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Research Proposal

Is Impulse buying significant? Impact of packaging and shelf-positioning on Impulse buying of FMCGs.

ABSTRACT:

Consumers are an extremely complicated phenomenon and need a close insight into understanding their behavior patterns for marketers to be successful. Sales are composed of both planned purchases and unplanned purchases which in totality determine the entire volume of FMCGs sold. Unplanned buying which is also known as impulse buying, is impacted by several factors. Two evident factors in this regard are related with the visibility of these products and include packaging and shelf-positioning. In the process of studying the effect of the two dimensions data will be obtained through surveys from a sample size of 450 consumers and 10 supermarkets in the premises of Rawalpindi and Islamabad. This data will then be analyzed and a clear relationship will be developed between each of the factors namely, packaging and shelf-positioning with Impulse buying. Variation in Impulse buying with the differences in packaging and visibility in terms of shelf-positioning will allow the marketers to develop a proper plan of actions to enhance Impulse buying by understanding the importance of their implication.

PROBLEM STATEMENT:

Planned purchases do not constitute all sales; as a matter of fact a significant portion of total sales is composed of impulse buying which shows inevitable variation with respect to factors such as packaging and shelf-positioning.

Consequences: In the absence of such a research the marketers will certainly be at a loss. They will not be able to gain an insight into the relationship of factors such as packaging and shelf-positioning with Impulse buying thereby obstructing their ability to manipulate these factors to their own advantage which could otherwise lead to increased sale.

LITERATURE REVIEW:

It appears that approximately 65% of all supermarket purchase decisions were made in-store with over 50% of these being unplanned decisions vary across product categories. (Popai/Du Pont Study). Average customer purchase 50.5% of the products on an unplanned basis. (Kollat and Willett, 1984). This shows that impulse buying accounts for a major portion of the buying patterns for consumer behavior.

‘Impulse buying’, which a more relevant term in today’s world, to be synonymous with ‘unplanned purchase’ that is it describes any purchase which a shopper makes but has not planned in advance and a major junk of consumer purchases are being made without advance or prior planning. (Hawkin Stern, 1962). Impulse buying is defined in this study as a purchase decision made in-store with no explicit recognition of a need for such a purchase prior to entry the store. (Kollat and Willett, 1967; Kollat, - 1966; Bellenger et al., 1978). Impulse buying, despite certain connations attached to it, has become an efficient and sensible way of buying goods and the incidence of impulse buying are growing (Hawkin Stern, 1962).

Impulse buying has been seen to be at work mostly in the case of FMCGs. Impulse purchasing is not confined to any type of marketing institution, but it probably most frequently refers to food purchasing decisions. (Kollat and Willet, 1969). Unplanned purchasing occurs in many types of retail outlets, it is most commonly studied in supermarkets. (David T Kollat and Ronald P. Willet, 1967).

Various studies identified impulse buying as a major segment of consumer buying behavior. In several studies it has been stated that shelf positioning greatly influences impulse buying because of its impact on the visibility of the products (West and Clover) and (Keith Cox, 1964). As the above studies impulse buying, we in this research paper will converge the two major effects and study its impacts.

Several variables are related to customer differences in unplanned purchasing. But when the number of different products purchased is held constant, these variables do not influence the percentage of unplanned purchase (David T. Kollat and Ronald P. Willett, 1967). These variables are Economic and Demographic Variables Behavior Variables, Personality Variables, Demographic variables and General food shopping behavior variables. This explains us the fact that during our research we do not need to count these factors while measuring the impact of packaging and shelf positioning on impulse buying.

On-shelf position is an important factor (DuPont Study). Controlled tests carried out in the United Kingdom and West Germany has concluded that the on-shelf position does influence the unit sales for supermarket products (Sewell, 1984). The rationale is that consumers have a natural tendency to focus and perceive at eye level. Displays can therefore increase the rate of un-planned purchase in retail stores (Peak and Peak, 1977; Quelch, 1983). Many studies have been conducted in an attempt to quantify the sales responsiveness of displays. All these found that displays increased the sales of items displayed (Chevalier, 1975; Engel et al., 1978; Kennedy, 1970; Wilkinson et al., 1982). Impulse purchase can be attributed to a lot of factors first being store location (Lawrence W. Patterson, 1963).

As impulse buying can be measured and identified in different kinds of items ranging from non-food items such as furniture and food items such as grocery items. So we focused our research on FMCG-Fast Moving Consumer Goods, in which impulse buying is greatly affected by packaging and shelf positioning.

