Business Strategy

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Relating the in-store experience to the customer retention

">Chapter 1 - Introduction

Overview

Various factors contribute to the success of any organization. The combination of these factors is required to be present for the sustainability and profitability of companies. The major element or the factor out of various aspects is the customer retention. It is one element which every company wants to achieve within their organization (Ang and Buttle, 2006). The customer retention is the term which represents that an organization has customers who are loyal to them or are buying the products from a long period of time. The customer satisfaction and positive customer experience are two elements which foster the customer retention at very large scale. It is to acknowledge that the customer satisfaction holds the customer towards the company in positive. The customer purchase decision making also becomes positive, and it establishes the stage of customer retention. At the same juncture, it is essential to mention that the customer retention shows the confidence of customers over the company. They are confident about the quality and value of money as well. There are various elements which help in achieving the customer retention within the organization (Lowenstein, 2010).

Out of the variety of factors the experience level of customers towards the service quality, dealing of in-house staff and so on also stimulates the positive response towards the retention. The main aspect of retention strategy is that customers must get positive buying environment when they purchase any product. It could definitely enable them to feel connected with the company. The situation of fashion sector organizations is more critical as they need to ensure that the customers should get positive buying environment (Goodman, 2014). In fashion sector organizations the in-store experience also plays a vital role in improving the customer retention strategies. The in-store experience includes various elements like product range, the appearance of the store, a way of handling, dealing with queries, attending and showing the products to customers, communication skills and so on. Thus, the in-store experience is a combination of physical aspects, psychological elements, and emotional factors as well.

It helps in building the strong connection with the customers. The retention strategy could never be successful until n unless there is no strong connection among the store people and customers (Garg, Rahman And Qureshi, 2014). While visiting the stores the employees and staff are the ones who first deals with the customers and try to influence them or to put the right kind of impression. It is to acknowledge that no matter if the company is selling high-quality products at very reasonable price, these all efforts are wasted if the in-store experience of customers is not positive and satisfactory. The communication and query handling capacity must be effective at very large scale. The store must have all the new products that have been launched as the latest fashion (Bean and Tyne, 2011). It is very crucial that the new product range must be available at stores as the in-store experience of customers seems to be negative and less excited. In fashion industry meeting out the excitement level of customers is the main job of companies. The store managers have to ensure that inventory must be properly managed as it is also a part of the positive in-store experience. It helps in gaining the competitive advantage and strengthens the strategies of customer retention.

This is the most required element to reach the top in the market and stay there until last. Everybody knows that it cost much more to acquire new customers than to retain the existing customers. That is the reason that treating the customer after selling the product is as important as treating them before selling. The useful information could be disseminated along with improving the familiarity level (Garg, Rahman And Qureshi, 2014). Thus, the customer retention is somewhere dependent upon the in-store experience for the fashion industry companies. Here in this report, the strong focus has been given to analyze the impact of in-store experience on the customer retention. It is the main agenda of study, and the whole report is revolving around such issues.

Aim

The aim of this research will be to relate the in-store experience to the customer retention.

Objectives

  • To understand the concept of in-store experience in retail industry
  • To understand the importance of in-store customer retaining techniques in growing the business.
  • To compare and contrast the in-store customer retention of Burberry (UK) and Armani (Italy).
  • Why it is important for the fashion retailers to focus on the in-store experience of their customers?
  • How in-store customer is retaining techniques are important in growing the business.
  • Does the concept of in-store experience vary between different countries?

Research Questions

Rationale of the Study

The major reason behind the selection of current topic is to ensure that the intellect about the customer retention could be gained, and most importantly the various aspects related to the customer retention could also be understandable. With the help of current report, the expediency of in-store experience could also become clear. Another reason behind the study is to investigate the dimensions of in-store experience in a deep manner. It could be helpful with a view of improving the service quality at stores, and various other attractive stores features could also be identified. Therefore, these are certain main reasons behind conducting the report.

Significance of the Study

The major importance of the study is that it shed light on international marketing and by narrowing down the study the aspects of fashion industry could become clear. The fundamentals related to the in-store experience could also treat as major learning or the important aspect of the report. Most interestingly the relationship between the customer retention and in-store experience could be established.  Therefore, these are major important aspects of the current report that could be beneficial in academic as well as professional manner.

Outline of the Report

Every report must be comprised into the proper format and in a structured way. It could help immensely in arranging the sections and giving the meaningful dimension to the report. Here in this report, the sections have been segregated in a logical manner. The first and foremost section in the report will be an introductory section that will consist of aims and objectives. Other than aims and objectives the section will include the rationale for the study and overview of the content. It is helpful in building the interest of viewers.

