neither agree nor

disagree, 6%
Disagree , 0%
0%
Fully
disagree
Disagree
Neither agree
nor disagree
Agree
Fully Agree
17
But tier III city pre-teens are not insensitive brat too.
They understand the boundaries of their parents
spending ability. So they are price sensitive, they look
for discount offers and they are quality conscious as
well. It is against the popular opinion of marketers that
pre-teens are insensitive to price and value and quality.
February 2013
Ref:Graph7.9 (Graph): Brand preference of tier III

city tweens
Brand Preference of tier III city Tweens( Age-9-13Yrs.)

60%
54%
Following graph shows it more evidently.
50%
Graph7.8 (Graph): Views about discount offers, price

and quality (Pre-teen children of tier III cities of India)
60%
50%
40%
30%
20%
10%
0%
40%
36%
44%
40%
30%
50%
24%
36%
24%
20%
12%
10%
6%
2%
Price discount
Reasonable
Pricing
Important
Quality
Very Important
0%
Reputed
Brands
Private levels Mostly Private, Mostly reputed Both private as

of the store
sometimes
brands,
well as reputed
reputed brands sometimes
private levels
Children
When they get across about price discount offers from

their classmates, cable TV channels and, local FM
radios, they use their pester power to convince their
parents to visit the organised retail stores, where such
offers are available. Their focus is not about defining
self but their focus is just on being in style. Their style
is often inspired by senior schoolmates, regional &
national youth icons and film stars. TV serials and
dance based TV reality shows, where children are
participating, also influence their fashion statements.
Although there are certainly some children and
preteens, who are concerned about projecting an image
to adults, most of them are concerned primarily about
how they look to their pears. For tier III city tweens
having a sense of fashion means blending in at school
and among friends, and confirming to trends. My study
shows tweens of the tier III cities of India are fast
becoming brand conscious. They are now among most
demanding shoppers. They are extremely aware of icecream brands, snacks, potato -chips and noodles brands.
Following table shows, 54 percent tier III city tweens
shoppers of ORFs prefer to buy reputed brands.
When it comes to shopping for entertainment related

products, children and preteens are at an awkward age.
Tier III city parents still want to tell them what they
should see and do, hoping to foster an environment of
wholesome and healthy enjoyment. Parents see them as
little children and want them to be entertained
accordingly. The kids however have other ideas. They
want to start to go to more grown up events. In malls
their obvious choice is Sony Play Station and other
computer games. In tier III cities outdoor and mobile
phones. It is the first generation in tier III cities of India,
born with personal computer at home. As children head
into the teen years and start to want to define themselves
through activities, the tier III city parents struggle with
the information. Take for example; recently when a
social awareness programme named Satyamev Jayate
Programme was aired on Durdarshan and many other
private TV channels, tier III city parents were very
confused whether kids should be allowed watch one of
its episodes of the programme that was based on the
sexual abuses of minors. These issues had never been
discussed earlier in the presence of children. Today,
there are thousands of porn sites that open on your
18
computer screen even without a clock of mouse. Now,

parents are under tremendous pressure of how to limit
the kids exposure to this highly dangerous information
THE TEENAGERS:
Teenagers represent an age group of 13 to 18 years.
Tier III city teenagers are conservative because they
believe in family system. Majority of them believe in
arrange marriage system, they prefer to marry in their
own caste. They are religious, and strongly believe in
god.
But, at the same time they are rebellions as well. They
consistently challenge the existing system. They do not
want to be dependent on the wisdom of their parents as
far as career options are concerned. They look quite
unconventional when; join unconventional courses like
film making, travel and tourism management, social
work media management and hundreds of other courses
that their parents had never ever heard of. They are
rebellions because they extend their support to Anticorruption Movement of Anna. But, they are not hard
liners. They are ready negotiating on almost every issue.
They do not mind to get railway reservation ticket,
paying a few rupees extra to a broker. They may bribe
the police constable who had found smoking in a public
place.Because, they are rebellions, they try new
products. They are religious and conventional so they
buy traditional clothes for festivals and traditional gifts
for their parents. They negotiate, when they can not
afford to buy branded t- shirts, sun glasses, foreign
perfumes and branded jeans every time, they wait for
discount offers. Their philosophy of life is:
Ji bhar kar jeo
Because,
Kal Ho Na Ho !
Kyoki, Jindgi Na milegi Dobara!
Life is a celebration !
This is the age when a customer begins to takes his
shopping decisions independently. Because their budget
is small, they show their independence on clothes, food
& entertainment that come under their limited budget.
Tier III city teenagers want to be an important part of
their peer group. Love and affiliation needs in are very
active. They shop in small groups, accompanied by their
February 2013
close friends. Impact of their close friends on their

shopping decisions is extremely high. Tier III city teens
prefer to purchase birthday gifts items for their peer
group members and expensive gift items for their
sweethearts. Their friend circle is the most important
group for them, where they shares good, bad and sweet
nothings. Small city teens are different from tier I & II
city teenagers in terms of spending power. Tier I & II
city teenagers have more money to spend than tier III
city teenagers. But, likes, dislikes and preferences of tier
III and tier I & II city teenage shoppers are now coming
quite close due to IT revolution.
Teenagers follow the dress code of their peer group
members. Their everyday gadgets and accessories are
also pretty similar. a smart mobile phone, a few sun
glasses, a motor bike, couple of branded T- shirts &
jeans and a pair of branded sport shoes. One side tier III
city teenagers want to be seen as a part of his peer group,
on the other, they want to keep their distinctness as well.
Tier III city
Teenage girls also not much different form their male
counterparts. They love to follow the similar dress code
of their peer group. They prefer t- shirts, jeans and
similar accessories that male peer group members use.
Their dressing sense is almost gender-free now.
But this segment is a very fickle customer segment.
They frequently change their hair style, and other
accessories. They use, hair color dyes, wear designer ear
rings, put tattoos on their body and wear highly stylish
branded clothes.
New media user
Increasing number of tier III city teenagers in India are
using social networking sites The GenY Survey 2011-12
by Tata Consultancy Services (TCS) covered 12,000
high school students aged between 12-18 in 12 cities
including Mumbai, Delhi, Kochi, Pune and Lucknow
between July and December 2011. According to the
report, while 84 percent of the respondents had internet
access at home, 85 percent used social networking site
such as Facebook and 79 percent owned a mobile phone.
Preferring entertainment on the move, 28 percent of the
respondents said mobile phone was their favourite
gadget. A total of 88 percent respondents from
metropolitan cities had a Facebook account while other
platforms such as Orkut and India-based Apna Circle,
Ibibo and Hi5 were more popular in small cities. It said.
19
According to the report, 21 percent of the small city

teenagers had internet access on their mobile phones
and television emerged as the least favorite gadget with
less than one percent voting for it. Further, SMS, text
and chat are growing as preferred alternatives to voice
calls. Use of Facebook and Twitter is also increased for
sending instant messages.
Tier III city teenagers have big dreams. Many of them
have plans to move on to bigger cities. In the cities like
Jamshedpur, Ranchi and Dhanbad, where up to class
12th, educational facilities are good. But, for the higher
education and better career opportunities they have to
move on to Delhi, Nagpur, Pune, and Bangalore and
other big cities.
February 2013
parents wallet than their previous generations so;

income is not as serious s problem for tier III city
teenagers as it was in past. I observed that teenagers of
tier III cities of India are big spenders in other ways. For
many people, gone are the days when a family purchased
on old bikes for a teenager. Today many teens get brand
new motor cycles, laptops and costly mobile phone sets .
In cities like, Jamshedpur, Bokaro, Ranchi demand for
ladies motor bikes (scooty) is very high now .
Interestingly, users of these snooty are mostly teenage
school going girls. Scooty is not only a mode of
transportation for teen-age girls of tier III cities of India
but also a symbol of their new found freedom and
independence.
ADULT SHOPPERS
When they come back to their home towns, from tier I

& II cities during the summer vacations, they have great
stories about big shopping malls and hypermarkets to
share with their other family members. One of the
reasons for the great success of a mega block buster
Bollywood movies like Bunty and Bably was that
these movie echoed the big dreams of small city
youths. Teen movies is a big business in small cities of
India today. Success of Harry porter series of movies in
the small cities of India is a good example of changing
taste of small city teenagers and young youths.
Tier III city teenagers are extremely brand conscious.
They use brands to define self. They visit malls because
they get latest dress materials. Their obsession for
trendy clothes is known to all. But unique part of tier III
city teenager is that now he plays very important role in
family purchasing. A teenager can influence the
purchase of almost all types of products, including
personal attire. So, Impact of teenagers is far bigger
than their size. Because of their knowledge, exposure
and experience their tier III city parents give more
importance to their advice and recommendations in big
purchases. Teenagers are not important only because
their segment size is big, but they are future customersand companies want to catch them young.
My study shows that earning power of tier III city
teenagers is not high. They are mostly full time
students, but, many of them work with companies like;
Tata Steel and Tata Motors, Usha Martin, as trainee
trade apprentice and get good monthly stipend. Folks,
who do not earn, have now greater access to their
There are two main shopper categories in this segment:

The young adult shoppers.
This is a post teen group that is single and working. This
group has enough time and money to shop in malls but
limited repertoire in which it is interested. This is the
time when young adults of tier III cities want to buy all
the things they dreamt of during their teenage and failed
to buy due to monetary constraints. This segment spend
lavishly on expensive designer clothes, music systems,
mobile phones, laptops, motorbikes, sun glasses, sport
shoes and designer watches. They frequently replace
their personal accessories like mobile phones, two
wheelers and laptops. In tier III cities, this group of
young adults I a very important customer segment for
organised retail stores. They mostly visit organised retail
stores on Sundays. They enjoy their weekends with there
close friends, shopping and entertaining in
hypermarkets. They are important customers of
amusement products, ready-to-eat foods, and other
sealed, packed and branded edibles. They spend lavishly.
They purchase gift items for their family members, close
friends and others. Their shopping is often unplanned.
They are instant buyers. Impulse buying is quite
common in this category.
Adult shoppers
Adult shopper, age group above 30 years of age is more
then just a shopper. They are fathers, mothers,
housewives and sometimes only earning member of their
family. They are the people who pay the bill of family
shopping. Traditionally tier III city adults are lucid and
20
price sensitive customers.

Unlike children and
teenagers, they are under tremendous pressure of
making their shopping under specific budget limits. For
many tier III city adult customers of organised retail
stores, shopping is an economic burden. There might be
huge differences between tier III city adult and teenage
customers of organised retail stores.. Teens shop for
themselves, but adult shop for others. Lets take the
example of tier III city housewives. While shopping in
malls, they buy shops, shampoo, cosmetics, biscuits,
health drinks, chocolates, pickles and other products,
keeping their family members taste in mind. They also
shop under tremendous budgetary limits.
Adult customers have the potential to power the
organised retail revolution in tier III cities of India. This
segment has busiest time when it comes to work. They
are trying to establish their career and also working hard
for financial security. This segment has huge workload
outside the office. In tier III cities, where women
usually stay at home and do not shop alone, male adults
have the responsibility for weekly shopping, taking
their children to the schools, tuitions and music classes.
Scarcity of time is a big problem for this customer
segment.
In a more liberalized economy like India, his job turns
more demanding, extended hours of work and other
daily activities demand for more attention. This segment
looks for time saving shopping. Here, small retailers
come into business. They offer home delivery services.
Organised retail stores serve the purpose of busy young
adults who do shopping on their way to back home.
This customer segment loves to visit organised retail
stores during weekends and holydays, and spend leisure
time with whole family- shopping and entertaining.
Many members of this segment have money but no time
for shopping. So, some organised retail stores have now
started personal shopping servicers for this customer
segment.
When it comes to shopping in malls, this segment wants
to do it in efficient manner and go for serious shopping
expeditions and experience pleasure of shopping and
gift buying. In tier III cities, adult customers purchase
large number of gift items for their relatives and other
guests during the family weddings and other family
occasions. Take for example, during the family
weddings, huge purchases are made to gift the family
relatives and marring couple. There are many customs
February 2013
and rituals associated with these gifts. In Ranchi, there