Two factors which determine impulse buying include Packaging of products and their positioning in the store. Packaging is very important because the customer is appealing in expectations that product will be precisely what mentioned in the illustration. Differences in packaging excellence are directly translated in to corresponding differences in sales appeal (Dik Warren Twedt). Therefore, one way to market the products without making huge promotional strategies is through packaging. An effective packaging can be the most efficient mass selling medium that marketing management can employ. It is worth much more attention and money than are now devoted to it by most companies (Dik Warren Twedt). Different retailers in the superstores maximize their profits through packaging and positioning of products and even the manufacturers want their products to be placed in the best place in the store. Positioning is operationalized as the perceptual distance between two brands, where brands positioned closer to each other exhibit higher gross price sensitivity (Serdar Sayman). Fundamentally consumers have the natural inclination to focus at the eye level therefore; products properly placed on the shelves are more eyes catching and are more vulnerable to impulse buying. These arguments are also supported by the studies carried out by Peak and Peak. Displays can therefore, increase the unplanned purchase in Retail stores (Peak and Peak 1977; Quelch, 1983). Some studies have also shown the impact of displays and positioning on increased number of sales items. From these studies it suggests that these purchasing habits may be greatly influenced by both the product attributes like packaging and merchandising practices.

RESEARCH OBJECTIVES:

The objectives of this research are primarily directed towards identifying the extent to which the factors packaging and shelf-positioning are related to Impulse buying, both individually and in combination.

• One of the major objectives of this research is to find out if there is some evident variation in the Impulse buying when there is a difference in either packaging or shelf-positioning of FMCGs.
• Another chief objective of carrying out this research is to be able to identify whether Impulse buying is greater in the case of better packaging or better shelf-positioning.
• One more objective of this research is to show whether high visibility in terms of shelf-positioning lead to diminished impact of packaging on Impulse buying as a result.
• The fourth key objective of carrying out this research is to identify if lower visibility of products in terms of their shelf-positioning, result in a greater role of the factor packaging to play in Impulse buying.
• The last and the most important objective of this research is to identify which combinations of the factors, such as better packaging and visible shelf-positioning, result in higher Impulse buying.

IMPORTANCE/BENEFITS OF STUDY:

The several benefits of this research will include:

• The marketers will be able to identify the actions they need to take in order to create positive impact of packaging and shelf-positioning on the consumers to enhance the sales through impulse buying.
• The players utilizing the services of retail outlets will learn the importance of these two factors and will know exactly what to do to make their products more visible and attractive to the consumers.
• This research would lead to better understanding of the importance of features related to the visibility of products in determining the rate of impulse buying.
• The marketers will be able to evaluate the trend with in their target markets and identify where they need to take initiatives for the purpose of enhancing Impulse buying of their products through spending on in-store stimuli such as packaging and shelf-positioning.
• This research will also benefit its readers in gaining an insight into how such attributes of a product play a role in enhancing the overall sales.

RESEARCH DESIGN:

This research paper is focusing on the effect of packaging and shelf positioning on impulse buying, in which we are directing towards Fast Moving Consumers Goods. For measuring consumer behavior regarding this impulse buying behavior, our research design would be primarily focusing on the primary sources of information i.e. Survey’s. But if during the course of our research paper we find the need to consult to any secondary sources of data, like Internet, we will also refer to those sources of information.

It is very important to mention in this section that are focuses geographically will be the twin cities: Islamabad and Rawalpindi. The reason to limit our selves geographically is that because this will enable us to draw a proper sample size from our population, considering a greater geographically dispersed area may manipulate our results because of an improper sample size.

This research paper will cover almost 350 consumers in 10 major super markets located in the twin cities, covering almost all the sectors of Islamabad and all the different colonies in Rawalpindi. The 10 super markets are geographically dispersed as to provide a fair representation of the twin cities consumer mix from economic, social and cultural point of view. These chosen super markets are the major players that dominate the retail supermarket industry in twin cities.

The 10 selected super markets from the twin cities are as follows:

In this research paper we are using both types of methods, which are

• Qualitative-Surveys
• Quantitative-we are going to use the SPSS software, than from the help of which we will draw out all the quantitative conclusions e.g. regressions analysis.

DATA ANALYSIS:

Analysis Techniques: For the purpose of analysis of the data collected from surveys we will analyze it through SPSS software. In the first step we will focus on effect of packaging on impulse buying. The second step would take in to account the effects of positioning of FMGC on shelves on impulse buying. The third step would collectively define the overall impact of packaging and positioning of FMCG on impulse buying. Analytical data will be represented in graphs and tables.

Assumptions: This study will be concerned with FMCG products available in supermarkets. The rationale for selecting FMCG products like tooth pastes, shampoos, detergents etc. is that they are more prominently paced in all of the stores, which will give us the same criteria for the analysis of all of super stores in Rawalpindi and Islamabad. Secondly these consumer products are used by all of the consumers in Pakistan. We would also assume that we will be strictly examining the impact of packaging and shelf positioning on impulse buying while keeping all other factors constant.

Limitations: The number of supermarkets selected is a limitation because there are few supermarkets in Rawalpindi and Islamabad. Still this study will be very meaningful based on the number of superstores selected. The sample selected will be the customers visiting these superstores and sometimes their biased views, brand loyalty, personal preferences and socially acceptable answers in survey can be regarded as limitations. Another limitation is the differences in the buying patterns of people because of large income differences. But through selecting a large sample size we hope to ignore these limitations.