The second section is the literature review that has a huge role in ensuring that the detailed knowledge about content could be gathered. The previous studies could be analyzed in an appropriate manner. The third section is the research methodology that has relevance with the scientific and logical aspects of the report. It is to acknowledge that the study is simply related to customer retention and in-store experience so accordingly the research techniques could be applied which must be suitable for the report.

Next section includes the data analysis section that explains about the interpretation and results and findings. It is a most crucial section that enables on the ground of providing the support to the whole study. At last, the section of conclusion and recommendations will be included in the report. It includes the summary of the results or findings. Therefore, the current study is segregated into five major sections so that the objectives could be achieved in an effective manner.

 

Chapter 2 - Literature Review

Introduction

            The aim of writing this literature is to tell the reader that the data which has already been published has been collected, read, and grasped concerning the given topic. This literature review includes the online researches, journals and also some of the books related to the topic. This literature review not only contains the description and the summary of what other people have said, but it also includes writer’s personal opinions, views, conclusion and recommendations for the subject. This literature review also shows the insights and different arguments, approaches and theories. This literature review is the analysis of the published relevant data (Gould, 2011).

            This literature review compares and contrasts the views of different people on the given subject. It also groups the authors who have similarities in their views. This literature review has shown how this study is related to the previous studies on the same topic. It defines the topic which is being worked on (Ridley, 2012).

            This literature review focuses on two different fashion retailing brands i.e. Burberry and Armani, from two different countries. This literature review tells about the entire in-store experiences of the potential customers. These different experiences from different customers of two different brands are mentioned in this literature review. The study focuses on the behaviours of the customers as well as the behaviour of the sellers (Ridley, 2012).

Burberry: A Luxury Fashion Retailer

            Burberry is a British luxury fashion retailer brand and the headquarter is in London. It is fashion house distributes and focuses on fashion accessories, fragrances, cosmetics, sunglasses and ready to wear outerwear. It was established by Thomas Burberry in 1856 which was mainly focusing on the trench coats, outdoors attire, pattern based scarves and many other fashion accessories. Burberry is the original name but after a certain time the company switched the name to Burberry because many customers from across the world started calling it as “Burberrys of London” (Burberry, 2016).

Armani: A Luxury Fashion Retailer

            Armani is short for Giorgio Armani S.p.A., which is an Italian fashion retailer brand and was founded by Giorgio Armani. Armani manufactures, designs, retails and distributes ready to wear, haute couture, shoes, leather goods, jewellery, watches, eyewear, accessories, home interiors and cosmetics. Armani markets all these products various labels, from the most expensive products to the most accessible products. Now Armani has become the fastest growing luxury fashion brand in the world (Biography, 2016).

In-Store Experience

            A shop or a retailer is a business which presents a selection of products and services and offers to sell or trade them to the customers for benefits and money. Shopping can be defined as the activity in which the customers browse all the available services and products which are presented by the retailers with the intention of purchasing the best selection of them (Rawson, Duncan and Jones, 2013).

            When a customer goes to purchase something from a shop, the customer faces many experiences about the store and the storekeeper. At the same time, the storekeeper also faces many experiences which totally depend on upon the behaviour of a customer (Rawson, Duncan and Jones, 2013).

On this basis, the in-store experience can be divided into two subcategories which are:-

  1. Customer Experience (Buyer)
  2. Storekeeper Experience (Seller)

Customer Experience (Buyer)

            Customers experience is a product of interaction between a customer and an organisation. This interaction contains the customer’s awareness, attraction, advocacy, discovery, cultivation and purchase and use of a product or a service. All these things are measured by the customer’s experience during points of contacts against the customer’s expectations. Customer experience implies the involvement of a customer at different levels like; emotional, rational, physical, sensorial and spiritual (Goodman, 2014).

The customers respond to indirect and direct contact with an organisation.

  • Indirect contacts: The indirect contacts usually occur because of news reports, advertising, word of mouth recommendations, unplanned encounters with the sales representatives and criticism.
  • Direct Contacts: The direct contacts occur when the use or a purchase of a product or a service is initiated by a customer himself (Bean and Tyne, 2011).