is an organised retail store named KVC (Kashmir
Vastralaya Collections) has positioned itself a
destination for wedding shopping.
Actually adult tier III city customers have four important
dreams. A flat in the city, Good school for children, a car
and jab with salary around Rs.40-50 thousand/months,
and their whole activity revolves around these four
dreams. It shows every individualistic, self centered
middle class dream, where Fear, comfort, luxury and self
gratification mix up with one another and make the adult
of tier III city very unique customer personality.
Young professionals and middle aged, customers of tier
III cities India have plenty of money but no time. They
do not have time to wonder the malls or travel long
distance on a leisurely shopping expedition. Neither do
they have time to cue in for bill payment or for replacing
defective products. They do not have time to spend
hours for picking and selecting products. They are now
gradually moving towards online shopping. Busy people
of tier III cities still shop for price and value. It is one of
the biggest reasons for high customer turnout during the
discount seasons. But these discount sales are one of the
biggest reasons for customer dissatisfaction also. When a
tier III city busy customer visits the organised retail store
during the discount seasons, he gets annoyed to see the
long cues of customers, poor billing services and other
shopping inconveniences. Such bad experiences often
detach him from organised retail stores. Actually tier III
city adults have conflicting desires. One hand they want
to buy products they dreamt of during their teenage
period, but, at the same time they are worried about their
growing age and social acceptability. For example, they
like to wear on red colour t- shirt but are bit little
hesitant to do it. Tier III city adult customers are quite
sensitive about the social image because their social
needs are very strong at this age. Mid aged customers
(age group between 40-60 Yrs) has huge spending
power. But, this segment has some new
family
responsibilities too. Now they need to save money for
their children admission in professional courses like
MBA and engineering. These responsibilities limit their
spending ability and make them very rational and value
oriented customers.
But at the same time, my study suggests that mind of
this customer segment is changed a lot. Now they spend
lavishly in shopping. There are two main reasons behind
21
it. First, their income level is increased, and second,

their attitude towards life is changed. Now we can see
many 40 plus people wearing jeans and t shirt, sun
classes, using expensive cars and living flamboyant life
style. May be it is because. They are better fund
managers now. They are smart investors and buyers
both. Rather than investing in pension schemes,
insurance policies they invest in, flats, gold and other
real estate items, where high returns is expected.. Every
middle aged tier III city middle income group are
turning smart investor and a very smart buyer. He
shops, not for consumption every time, but, for
investment and financial stability.
SENIOR CITIZENS:
Senior citizens comprise almost, 20 percent of Indian
population. Opposite to younger customers, needs of
these age group customers is different. They spend on
medicines, health foods, green vegetables, fruits and
low fat, low calorie food. They spend on clothes that
they often buy for their younger family members. They
buy expensive gift items for daughter- in -laws, son-in
laws and other close relatives. Women are more
consummate shopper than males.
I saw many tier III city senior citizens (women) buying
chocolates for the younger members of their families.
Unlike US, Indian senior citizens mostly live with their
grown up children and other family members. My study
shows that senior citizens prefer to shop in organised
retail store, because shopping is convenient for them
here. Degree of awareness about organised retail stores
is quite high among senior citizens of tier III cities of
India. Following table shows that as much as 64
percent tier III city customers of organised retail stores
are fairly aware of organised retail formats.
Ref:Graph No.7.1 1(Graph) Degree of awareness
about organised retail formats: Senior Citizens of tier
III cities.
February 2013
50%
44%
45%
38%
40%
35%
30%
25%
20%
15%
14%
10%
6%
5%
0%
Fully aware
Well aware
Failry aware
Moderately
aware
Little aware
Interesting thing about tier III city Indian senior citizens

is that they are consummate readers of daily newspapers,
viewers of TV news. Therefore, their degree of
awareness is very high. They discuss things with other
morning walkers. I found that many senior citizens were
more aware of issues like FDI in retail sector than
younger generation. Indian tier III city senior citizens
are believed to be very conservative. But, my study
shows that re now more liberal. Their attitude towards
organised retail stores is quite positive, and not much
different from younger generations.
Ref: Figure No 7.11(Graph).. Attitude of tier III city
senior citizens towards organised retail stores
Views of Senior citizens of tier III cities of India
Statement: Organised retail stores offer convenient
shopping experience
70%
60%
50%
40%
30%
20%
10%
0%
58%
30%
10%
Fully agree
Agree
Neiither agree
nor disagree
0%
2%
Disagree
Fully disagree
As per my survey findings, only 22 percent tier III city

senior citizens always/most of the time prefer to shop in
organised retail stores. And, 50 percent seniors citizens
sometimes prefer to shop in organised retail stores. That
means, only 28 percent senior citizens of tier III cities do
not prefer to shop in organised retail stores.
22
Ref: Figure No 7.12Graph). Views of senior citizens

about organised retail store.
Views of Senior citizens of tier III cities of India
How often tier III city senior citizens prefer to shop in
organised retail stores?
60%
50%
50%
40%
28%
30%
16%
20%
10%
6%
0%
0%
Always
Mostly
Sometimes
Rarely
Never
EDUCATION
Literacy rate of tier III city customers is increased
significantly in last 50 years. So, tier III city customers
are now more prepared to respond the market stimuli.
Knowledge and information come to the tier III city
customers through formal education system, social &
personal interactions, TV, mobile phones, internet, FM
radio and traditional media like, newspapers. On-line
educational programs and satellite based distance
learning programme, both have made higher education
easily accessible to tier III city people. World class
educational and professional educational institutions
like XLRI, IIMs, IGNOU, etc. offer plenty of vocational
courses for the people, living in small cities of India
Democratization of education is hugely influenced the
consumer behavior of tier III cities of India. In tier III
cities almost 90 percent population has access to
television and 65 percent have access to mobile phones
and 51 percent has access to internet connectivity. But
there is huge disparity in the education system of India.
There are different types of educational systems coexist. Due to differences in the quality of education,
people behave differently as buyer. Customers of tier III
city organised retail stores may be divided into
following categories on the basis of their educational
background.
February 2013
School Type and school environment: Mostly children

below 15 years of age come under this category. Their
shopping needs may be influenced by the type of the
school, and the social and educational environment of
the school. Buying behaviour of school going customers
may vary with the type of the school they study. In the
tier III cities of India, there are two types of schools for
children. First one is administered by the state
governments, and the second one administered is by
private trusts and organizations. Buyer behaviour of the
students of these schools may vary significantly due to
differences in the quality, level and language of
education. I found that most of the students (children)
who visit organised retail stores, study in English
medium private schools. Impact of their classmates,
teachers and the school culture might be very high on the
buying behaviour of young customers. For a tender age
student, his role model is their seniors. He may follow
the life style of his classmates and seniors.
College going customers: It is an important customer
segment of tier III cities of India. They are trend setters,
and also very innovative customers. They dare to
experiment in shopping centers. They experiment with
different hair colour sheds, contact lens colors, dress
materials, fancy sun glasses, dress materials, designer
ladies bags, shoes and sandals. They often focused to be
on trendy and cool and expensive outfits, depending
upon their spending ability. They follow their collage
group friends life style. Classmates and friends are
their important reference group members. Their
inspirational group members and role models are
national and international stars. MS Dhoni, a local boy
of Ranchi when became a world class cricketer, led
Indian cricket team in many word cup wins and
achieved memorable personal height ,became youth
icon for local youths. Teenagers started following
followed his long hair style. There is important shift in
tier III city teenagers behaviour. Local heroes inspire
them more than the national and internationals stars.
They take inspiration from MS Dhony type of local role
models who emerged from their own small cities. A
dream of small city teenagers is far bigger than their
predecessors. Such an attitude cosmopolitised their
tastes, likes & dislikes.
Collage Drop outs:
This is also a very important
customer category of tier III city customers. They often
work for private factories or have their own small
23
business. Their purchasing power is not very high, but

this customer segment is quite big. Often look for cheap
replica of reputed brands due to their limited spending
power. In small cities, girls get married quite early,
even before finishing their higher education. Large
number of married women of well off families of tier III
cities of India are also under graduates. But, are
frequent visitors of organised retail stores. Many of
them are shopping edicts, bargain lovers and smart
shoppers. They often wait for discount offers. Many are
impulse buyers. When they see huge price discounts,
they can not resist purchasing the products not planned
earlier.
Diploma Holders: It is an important customer segment
of tier III cities. In the industrial cities like, Jamshedpur,
Bokaro, Raurkela, Bhilai, and Durgapur, large number
of diploma holders (Technical courses) work for local
steel factories like, Tata Steel, Bokaro Steel, Rourkela
Steel and Bhilai Steel. In Jamshedpur only, there are
more than 25 thousand diploma holders working for
Tata Steel and many other small scale industries. They
are well paid technicians. They earn good salary and
spend generously on shopping. In the Tata Steel, a
diploma holder gets salary up to Rs. 20 thousand/month
at the entry level.
This customer segment visits
organised stores along with their family members and
friends. They often purchase kids wear; gents dress
materials and household merchandise
Graduates: This segment is well balanced, nicely
informed and quite aware of the things happening
around. They use their personal wit to judge the
products. They respond logically to the market stimuli.
Young graduates prepare for entrance tests for the
courses like MBA, MCA or already doing higher
professional course.
Many adult graduates are
government employees, bank employees or working in
private companies. Buyer behavior of this segment
reflects a wide array of variables, influenced by
personal, social and family need under the realm of
knowledge and purchasing power.
MBAs, Engineers:
Large number of graduate
engineers, MBAs and other professional degree holders
live in industrial cities like Jamshedpur. Size to this
segment is not as big as other segments, but is an
important customer segment of organised retail stores
due to their high purchasing power and life style. Many
February 2013
of them work in private companies as senior executives.

Convenience, quality, social status, shopping ambience
and desired product range are the key variables for them.
They and their family members prefer to purchase
products from organised retail stores.
INCOME
High income group:It is an important consumer
segment of tier III city customers of organised retail
companies target. But, the market size of this customer
segment far smaller in tier III cities than tier I & II
cities. So, it is bit difficult for organised retail companies
to get the breakeven, focusing solely on this segment
only.
In small cities of India, number of millionaires is
increased in last two decades. But, they are neo-rich
people; their life style is not as established as tier I& II
city millionaires.
In tier III cities, newly made
millionaires spend generously on luxury cars, houses.
Their speeding is more focused on self- image building
and meeting their esteem needs rather than life style and
high quality standard of living. In the tier III cities of
India, neo-rich consumers are government contractors,
corrupt bureaucrats and political leaders, builders, land
and mine Mafia etc. therefore, their buying behaviour is
quite different from elegantly civilized rich customers
of tier I and II cities. in the tier III cities neo-rich
customers often follow the suggestions of shopping
agents, reference groups and others due to moderate
level of awareness about the products and brands. But,
they are not the only segments who represent higher
income groups of tier III cities of India. Government
officials, top level company executives, businessmen
and young entrepreneurs. Their buying behaviour might
be quite predictable on the basis of tier I & II cities.
Middle income group: Middle income group is an
emerging customer segment for organised retail stores of
tier III cities of India. Emergence of this segment is a
result of economic growth of the country. It is believed
that there are 33 crore middle class customers present in
tier I, II &III cities of India. They are the back bone of
Indian economy. They are eager to upgrade from two
wheelers to four wheelers. Their dreams move around
four modest basic needs; a good job, good education for
children, a three bedroom flat, and a family car. In
24
Jamshedpur, this is the segment, members of that

