Consumer Preference

Consumer Preference BY Aaron’s Study of consumer preference for Online versus Traditional Shopping in the purchase of Apparels Contents 1 . Objective of Research Research Design 2. Sampling Design 3. Data Collection Method 4. 5. Data Interpretation Hypothesis Testing (Z-Test) 6. Hypothesis Testing (Chi-square Test) 7. Conclusion & Suggestions 8.

Bibliography 9. 10. Appendices According to a research carried out by AC Nielsen, online retail revenues crossed the USED 300 billion mark in 2011. They are projected to increase to USED 700 billion by 2015.As a result, it is not surprising that there is increased interest in understanding nonuser choice behavior in computer mediated shopping environments and how a new generation of shopping infrastructures can be constructed based on these choice behaviors.

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For example, consider a manager who seeks to provide a new internet-based consumer durables shopping and delivery service in a certain geographical area. He begins thinking about the design and marketing strategy of the service on aspects such as product assortment (brands and sizes to offer in different product categories), prices, and usage of promotions.He ponders whether product assortment, prices, and promotions should be similar to traditional supermarkets in he geographical area or whether these aspects should be different. He asks a number of central questions. What kinds of consumers are attracted to shopping for consumer durables online versus in a traditional supermarket? Are there behavioral differences (on price sensitivity, preference for sizes, brand loyalty, etc.

) between consumers attracted to shopping for consumer durables online versus in a the implications of any such behavioral differences for the design and marketing strategy of the online consumer durable service?Identifying differences in choice behavior between consumers attracted to shopping online versus in a traditional tore is critical to determining the proper design and marketing strategy of the online shopping environment. Unfortunately, despite the growth in online sales, and recognition that online sales are likely to impose more pressure on traditional distribution channels, there is still only very limited academic research in this area.Largely due to a lack of usable data, there is a striking absence of published empirical work on what kind of customers, from a behaviorally oriented perspective, are attracted to shopping online versus in a traditional store. Many managerial decisions regarding enterprise design and racketing strategy for online as well as traditional stores such as product assortment, pricing, and promotional strategy will rely on whether and how choice behaviors differ in the two environments.Globally, one-third of online consumers say they primarily do their Internet shopping at retailers that have only an online presence followed by an equal 20 percent of respondents who prefer sites that also have traditional “brick and mortar” stores and those that allow you to select products from many different online stores. Only 16 percent of respondents globally indicate they have never shopped online.

Site preferences vary across the world. Half of North Americans said they most frequently purchase from online-only stores, while one-third of Latin Americans prefer sites that also have traditional offline stores.Almost half (47%) of online consumers in the Middle East, Africa and Pakistan say they have never shopped online. In a sign that there remains tremendous room for growth, 44 percent of online consumers say they spend less than 5 percent of their monthly spending online and 29 percent say they spend between 6 percent and 10 percent. We, the students of Jambalaya Baja] Institute f Management Studies BOOMS) have decided to study the preference of buyers for purchasing apparels online versus traditional stores.The objective of this study is to understand whether there exists a difference in consumer preference in shopping for apparels.

(Do consumers prefer to shop for apparels in a retail store or online). To understand whether gender plays any part in this. Is the decision to shop in a retail store or online affected by the gender of an individual. Also to gain an insight into the factors influencing the decision of an individual to shop in a traditional store versus online. 2.

Research Design Research design is the conceptual structure within which the research is conducted.For example, when constructing a building there is no point ordering materials or setting critical dates for completion of project stages until we know what sort of building, a factory for manufacturing machinery, a school, a residential home or an apartment block. Until this is done we cannot sketch a plan, obtain permits, work out a work schedule or order materials. Similarly, any research needs a design or a structure before data collection or analysis can commence. A research design is not just a work plan. A work plan details what has to be done to complete the project but the work plan will flow from the project’s research design.The function of a research design is to ensure that the evidence obtained enables us to answer the initial question as clearly as possible. Obtaining relevant evidence entails specifying the type of evidence needed to answer the research question, to test a theory, to evaluate a programmer or to accurately describe some phenomenon.

In other words, when designing research we need to ask: given this research question (or theory), what type of evidence is needed to answer the question (or test the theory) in a convincing ay? In keeping with our research objectives, we chose the descriptive research design.A descriptive study is one in which information is collected without changing the environment. The main reason for choosing this design is that, descriptive studies are the best methods for collecting information that will demonstrate relationships and describe phenomenon as they exist. We wanted to describe the data and characteristics of consumer preferences for purchasing apparels from either traditional stores or online. We wanted to know what is the phenomenon and not why does a particular phenomenon occur. We wanted to gain an understanding f what is the preference of consumers.Hence, we chose descriptive research as it is used when a researcher wants to gain a better understanding of a specific topic.

Descriptive research is the exploration of the existing certain phenomena. The details of the facts won’t be known. The existing phenomena’s facts are not known to the persons. 3. Sampling Design When conducting research, it is practically impossible to study the entire population that you are interested in.