The customer experiences can be defined as the customer’s personal and internal responses which might be connected with the company either indirectly or directly. To make the direct relationships receive, buy or use a product or a service by a business intended for the potential customers such as face to face or in store contact with those customers that could be seen by interacting with the potential customers with the retailing staff (Bean and Tyne, 2011). Instead of this, an organisation should have the indirect relationship that may take the form of that of the unexpected interactions with an organisation’s sales representatives, a few brands or services and some of the positive recommendations or it also could take the form of news reports, advertising, criticism and many more (Schmitt, 2010).

The customer experience is made by the customer values, and also, the company provides the experience. All those experiences which are usually faced by the customers before and after purchasing a product or a service are known as customer experiences. When a customer undertakes the experience, it has usually been seen as unique and personal. Along with this, it provides stimulation to emotional, sensory, physical and rational aspects of that may help to create some memorable experiences for a customer of which he/she would never forget. This concept can be investigated in several industries and organisations in all around the world. Both the customers and the storekeeper play a significant role in a retail industry to create a customer experience (Schmitt, 2010).

Storekeeper Experience (Seller)

            When a customer enters a store to purchase a product or a service, the customer faces so many experiences. At the same time, the storekeeper or the sales executive also faces different experiences according to the mood, behaviour, and demands of different customers whether the customer may or may not be a potential customer. Mostly the sales executives do not take much time to recognise whether the customer is potential or not about purchasing the products and the services offered by the retailer. However, it often happens that even the sales executives, the storekeepers, the staff, the retailer and the company sometimes cannot recognise that the customer is actually potential to purchase the product or not. In that case, the experiences faced by the storekeeper and the customers are completely different from each other (Shaw, Dibeehi and Walden, 2010).

            Just like the customer experience, the store keeper experiences are also created by the customer values and also the customer provides the experience. All these experience are usually faced by the store keeper before and after the customer purchases the products or the services offered by the company. When a storekeeper or a sales executive undertakes the experiences, it has usually been seen that all these experiences are unique and personal as all the customers are different from each other, and not a single customer thinks the same as others. The concept of store keeper experiences can also be investigated from the different industries and organisations throughout the world (Teixeira, 2012).

Customer Engagement

            The marketing strategy which is used to engage the customers encourages and invites them to take part in the evolution of a brand is called as customer engagement. The engagement marketers believe that instead of looking at the customers as the passive receivers of the given message, they should be involved actively in the co-creation and production of the programs of marketing which are being developed in a relation with the brand (Shaw, Dibeehi and Walden, 2010).

There are three important elements of customer engagement which are:-

  1. Customer experience.
  2. Customer loyalty.
  3. Customer satisfaction.

Figure 1: Elements of Customer Engagement

(Source: Learly, 2016)

Customer Identification

            Almost everyone thinks that the terms “customer” and “consumer” are the synonyms of each other but actually they are not. A customer is the one who purchases a service or product. Unlike the consumer is the one who already uses those services and the products.

            The purchasing behaviour of a customer is highly influenced by the needs, requirements and the preferences of the consumers for whom the services and the products are purchased (McColl-Kennedy, et al. 2015).

            However, we are here concerned with the buying behaviour of customers instead of the preferences of the consumers. The perfect definition of a customer as a buyer is impractical because it is not very easy to identify a buyer in a store. For example; a couple (husband and wife) who are shopping together may represent two different customers, or they may also represent one bundle carrier and one customer and it is very difficult to recognise which is which. Therefore, every single person who enters a retail store is a potential buyer and also represents a part of the customer traffic in the store. It is actually not sufficient to study the patterns of purchasing behaviours without knowing whose behaviour is involved (Garg, Rahman and Qureshi, 2014).

Origin of Customers

ü  Where does a customer come from?

ü  How far do the customers travel to the store?

ü  What is the geography of their houses?

            The answers to the questions mentioned above give a useful data on the origin of customers. The origin of the customer explains whether the customer is a dweller of a large city apartment, a ruralised, a suburbanized or a transient. The behaviour pattern of food purchasing of a customer who is living in a very congested area of a large city may differ from the behaviour pattern of the customer who is living in a rural area and has a very big vegetable garden along with a home freezer (Garg, Rahman and Qureshi, 2014).

Customer Purchasing Behaviour Pattern

            To buy is simply to purchase. However, unlike, to shop is to visit the establishment of business for either inspection or buying products. For example; a person who is trying to place an order on a phone call is buying the product, not shopping. With the help of this information, purchasing and shopping can be distinguished.

            Similarly, buying habits and buying behaviour patterns should also be distinguished. Habit can be defined as the tendency towards an activity which becomes spontaneous by repetitions. Unlike a pattern is a type or design. Every customer has his/her own unique buying habits, but their behaviour pattern represents the type of behaviour of many customers. The customers buying behaviour patterns and buying habits are not fixed (Teixeira, 2012).