frequently visit organised retail stores.
FAMILY TYPE
Single: This is a very small but interesting customer
segment of organised retail stores. This is a segment of
unmarried youths who study in local medical
engineering business management schools. Some of
them work in factories and other private institutions. At
Jamshedpur, there are at lest 5000 unmarred graduate
trainee officers in Tata Steel and Tata Motors only.
Many single young persons study in XLRI, MGM
Medical College and NIT, Jamshedpur. Their size is
something around 3000. They do not have families in
Jamshedpur. They purchase almost everything from the
market. They visit organised retail stores for buying
branded t-shirts, trousers jeans, Bags, sun glasses,
saving creams, cosmetics and ready- to- eat snacks.
They mostly visit organised retail stores during the
weekends along with their. Colleagues and classmates
Joint Families: Large number of joint families lives in
tier III cities of India. In the traditionally old cities like,
Kanpur, Varanasi, Gwalior, Patna, Ranchi, Cuttack etc,
joint families have been living in these cities for
centuries representing the traditions and cultures of
these historic cities. Their buying behaviour is
significantly influenced by the family traditions and
local culture. For example, Brahmin Pandas of
Varanasi, elite Muslim families of Lucknow, Bhdralok
Samaj of Asansol and
Aiyar
families of
cochin(Kochi),however, loosen a bit, but still bundled
with very
strong social, cultural, traditions and
religious values Unique part of Indian tier III city
family value system is the duality in role playing.
When any member of tier III city joint families, moves
on to another III cities, now he behaves quite differently
as a customer. He permits his wife to shop alone in
malls and make independent buying decisions. Buying
decision is more democratic in nature his family now.
Even his food habit gets takes dramatic shift now. Now
he starts eating non- vegetarian foods. But when he
goes back to their native city to join their joint family,
he immediately changes his eating habit for a time being
only. Women also happily adopt family dress code and
follow the joint family norms and traditions.
February 2013
I observed that joint families of old tier III cities are

more conservative than the joint families of new tier III
cities. People of newly developed cities have low
impact of local culture than old cities. Take for example;
Jamshedpur was systematically set up as an industrial
city by Tata group almost 100 years ago. Although this
city is now 100 years old, it does not show any
significant influence of local tribal culture on its life.
Similar thing can be said for Bokaro, Rourkela, and
Dhanbad. Joint families live in these cities are gradually
losing their old cultural links and adopting new ones.
But it is not equally true for ancient cities like Patna,
Varanasi, Puri, and Amritsar. These cities have strong
reflection of their historic cultural background. This
reflects in the life style of families of these cities. In the
joint families of these cities, often major buying
decisions are taken by family heads. Products are
purchased in bulk. Personal preferences are generally
suppressed under family norms, social boundaries and
family traditions. Festivals are celebrated in traditional
way. In family shopping, family norms are strictly
followed. Individual members of the family visit
organised retail stores, but their shopping remain limited
to certain product categories only. For example, one
shampoo brand or one soap brand for the whole family.
Nuclear Families:
With emergence of nuclear families has challenged the
one-size-fits-all syndrome and has now been replaced
by each-one-to-its-own as consumerism and product
categories have significantly evolved over time. Buying
behaviour of nuclear families may show entirely
different shopping behaviour from traditional joint
families. Their shopping could be more personalized and
individual taste and preferences can be stronger. During
the pre-liberalization era, choices were few and far
between. There used to be only one bath soap for a
family which perhaps also doubled up as shampoo. And
when shampoo did arrive, we didnt have different
shampoos for dry hair, broken hair and other
innumerable hair types. Likewise, there was only one
general purpose face cream which worked as a
moisturiser, a day cream and a night cream, and for all
possible skin types. The world was quite simple.
Conformity was in and consumerism was unheard of.
Flamboyance, outrageousness, individualism were traits
that were shunned by most for the fear of a social
backlash. Everyone tried to stick to the given norms and
stayed within the boundaries of the acceptable social
25
structure. But the break up of joint families and entry of

nuclear families have , liberalized the thoughts of
young women, men and youths to realize their dreams.
Consumers today have gone ahead and are challenging
nature. Hair streaking, frowned upon by most a decade
back, is now an accepted personal style statement. So is
the emergence of male grooming products, a
phenomenon just about five years old. This evolution
has been further hastened to the next level with the
creation of products catering to the different skin and
hair types for men, which was previously considered a
female bastion. Consumers can now choose the colour
of their eyes, facial structure, shape of their nose, and
skin type thanks to contact lenses, plastic surgery, etc.
So from the times of Hamara Bajaj, the shift has
already been completed to Mera Wala Blue with
thousands of shades of blue thanks to paint tinting
machines where at the touch of a button, your own kind
of blue can be created.
HOUSE TYPE:
Tier III cities customers live in different types of
houses. Type of house may influence their buying
behaviour in a big way. There are three types of houses,
where tier III city customers of organised retail live.
Flats: People who live in two three bedroom flats
purchase products according to their flat size. They have
generally small families. They behave as a nuclear
family member. Their social behaviour is guided by the
people who live in other flats in their locality.
Old built-traditional house: They generally follow
their tradition family life style and, sometimes they use
modern gadgets but not very specific to colour design
and look. They emphasize on utility value more and
they do not give much emphasis on home dcor. Mostly
joint families live in traditional houses.
February 2013
children. They are very important customer segments of

LOCALITY:
Tier III city customers of organised retail stores come
from Rural, urban and semi- urban backgrounds Their
geographical background may significantly influence the
buying behaviour
Rural migrants: In tier III cities, people having rural
background are good learner.. They try to learn the life
style of others. They may take some time to develop
equilibrium between their rural backgrounds and unban
life style. In this adaption process they take the help of
their colleagues, neighbors and retailers. In malls, they
ask so many questions and expect assistance from the
sales personnel in their shopping activity.
Rural
migrants bring considerable amount of rural culture to
the tier III cities. Educational and socio- economic
background of rural migrates also play an important role
in the shopping behaviour. Take for example, millions of
rural migrants from the remote areas of Bihar,
Jharkhand, and West Bengal set up their own slum
colonies and gradually affected the socio- cultural
character of these cities rather than adopting the urban
culture of these cities. Due to their poor socio economic
status, two distinctly different sub- cultures are visible in
these towns, showing entirely different buying
behaviors. These segments are UNTOUCHABLE for
organised retail stores. Interestingly. 70 percent of HUL
products like shampoo, washing power, tooth paste, are
consumed by these customer segments
Semi urban: People who migrated from semi rural
areas to the tier III cities, adopt urban life style rather
easily
RESIDENTIAL AREAS:
Rented house: Customers, who live in rented houses,
are the customers who frequency switch over from one
house to another. One locality to another. They often
negative attitude towards buying expensive consumer
durables and heavy furniture. They look for portable
furniture and light weight consumer durables. Central
government officials, business executives and others
having transferable jobs, come under this category.
Families are often of nuclear type with growing
Unorganized Slum area: tier III city customers who

live in unauthorized slum areas, or Mohalla as of tier III
city generally come under lower middle income group
category. In India, almost 40 percent urban population
lives in these slum areas. Gone the days when only low
income group people lived in these unauthorized slums.
Large number of middle income group people also lives
in these areas. They spend quite generously. In tier III
26
cities slum areas are now developed as business centers

where large number of small and tiny industries are
established. Customers living in slums spend more or
apparels, & edibles in organised retail stores. They
welcome heavy price discounts. Their aspiration groups
are the people who live in well organised colonies of the
city.
Well organised colonies: They make an important
chunk of the customer segment and buy products from
almost every product category of organised retail stores.
February 2013
ethnic norms. It is reflected in the product selection

process. They are buyers of basic products.
OCCUPATION
Self employed: Self employed customers are new
entrepreneurs, businessman, transporters, and factory
owners. Their size is growing big in tier III cities since
after the liberalization process started. They spend on
consumer durables, branded clothes and other life style
accessories like mobile phones, camera and music
system.
LANGUAGE:
Hindi speaking: Linguistic segmentation of organised
retail customers is also very important because a
particular language represents a particular geographical
and cultural background. Take for example; Hindi
speaking customers represent the largest customer base
of India, covering the entire north and central India and
three metro-cities, Mumbai, Delhi and Kolkata. People
who live in Hindi belt of India, show of commonalities
in their buying behaviour. Their major festivals, rituals,
customs and eating habits and dressing sense all are
quite similar. But, in the non- Hindi belts, things might
be different altogether.
Regional Language: specially south Indian language
speaking customers represent different cultural and
ethnic groups like Tamils, Malyali and Kannidiga
MODE OF EDUCATION
English medium public schools: Customers who have
studied in English Medium schools show different
buying behaviour. They behave more innovatively, they
spend more generously on stylish clothes, ready to-eat
food and life style related products.
Regional Language Government schools. English
medium public schools: Customers who have studied in
English Medium schools show
different buying
behaviour. They are more inclined to their social and
Government employees: Traditional middle income

group segments of tier III cities. Their family members
enjoy shopping in malls and hyper market. They are
rational buyers. Low salary government employees
spend on mid price range clothes. They buy grocery
from neighborhood retailers and do motherly payment.
Private company employee: They are emerging
segment of tier III city customers. They spend more on
branded clothes, quality food and fun and amusement
facilities.
House-wives: For long they were jailed in home. Now
they come out to make purchases in shops without the
shadow of their other family members. They are now
capable of making independent decisions in many
product categories like: food and other household items
due to increased education level and new found liberty
due to extremely busy lives of their husbands.
Retired senior citizens. Very important but unnoticed
customer segments of tier III cities. It is true that 40
percent newly constructed housed are funded by these
customers with their Provident fund, Gratuity and other
retirement benefits. In the 21st century this segment is
enlighten to live healthy, peaceful and cool life. They
spend lavishly on fruits, health drinks, medicines, gift
items for younger family members. For them, organised
retail stores are the safe, convenient and comfortable
place for shopping. Air conditioned shopping ambience,
alleviator, nicely placed products and
easy billing
facilities are the real advantages for them On the basis
of above analysis of the demographic profile of tier III
city customers of organised retail formats, I have
developed the following model for the demographic
segmentation of the existing and potential customer
segments of tier III cities of India
27
ETHNICITY
In India there are many cultural groups exists. These
cultural groups have very old and very strong cultural
identity. Apart from same religious similarities, they
show very strong cultural differences in festivals they
celebrate, foods they consume language they speak, etc.
Bihari:
Tier III city customers of Bihari ethnic
community are people who originated from Eastern
UP and Bihar. Maithili and Bhojpuri speaking
customers are the main components of this segment.
They are strongly present in Bihar, Jharkhand, eastern
parts of Utter Pradesh. In the metro cities like;
Mumbai, Delhi and Kolkata they have significant
presence. They are a very strong customer base of
North India. Their population is approximately 10
million. Bihari community mostly celebrates Chath
and Holi festivals. During these festivals they spend
hugely on dress & food.
February 2013
Rajsthani: A high income group, business class

community of hardworking people having very strong
presence all over the country. Spend lavishly on
consumer durables, cars and house. But life style is bit
traditional. Their most celebrated festival is Diwali.
They spend very lavishly on new clothes, jewelry and
food.
Punjabi: A dominating business community. Spend
lavishly on food, cloth, music, entertainment and latest
life style. Bold, brave and rich community of North
India. Their favorite festival is Baisakhi
Tamil: Mostly found in Tamil Nadu state of India.
Strong ethnic identity. Population wise not very strong
community in north India.
Keralites - Mostly found in Indian state of Kerala.
High literacy rate, strong ethnic identity and tourism
based economy gives the state a very unique identity.
Their most celebrated festival is Pongal.
Bengali: Originally from West Bengal; but have

strong presence in all over the country. Generally
service class people with very strong linkage with
Bengali food, clothes and life style. Their most
celebrated festival is Durgapuja, when every Bengali
loves to visit Kolkata. During the Puja festival they
spend very generously on food and clothes
6. COMPARATIVE ANALYSIS OF BUYER BEHAVIOUR OF TIER III AND TIER I

CITY CUSTOMERS
My study shows that there are very significant differences in the buying behaviour of tier III & I and
II city customers of organised retail stores.
Area
Tier III city Customers of ORFs
Tier I & II city Customers of
ORFs
Degree of awareness
Only 48 percent tier III city
More than 90 percent tier I & II
about organised retail
customers of organised retail
city customers are fairly aware
format, its key attribute
formats are fairly aware of the key
of organised retail format and its
and benefits.
attributes and benefits of organized
key attributes and benefits.
retail formats
.
Conclusion: Degree of awareness about organised retail format and its important features among tier III
city customers is quite lower than tier I & II city customers of organised retail stores.
Degree of awareness
Spensors- 28%
Spensors- 91%
about famous organised Vishal Mega Mart-47 %
Vishal Mega Mart-86 %
retail chains.
Big Bazaar- 58.5 %
Big Bazaar- 91 %
28
Reliance Fresh -59%