For example, if you were studying the preference of mobile service providers among college students in India, it would be nearly impossible to river every single college student across the country.If you were to survey the entire population, it would be extremely timely and costly. As a result, researchers need to use samples as a way to gather data. A sample is a subset of the population being studied.

It represents the larger population and is used to draw inferences about that population. It is a research technique widely used in the social sciences as a way to gather information about a population without having to measure the entire population.Sampling methods and be broadly classified into two major categories, non-probability based sampling and probability based sampling. Non-probability Sampling Techniques Non-probability sampling is a sampling technique where the samples are gathered in a process that does not give all the individuals in the population equal chances of being selected. In this type of sampling, items for the sample are selected deliberately by the researcher; his choice concerning the items remains supreme.In other words, under non-probability sampling the organizers of the inquiry purposively choose the particular units of the universe for constituting a sample on the basis that the small mass that they so select out of a huge one will be typical or impaling are: Convenience Sampling Judgmental Sampling Snowball Sample and Quota Sampling Probability Sampling Techniques Probability sampling is a sampling technique where the samples are gathered in a process that gives all the individuals in the population equal chances of being selected.

It is, so to say, a lottery method in which individual units are picked up from the whole group not deliberately but by some mechanical process. Here it is blind chance alone that determines whether one item or the other is selected. The results obtained from probability or random sampling can be assured in terms of probability I. E. We can measure the errors of estimation or the significance of results obtained from a random sample, and this fact brings out the superiority of random sampling design over the deliberate sampling design.Random sampling ensures the law of Statistical Regularity which states that if on an average the sample chosen is a random one, the sample will have the same composition and characteristics as the universe.

This is the reason why random sampling is considered as the best technique of selecting a representative sample. The various techniques of probability based sampling are: Simple Random Sample Systematic Sample Stratified Sample Cluster Sample For our research we have used a non-probability based sampling method because of the ease of use of this method.Further, we used the Judgmental sampling technique. A Judgmental, sample is one that is selected based on the knowledge of a population and the purpose of the study. The purpose of our study was to study the preference of consumers for shopping online versus traditional stores. Hence we chose all students of the JIBES part-time course as our sample. As the students are required to be working to enroll for the course and being of the current generation they would be aware of the various online shopping portals.

There was an element of convenience sampling also involved as the questionnaire was sent out to all students of JIBES and responses were collected from all who chose to reply. 4. Data Collection Method The task of data collection begins after a research problem has been defined and research design/plan chalked out. While deciding about the method of data collection to be used for the study, the researcher should keep in mind two types of afresh and for the first time, and thus happen to be original in character.The secondary data, on the other hand, are those which have already been collected by money else and which have already been passed through the statistical process.

The researcher would have to decide which sort of data he would be using (thus collecting) for his study and accordingly he will have to select one or the other method of data collection. The methods of collecting primary and secondary data differ since primary data are to be originally collected, while in case of secondary data the nature of data collection work is merely that of compilation.Primary Data Sources Observation method Interview method Questionnaire Consumer panels Audits In-depth interviews Content analysis Secondary Data Sources Census data Organizational records Data collected through qualitative methodologies or qualitative research. We used the questionnaire method for collecting data for our research. The questionnaire method of data collection is quite popular, particularly in case of big enquiries. It is being adopted by private individuals, research workers, private and public organizations and even by governments.

In this method a questionnaire is sent to the persons concerned with a request to answer the questions and return the questionnaire. A questionnaire consists of a number of questions printed or typed in a definite order on a form or set of forms. The questionnaire is mailed to respondents who are expected to read and respond to the questions. For ease of collection and analyzing the data and reducing costs we decided to send out on-line surveys to our target audience. The questionnaire was prepared on also made use of the Liker scale so that we could collect statistical data to test our hypotheses.The main benefits of using the questionnaire method and conducting the survey online were: It involved low cost Less time consuming It was free from the bias of the interviewer Respondents had adequate time to give well thought out answers Respondents, who were not easily approachable, were also reached conveniently Large scale sampling was made possible and thus the results are more accurate 5.

Data analysis & interpretation Shopping preferences A majority of individuals in our sample spend between to,OHO to to,OHO every time they shop for apparels.Scoring of questions on the Liker scale response to a statement. We used the five point Liker scale for recording responses to our questionnaire The questions on the Liker scale were divided into two groups Favoring traditional retail Favoring online retail Scores ranging from 1 to 5 were assigned to the responses. A response of Strongly Agree was assigned a score of 5, Agree was assigned 4, Indifferent was assigned 3, Disagree was assigned 2 and Strongly Disagree was assigned 1.

Responses of all participants to questions on the Liker scale were scored in this fashion. The scores of all questions indicating preference for online retail and those for traditional retail were added up separately. IF the score in favor of online retail was higher, the individual was categorized as preferring online retail when shopping for apparels. Similarly, if the score for traditional retail was higher, the individual was categorized s preferring traditional retail when shopping for apparels.