The purchasing behaviour pattern of a customer can be grouped into:-

a)      Products purchase.

b)      Place of purchase.

c)      Frequency and time of purchase.

d)     Methods of purchase.

Research Techniques

The research techniques of marketing which are used in studying the customer’s behaviour in a retailing store are as follows:-

a)      Analysis of records.

b)      Interviews.

c)      Observation.

d)     Controlled experiments.

  • Analysis of records: In a well-established business, records are kept of all the activities like; what product was sold, when the product was sold and what price it was sold at.
  • Interviews: Some of the information about customer’s characteristics and their purchasing behaviour is obtained by interviewing those customers in a store (Teixeira, 2012).
  • Observation: The colour, sex and age groups of a customer can easily be observed whether the customer leaves, enters or keeps shopping in the store. With the help of this observation, it may also be learnt what a particular customer wants in the store.
  • Controlled Experiments: The stores conduct controlled experiments in a unique laboratory, to ascertain the response and the behaviour of the customers (Teixeira, 2012).

Customer Retention

            Customer retention can be defined as the activity which is undertaken by a retailing company in order to reduce the defections of the potential customers. Successful customer retention follows the concept of “ the first impression is the last impression” because it starts from the very first contact that a company has with its customers and the relationship continues throughout the lifetime. The ability of a company to retain and attract the new customers is related to its products and services along with the way it serves the existing customers and also the reputation that the company creates across the marketplace (Goodman, 2014).

Customer Retention Strategies

            Customer retention is the best and the only way to improve the growth of an organisation. If the organisation keeps its customers happy, then the customers will keep purchasing the products and the services from the company which will lead to the growth and the success of the company. First of all, an organisation needs to understand the customers, their needs, their requirements, their preferences and their intention (Learly, 2016). If an organisation does not know its customers and does not even know why the customers are buying from the company, then most probably the company can never grow in its business because the customers purchase from a company and then they disappear. The company is supposed to retain and take the time to understand the base of the customers.

            The first step for an organisation is to analyse how its sales are made and why the customers visit their stores. Then the organisation is supposed to evaluate the purchasing process for different types of customers (Learly, 2016).

            The company should train its staff and employees so that they can approach all the phases of business in a customer’s mind. The company should train them how to respond in a positive way, how they should resolve the particular issues and how they can escalate that issue.

There are four things that should be kept in mind while giving training to the staff for customer retention:-

        i.            Ask the right questions.

      ii.            Stay positive.

    iii.            Understand the issue clearly.

    iv.            Confirm customer’s satisfaction before disconnecting (Learly, 2016).

Summary

            This literature review includes the online researches, journals and also some of the books related to the topic. This literature review also shows the insights and different arguments, approaches and theories. This literature review is the analysis of the published relevant data.

            A shop or a retailer is a business which presents a selection of products and services and offers to sell or trade them to the customers for benefits and money. Customers experience is a product of interaction between a customer and an organisation. This interaction contains the customer’s awareness, attraction, advocacy, discovery, cultivation and purchase and use of a product or a service. The storekeeper or the sales executive also faces different experiences according to the mood, behaviour, and demands of different customers whether the customer may or may not be a potential customer.

            The marketing strategy which is used to engage the customers encourages and invites them to take part in the evolution of a brand is called as customer engagement. A customer is the one who purchases a service or product. Unlike the consumer is the one who already uses those services and the products. To buy is simply to purchase. However, unlike, to shop is to visit the establishment of business for either inspection or buying products. Customer retention can be defined as the activity which is undertaken by a retailing company in order to reduce the defections of the potential customers.


References

Ang, L. and Buttle, F. 2006. Customer retention management processes: A quantitative study. European Journal of Marketing. 40(2). pp.83-99.

Applebaum, W. n.d. STUDYING CUSTOMER BEHAVIOR IN RETAIL STORES. [pdf]. Available through:<http://www.ecu.edu/cs-cas/anth/nuevosouth/upload/studyingcustomerbehaviorinretailstores-090623023217-phpapp01-slideshare.pdf>. [Accessed on 18th April, 2016].

Bean, J. and Tyne, V. S. 2011. The Customer Experience Revolution: How Companies Like Apple, Amazon, and Starbucks Have Changed Business Forever. Brigantine Media.

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Teixeira, J. 2012. Customer experience modeling: from customer experience to service design. Journal of Service Management. 23(3). pp.362-376.

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