Nilgiries- 36%
Trent - 65%
Pantaloons- 31%
February 2013
Reliance Fresh -88%

Nilgiries- 41%
Trent - 65%
Pantaloons- 75%
Conclusion: Tier I & II city customers of organised retail stores are more aware of national level retail
chains than tier III city customers. Tier III city customers are mostly aware of only those retail chains,
located in their cities.
Attitude of organised
Organised retail formats offer good Organised retail formats offer
tier III city customers
quality of products.- 52%good quality of products.- 87.5%
towards organised retail Organized retail stores offer
Organized retail stores offer
Formats
products at a very competitive
products at a very competitive
price.-35%
price.-91%
Areas:
organised retail stores offer
organised retail stores offer
o Product quality
pleasurable shopping experience.pleasurable shopping
o Fair pricing
56%
experience.-93%
o Pleasurable
shopping in organised retail stores
shopping in organised retail
shopping
is quite convenient.-27%
stores is quite convenient.-96%
o Convenient shopping update customers with latest fashion Update customers with latest
o Latest Product
trends-82%
fashion trends-82%
Range
Conclusion: Attitude of tier I & II city customers is very positive towards organised retail stores than tier
III city customers of organised retail stores.
How often customers
Always.- 6 %
Always-31%
prefer to shop in
Mostly -14%
Mostly 54%
organised retail formats. Sometimes -53%
Sometimes 6.5%
Rarely -25.5%
Rarely -3.5%
Never -2%
Never -5%
Conclusion: 87 % Tier I & II city customers mostly/ always prefer to shop in organised retail stores, but
only 20 percent tier III city customers prefer always /most of the time prefer to shop in organised retail
stores. My study shows that tier III city customers are occasional shoppers of organised retail stores but tier
I & II city customers are regular ones.
How does tier III city
Rank:
Attribute
Rank:
Attribute
customers decides their
1- Facility to see and touch the
1. Pollution free Air conditioned
organised retail
product: 4.43
shopping area: 4.585
shopping destinations.
2- Pollution free Air conditioned
2. Facility to see and touch the
(store evaluation
shopping area:4.42
product: 4.485
criteria)
3- After sales services:4.405
3. After sales services: 4.46
4- Product quality: 4.36
4. Product quality:4.36
5- Convenience in billing facility:
5. Convenient billing facility 4.32
4.255
6. Parking Ease: 4.285
6- Shopping assistance from the store
7. Convenience in picking and
staffs.:4.155
selecting brands: 4.205
7- Fun, entertainment and amusement 8. Convenience: 4.175
facilities: 4.11
9. Good quality of customers in the
29
8- Convenience in picking and

selecting brands:4.105
9- Credit facility: 4.06
10- Reasonable pricing:4.025
11- Good quality of customers in the
surrounding:3.89
12- Non -disturbing selling staffs:3.885
13- Quality of customer service:3.835
14- Parking Ease:3.83
15- Availability of wide product
range:3.79
16- Convenience (Accessibility):3.755
17.Good price discount:3.725
February 2013
surrounding:4.12
10. Fun, entertainment and
amusement facilities: 4.11
11. Non -disturbing selling staffs:
4.105
12. Quality of customer service: 4.1
13. Reasonable pricing: 4.025
14. Availability of wide product
range: 3.73
15. Shopping assistance from the
store staffs.: 3.695
16. Good price discount: 3.04
17. Credit facility:3.005
Conclusion: Tier I & II as well as III city customers use almost similar store choice evaluation criteria.
That means, tier I & III city customers have very similar needs and expiations from orgnaised retail
formats, and both want to get delightful shopping experience. But there are some significant differences as
well. Desire to avail the unique facilities is more acute among tier I & II city customers than tier III city
customers. Moreover, tier III city customers are more prices sensitive, and are more inclined towards
discount offers than tier I & II city customers. Tier I city customers give more importance to parking
facility than tier III city customers. Tier III city give importance to shopping assistance from store staffs
but tier I& II city customers do not want to be disturbed by store staffs, and they do not want any store
staff assistance.
Why does tier III city
customer shop in
organised retail store?
For fun, delight and refreshment88%

For their kids and spouses
pleasure.87%
In search of price off and other
customer incentives.-78%
Because other members of their
society do the same-59%
Purely for shopping purpose-44%
Getting update with latest
products& brands- 59%
For fun, delight and

refreshment.-94%
For their kids and spouses
pleasure.35%
In search of price off and other
customer incentives.21%
Because other members of their
society do the same: 39%
Purely for shopping purpose39%
Getting update with latest
products& brands-36%
Conclusion: Tier III as well as tier I & II city customers prefer to shop in organised retail stores for fun,
delight and excitement. But, for the tier III city customers, shopping in mall is an occasion for family
celebration. Tier III city customers of organised retail stores visit organised retail stores for getting updated
with latest fashion and trends, in search of huge price discounts, and to meet their social as well as esteem
needs. These needs are not much intense among tier I & II city customers. For tier I & II city customers,
shopping in malls is a routine activity.
30
February 2013
Is tier III city shopper of

o Purchase more than planned: 20%
ORFs, a planned
o less than planned: 19.5%
shopper?
o I purchase as planned :13.0%
o return without any serious purchase:31%
o Sometimes more and sometimes it is less than the plan:16.5%
Conclusion: Tier III city customer of organised retail stores often purchase less than their earlier plan and
tier I & II city customers purchase more than their earlier Plan for the malls and organised retail stores.
People who motivate
customers to shop in
Organised retail stores
Children:9.0%
Spouse : 24%
Parents: 22%
Friends:31%
Colleagues: 14%
None: 00%
Children: 7.5%
Spouse: 19 %
Parents: 16.5%
Friends: 24%
Colleagues: 11%
None: 22%.
Conclusion: Both tier III as well as tier I & II city customers of organised retail stores are motivated to
visit organised retail stores by their family members, friends and colleagues. Tier III city customers are
not the self motivated shoppers of organised retail stores. But, many tier I & II city customers are selfmotivated shoppers.
People who accompany

the Tier III city
customer in malls:
Children: 20.5 %
Spouse: 20.5%
Parents: 10.5%
Friends: 20.5%
Colleagues: 6.5%
None: 16.0%
Others : 5.5%
Children: 24 %
Spouse: 24 %
Parents: 11.5%
Friends: 16%
Colleagues: 9%
None: 7%
Others :8%
Conclusion: Tier I & II as well as tier III city customers are not alone shoppers. They like others company
when they are shopping in malls. Most of the time family members company them. That means, shopping
is a family affair in both the city types.
Brand references
Tier III city customers prefer to buy

branded products from malls. They
do not like to purchase private
levels
Tier I & II city customers prefer

to buy branded products as well
as private levels from malls.
They do not like to purchase
private levels
Conclusion: Tier III city customers are more brand conscious than tier I & II city customers. They use
brand name to evaluate the product quality. They do not prefer to buy private levels of the organised retail
stores. Tier I city customers prefer private level as well as brands.
31
Source of Information
34 percent -newspapers.
19 percent -local Cable TV
channels.
18 percent-friends, relatives and
other close ones.
February 2013
33 % Internet.
23% Newspapers
11% Reference groups
11 % outdoor media.
23- TV media
Conclusion: Tier III city customers use conventional source of information( Newspaper, TV, Cable TV,
FM radio , tier I& II city customers use traditional as well as new media both, for the information search.
They discuss over social networking sites like Facebook, Twitter etc.
Most suitable time for
17.5 % - during the mega discount
shopping in malls
offers.
27 % - during the mega discount 28 % - during the weekends and
offers.
holidays.
23 % - during the weekends and 12.5 percent - during the festive
holidays.
season.
22.5 percent - during the festive 11 %- without any specific
season.
occasion.
16 %- without any specific
17 % - when they feel happy and
occasion.
want to celebrate it
10 % - when they feel happy and
want to celebrate it with
delightful shopping experience.
Conclusion: 50 percentage of tier III shoppers of organised retail stores visit organised retail stores during
the discount offers and festive season period. Where as, only 30 percent tier I & II city customers visit
organised retail stores during mega discount offers and festive season. In other words, 70 percent tier I &
II city customers visit organised retail stores during the weekends, and other weeks days. That means, tier
III city customers of organised retail are more occasional an non-routine shoppers than tier I & II city
customers.
Does tier III city
customer wait for Mega
discount offers?
33 percent tier III city customers

of organised retail stores never
wait for discount offers.
of organised retail stores
sometimes wait for discount
offers.
of organised retail stores always
wait for discount offers.
40 percent tier I & II city customers

of organised retail stores do not
wait for mega discount offers.
of organised retail stores sometimes
wait for mega discount offers
of organised retail stores always
wait for mega discount offers
Conclusion: 33 percent tier III city customers and 40 percent tier I& II city customers never postpone their
mega shopping decision waiting for discount offers. That means, tier III city customers of ORFs have more
inclination towards mega discount offers.
32
February 2013
1. Gents dress materials:69%

1. Gents dress materials:70%
2. Kids wear:68.5%
2. Kids wear:89.5%
3. Items like bedsits, curtails
3. Items like bedsits, curtails etc:78 %
etc:64%
4. Ladies garments:62%
4. Ladies garments:61%
5. Ice creams, snacks:83%
5. Ice creams and other snacks:61
6. Furniture:73%
6. Furniture:54.5%
7. Ready to eat foods:59.5%
7. Ready to eat foods:54%
8. Amusement products:79%
8. Amusement products:47%
9. Grocery items: 68%
9. Grocery items:45%
10. Cosmetics :62%
10. Cosmetics :41%
11. Mobile phones:47%
11. Mobile phones:32%
12. Vegetables and fruits :75%
12. Vegetables and fruits :31%
13. Computer accessories:46%
13. Computer accessories:24%
14. Consumer durables: 64%
14. Consumer durables:23%
15. Insurance products :34%
15. Insurance products :22%
Conclusion: Tier III city customers purchase only few categories of products, like kids wear, gents dress
materials, ladies garnets from organised retail stores. But tier I & II city customers all types of consumer
goods from organized retail stores, available in the stores.
o Tier III city customers prefer o Tier I & II city customers prefer Cash
Mode of Payment
Cash payment. Credit Card is
payment. As well as credit cards
not very popular.
Conclusion: Tier III city customers prefer cash payment. Where as tier I & II city customers prefer both
cash as well as credit cards.
Most widely purchased
products
Degree of Satisfaction of Tier I & II and III City Customers of Organised Retail Formats.
o Only 25 percent tier III city
Store Staffs
87 percent tier I& II city customers
customers are satisfied with
are satisfied with the staffs of
the staffs of organised retail
organised retail formats of tier I & II
formats of tier III cities.
cities.
Conclusion: Tier I & II city customers are satisfied, but tier III city customers are not satisfied with the
quality store staffs of organised retail stores of their respective cities
After- Sales- Services
o Only 18 percent tier III city o 82 percent I & II city customers are
satisfied with After- Sales- Services of
After- Sales- Services of the
the organised retail stores, of tier I & II
organised retail stores, of tier
cities of India.
III cities of India.
after sales services of organised retail stores of their respective cities.
Convenience
(Accessibility)
Only 16 percent tier III city

location of organised retail
store

are satisfied with location of
organised retail stores in tier I & II
cities
33
February 2013
Conclusion: Tier I & II city customers are satisfied, but tier III city customers are not satisfied because
organised retail store are not easily accessible in their cities.
Product Range
o Only, 33.5 percent

respondents are satisfied with
the product range offered by
the organised retail formats of
tier III cities of India.

are satisfied with the product range
offered by the organised retail formats
of tier I & II cities of India.
product range available in the organised retail stores of their respective cities
Pricing
o Only, 45 percent respondents

are satisfied with the pricing
of the products in the
organised retail formats of
tier III cities
88.5 percent tier I & II city

customers are satisfied with the
pricing of the products by the
organised retail formats of tier I & II
cities
pricing of organised retail stores of their respective cities.
Product Quality
o Only 47 percent respondents o

are satisfied with the quality
of products offered by the
organised retail formats of tier
58 percent tier I & II city customers are

satisfied with the quality of products
offered by the organised retail formats
of tier I & II cities of India.
product quality of organised retail stores of their respective cities
o Only 89 percent tier I & II city
sales staffs of the organised retail
formats of tier I & II cities of
India
quality of sales staffs of organised retail stores of their respective.
Sales personnel
Shopping Ambience
o Only 29 percent respondents are

satisfied with the sales staffs of the
organised retail formats of tier III
cities of India.
59 percent customers are satisfied with

the shopping ambience of tier III city

shopping ambience of tier I &
II city organised retail stores
Conclusion: Tier I & II city customers are satisfied but tier III city customers are not satisfied with the
shopping ambience of organised retail stores of their respective cities
34
o Only 38.5 percent respondents are

