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Study of Factor Affecting Customer Retention1
“Study of Factors Affecting Customer Retention”
Market Research
In
SUBMITTED TO
Prof. Sameer Phanse
VPM’s Dr V.N. BEDEKAR INSTITUTE OF
MANAGEMENT STUDIES, THANE
MMS III
Chanakya-15
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention2
INDEX
Genesis of the Report…………………………………………………………….3
Globus …………………………………………………………….……...….......4
Customer Retention………………………………………………………………5
Objectives of Project……………………………………….……………....….....6
Research Details……………………………………….…………………...…….7
Analysis of the main research ………………………………………..……..…...9
Hypothesis Formulation …………………………………….……….….………14
Testing of Hypothesis and Result………………………….…………..………...15
Conclusion……………………………………………….……………..………..16
Limitations of the Project…………………………………………….….……....18
Recommendation and Suggestions…………………………….…….….……….19
Appendix………………………………………………………….……….…….20
Bibliography………………………………………………………..……….…...22
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention3
Genesis of the Report
Retail Industry is booming sector in India. This sector is growing at the rate of 11.4% (acc. BMI
India Retail Report2009). It is divided in to organized and unorganized retail sector. Organized
retail constitutes about 3% of total retail market whereas remaining 97% is of unorganized.
Apparel and food sector are major sector in organized sector.
Globus of R. Raheja group is the first Indian brand to enter into the fashion clothes. The
company focus is to provide fashionable clothes to changing India. The company was successful
to achieve good growth and build itself as brand in minds of customer at initial stage. Company
suffered higher losses in the recession period and even fails to meet its profit target after
completion of that period. The company finds out that the earlier customer of globus are not
coming back to repurchase its clothes. So to retain the customer is big challenge faced by
company
The purpose of this report is to find out which are the factor affecting the customer retention and
the areas where globus should improve itself to provide better service to customers. The
methodology used in the project was interrogation study, observation techniques, and study of
graphs, charts and questionnaires. Statistical tools such as Chi Square Test were used to
determine the grey area where preventive actions need to be taken.
This report not only identifies the problematic area but also provides suggestions and
recommendation to take corrective measures.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention4
globus
History:
globus is part of Rajan Raheja group. The company launched in January 1998. This
company deals with the apparels and clothing. The store is of Department Stores type in
retailing. The company opened its first store in 1999 at Indore followed by launch of second
store in Chennai. The flagship store in Mumbai was opened on 1st November 2001. There are 24
stores of globus all over India.
Mission:
Achieve customer delight by offering quality product and service through a process of
continuous innovation and adaptation.
Build a dynamic team of committed and passionate employee through sustained learning
and grooming
Develop mutually beneficial relationship with our business partners
Employ cost effective process and thereby create strong organization
Customer Loyalty Program of GLOBUS "PRIVILEGE CLUB"
The customer reward program followed at Globus is called the 'Globus Privilege Club'.
This is the first of its kind program in India where the members are rewarded immediately for
their purchase at any of the stores.
Three types of membership cards:
Privilege Card
Gold Card
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention5
Customer Retention
Many Companies are looking for growing their business and profit, for that they are
ready to spend their time, money and resources in the search of the new customers. Companies
are using all possible channels, tools and skills for acquisition of new customer. Though it is not
sufficient to acquire only new customer, company must keep the existing one. Many companies
suffer from high customer churn. Customer retention is always economical than customer
acquisition as acquisition costs 5times more than customer retention. Traditionally companies
emphasis on making sales instead of relationships building or caring for customer after sales.
Benefits of Customer Retention:
Retained customer buys company product new and existing one.
Talks In favor of company and its product.
Easily accept new product and innovation in product of company.
Cost less to serve than new customer due to familiarity with process.
Offer product and services to others, giving mouth publicity.
Ignores competitive brand, product and advertisements.
Less sensitive to price.
Customer Satisfaction: Whether the buyer is satisfy after purchase depend upon the offer’s
performance in relation to buyer’s expectation. If performance falls short of expectation
customer became dissatisfied.
Customer satisfaction is needed for customer retention. A Satisfy Customer bring customer back
for purchasing in company.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention6
Objectives of Project
In Retail Industry customer retention is extremely important. It is something which can make
or break a business as customers are what make the business operate. If there are no customers,
then there is no business.
Generally for retaining one customer company required 1% amount & for acquiring same
customer required 5times of the amount.
So to reduce this expenditure store is focusing on customer retention.
