Study of Factor Affecting Customer Retention

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1 Study of Factor Affecting Customer Retention

Study of Factors Affecting Customer Retention Market ResearchIn

SUBMITTED TO

Prof. Sameer PhanseVPMs Dr V.N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES, THANE

MMS III

Chanakya-15

VPMs Dr.V.N Bedekar Institute of Management Studies

2 Study of Factor Affecting Customer Retention

INDEX

Genesis of the Report.3 Globus ...........4 Customer Retention5 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

VPMs Dr.V.N Bedekar Institute of Management Studies

3 Study of Factor Affecting Customer Retention

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.

VPMs Dr.V.N Bedekar Institute of Management Studies

4 Study of Factor Affecting Customer Retention

globusHistory: 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 CardVPMs Dr.V.N Bedekar Institute of Management Studies

5 Study of Factor Affecting Customer Retention

Customer RetentionMany 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 offers performance in relation to buyers 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.

VPMs Dr.V.N Bedekar Institute of Management Studies

6 Study of Factor Affecting Customer Retention

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 companys 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.

VPMs Dr.V.N Bedekar Institute of Management Studies

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Research DetailsResearch methodology:- A system of model, procedures and techniques used to find the results of aresearch 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 Nakas 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.

VPMs Dr.V.N Bedekar Institute of Management Studies

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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

VPMs Dr.V.N Bedekar Institute of Management Studies

9 Study of Factor Affecting Customer Retention

Analysis of the Research

Q1.Which things you consider while going to shop your apparels?Price Brand 4 10 7 9 16 20 34 Brand ambassador Advertise Collection of apparel Service

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.

VPMs Dr.V.N Bedekar Institute of Management Studies

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