Pollution free, airsatisfied with the pollution free
conditioned shopping area
shopping ambience offered by the
cities of India.
February 2013
o Only 85.5 percent tier I & II city

pollution free shopping ambience
offered by the organised retail
India.
quality of pollution free, air-conditioned shopping area of organised retail formats of their respective cities
Facility to pick & select
the products.
o 41 percent customers are satisfied

with facilities of selecting & picking
products in the organised retail
formats of tier III cities.

facilities of selecting & picking
products in the organised retail
formats of tier I & II cities.
facility to pick & select the products in organised retail stores of their respective cities
o 55 percent respondents are satisfied
74 percent tier I & II city
Fun and entertainment
with the fun and entertainment
facilities
facilities offered by the organised
fun and entertainment facilities
retail formats of tier III cities of India. offered by the organised retail
India.
Fun & entertainment facilities offered by organised retail formats in their respective
Customer service
o Only 56 percent respondents are
81 percent respondents are tier
satisfied with quality of over all
I & II city customers with
customer services offered by the
quality of over all customer
services offered by the
cities of India.
I & II cities of India.
overall Customer Service of organised retail stores of their respective cities
Billing System
39.5 percent respondents are satisfied o 85 percent tier I & II city

with the billing facilities offered by the
organised retail formats of tier III cities
billing facilities offered by the
of India.
Billing System of organised retail stores of their respective cities
35
Parking Facility
o 64 percent respondents are satisfied

with the parking facilities offered by
the organised retail formats of tier III
cities of India.
February 2013
o 68 percent tier I & II city

parking facilities offered by the
7. STRATEGY OF ORGANISED RETAIL COMPANIES IN TIER III CITIES OF
INDIA : AN ANALYSIS
My study shows that marketing strategy of organised
retail stores in tier III cities of India is not effective and it
needs serious modifications.Organised retail business
when started in tier III cities of India, their aim was to
become a substitute of traditional shops and meet the
expectations of tier III city customers. Market experts
estimated the growth of organised retail business 16
percent annually expecting the huge success of organised
retail stores in tier III cities. They expected that by 2012,
market share of organised retail will be 16 percent. But,
all the estimates and hopes floored unexpectedly. The
entire Indian industry blame central government for this
slows down in organised retail business. Their allegation
is that, Indian government has decelerated the velocity of
organised retail by not allowing FDI in multi brand retail.
But, my study shows that there are some other serious
problems with organised retail business in India. These
problems are developed due to wrong marketing strategy.
As a result, organised retail companies in tier III cities of
India, totally failed to project itself as a better substitute
of local retail stores. They failed to target major part of
tier III city customer Base and, they also failed to meet
the needs and expectations of tier III city customers.
I found major pit falls in the Segmentation targeting and
positioning strategy of organised retail stores in tier III
cities of India. Organised retail stores followed the same
strategy for the segmentation, targeting and positioning
strategy that they used in tier I & II cities. They
segmented the market on the basis of age group, and
economic condition and overlooked the other variables
and targeted children, teenagers, and young adults of f
upper middle class group of tier III cities. Unlike tier I &
II cities this segment is not big enough to generate
requited return on investment. In tier I & II cities younger
generation have more disposable income and spending
power. In tier III cities younger generation is not involved
in well paid jobs. Organised retail stores also failed to
position it as reasonably priced shopping centers.

They wrongly interpreted the tier III city
customers price sensitive behaviour. Instead of
positioning themselves as a fair price stores they
positioned themselves as discount stores. As a
result, tier III city customers developed an
impression that organised retail companies are
highly priced and suitable for high income group
customers only. Majority of tier III city consumers
decided to visit organised retail stores, only during
the discount season. Tier III city customers
developed an impression that during the nondiscount offer period, product are over priced.
When customers compare the price of vegetables
and fruits
with the open market price, they
always find ORF price 20 percent higher. Its a
pricing strategy blunder. At least, easily available
products should be competitively priced. Today a
customer has many electronic devices to compare
the store price and open market price. When I
personally compared the price of the following
products, I found that price in organised stores is
significantly high. Organised retail stores failed to
understand that tier III city customers prefer fairly
priced stores rather than discount stores.
Ref: Table No. 9.15: Product/price:
36

Category
Product
Vegetable
Mixer
Grinder
Edible
oil
Tomato
Bajaj
Cx-5
Elephant
brand
Mustard
oilToshiba
32HV10
32 Inch
LCD TV
TV set
Open
Market
price
Rs.24/Kg
Rs 2000/-
ORF
price
Difference
30/Kg
Rs.2400
25%
25%
Rs-86/Kg
Rs-90/Kg
15790
17,200
7%
However there are so many merchandise categories,

where I found products fairly priced. Products like
cosmetics and consumer edibles (noodles, snacks) small
retails change MRP where as organised retail stores give
some discount on MRP. But, problem is that less than 10
percent of price off does not work (Webers Law).
Indeed, organised retail companies failed to persuade tier
III city customers that product are fairly priced and
everyone can visit these stores. Unfortunately organised
retail stores failed to communicate the other benefits of
organised retail stores. Their too much emphasis on
discount offers shadowed the other benefits of organised
retail stores. In tier III cities most of the organised retail
formats are in frequent advertisers. They use transit
media, newspapers and local cable TV for the
announcement of their latest offers. But, they always fail
to hit the bulls eye and stimulate the psychological needs
of tier III city customers. During the Mega Discount
Days organised retail stores see huge foot falls, but very
few of them are converted in to actual worthy purchase. I
found that almost 12 percent of the tier III city customers
are fully or well aware of organised retail stores and their
important attributes. Lack of information may generate
wrong perceptions. It is reflected in the following graph
As per my survey findings only 34% tier III city
customers believe that products are competitively priced
in organised retail stores. 52 % tier III city customers
believe that organised retail stores offer excellent quality
of products, 56 percent tier III city customers believe that
organised retail stores offer pleasurable shopping
experience, and only 27.5 percent tier III city customers
think that shopping is quite convenient in organised retail
formats.
February 2013
Those who shop in organised retail stores are also

not satisfied. My study shows that there is a huge
gap between customers expectations and actual
products and services they have been delivered in
organised retail stores. Following are the
organised retail attributes where tier III city
customers were not satisfied.
a. Store staffs
b. Shopping Ambience
c. Facility to picking and select products
d. Pricing
e. Quality of the products
f. Product range
g. Pollution free, Air conditioned shopping area
h. Fun and entertainment facilities
i. Credit -Facility
j. Facility to see and touch the products
k. selling staffs
l. After sales services
m. Billing facility
n. Convenience (Location)
Customer dissatisfaction at such a large scale
shows serious problems in the over all store
management strategy. I found that organised retail
companies operated their business on the line of
Wal-mart, and other world famous organised retail
formats but failed to materialize it on grass root
level. Wal-Mart model of low pricing and
economies of scale worked well in metro cities but
same experiment did not work in tier III cities of
India. I found serious differences in the buyer
behaviour of tier I & II and III city customers of
organised retail due to social, economical, cultural
and personal level variations. I found that there
is a great relevance in the expectations of tier I, II
and III city customers. They give priority to
convenience, after sales services, easy selecting
and picking products, and fun, entertainment and
amusement facilities. Like tier I city customers,
they also believe in shopping experience full of
fun and excitement. But, problem starts with their
social, cultural and economical differences. That
is, tier III city customers have limited earning
power. Teenagers and young chaps do not get high
salary packages to spend lavishly in malls.
Teenagers do not earn and depend on their parents.
In totality women are less independent in tier III
cities and male are very price sensitive. Actually,
37
tier III city customers need all the facilities that metro city
retail outlets offer but can not pay as much as tier I city
customers
Major pit falls

Wrong Target
1.I found that organised retail stores in tier III cities are
focused on upper middle class customers only and they
failed to target other lower income group customers of
tier II cities of India. Catering such a small customer
segment, it is very difficult to get break even from. In this
customer category there is huge competition between
specialty stores and single brand national and
international outlets.
Organised retail companies failed to segment the tier III
city market on the basis of relevant demographic and life
style variables. Tier III city customers should not be
segmented on the basis of age, gender or income only but
their ethnicity, cultural, social, educational and religious
and life style variables background should also be taken
into consideration. Take for example, a teenage girl who
studies in an English medium public school will prefer to
purchase products from an organised retail stores, but her
sister studies in a Hindi medium school may not be very
fascinated to shopping in organised retail stores because
both of them have two different life styles due to
differences in their school culture. Similarly, on occasions
of regional festivals like Sarhul, and Chath, related ethnic
groups behaved differently in organised retails stores.
Take for example, during the Chath festival plenty of
fruits are purchased by devotees. They also purchase
specific type of cloths for the rituals. Therefore, need for
understanding the stipulations of these local festivals and
celebrations is important, but often overlooked by the
organised retail companies in small cities. Understanding
of customer behaviour of tier III cities is vital.
Each small city has its own cultural specialties due to
predominance of local culture and customers. Local
retailers understand these cultural specifications very
well. Does any organised retail store in India, sells
products used in religious rituals like Mundan Sanskar,
Yagyaopvit sanskar Marriage ceremony &
Sradh?
Actually, products used in these religious rituals are
available in traditional retail shops only.
February 2013
In the earlier days, during the pre-liberalization

era, choices were few and far between. There used
to be only one bath soap in a family which perhaps
also doubled up as shampoo. And when shampoo
did arrive, we didnt have different shampoos for
dry hair, broken hair and other innumerable hair
types. Likewise, there was only one general
purpose face cream which worked as a
moisturiser, a day cream and a night cream, and
for all possible skin types. Life in small cities was
quite simple. Conformity was in and consumerism
was unheard of. Flamboyance, outrageousness,
individualism were traits that were shunned by
most for the fear of a social backlash. Everyone
tried to stick to the given norms and stayed within
the boundaries of the acceptable social structure.
We were also a closed economy and exposure to
varied brands and categories elsewhere was
limited.
New generation of tier III cities through not as
affluent as tier I & II city through share similar
aspirations as the youths of other parts of the
world because a tier III youth is proficient of
getting connected with his global friends through
Rs 2500 mobile phone and Rs 10 @ hour internet
services. As a result his taste and preferences are
absolutely personalized.
One-size-fits-all syndrome has now been
replaced by each-one-to-its-own as consumerism
and product categories have significantly evolved
over time.
Gone are the days when tier III city youths
content with what they originally inherited hair,
skin type, build, eye colour et al. Consumers today
have gone ahead and are challenging nature. Hair
streaking, frowned upon by most a decade back, is
now an accepted personal style statement. So is
the emergence of male grooming products, a
phenomenon just about five years old. We can see
young boys purchasing talc powder, face cream,
hair colour dyes, body lotions, hair removers,
body spray carelessly from cosmetics shops. This
evolution has been further hastened to the next
level with the creation of products catering to the
different skin and hair types for men, which was
previously considered a female bastion.
38
Consumers can now choose the colour of their eyes, facial

structure, shape of their nose, and skin type thanks to
contact lenses, plastic surgery, botox jabs, etc. So from
the times of Hamara Bajaj, the shift has already been
completed to Mera Wala Blue with thousands of shades
of blue thanks to paint tinting machines where at the
touch of a button, your own kind of blue can be created.
In a way it mirrors the larger change that is taking place in
small city society. Earlier we were conditioned to be part
of a herd, doing stereotyped activities. Standing out or
going against the grain was deemed outrageous.
Conformity was the rule by which we all were expected to
live. Now it is exactly the opposite as everyone wants to
be unique and different, not only by looking for a
personalized channel of expression but also going to the
extent of challenging what nature has given them.
The IT world has virtually infused this seed of
personalisation at a very rapid pace through various
media, ranging from personalized email ids to online
avatars. Earlier the trend was to read books only of a
celebrated class of individuals called authors. Now selfexpression in the form of blogs and tweets is becoming
popular.
Gone are the days of herd mentality and conformity. Now
is the time to create your own following. Yes, people do
look up to trend setters for certain hints and directions,
but instead of aping them, as they did in the yesteryears;
they prefer to create their own sense of individuality
through personalisation. With rising aspirations and
avenues due to the nearly 9 per cent GDP growth, many
more professions are now respected. A decade ago, being
a DJ or a wedding planner would not have been
considered respectable. But with the explosion of new
professions and new communities, some of them being
online, new categories are being formed to allow
expression for the same. With college admission cut-offs
hitting the 100 per cent mark and new professions coming
to the fore that can be the route to good income and fame,
parents are also increasingly letting their children make
their own choices. Although there is a sense of acceptance
towards trendsetters, when it comes to showcasing to the
world, individuals today try to innovate and add their own
personal touch to the trends to be able to stand out. I am
the star in this movie called Life This idea is becoming
common for todays generation.
February 2013
What does it mean to marketers?

