The Impact of Store Characteristics on Consumer Behavior and Overall Store Performance - Research Paper Example

The Impact of Store Characteristics on Consumer Behavior and Overall Store Performance Total Number of Words: Table of Contents I. Executive Summary …………………………………………………….. 3 II. Introduction ……………………………………………………………… 4 III. Problem Statement ………………………………………………………. IV. Importance and Benefit of the Study …………………………………….. V. Summary of Research Findings Executive Summary Introduction Jo Jo’s, a large clothing store chain, started its operations back in 1980. Over the years, the company managed to establish a total of 40 stores across seven Australian states and territories. The store enjoyed high returns almost immediately and continuously since opening. Between the years 2004 and 2005, Jo Jo’s top management noticed the increasing number of their stores to be underperforming as compared to the market expectations. Following two consecutive years of declining returns, Jo Jo’s was acquired by “The Consortium” (a group of fashion companies) in June 2005. As part of the acquisition, The Consortium launched a ‘rebuild program’ primarily aimed at redesigning and improving each individual store in order to recreate Jo Jo’s image at a higher market level. Enhancement of the store’s atmospheric presentation specifically on changing the building materials and store colors, and lighting were considered to dramatically improve both the store appearance and the shopping experience for Jo Jo’s customers. In 2007, Jo Jo’s half-year financial report revealed eighty-percent increase in returns as a successful result of the rebuild program. With no apparent market or economic reasons, The Consortium is interested in establishing a good strategy that could minimize and lessen the twenty-percent loss of opportunity from their sales and profit. This study aims to discuss about the impact of having musical background in retail store as well as determining the type of music that is appropriate to clothing store. The importance and benefits of studying these factors will also be discussed. In line with addressing this issue, the author will gather relevant journals that could justify the effects of environmental atmospheric psychology of retail store on consumer behavior. The experimental approach used to test the hypothesis will be clearly explained on the research design portion. Based on the result of the data gathered, justification on the relevance of environmental impact on the success of the clothing store will be made on the conclusion part together with the limitations of the study and the recommended future research. Problem Statement The store manager speculates that the individual store differences such as: overall store atmospheric environment issue related to changing the building materials and store colors, lighting, and type of music have a strong impact on business profitability and on customer perceptions of the store. Since the store has recently undergone through an intensive rebuild program on the store’s visual appearance, the manager aims to identify how music could impact on the consumer shopping behavior and how these variables correlates with the store performance. Research Objectives – approx 400 words For descriptive and explanatory studies (quantitative studies) the research objectives might be stated as research hypotheses; that is, stated as relationships that would be worth testing (e.g., there is a positive relationship between x and y). Be sure to identify the independent and dependent variables for explanatory studies, and the nature of their relationship (e.g., positive or negative, linear or curvilinear). In some cases it may be more appropriate to state your hypotheses (and possibly this section) after the summary of literature – you decide. For exploratory studies (qualitative studies) the research objectives might be stated as propositions. Indicate how the variables of interest would actually be measured. For a quantitative, descriptive or explanatory study the measurement instrument might be a questionnaire that would be used to collect data from respondents. Considering my scenario I was thinking about having a hypothesis for the effects of music and effects of store layout? Importance and Benefits of the Study Summary of Research Issues Psychologists traditionally noted that environmental factors (physical elements) and individual differences (non-physical elements) are two types of variables that could affect the consumer behavior. (Eroglu and Machleit, 1989; Russel and Mehrabian, 2001) Since store environment is an effective tool for market differentiation (Levy and Weitz, 1995), it is a challenge for store managers to create an inviting and soothing store atmosphere according to the target market of each store. Phil Kotler (1973) stated that retail environments could either create a positive or negative atmosphere that could affect the shopping behavior of the consumers. Some researchers believe that there is a significant connection between the time spent of each customer in the store and the satisfaction that comes from the store visit experience with the emotional state of the customers. (Dawson, Bloch and Ridgway, 1990; Kellaris and Kent, 1993; Yalch and Spangenberg, 1993) A past psychological research also concluded that the emotional states of the consumers are strongly related to their behavior in the sense that shoppers with good mood and has good impression on the store appearance could persuade buyers to purchase more items (Bem, 1972; Schachter and Singer 1962; Rook, 1987), spend longer time inside the store (Donovan and Rossiter, 1982), and increases the chance of future patronage (Golden and Zimmer, 1986; Swinyard, 1993). Several