6.Hypothesis Testing (Z test) Hypothesis 1: There exists a significant difference in the preference of consumers for traditional v/s online retail of apparels Null Hypothesis: There exists no significant difference in the preference of consumers for traditional v/s online retail of apparels After scoring the data on the Liker scale as explained above, we got the following information on which we tested our 1st hypothesis No of people preferring online retail = sample population = ml = 111 Mean score of these individuals = sample mean =27. 5 Standard deviation of sample scores from the mean = 01 = 3. 81 No of people preferring traditional retail = sample population = no of these individuals = sample mean = XX’ = 26. 05 Standard deviation of sample scores from the mean = 02 = 4. 56 Mean of population = p = 24 111 139 27. 15 26.

05 01 3. 81 02 4. 56 In short, = 139 Mean score Substituting the data in the above formula, we get the value of Z as 2.

1 Two Tailed (+-)2. 58 The test is a two tailed test. Since the calculated value of Z is less than the table value of Z at 99%, it lies in the acceptance region Therefore, we accept our hypothesis that here exists a significant difference in the preference of consumers for traditional v/s online retail of apparels 7.Hypothesis Testing (Chi-squared test) Hypothesis 1: The preference for online or traditional shopping is independent of an individual’s gender Null Hypothesis: The preference for online or traditional shopping is dependent on an individual’s gender After divided the respondents on the basis of their gender and observed the following values on which we tested our 2nd hypothesis Males Females Total Online 45 Retail 76 142 108 250 Doing the chi-squared test on this data 63. 05 2. 95 8.

70 0. 14 7. 95 -2. 95 0. 18 78. 95 0. 11 60.

05 Chi Square 0. 7 Table value for chi-square for degree of freedom 1 at 95% is 0. 00393 This is a single tailed test and the calculated value of chi-square is greater than the table value.

Hence we reject our original hypothesis and accept that the preference for online or traditional shopping of apparels is dependent on the gender of an individual. 8. Conclusion A study by Indian Council for Research on International Economic Relations (CRIER), suggests that organized retail is likely to grow at a much faster pace of 45-50 per cent per annum for a couple of years.The study also revealed that the majority of numerations retailers indicated their preference to continue in the business and compete rather than exit, representing a future scenario in which both numerations and organized retail not only coexist but also grow substantially in size.

In such a scenario, there is certainly a need for the former and larger segment to innovate. Online retail is one such tool to boost the sales of small retailers.For those operating single or even a couple of stores, the clientele may be limited; however, their adoption of an online model will not Just boost visibility and reach – and thereby ales revenues вЂ? but also help build proximity with clients, thanks to many inbuilt reach for both buyers and receivers, which is absent in the case of a fixed physical store. It also provides round-the-clock reach and hence there are no market timing restrictions. Despite all the advantages, when it comes to credibility, it is no secret that Indian consumers still prefer a touch-and-feel experience when it comes to shopping.

Some analysts, however, believe that it is only a matter of time before Indians begin trusting the online shopping space. E-commerce is growing by 30 percent to 40 percent each year. With growth of disposable income of households, people have a lot more money to spend. When it comes to shopping, people are finally opening up to shopping online and are willing to take a chance.Also, e- commerce companies are going out of their way to give the consumer not Just a product but an experience altogether. Credibility too does not seem to be an issue, with more and more branded players stepping into the e-commerce scene.

With the wide spread of the internet, everyone is dipping their hands into the e-revolution. Online retail business is another format which has high potential for growth in the ear future. The online retail segment in India is growing at an annual rate of 35 per cent, which would take its value from to,OHO core in 2011 to to,OHO core by 2015.For instance the Data Group firm Infinite Retail, that operates its consumer durables and electronics chain of stores under the ‘Carom’ brand, is in the process of tapping net savvy consumers. Similarly, the Future Group, that operates a dedicated portal ‘Afterburner. Com’ for online sales, has revealed that it is targeting at least 10 percent of the company’s total retail sales through the digital medium.

ERE Agro, which operates grocery retail chain ten, plans to launch My Graham, an online platform.Future Group has started selling personal care products through its online channel Afterburner. Com.

” With the passage of time came an era of less popular tell-shopping which dealt in limited range of products such as Astrology and spirituality products (such as Aardvarks Mall, Human Kava, Bal Rakish, etc), Health and fitness equipments (such as Tread Mill, Leg Massager, Height Increaser, Sauna Belt, etc) and even some of the Cooking ranges (including Juicers and Mixers, Vegetable Choppers, etc).But, most of these products could be termed as low-intensity and niche products which could interest only a limited target of people. Most of us are also a witness to the recent mall culture where all the products are available under a single roof and at competitive price points. Little needs to be analyzed about it over here as most of people might have visited a mall at least for once as a past time on a weekend, if not for shopping precisely. Next in line is the concept of virtual mall or online shopping which is already existent at its preliminary stage in India and is gradually growing exponentially.The market opened up with innovative online shopping initiatives from eBay, Reedier shopping and afterburner. Com Just to name a few.

Thus, with modernization and fast paced life, came the constraints of time and eventually increasing dependence on online shopping. This has led to online shopping coming of age in India. People have commenced shopping through the convenience of online portals from the comforts of their drawing rooms.

It is needless to say that shopping has been revolutionized by its wide spread presence across the various mediums