In India, most consumers dont know the
difference between a packaged fruit drink,
packaged juice, fruit beverage or packaged nectar,
though the fact is that the category evolution from
plain bottled mango drink that started decades ago
is almost complete. Today consumers have a
mixed fruit juice where the choice of fruits is
decided by the manufacturer. The day is not far
when there will be not just one mixed fruit juice,
but many options of mixed fruit juice by the same
brands. So consumers would be able to select the
juice based on their choices of fruit. They can pick
their personal taste and leave the general aside.
More personal-More customized-More for you
only!
Bread is bread. But now you can ask which bread.
Wheat bread? Rye bread? Honey bread? Multigrain bread? Same is the case with sauces, dips
and cheese.
Consumers want to be different and discover the
individual in them vis--vis the common choices
they had before. It is certainly rewarding to
discover oneself through ones unique tastes and
choices. The times of 9 per cent growth and rising
incomes and aspirations make this discovery
possible. Brands should find ways to identify and
communicate consumer benefits so that they can
create more sub-categories, thereby taking
advantage of this discovery route of
personalisation which the consumers have
embarked upon. With so much attention being
paid to their needs and changing tastes, the
consumers can be excused for feeling like kings
and saying Its my life.But it is only one side of
the picture: in tier III cities of India two types of
India co- exists. A very large percentage of tier III
city customers live in unauthorized Mohallas and
slum areas. It is a lower- middle income group
segment. This segment is very similar to Middle
class customers. They use mobile phones, they
have satellite TV connection, their children study
in good schools and colleges. But they have
relatively lower disposable income; however their
shopping needs are very similar to other higher
class segments. This segment has tendency to look
39
for discount offers; they postpone their purchasing

decision waiting for discount seasons. This customer
segment reflects the 25-35 percent of tier III city
population. But, organised retail stores have no separate
plan for this important customer segment except few
racks of low priced clothes and discount offers on old
stalk. C. K Prahlad calls this segment Bottom of
Pyramid. As per my study, biggest failure of organised
retail companies in tier III cities of India is their inability
to target this huge customer segment. This is the segment
who visits organised retail stores, postpone his purchase
decision and return back empty handed, because he finds
product prices out of his price range. In my view,
organised retail companies will have to be more
innovative to come up with low priced good quality
substitute of high end products. Rather than launching
noodles and soups, they should come up with products
and services that change the lives of these people
positively. Low priced tablets, mobile sets, and nutritious
food for kids, adults and senior citizens. Low priced but
high quality herbal cosmetics, low priced solar systems
for poor customers. But, unfortunately organised retail
companies did not come up with low priced substitute of
revolutionary products.
It is true that tier III city customers have very moderate
knowledge about organised retail stores but they are
extremely aware about other issues. They are highly
health conscious and environment conscious too. I met an
11 year old school girl; shopping in Big Bazaar. She was
insisting her parents not to purchase local made low
priced tomato sauces, and she had a very strong argument
for it - how does a company sell 1 kg of Tomato Sauce
for Rs. 45 per kg, when the price of one kg of raw tomato
is Rs 30? I saw a 6 year old kid in Bazaar Kolkata telling
his father not to use polythene carry bag because her class
teacher suggested her not to use polythene bags. So, it is
stupid to underestimate the intelligence of tier III city
customers.
It seems that many organised retail chains used tier III
city organised retail stores to market their tier I & II city
unsold stocks. I found many old models of Mixer
grinders, washing machines and colour TV sets at selling
at discounted price at the Big Bazaar, Jamshedpur.
Tendency of organised retail stores to consider tier III city
customers as a price sensitive discount savvy stupid
animal has damaged the image of these stores in small
February 2013
cities. My study has clearly distinguished that tier

III city customers are extremely brand conscious
and they do not trust private levels. To get the
better margin, organised retail companies have
pushed private levels in almost every popular
product category. But this idea did not seem to
have worked in tier III cities. Brand conscious tier
III city customers, prefer to purchase products,
specially apparels and consumer durables from
branded specialty stores that give them assurance
of quality, after sales services as well as very
specialized sales services. I found that shopping
ambience of organised retail stores does not suit
many. Older generation looks quite confused and
down there. Well dressed sales persons and other
store staffs look very uncaring to tribal and rural
customers. Customers who visit organised retail
stores hoping well-mannered and courteous
behaviour from store staffs return with great deal
of disappointment. In their neighborhood retail
store they always get personal attention and
respect from the shopkeeper, totally missing in
organised retail stores of tier III cities. Tier III city
customers like shopping assistance. For centuries,
their neighborhood retailer was his advisor, and
important purchase decision influencer. Small city
customers trust their retailers and follow their
advice blindly due to their long term relationship,
based on mutual trust, and loyalty. Such
relationship is totally missing in tier III city
It can be said that organised retail companies have
failed to develop an appropriate market strategy
for tier III city customers. Their segmentation
strategy was wrong, their target customer segment
was too small for such a large business format,
their positioning strategy of Low priced Discount
store backfired because it sent a very wrong
message to the customers. Customers remained
confused about the product quality as brand
conscious tier III city consumer market, private
levels were pushed. Price of the major product
categories was not under the affordability range of
majority of tier III city customers. Due to high
rentals and floor price, most of the malls and
hypermarkets are located in outskirts of the tier III
cities led to inconvenient accessibility, time
consuming and high transportation cost.
40
Organised retail stores did not show any accountability

towards the society and environment as a whole. They
remained focused on selling high end products for upper
middle class and overlooked lower middle class
customers. They failed to learn a basic lesson form WalMart that they sold worlds best quality of products at the
lowest price to the mass and lifted their standard of living
all over the world including USA.
8. CONCLUSIONS:
Hypothesis tested
On the basis of above finding, we are in position to
accept the following hypothesis
a. Tier III customers of organised retail store are not
aware of benefits associated with organised retail
formats.
b. Buyers behavior of Tier III city customers of
organised retail formats are quite different from that
of the buyer behavior of Tier I and Tier II city
customers of organised retail formats due to social,
cultural, economical, and psychological variations.
c. Insightful understanding of buyer behavior of Tier
III city customer of organised retail stores would
help organised companies to design appropriate
marketing strategy ( product, price, place and
distribution strategy) fit for local needs.(Tier III
cities.)
d. Marketing strategy (product, price, place, and
promotion and STP strategy) adopted by organised
retail companies for Tier III cities of India is less
effective.
KEY FINDINGS AT A GLANCE:
1. Needs and expectations of tier III city customers of
organised retail stores are quite changed now. They
shop in organised retail stores not merely for buying
product but they want delightful shopping experience
as well. Actually psychological needs of tier III city
customer are become more active than physiological
needs when they shop in organised retail stores.
2. My study shows that the buyer behaviour of tier III
city customers of organised retail stores is quite
different from tier I & II city customers; however the
needs and expectations of tier III and tier I & II city
customers is quite similar. The value seeking new tier
III city customers of organised retail stores seek the
February 2013
best of both worlds. They choose for the home

friendliness of the neighborhood kirana, with
the structured comforts of an organized
shopping environment. Tier III city customers
prefer, latest and deepest variety of product
range, flexibility in payments, superb pre-sales
& after-sales services and many other facilities
at a price affordable to them.
3. Tier III city customers are extremely price
sensitive. They love price offs and discount
offers, but are not ready to compromise with
quality and other modern shopping luxury.
Since, Buyer behaviour of tier III city
customers is quite different from tier I & II
city customers, organised retail companies
require a separate marketing strategy for the
customers of tier III cities of India. Since,
small cities have very dominating regional
difference, specific marketing strategy for each
tier III city becomes imperative
4. My study shows that the STP strategy as well
as the marketing mix strategy of organised
retail stores is not customized for tier III city
organised retail market. Tier III city customers
are highly fragmented due demographic,
social, cultural, economical and value & life
style
variations.
Therefore,
traditional
segmentation & marketing strategies might not
be very effective in tier III cities. Organised
retail companies need to study the local market
speciation, and develop their marketing
strategies accordingly. Since, small cities have
very dominating regional influences, specific
marketing strategy for every tier III city might
be a better option. Therefore, organised retail
companies require modifying their marketing
strategy for the customers of tier III cities of
India.
9. RECOMMENDATIONS:
Focus on the psychological needs of the tier III
city customers:
Today tier III city customers are more aware,
informed and selective than ever before. My study
shows that today tier III city customers have
41
almost similar types of needs and expectations that tier I

& II city customers have. They visit organised retail
stores for shopping convenience, fun and entertainment.
They shop for and meeting their psychological needs. So,
organised retail stores should give more focus on
psychological needs of tier III city customers (fun,
delight, excitement, social needs, family pleasure, and
esteem needs)
Offer them products and services at an affordable
price:
But important difference lies between per capital income
of tier I & II and III city customers. Purchasing power of
tier III city customers is comparatively lower than tier I &
II city customers. That means, organised retail companies,
doing their business in tier III cities of India have very
serious challenge of
meeting the psychological and
physiological needs of tier III city customers by providing
them quality products and services at a price, affordable
to them.
Target the bottom of pyramid:

So far, organised retail formats in India failed to challenge
the supremacy of small shops in tier III cities. They cant.
Reason - small retailers are nicely positioned due to their
flexibility to meet the needs of poorest of poor and richest
of rich of small cities. They can sell 50 grams of foods
gains or two pieces of Britannia Marigold biscuits. But at
the same time they meet your monthly ration needs
without any problem. Because of low overheads, they can
afford to sell products at a very competitive price.
Organised retail companies in tier III cities have been
focused on upper and upper middle income group
customers in tier III cities of India. This strategy has
worked well in metro cities because market size of these
two segments is quite big. But, in their III cities, market
size of upper and upper middle class income group is in
not as big as tier I & II cities. I found that only 5-8
percent tier III city customers come under these income
groups. Organised retail companies, working in tier III
cities need to expand their customer base and target new
customer segments with more flexible marketing strategy.
Current marketing strategy and offerings does not suit
majority of tier III city customers because these are not
designed for them. Its a time for organised retail
companies to target the bottom of pyramid. To get break
February 2013
even in small segment scale is important. In order

to target the lower income group customer of tier
III cities- innovation, affordability and quality
assurance is the key.
My study shows that most of the tier III city
customers of organised retail format are not
satisfied with organised retail formats of their
respective cities. That means, organised retail
formats have been so far failed to meet the needs
and exceptions of tier III city customers. In other
words, organised retail companies failed to
understand the changing needs and expectation of
tier III city customers.
Actually, organised retail companies in tier III
cities have been unable to bridge the rift
developed between the expectations of tier III city
customers and products & services offered by
small retails. Tier III city customers are not
satisfied with small retailers because small shops
not meet their physiological needs and do not meet
their newly evolved psychological shopping
needs. But tier III city organised retail stores also
failed to do it.
Focus on core customer value:
As my survey findings show, tier III city
customers are not well aware of the organised
retail format and its important features. Perhaps,
low degree of awareness about organised retail
format a reason for low footfalls in organised
retail stores. Yes, a good promotional strategy can
do the work. But the fundamental question is,
whether increased number of footfalls will be
converted into loyal and regular customers of
organised retail stores in tier III cities? Perhaps,
answer is No! Good promotional strategy can
bring the customers to the malls but to keep them
intact, a more effective integrated marketing mix
strategy is needed. Malls have to offer unparallel
customer value to meet the customers
physiological
and
psychological
needs.
Acceptability of organised retail formats is far
bigger challenge than increasing customer
awareness. Organised retail companies have not to
become a substitute of small retailers but have to
meet the new shopping needs of the tier III city
42
customers, evolved due to economic liberalization, IT