studies shows that environmental atmospheric factors like interior design (Donovan and Rossiter, 1982) such as: the color of the store structure (Bellizzi, Crowley and Hasty, 1993); store layout, and lighting (Donovan and Rossiter, 1982); the type of music played in the store (Kellaris and Altsech, 1992; Yalch and Spangenberg, 1993); the scent or aroma used in the store (Spangenberg, Crowley and Henderson, 1996); and point-of-purchase display (Quelch and Cannon-Bonventre, 1983; Phillips and Bradshaw, 1990) could affect the customers’ impulse buying, shopping behavior and the amount of purchase spent on the store. (Rook, 1987) In line with this matter, Donovan and Rossiter (1982) suggested that store managers should take advantage of using environmental psychology in motivating the customers to purchase goods sold within a store. Mehrabian (1980), Mehrabian and Russel (1974), and Russell and Pratt (1980) also share the same view with regards to environmental psychology. Environmental Psychology in Retail Stores Mehrabian and Russell (1974), Mehrabian (1980), and Russell and Pratt (1980) established an environmental psychology model that serves as an interesting framework for viewing the impact of a good quality store environment. This model suggests the stimulus-organism response (SOR) process of the customers with the store presentation. (See Figure I – The Mehrabian-Russell Model of Environmental Influence below) Figure I – The Mehrabian-Russell Model of Environmental Influence The Mehrabian-Russell Model (M-R Model) of environmental influence shows that in-house environmental stimuli could contribute to the mood/emotion on behavior – either positively or negatively loaded. (Darden and Babin, 1994) When the environmental factors are designed to give pleasure to the five senses of the customers, these people are most likely to be attracted with the store. On the other hand, when the environmental structure and design of the store outlet is uninspiring and dull, customers may have a sense of displeasure. Therefore, the customers would search for other more attractive similar store. Interior Design like: Color, lighting, and Store Layout According to Woolrich’s retail manager, the “store design alone could bring people in and clothing sells itself.” (Horst, 2002) The store appearance particularly the application of the right colors, materials, graphics, displays, lighting, and store layout is enough to capture the attention of the customers. The color of the store is very important depending on the store’s target market. (Bellizzi et al., 1993) In case the target customers are teenagers, the design of the store should be appealing to them. Therefore, a more vibrant colors and theatrical lighting is advisable. (Areni and Kim, 1994) For the upper class market, a combination of monochromatic muted color palette, wood, marble floors, and other elegant materials are more effective. (Horst, 2002) Retailers should ensure that customers have a smooth flow of traffic within the store area all the time. The store layout is in fact another significant factor to consider. All products should be strategically arranged such that fragile items like expensive vase should be placed in areas wherein children would not easily reach the products and impulsive items like belts and ties should be within the customers’ reach all the time. (Gerba, 2006) Type of Music Used in a Retail Store Background music can be used to improve the current store image, promotes a livelier attitude on employees / staffsi and stimulate the purchasing attitude of the customers. (Milliman, 1982) Based on a survey that was conducted by the Personnel Research Committee of the Administrative Management Society, music could improve the morale and relive job monotony among the workers. (Walter, 1971) Several studies prove that background music could increase the buying habits of the customers. (Linsen, 1975; Burleson, 1979) According to Grayston (1974), the type of music should fit the market environment and situation. Using a ‘fast-slow’ and ‘loud-soft’ music should depend on the kind of products and the type of customers the store is serving. (Milliman, 1982) Using a wrong type of music could produce an ineffective type of marketing strategy. In worst cases, the store could give the customers a mixed signal causing the store to become less attractive to consumers. The tempo of instrumental background could significantly influence the increase in the volume of sales purchase of the customers each day. (Milliman, 1982) Some stores prefer to use slow-tempo music to enable the customers to stay longer inside the store. On the other hand, most fastfood restaurants would prefer fast-tempo music to speed up people and freeing more seats for the next customers. The Scent or Aroma Used in the Store Very few researchers have focused on the effects of Scent in the retail atmosphere. (Turley and Milliman, 2000) Among the five senses, the most closely related to our emotional reaction is smell since the olfactory bulb is directly connected to out limbic system in the brain. (Wilkie, 1995) For this reason, scent or aroma applied in store is considered as an important atmospheric variable. These fragrances are normally used to support the environmental psychology model. (Donovan and Rossiter, 1982) In the past, studies have shown a little evidence that scent could affect retail behavior. (Bone and Ellen, 1999) Today, using scent and other aroma is considered a strategic way of improving the atmospheric environment in retail stores. Studies on Scent application in retail stores are either performed in a simulated environment (Mitchell, Kahn and Knasko, 1995; Fiore, Yah and Yoh, 2000; Morrin and Ratneshwar, 2000 ) or in the