To understand the factor affecting on customer retention.
To analyze reasons for customers brand switching.
To analyze the current perception about Globus in minds of customer
To identify the company’s position among competitors.
To understand retail industry.
The market research is based on the basis of above parameters so that reasons behind
customer research can be successfully find out.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention7
Research Details
Research methodology:- “A system of model, procedures and techniques used to find the results of a
research problem.”
This study is simultaneously investigating multiple direct links between service, quality,
and behavioral intentions of customer retention.
This research is study of consumer buying behavior, their perception, satisfaction, need and
wants. It explores the factors which are necessary to retain customers by the retailer, because
customer retention has a more powerful effect on profits than market share.
Research Type:-
Type used in research is Descriptive type. The objective of descriptive studies is to answer the
WHO, WHAT, WHEN, WHERE AND HOW of the subject under investigation
Research problem:
Globus is located at Teen haat Naka’s Eternity Mall, Thane. When store was established it
was doing excellent revenues to the company but now sale has decreased. In the year 2008-09 it
was 7,13,60,570 and now it has decreased up to 4,99,87,799 which is about 29.99%. The
recession period was the worst time for globus and it had incurred tremendous losses. Even after
the end of this recession store become failure to achieve its target. By studying customer
database it was observed that the earlier customers who were shopping at globus are not coming
back for shopping specially after the opening of Korum mall. These customers are the gold card
holder customers who were contributing major part in the profit of globus.
To identify why the customers are switching from globus to other brand this research was
conducted.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention8
Information Required.
Primary data
Survey of consumers though questionnaire
Observation : Observation made on the competitor malls and competitor stores/brands in this
mall. This observation was based on different parameters like their collection of apparel, quality,
prices, staff and service, visual merchandising and arrangement in mall, total environment of
mall and stores, also different other stores and things which attracts the consumers to come in
these malls.
Secondary data
Customer database that have been not purchase from last 6th months.
Existing Customer database
Sales report before & after starting competitors store/mall.
Sample area:-
The area covered for the research is Thane especially Ghod Bander Road as most of the target
customer of globus resides at Ghod Bander Road .
Sample size:-
The sample size for the research is of 100 candidates.
Type of sampling:- Convenient Sampling
The sampling method used for this research is Convenient Sampling as customer who have not
purchased were selected and from them some of the customer were not ready to give their
opinion
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention9
Analysis of the Research
16
20
34
104
79
Q1.Which things you consider while going to shop your apparels?
PriceBrandCollection of apparelServiceBrand ambassadorAdvertiseRecommendation
Options were asked to know which
factors influence there buying decisions. From
above graph it can be seen that 32 respondent
prefer the collection of apparel of the shop i.e.
they prefer shop which will give them nice
collection of apparel. While 20 respondents go
for brand they will only buy the branded product
and 16 respondents lookouts for prize of the
clothes. Out of remaining respondent 10 look for
what kind of service they get, 9 took
recommendations, 7 go for advertisement and 4
look at the Brand ambassador.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention10
17
3238
13
Q2. Which mall do you prefer for shopping?
EternityR mall Korum Others
27
1911
28
15
Q3. Which things do you like about mall you mentioned in previous
Question?
Variety of brandsAccessiblityEnvironmentEvery thing undder one roofPrices
Options were given to customer for
choosing a mall they prefer for shopping. The
option of the mall given are from thane. This is
because sample population is from thane and
customer usualy prefer to go in nearest mall for
day to day shopping. Objective of the question is
to know wheather the globus’s location is one of
the reason for customer switching or not. 38 out
of 100 prefer Korum mall for shopping 32
respondent prefer R-mall and only 17 prefer
Eternity mall for shopping while remaining 13
having no preferance or they prefer some other
mall/shops for shopping.
In this question respondent has to choose
the possible factors for which they prefer the
mall they mentioned above. 28 customer prefer
the mall which is having the product for every
segment i.e. product required by every member
in the house, from child to adult. This is
followed by 27 respondents who opt for variety
of brands available in the mall. From remaining
respondent 19 prefers accessibility i.e. easy to
reach place, 15 look out for price and 11for
environment.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention11
24
35
17
14
10
Q4. Rate the collection of apparels of globus
Very BadBadAverageGoodVery Good
26
21
8
39
6
Q5. How do you find the collection of apparel in globus?