revolution and increasing per capital income.
Remember new competitor comes from virtual space :
If organised retail companies failed to meet their
expectations, on-line shopping sites are is in the cue.
Home Shop 18, and many other on-line shopping sites are
fast interning the small cities of India. Now, organised
retail companies have to realize that now their
competition is not with small retailers only but there are
some other competitors as well. On-line shopping sites
offer all the features (except one or two) to a small city
customer. A very competitive price, convenience, payback -guarantee and after sales services make online
shopping sites, a very mighty virtual mall of future.
Keep eye on virtual space:
It is a fact that tier III city customers are getting more and
smarter day by day and before making their final buying
decision, they compare products, features and prices of
various companies and shopping destinations on internet
sites. They discuss on social networking sites, sites and
get suggestions from his social site friends and also post
their post- purchase feedback on social sites. Searching
for products details is a fun. It is just like window
shopping for many customers. It is a new kind of
shopping with fun experience where a product is just a
click of mouse distant.
Remember Tier III city busying behaviour is different

from tier I & II city customers:
Small city customers purchase products in fractions on
daily and weekly basis. From that perspective, shopping
in malls is neither convenient nor cost effective for them.
Now, organised retail formats of organised retail stores
have to strategize, how these daily shoppers be converted
into weekly or monthly shoppers. It is all about changing
shopping habits. It may be time taking, expensive and
tiring.
Position yourself as a socially responsible company
and a socio-economic change agent:
Organised retail companies need to justify their reason for
doing business in tier III cities. They have to reposition
themselves as a philanthropic, socially responsible
company and develop their brand image through building
trust through their action. It is important for organised
retail companies to be a direct part of peoples life and
February 2013
smoothen the progress of the social and

economical growth of small cities without
harming the environment and also, without axing
the interest of millions of small retailers and
middlemen. Customer will respond positively
when they feel there is genuineness in retailers
claim. Organised retail stores can positive change
in peoples lives though product innovation,
sustainability and social accountability. Organised
retail companies should align their business with
fundamental ideal of Human Growth.
Organised retail companies may position
themselves on health ground. Those vegetables
and other food grains, sold in the organised retail
format are produced by farmers without the use of
poisonous pesticides and chemical fertilizers. i.e
only organic fertilizers are used in the production
of edibles. Organised retail companies can
promote organic farming in the areas they are
doing their business, and market only those
produces, produced through organic farming. They
can request state governments to allow then to sell
generic life saving drugs and medicines to the
customers at a reasonable price.
Product innovation:
My study shows that tier III city customers who
shop in organised retail formats look for the new
products and latest fashion trends. Organised
retailers need to rotate their product lines fast to
keep the newer products on the selves. It is almost
like green grocers who keep fresh products on
display. When a customer makes a return visit to a
store, a week after his last trip he wants to see new
products. Now these days, shoppers expect change
and novelty as a regular part of retail enterprise.
Consumers want innovation, invention, and ideas.
Fashion trends; seem to go far faster than ever
before. Now, organised retailers have to realize
that customers want new products every time they
return back to the retail stores.
i. Maintain the freshness:
I found that tier III city customers of organised
retail stores do not prefer to purchase grocery
items. Issues like freshness, quality assurance,
innovative products and reasonable pricing are the
important issues. Consumers will make repeat
43
visits to stores that are known for having high turnover

rate of products. It is good for scale and good for repeat
purchase. If the same product is displayed time and time
again consumers do not like to visit those stores. Such
organised retail stores are unable to persuade consumers
for repeat purchase. In is very important that organised
retail stores to keep adding new products in the product
range to keep the customer interest alive.
Customers do not like to see dust on any product in any
kind of retail store. If organised retailers have to succeed
in tier III cities, will have to these common problems and
follow the Green Grocer Principle- to keep product
displays farm fresh and spotlessly clean. The goal is to
make the product look appetizing to shopper, whether it is
new shoes or old appliance.
j. Location:
A well -known mantra in retailing business is that
location is every thing. A business can always compete
with adversaries by lowering prices, improving services,
duplicating products, increasing advertising. But when
location of the retail store is not convenient and accessible
to the target customers, any of these strategies would not
worth anything. My study shows that, in tier III cities of
India, locations of orgnaised retail formats are not
convenient. Actually organised retail chains have two
options, either to open the chain in the centre of the city,
where rent of floor area is very high or to move to
outskirts of the tier III cities where rent is relatively low.
Most of the organised retail companies went for the
second option, and now facing problems. In cities like
Jamshedpur, malls are so distant from the main city that a
customer needs a car for the family shopping. Poor road
conditions and insufficient private transportation system
have made the problem more serious. Due to location
disadvantage Vishal Mega mart had to shut its mall in
Jamshedpur. In case, hyper market opens its branch in
any prime location, to meet its cost, prices of the products
has to be fixed little higher, that does not suits the price
sensitive tier III city customers. And, also a major section
of potential customers (lower income group) deserts the
mall. Spensors had opened a mall in highly crowded
Sakchi Market of Jamshedpur. But the chain failed to
balance and closed down the mall.
Meeting the scarcity of shopping area in any prime
location at an affordable rent is quite challenging task
now. Actually convenience is not the only factor the
February 2013
shoppers. The location should have central appeal.

For example in tier III cities many female
shoppers do not like to visit their neighborhood
departmental stores, though these stores are easily
accessible. Shoppers are creatures of habit. A
shopper often first patronizes a store having good
location but shopper will continue to patronize the
store only if the store attracts them on its own
merits. A good location will not work if store fails
to meet the customer expectations. Case of
Spensors is a good example that sore location is
not everything. However, it can not be denied that
the good locations attract high volume of walk-in
traffic and also attract greater number of
unplanned shoppers, often make impulse
purchases. Heavy impulse buying is the
characteristic of good location. Hence it is
worthwhile to set up the organised retail store at
any location where there is heavy customer traffic.
But need to be remembered that store must have
its own merits to covert the heavy crowd into
customers.
Other Suggestions:
Increase the degree of awareness about the
organised retail formats and their benefits
among tier III city customers: It is quite obvious
that organised retail companies need to increase
the degree of awareness about organised retail
stores, and their attributes to change the perception
of tier III city customers towards organised retail
stores. Newspaper ads and TV advertisements can
only be effective in increasing awareness about a
brand; but for the detail information, personal
selling might be a more effective tool. Those
customers who visit the store need to be more than
just satisfied. They are the best paraphernalia for
changing the peoples attitude. In tier III cities
Word- of -Mouth can do the magic because its
unique social structure where people love to share
their shopping experience with others. New
technologies like, signage digital boards can be
displayed at the prime locations of tier III cities to
communicate and interact with potential
customers, (where they may get any type of
information they want). Companies can use these
signboards to announce new offers and giving
44
other information, important for marketing point of view.

It is also nice idea that all the organised retail chains
promote the benefits and other advantages of organised
retail formats jointly to increase the area of operation, and
reduce the cost.
Build your brand image locally: It is quite clear that the
legacy of great retail chains does not work very
effectively in tier III cities, because quite a fair percentage
of the tier III city customers are not well aware of these
national and international retail companies. So, organised
retail stores need to work upon building their brand image
at the local level. Organised retail formats may take the
route of Customer Relationship initiatives to win the trust
and loyalty of tier III city customers.. Every organised
retail store is itself a brand, and their brand personality
need to be built. Think global, act local could be a great
strategy
Change the attitude of tier III city customers towards

organised
retail
stores
through
integrated
communication: 48 percent tier III city customers
believe that quality of products offered in organised retail
stores, is not up to the mark. Indeed, brand & quality
conscious tier III city customers are not ready to accept
unknown private levels. It is very difficult for organised
retail companies to convert its every private level into a
power brand, because such efforts need millions of rupee
and plenty of time both. However, an organised retail
company may bring all of its private levels under one
umbrella brand of and extend its brand image to bunch of
private levels. For example, Big Bazaar may use Future as
an umbrella brand and launch all its private levels under
the umbrella of brand Future. Now it is quite effective to
promote brand future, leveraging the sell of private levels
as Future- Atta, Future- noodles and future sweets.
Convert occasional customers into regular ones:
Organised retail customers of tier III cities visit organised
retail stores occasionally only. Actually, such shopping
behavior is quite common in these parts of the world. So,
it is quite logical to encourage weekly, monthly and
occasional customers to make purchases as much as
possible. Companies can offer special discount offer
coupons for the next visits, and for weekly and monthly
customers. Reliance Fresh stores offer special discounts to
their regular customers. Actually tier III city customers
purchase essential commodities like rice, wheat, mustard
February 2013
oil, green veritable etc on daily and weekly basis

from their neighborhood stores. They purchase
expensive life style products from organised retail
stores due to inconvenience and high cost of
visiting malls. If the cost of shopping in malls is
reduced and shopping becomes more convenient,
tier III city organised retail formats may become
more acceptable for the small city customers. For
an organised retail store, meeting both the ends of
customers needs i.e. physiological as well as
psychological is vital. A consumer shops for many
reasons. His shopping may be for basic needs,
security needs, love & belongingness needs,
esteem need (social shopping) or self actualization
needs. For majority of tier III city customers
(bottom of pyramid) physiological need shopping
is very important. Here, price and basic benefit are
the two vital ends that need to be meet. It is a
hilarious task that organised retail companies have
achieves effectively. It is not enough to bring the
customers to the doorsteps of an organised retail
format but it is more important to persuade them
to visit the store on regular basis. Discount offers
may bring the inertia and attract the customers
towards organised retail stores. But, real acid test
is the degree of customer satisfaction in side the
store.
Compete with small retailers on the basis of
highly customized, quality services JUST IN
TIME: Small retailers have some inherited
advantage of organised retail stores in form of
location advantage, customer relationship and
traditional credit facility. But organised retail
stores can overcome first two disadvantages by
offering home delivery on phone in 60 minutes.
Display products properly and help customers
buying right products: Consumer behaviour is
largely about making decision, and when people
make multitude of decisions they develop criteria
for making their decision logical. In Tier III cities
of India, customers have changed their priorities.
Now they want to see and touch the product before
purchasing it. It is a new found wisdom. So, any
organised retail that does not provide this facility
to the shoppers, it bound to bind up his business.
Products must be properly displayed. And lay out
in a manner that customers could find and
compare the products easily. Tier III city
45
organised retail stores need better way of presenting and

organizing information inside the store. Due to lack of
information, tier III city customers fails to access the right
products and end up their shopping with wrong ones.
Signet digital boards, handbooks and nicely written
display boards can make the big difference. Now time has
come that tier III retail stores give more focus on product
display system, store layout, store ambience, after sales
services and other facilities like: fun & entertainment and
shopping convenience
Make the shopping process convenient, delightful and
economical: Now tier III city customers are changed a
lot. They look for convenient shopping because their life
style is changed and they can afford it. They do not shop
for physiological needs only but their psychological needs
also motivate them for shopping. They are price sensitive
though they make more money than past. Their social
needs are very strong because they live in a traditional
society where people share their shopping experience and
also satisfy their esteem needs. Organised retail sores
have to make balance between reasonable (read
affordable price), high quality product, excellent shaping
ambience and, projection itself as status symbol of
shopping in malls. These things need multi dimensional,
multi layered initiatives. In order to keep the product price
affordable economies of scale is important. Innovation at
every level is important for the cost cutting without
compromising the quality. Local level supply chain
systems need to be developed to reduce the long chains of
middle man. Good inventory management system is the
need of the day. It is also very important to keep eye upon
the nature of customer demand. As per my study tier III
city customers do not prefer to buy consumer durables
from the organised retail stores. They also do not like to
purchase vegetables and fruits from organised retail
stores. So, unless the a store has nicely crafted strategy for
creating demand for high end products where, lot of
capital is blocked, or perishable products like fruits and
vegetables, excessive inventory is not a good idea. Today
taste of tier III cities is guided by global trends. So,
outdated products, cloths and other commodities could
only hamper the reputation of the mall. It is disastrous to
take tier III city customers as second rate customers.
Those who visit organised retail stores regularly are, as
smart as tier I & II city customers. They are the people
who destroy or build the image of a mall or organised
retail store.
February 2013
Help customers to buy products, according to