actual retail environment (Knasko, 1993; Hirsch, 1995; Chebat and Michon, 2003).In general, the result of these studies confirm that scent has a big impact on consumer shopping bahavior. (Fiore, Yah and Yoh, 2000) Research Design Using a 2 x 2 factorial experiment, the effects of ambient scent and background music on the emotions and perception of the shoppers with the store environment and service quality will be tested. A lot of environmental psychology schools believe that these two variables could mediate approach or avoidance behaviors on the prospective consumers. (Mehrabian and Russell, 1974; Donnovan and Rossiter, 1982) This test is necessary in order to determine the degree or level of effects of these variables. This information is necessary for the decision-making of Jo Jo’s manager on whether to apply this strategy on each retail store outlet in order to minimize of lessen the twenty percent opportunity loss by increasing the business’ daily profitability. In determining the impact of musical background in retail store, slow top-40 music will be used to influence the customers’ perceived quality service and pleasure in shopping environment. (Sweeney and Wyber, 2002) For the aroma, I personally chose a citrus scent – a combination of orange, lemon, and grapefruit. A lot of research shows that the scent applied to retail stores (Scholder and Bone, 1998; Ehrlichman and Halpern, 1988; Mottin and Ratneshwar, 2000) and musical background (Dubé and Morin, 2001; Chebat, Gélinas-Chebat and Vaillant, 2001) may be recognize by the customers without changing their mood. The hypotheses that will be used for this study are the following: Popular music with slow-tempo is likely to increase shoppers’ positive influence  H1a A pleasing and light Aroma increases Shoppers’ positive influence  H1b Shoppers’ mood improves perception on the shopping environment H2 Positive effect will foster shoppers’ perception of the service quality  H3 Slow-tempo musical background could stimulate customers’ perception of the store environment more than using fast-tempo music.  H4a A light and pleasing aroma could positively influence the customers’ perception of the mall environment.  H4b Customers’ perception of the mall environment creates positive influence  H5 Customers’ perception of service quality is influenced by the perception of mall environment  H6 Note: See Figure I – Research Hypotheses on page Methodology The experiment was conducted inside a small retail store. Data has been collected within two weeks within the month of May 2007. During the experiment period, it was considered that no promotional strategies or other forms of marketing method were implemented. This will ensure a normal in-store traffic flow. During the first test, the smell of the store atmosphere was left unmodified with fast-tempo music playing on the background. Without any distractions, a light pleasing scent was diffused in the store atmosphere for 3 seconds on a 6 minutes interval. Based on Spangenberg, Crowley, and Henderson (1996), the use of citrus scent gives a good result for the purpose of this study and is readily available in store outlets. The use of Lemon scent was totally avoided because of its association with household cleaning products. (Bone and Janatrania, 1992) For the musical background in this study, ‘light rock’ musical genre set on a constant volume was used throughout the experimental period. The tempo of the music was set at 60 (slow-tempo music) and 96 bpm (fast-tempo music). Questionnaires were administered to the randomly selected customers as soon as they walk outside the store area. In order to prevent a bias respond on the survey, the research objectives of the questionnaires were not imparted to the respondents. The tallying of the survey form was completed at the end of each day. A total of 112 respondents completed the questionnaires based on fast-tempo music with no scent or aroma diffused in the store area. Some 37 respondents were exposed to a fast-tempo music with a citrus scent. Another 36 respondents were subjected to slow-tempo music with no aroma. Lastly, 64 individuals were exposed to slow-tempo music with citrus aroma. Proposed Data Analysis Techniques The guide on manipulating the scent application and musical background used in this study were all based from Bagoozi (1994) and Bagoozi and Yi (1989). To measure and illustrate the cognitive and influential paths of using citrus scent and musical background, a structural equation modeling (SEM) method was used using EQS for Windows 6.1. The Mehrabian and Russell (1974) pleasure components of the PAD scale were used as a guide for the test giving a result of an Alpha coefficient = 0.96. On the other hand, the customers’ perception of the store environment was based on Fisher (1974) semantic differentials that results to Alpha coefficients = 0.92. For the purpose of this study, the key relevant information that comes from Mehrabian and Russell (1974) pleasure components of the PAD scale and Fisher (1974) semantic differentials were entered in the model. In measuring the perception of service quality, Cronin and Taylor (1992) was applied to give a result of Alpha coefficient = 0.83. (See Table I – Measuring Scales; Factor Loadings and Alpha Coefficients on page ) Nature and Form of Results Based on the research findings, the result of H1a – popular music with slow-tempo is likely to increase shoppers’ positive influence, with the presence of citrus aroma is beta = 0.32 and t = 2.19. Without the citrus aroma diffusion, the outcome of the test gives a higher beta = 0.42 and t = 2.18. It means that the positive effect of citrus scent could reduce the positive influence of slow musical background. This study could not verify