FashionableAffordableVariety givingRepetitiveother
Options were given from very bad to
very good to know the customers perception
about the collection of apparels. Above graph is
showing that 35 out of 100 customers are
having bad perception about the collection of
apparel in the minds of costumers while 24
customers are having very bad impression
about collection of apparel in globus where as
17 think it is average, 14 think it is good and
remaining 10 thinks its very good.
Respondents were told to mark the
various options according to their preference.
Here customer has to choose option to
describe collection of apparel in globus or
what is their opinion about it. 39 among the
respondent said globus collection is
repetitive, while 26 opt for trendiness. 21 out
or remaining said it is affordable while only
8 respondent said it is variety giving.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention12
28
1920
15
126
Q6. Which brands other than globus you prefer to shop?
Life StylePantaloonsShopper's StopWest SideReliance Trendothers
28
10
16
32
9 5
Q7. Which things do you like about other brands/Shops you mentioned
earlier?
Collection of apparelPriceQualityVarietyServiceOthers
In this question options were given on
the basis of Pilot study to know which
competitive brand respondent prefer most for
shopping/ where the customer had switched
most. Response of the customer shows that
customer preference for Life Style is most and
28 customer prefer this brand while 20 prefer
Shopper’s Stop Followed by 19 people who
prefer pantaloons, 15 West Side and 12 go for
Reliance Trend and remaining prefer others.
Respondents were told mark the
various options according to their preference
for the specialty or features for which they
prefer brand they mentioned in earlier
question. 32 respondents prefer the brand
which gives variety to them, 28 look for the
brand which will give them nice collection
of apparel of particular brand. While 16 look
at the quality of brand, 10 go for the price
followed by 9 respondents prefer service
given by brand and 5 opt for other things
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention13
Q8. Should globus include variety of brands? If any other pleases Suggest.
This was an open ended question in that customer has to answer that if globus include
more brands, would they come to globus for shopping again or not? Many of the customers give
positive response to this question i.e. they are ready to come back to globus if they keeps variety
of brands. Suggestion for the brand from them are like Me, And, BIBA, Peter England, Levi’s,
Park Avenue, Mufti, Pepe, Lee, variety in Spykars etc.
Q9. Can you recall any recent adv/promotion of globus? Where?
This was an open ended question. Very few of the respondents were able to recall the
advertisement/promotions of globus, mostly the customer remembers advertise did by earlier
brand ambassador KAREENA KAPOOR which was in media last year but not now. Some of the
respondent recall advertises in Hoardings of thane road and some customer gets the SMSs from
about sale in the globus and some recall ads in news paper. Except these no any other
advertise/promotion are noticed by customers.
Q10. Suggestions for globus
In this question customers have to give suggestion for improvement in globus. Customers
give suggestion regarding the type of the collection they keep in their shop. Mostly they want the
variety in the collection of apparel. Also they wanted to see some new sections in the globus in
feature like the traditional section in Men’s ware, more clothes in Kid section with toys and
stationary, lingerie, Foot ware, cosmetics and perfumes. Some of the respondents make
complaint about size unavailability and unawareness about the sale season and some makes
complaint about offers given by globus. Some of the respondents suggest improving section like
Panjabi Suits, Women and Men Formal ware, Kurti Section etc.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention14
Hypothesis Formulation
The data compiled through the questionnaire is of qualitative nature and so Chi- Square
Test can be applied on the Null (H0) and Alternate (H1) Hypothesis
The results are obtained by considering the Parameter used to rate the collection of
apparel in globus
The results are shown below: -
The hypothesis for the study is defined as below:
Null Hypothesis (H0) : There is no significant effect of the Collection of apparel on the
customer retention (in globus).
Alternate Hypothesis (H1) : There is significant effect of the Collection of apparel on the
customer retention (in globus)
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention15
Testing of Hypothesis
Out Put:
WEIGHT BY frequency.NPAR TEST/CHISQUARE= Lable/EXPECTED= EQUAL
/MISSING ANALYSIS.
Chi-Square Test:
Frequencies
Lable
Observed N Expected N Residual
Very Bad 24 20.0 4.0
Bad 35 20.0 15.0
Average 17 20.0 -3.0
Good 14 20.0 -6.0
very good 10 20.0 -10.0
Total 100
Test Statistics
Lable
Chi-Square 19.300a
DF 4
Asymp. Sig. .001
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 20.0.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention16
Result
Parameter Table Value
Chi Square Value
(5 % significance)
Contractor Compliance 18.47 19.300
Chi square value is greater than Table value thus null hypothesis is rejected
Therefore the Collection of apparel shows significant effect of on the customer retention in
globus and as the most of the customer opt for bad option it can be concluded that poor
collection of apparel affecting the customer retention.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention17
Conclusion
In retail sector the product is combination of goods and services. From the data analysis
it can be seen that very few customers are satisfied with the collection of apparel in the globus.