their plan: Tier III city customers are not planned
shoppers. Mostly they buy less than the earlier
plan. First important challenge is to encourage the
customers to buy products according their plan.
As per my study, tier III city customers often
purchase less than their plan due to various
reasons. Like high price, unavailability of desired
product/brand and unsatisfactory discount offer
besides many other reasons.
Do not announce misleading and ambiguous

sales promotion offers.
Keep the product range updated.
Help the customers buy products/brands
they actually want to buy.
Give branded products priority over private
levels.
Keep product price highly competitive and
as par with on line shopping sites.
Make the shopping ambience conductive for

family shopping: In tier III cities, shopping is a
family affair. In tier III cities familiars are
generally joint families. So, organised retail stores
need to develop a shopping ambience where there
must be something for each and every family
member. My study shows that kids are not the key
motivators for the shopping in mall (only 9%).
This is why because kids specific shopping
ambience is almost absent in the small city malls
where they might move and enjoy freely. For
kinds/children, amusement facilities are not of
international standard. Organised retail companies,
operating in tier III cities of India should take
initiatives in this direction. Here two areas are
very important. First, kids specific shopping
ambience and second, world class amusement
facilities for kids. Many organised retail stores
have location disadvantages. Due to poor
transportation facilities, many families do not
move to malls.
Give emphasis on big brand and build your
private brand strategically .
Suggestions: Tier III city customers of organised
retail stores are brand conscious. Brand names
help them evaluate the quality, and esteem need
46
satisfaction. Private levels do not give a customer quality

assurance and psychological satisfaction. Organised retail
stores can use private levels in the food category but in
other product categories where brand name is associated
with social status and esteem needs, famous brands
should be given priority over private levels. Jeans, Shoes,
t- shirts, watches, and other life style products come under
this category.
In order to increase the brand veracity organised retail

chains may integrate other companies brands with the
retail chain. Recently Pantaloons integrated Aditya Birla
groups Mudra Garments. There single brands are have
stronger brand equity than private levels.
Do not give too much emphasis of regular price offs- it
is dangerous.
Suggestions: Tier III city customers love discount offers.
But now they are able to judge the value of discount
offers. When discount offer is announced, visiting
customers must feel the value proposition of the customer
incentive. Misleading and fake and regular discount offers
only irritate the customers and hamper the brand image.
Mega Discount offers should be announced only once or
twice in a year. It should not be a yearly programme.
Improve after sales services, increase product range
and train your sales personnel:
As per my findings tier III city customers do not purchase
consumer durables, and other highly expensive products
from the organised retail stores. They mostly buy clothes
and household items. Organised retail companies should
take suitable initiatives to win the trust of customers to
make them buy consumer durables and other product
varieties. Otherwise, they will not be able to get desired
ROI. Following are the steps that organised retail stores
must take in this regard:
Organised retail store need to stay in touch with the

customers even after the deal is over. Never ignore
their calls.
Call them once in a while to exchange pleasantries.
Give them the necessary support. Help them install,
maintain or operate a particular product. For example,
sales professionals selling laptops must ensure
windows are configured in the system and customers
are able to use net without any difficulty. Similarly
organizations selling mobile SIM cards must ensure
February 2013
the number is activated immediately after the

necessary documents have been submitted.
Any product found broken or in a damaged
condition must be exchanged immediately by
the sales professional. Dont harass the
customers. Listen to their grievances and make
them feel comfortable.
Create a section in retail stores website where
the customers can register their complaints.
Every organization should have a toll free
number where the customers can call and
discuss their queries. The customer service
officers should take a prompt action on the
customers queries. The problems must be
resolved immediately.
Take feedback of the products and services
from the customers. Feedback helps the store
to know the customers better and incorporate
the necessary changes for better customer
satisfaction.
Ask the customers to sign Annual
Maintenance Contract (AMC) with your
organization. AMC is an agreement signed
between the organization and the customer
where the organization promises to provide
after-sales-services to the second party for
certain duration at nominal costs.
The exchange policies must be transparent and
in favour of the customer. The customer who
comes for an exchange should be given the
same treatment as was given to him when he
came for the first time. Speak to him properly
and suggest him the best alternative.
Smartly widen your Product Range : Wide
product range is an essence of organised retail
store. People not only expect everything under
one roof but they also want fresh and latest
product range. It is not important that how
wide is your product range but also important
is the freshness of the product range. Today
customers take references from world media
and mostly come up with very clear state of
mind. So, it is very important that they easily
get what they want without much ado.
Focus on competitive pricing: Need to keep
the product price highly competitive. Never
overprice the products. Premium pricing does
47
not work in tier III city market for mass marketing.

Need to take e references from online shopping sites
during price fixation
Never compromise with quality: Tier III city

customer is highly quality conscious. We can not
attract him with low quality -low price products
because such combination is easily available in grey
market. So, real challenge is to maintain the equation
of good quality at affordable price. A good quality
assurance plan is need. Quality Assurance is
considered as controlling activities to ensure the
customers expected and meet the required standards.
For any quality assessment to be reliable, there need

to be a set of objectives and criteria. Therefore, the
introduction of ISO 9000 series of standard provides
an internationally agreed set of criteria. They may join
hands with leading manufacturing brands in the
county and world over. Brand image of these
manufactures would leverage the product sales.
Keep your staffs on regular training mode

Develop appropriate sales training programs in
accordance with the pacific needs of tier III city malls
and organised retail stores, keeping the customer in
the centre of the entire training programme
Regularly monitor and evaluate the performance and
motivation level of the store sales staffs and send
them for the sales training on regular basis.
Do not generalize the training programme.
Give sales training on the basis of products category.
Avoid job rotation between sales and non-sales jobs.
Retailtenment- improve the she store ambience :

Tier III organised retail formats are finding it more
and more difficult to differentiate their stores based
upon the traditional components of the retail mix.
Retail store elements such as colour, lighting and
visual merchandising have always been considered as
having immediate effects on the buying decision
making process. Organised retail stores in India need
to be much more than just passive places that display
merchandise for sale. The main purpose of developing
good store ambience is to improve the experience of
shoppers in side the store and differentiate the retail
outlets brand image of the store from retail outlets.
One of the key challenges for retailers is to constantly
February 2013
add value to their brand. It can be achieved by

adding new and innovative elements to their
existing retail marketing mix. The emphasis
has moved away from in store product
displays, towards elements that excite the
senses of shoppers. Elements such as flat
screen videos, graphics, music, aromas,
lighting and flooring tend to capture the brand
image or personality and help to create a
unique atmosphere and shopping experience.
The use of strategically selected in-store music
is thought to create an immediate distinction
for a retail brand.
Retail interior designers can use atmospheric

influencers to engineer shopper moods and
emotions. Designers create in-store microclimates that can excite the five senses and that
can influence shopper behaviour. When
deciding to purchase, shoppers may respond to
more than just the product and services being
offered
Creating the Wow! Factor in the tier III cities

organised retail environment is becoming more
and more difficult because retailers are facing
an increasingly competitive market and can no
longer differentiate their stores only on the
basis of product, place, people, price and
promotion. Therefore, there should be move
towards the concept of retailtainment. This
phenomenon, which brings together retailing,
entertainment, music and leisure, has seen the
emergence of concept stores like Nike Town,
REI, Bass Pro and theme restaurants such as
Rainforest Caf, The American Wilderness
Caf and Bubba Gump. Retailers need to look
further than the traditional retail store elements
such as colour, lighting and visual
merchandising to influence buying decisions.
Keep the shopping floor area clean and clear

so that shoppers could move easily.
Use music system to keep the shopping
ambience alive.
Use atomizer to regularly throw pleasant
fragrance.
48
February 2013
Use sufficient number of while florescent tubes to

make their entire shopping area full of light.
Do not display dangerous products like germicides,
insecticides etc in lower selves.
Area of each and every product category should

be properly displayed in bold letters, both in
English as well as regional language. Price tags
should be properly placed.
Keep the shopping area pollution free and fully airconditioned:: Tier III city customers hate to shop in
dusty and polluted market places. An organised retail
store must meet this specific need of modern customers.
Pollution free airconditioned shopping ambience, attract
senior citizens, women and children, and encourage
people to stay longer in the shopping areas. Previous
researches on store ambience have indicated that when
customer spend more time in a shopping areas he likely to
purchase more. Many organised retail companies use
many methods to increase the shopper staying in the
shopping area. Pollution free, air conditioned shopping
ambience is one impotent method. It is important
sufficient number of air conditioners is installed and they
are in working condition. Soundless generator systems
are also required to meet the regular power cuts in the tier
Fun and entertainment related products: My

study shows that main reasons for visiting malls
and other big shops is entertainment, excitement
and fun. But, in tier III city, organised retail stores
have very limited offers for shoppers especially
for children and core 18-35 year old shoppers. In
metro cities of India, and in other parts of the
world fun & entertainment relate novel products
are many. From the outset, Spencers quickly
became an oasis within the mall environment
offering its guests an entertaining experience both
through its merchandising and product mix. In
2003, under new management, Spencers lifted the
bar higher and set out to reinvent itself. Remaining
true to its roots, the reinvention process remained
focused on Spencers strong history and
commitment to irreverence, humor and fun. The
result of this reinvention set Spencers on the path
to greatness in a subtle shift from Spencer Gifts to
Spencers. Today, Spencers operates over 600
stores throughout the United Sates, Canada and
online and is proud to be one of the longest
running shows in the mall. Strong operating
disciplines
combined
with
our
unique
merchandising formula underpins our continued
growth. We are committed to, and focused on, our
core mission Lifes a PartyWere Makin it
Fun!
Facilitate the pick and selecting products:

I have observed that many tier III city customers have
great difficulty in picking and selecting merchandise in a
mall or organised retail formats because they are not
accustomed to this kind of shopping ambience .
Therefore, it is very important to make their shopping
process easier. There are two ways. First, increasing the
number of floor staffs and giving them training to assist
tier III city customers in their shopping. An other method
can be used is - latest technology- Digital Signage. Digital
signage is a form of electronic display that shows
television programming, menus, information, advertising
and other messages. Digital signs (frequently utilizing
technologies such as LCD, LED, plasma displays, or
projected images to display content) can be found in both
public and private environments, including retail stores,
hotels, restaurants, and corporate buildings, amongst other
locations. Digital signage displays are most commonly
controlled by personal computers or servers, through the
use of either proprietary or public-domain software
programs; this approach often allows the operator to avoid
large capital outlays for the controller equipment. In tier
III cities of India, this device might be used to display
important products, product attributes prices etc. using
local language.
Customer service: III city customers are looking

for hassle-free, convenient, pleasant shopping.
Gone are the days when the customer overlooked
poor service because the price was discounted.
Finding ways to exceed the customers'
expectations is the key. Good customer service is
the lifeblood of any business. An organised retail
outlet can offer promotions and slash prices to
bring in as many new customers as it want, but
unless it can get some of those customers to come
back, its business won't be profitable for long.
Good customer service is all about bringing
customers back. And about sending them away
happy - happy enough to pass positive feedback
49
about the retail outlet along to others, who may then try
the product or service the retail outlet offer for themselves
and in their turn become repeat customers. A good
salesperson, can sell anything to anyone once. But it will
be his approach to customer service that determines
whether or not he will ever be able to sell that person
February 2013
anything else. The essence of good customer

service is forming a relationship with customers
a relationship that that individual customer feels
that he would like to pursue. Customer service of
an organised retail store is judged by what it
offers,
not
what
it
promises
.
______________________________*****************_______________________________________
50

Buyer Behaviour of Small City Customers of Organised Retail Formats

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Buyer Behaviour of Small City Customers of Organised Retail Formats

Transféré par

Droits d'auteur :

Formats disponibles

Jamshedpur Research Review ISSN 2320-2750 Year I Vol I Issue 1