the link between playing a slow-tempo music with the customers’ perception of the store environment. The citrus scent application together with the use of a fast-tempo musical background (H4b) could minimally influence the shoppers’ perception of the store environment (beta = 0.27, t = 2.26). However, when the citrus scent application was combined with slow-tempo music, the scent application fails to achieve a significant influence over the customers’ perception of the store environment. Another area of concern is the customers’ positive influence over their perception of the service quality. In this study, the customers’ positive influence does not have a significant influence over the perception service quality. It is the customers’ perception of the store environment that could moderately influence the customers’ perception of the quality service offered by the store (beta = 0.48, t = 15.41). In relation to this matter, it is the shoppers’ emotion that could moderately influence the customers’ perception of the store environment (beta = 0.20, t = 8.02). Discussion The use of slow-tempo musical background could influence the environmental psychology model (Mehrabian and Russell, 1974; Donovan Rossiter, 1982) However, this findings does not support the theory of Dubé and Morin (2001) and Chebat, Gélinas-Chebat and Vaillant (2001). It is possible that slow-tempo music could cause a little arousal that is not enough to stimulate the cognitive processes of the customers. (MacInnes and Park, 1991; Kellaris, Cox and Cox, 1993) It is the other way around in the case of using a fast-tempo musical background; the combination of fast-tempo music and citrus aroma could trigger the cognitive processing of the customers’ perception of the store environment. Even though Lavander is also a well-known scent, citrus scent was considered in this experiment because it has more arousing properties and is readily available in the market. (Spangenberg, Crowley, and Handerson, 1996) Based on another research, a low arousal scent such as Lavander is best combined with a slow-tempo musical background in order to produce a greater influence to the customers. (Mattila and Wirtz, 2001) On the other hand, this study proves that a strong arousal scent such as citrus is best combined with fast-tempo musical background. The choices of using these combinations should be in accordance to the product lines sold within the store and the store themes. (Fiore, Yah and Yoh, 2000; Spangenberg, Crowley, and Henderson, 1996) It should be taken into consideration that not all environmental atmospheric variables could behave in the same wavelength. The atmospheric variable specifically the application of scent within the store area could stimulate the cognitive processing of the customers. Wilkie (1995) explained that despite the fact that our olfactory bulb is directly connected to our limbic system in the brain, the scent diffusion could arouse our ‘Proustian’ memory. (Annett, 1996) On the hand, music could trigger similar memory. (Kellaris, Cox and Cox, 1993; MacInnes and Park, 1991; Chebat, Gélinas-Chebat, and Vaillant, 2001) For this reason, familiarity and the preferences of the customers regarding the type of music played is important factor that affect their emotional state. (Sweety and Wyber, 2002) It means that musical background played within the store area could influence the customers’ emotions while the scent application triggers their cognitive processing. As part of the result of this study, it is proven that the use of musical background and the application of scent have no direct effect over the customers’ perception of the store quality of service. In fact, Baron and Kenny (1986), noted that these variables simply acts as a mediator and not a moderator of the quality of service rendered to the customers. Action Plan Based on the research study, Jo Jo’s store managers should carefully choose between using a fast-tempo musical background with a strong scent aroma or slow-tempo musical background with a low scent aroma in order to achieve the best result over the customers’ purchasing habits and perception of the store image. Schedule Measurement Instrument (a draft survey) (Appendix1) Measurement Instrument – (approx 1 page of possible questions to test hypothesis) Including a copy of the proposed measurement instrument (in an appendix) is important; because it illustrates that you know how the variables of interest would actually be measured. For a quantitative, descriptive or explanatory study the measurement instrument might be a questionnaire that would be used to collect data from respondents. For a qualitative, exploratory study the measurement instrument might be an interview protocol (e.g., a form listing the interview questions).This section is very important… (Check past literature for examples of appropriate measures – maybe adapt them to your context.) References: 1 Areni, J.L. and Kim, M. (1994) ‘Background Music as an Influence in Consumer Mood and Advertising’ Advances in Consumer Research, Vol. 16, 485 – 491. 2 3 Bellizzi, J.A.; Crowley A.E.; and Hasty, R.W. (1993) ‘The Effects of Color in Store Design’ Journal of Retailing. Vol. 59 (Spring), 21 – 45. 4 Bem, D. (1972) ‘Self-Perception Theory’ in L. Berkowitz (ed.), Advances in Experimental Social Psychology. Vol. 2, New York: Academic Press. 5 Bone, P.F. and Ellen, P.S. (1999) ‘Scents in the Marketplace: Explaining a Fraction of Olfaction’ Journal of Retailing, 75 (2): 243 – 262. 6 Burleson, G.L. 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Psychology & Marketing Vol. 14(4):361–378 (July 1997) The Effects of Store Environment on Shopping Behaviors: A Critical Review Shun Yin Lam, City University of Hong Kong Read More