Product offered by globus is trendy, having good quality but repetitive. Globus always offers
something different than other to customers but over the period of time the collection of globus
has got saturated therefore the consumers are not coming back to buy its clothes.
This analysis also states that brand which offers variety in clothes are preferred by customer and
customer would like to see such variety in globus also.
From the above graphs and data it can be concluded that place at which globus is having its
outlet i.e. at Thane Eternity mall is not preferable by respondent for shopping resulting in to less
foot fall which intern resulted into less customer coming to globus. Also it is observed that other
competitive mall like R mall and Korum is having more brands and different type of things under
one roof i.e. products for everyone in house, which may be the reason for not choosing the mall
by customers.
While going for shopping many of the customers take variety and type of the collection of
clothes in mind also brand name, price etc
From the above graph it can also be concluded that globus is lacking in the promotion/
advertisement or the promotion/ advertisement done by globus so they are not recognized by the
people. This is resulting in to the less visibility of the globus.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention18
Limitations of the Project
Time Constrain:
There are many aspects within this research area but this study is focusing on some of them.
It is believed that more amount of data give higher accurate results. But due to time
limitation it was difficult to get high amount of data so a complete picture of topic will not
provided.
Cost constraint:
Research is a costly process. Different costs are involved in the research. As it was academic
research cost is one of the limitation
Restriction in sample selection:
There was a restriction in sample selection as many of the customers were based at thane
Ghod Bunder road and also the survey has to done on the switched customer only so it was
not possible to get response from everyone.
Respondent Bias:
This thesis will be based on more on primary data which get collected from the customer.
There may be some biased customer which will affect final result.
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention19
Recommendation and Suggestions
Product: Globus should offers a wide range in Own Brand and also include product of others
brands to provide variety to consumer.
Should include other product which varies from men’s traditional wares, Accessories, Foot
Wares, Cosmetics etc.
Price: Can introduce new segment pricing lesser than existing
Place: Can open new outlet in nearby area of target customer as its strong competitors are at
nearby area.
Promotion: Sponsoring events
Advertisement:- TV Commercials, Effective print ads, Internet ads, other out door ad media.
Branding:- Branding can be done through Brand Endorsement by Celebrity. They should change the perception of customer for brand from ‘Globus Fashion for changing World’ to ‘fashion is equal to globus / fashion only at the globus’
Relationship Marketing: Globus can use customer relationships strategies to retain their
customers. It will help to hold the customer. Globus can take the ideas and suggestion from their
sales executive because they are the one who are in continuously contact with the customers.
Competitor’s analysis is very important to study competitors plan and move to modify
company’s strategy accordingly to that. So it should be done on regular basis.
Continues research should be done to know which are the current trends in the market also ti
helps to bring innovations in product and to deal with customer’s changing tests and wants which
is required to be in market
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention20
Appendix
Questionnaire
Name:
Tel No: Age :
Which things you consider while going to shop your apparels?
Brand Collection Price Quality Service
Recommendations Brand Ambassador Advertise
Which mall do you prefer for shopping?
Eternity R mall Korum Others
Which things do you like about mall you mentioned in previous Question?
Diff Brands Accessibility Environment Everything under one roof
Rate the collection of globus
Very good Good Average Bad Very Bad
How do you find the collection of globus?
Fashionable Affordable Repetitive Variety giving
Which brands/Shops other than globus you prefer to shop?
Life style Pantaloons Shopper’s Stop West Side Others
Which things do you like about other brands/Shops you mentioned earlier?
Collection Price Variety Service Others
Should globus include variety of brands? If any other please Suggest
Can you recall any recent adv/promotion of globus? Where?
Suggestion for globus
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention21
Chi-square Table
VPM’s Dr.V.N Bedekar Institute of Management
Studies
Study of Factor Affecting Customer Retention22
Bibliography
Retail Marketing Management, Gilbert, Pearson
R. Paneerselvam,’ Research Methodology’, Prentice Hall of India, New Delhi, 2008
Webliography
www.globus.in
www.wikipedia .com
www.businessmapsofindia.com
www.ibef.org
VPM’s Dr.V.N Bedekar Institute of Management
Studies