NATURE AND FORM OF RESULTS:

As the results will be deducted using various statistical applications the primary forms in which the results are going to be presented will include Graphical as well as Tabular tools. In this way it would be quite easy for us to conclude our findings in the form of various tables and graphs and it would also be easy for users to comprehend the report. The examples of charts and tables that will be used are given below.

SCHEDULE:

The research is expected to complete within 90 days (approximately 3 months). The schedule has been made in accordance with the time format given by the instructor for the completion of the research paper. According to the sample provided the following tasks are to be completed on the mentioned date

It can be seen from the Gantt chart above that the project will be completed on the above mentioned dates. Since all the details have been decided already, 90 days will be a good enough time period to complete this research. The time period for which we will be working on the research starts from 28th of March and will end by 18th of June. The detail of what is going to be done each day is given in the diagram as under.

FACILITIES AND RESOURCES:

The Facilities and Resources which will be needed to carry out this research include:

• Internet
• Jstor
• Libraries
• Published papers
• SPSS
• Smart Draw
• Microsoft Office

BUDGET:

Since most of the work is related to the internet and conduction of surveys. The costs will primarily include internet charges and travelling charges along with software usage charges that will used to perform the regression analysis and for deriving of the results.

In total, the total money that we would have to spend in order to complete this research would approximately be equal to Rs. 2500.

BIBLIOGRAPHY:

• Abratt, R. and D.G. Stephen (1990). Unplanned Buying and In-Store Stimuli in Supermarkets, Managerial and Decision Economics, Vol. 11, No. 2. (May, 1990), pg. 111-121.
• Bellenger, N. et al. (1978). Impulse Buying Varies by Product, Journal of Advertising Research 18, December, pg. 15-18.
• Bultez, A. and P. Naert, (1988). Shelf Allocation for Retailers’ Profit, Marketing Science, (1988), Vol. 7, No. 3, pg. 211-231.
• Consumer Buying Habits Studies, E. I. du Pont De Nemours and Company, 1945, 1949, 1954, 1959, 1965.
• Cox, K. (1964). The Responsiveness of Food Sales to Shelf Space Changes in Supermarkets, Journal of Marketing Research, Vol. 1, No. 2. (May, 1964), pg. 63-67.
• Clover, V.T. (1950). Relative Importance of Impulse-Buying in Retail Stores, Journal of Marketing, Vol. 15, No. 1. (Jul., 1950), pg. 66-70.
• Chevalier, M. (1975). Increase in sales due to in-store display, Journal of Marketing Research 12, November, pg. 426-31.
• Engel, J.F. et al. (1978). Consumer Behavior, New York: Holt, Rinehart and Winston.
• John, W.C. (1951). Results of Two Years of Study into Impulse Buying, Journal of Marketing, Vol. 15, No. 3. (Jan., 1951), pg. 362-363.
• Kennedy, J. R. (1970). The Effect of Display Location on the Sales and Pilferage of Cigarettes, Journal of Marketing Research 7, May, pg. 210-15.
• Kollat, D.T. (1966). A Decision-Process Approach to Impulse Purchasing, Science, Technology and Marketing, American Marketing Association, September, pg. 626.
• Kollat, D.T. and R. P. Willett (1967). Consumer Impulse Purchasing Behavior, Journal of Marketing Research 4, February, pg. 21-31.
• Kollat D.T. and R. P. Willett (1969). Is Impulse Purchasing Really a Useful Concept for Marketing Decisions? Journal of Marketing 33, January, pg. 79-83.
• Kotler, P. (1984). Marketing Management: Analysis, Planning and Control, Englewood Cliffs, NJ: Prentice-Hall.
• Kollat, D.T. and R.P. Willet (1969). Is Impulse Purchasing Really a Useful Concept for Marketing Decisions? Journal of Marketing, Vol. 33, No. 1. (Jan., 1969), pg. 79-83.
• Patterson, L. W. (1963). In-Store Traffic Flow, New York: Point-of-Purchase Advertising, Institute, Institute, Inc., (1963), pg. 2.
• Peak, H. S. and E. F. Peak (1997), Supermarket Merchandising and Management, Englehood Cliffs, NJ: Prentice-Hall
• Quelch, J. A. (1983). It's Time to Make Trade Promotion More Productive, Harvard Business Review May/June, pg. 130-36.
• Sayman, S et al., 2002, Positioning Of Store Brands, Marketing Science, Vol. 21, No. 4, (Autumn 2002)m pg. 378-397.
• Sewell B. (1984). Merchandising Seminar, Institute of Marketing Management, London, April.
• Stern, H. The Significance of Impulse Buying Today, Journal of Marketing, Vol. 26, No. 2. (Apr., 1962), pg. 59-62.
• Twedt, D.W. 1968, How Much Value Can Be Added Through Packaging, Journal of Marketing, Vol. 32, No. 1 (Jan. 1968), pg. 58-61.
• Vernon T. Clover, "Relative Importance of Impulse Buying in Retail Stores," Journal of Marketing, 15 (July 1950), pg. 66-70.
• Wilkinson J.B. et al. (1982). Assessing the impact of short term supermarket strategy variables, Journal of Marketing Research 19, February, pg. 72-85.

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