Consumer Behavior in Stock-Out Situation

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Literature Review

There were many researches that aimed to crack the determinants for the consumer purchase behaviour in out-of-stock situations. According to Willem Verbeke, Paul Farris and Roy Thurik, the consumer behaviour were classified into 3 types: delaying purchase, switching brands and switching stores. Also from this paper we came to know about the different factors that will be effecting the out of stock (OOS) situations which includes loyalty, length of time the OOS exists, perceived product risk and time pressure due to urgency of product need.

According to Madhukar Nagare and Pankaj Dutta factors like availability of acceptable alternative item, store service, store loyalty, greater purchase urgency and shopping attitude were proved empirically that these factors will influence the consumer to substitute the brand. Mauro Sampaio and Claude Machline found out that parameters like discount store perception, urgency, store loyalty and brand loyalty had positive effects on the consumer response in such situations. Professor Torben Hansen, Professor Suzanne C. Beckmann and Professor Hans Stubbe Solgaard from their findings they confirmed that in out-of-stock situations consumers would switch to another store to buy their preferred brand. The results also confirmed that preferred supermarket satisfaction has a positive moderating influence on the relation between price consciousness and out-of-stock store switching.

Prof. Dr M.A.K Chishty, Samiya Loya, Saman Ismail and Humza Zaidi suggested a conceptual framework that incorporates the chief determinants of consumer responses to out of stock situations. The result showed that consumers react differently prior to the particular variable. When talking about general time constraint consumers were more likely to leave the store or delay purchase. Similarly considering another variable brand loyalty, customers using brands for less than 1 or 2 years substitutes the product immediately, but a brand loyal person who had used the product for more than 6 years was ought to delay or leave the store. Other factors like type of shopping trip and store distance had a significant effect on consumer response to stock out.

According to Leela Rani and Sanal Kumar Velayudhan, the key findings of the study showed that perception of shopping as work or fun, tendency to concentrate purchases in one store, overall price perceptions of the retail store, store distance, brand loyalty and number of shopping trips in a week have a substantial impact on consumer’s store attitude in out-of-stock. According to Stephen B. Castleberry parameters that would affect the OOS situation were divided into short term and long term. Short term included loss of sales and switching of products, whereas the long term factors included deterioration of brand loyalty and permanent switch of customers

Objective

The main objective of the study was to identify the factors that affect customer behavior in the stock out situation of their desired product by studying the various courses of actions taken by prospective customers. The literature review provided us with various options commonly adopted by customers, and hinted that there were certain other factors. In our study itself, we aimed to see what decisions people take and if there was any other variable such as their preferred marketplace, or their frequency of visits, which affects their buying decision. In addition to this, we also put in certain constraints to the out of stock circumstance to see if their decision is rigid or circumstantial. This will help us understand a consumer’s behavior much better and help us mitigate the problem as a retailer. It will give us practical knowledge on reading consumer behavior and their reactions. Only when we get to know the factors which affect a consumer’s purchase decision and also to what degree, we can make a correct decision to mitigate this problem.

Research Hypothesis

H1: Customer reaction in out of stock situation of the preferred brand is independent of shopping point

H2: Customer response in out of stock situation of the preferred brand is independent of frequency of shopping in a week

H3: Customer response in out of stock situation of the preferred brand is independent of customer’s gender

H4: Customer response in out of stock situation of the preferred brand is independent of day of shopping

H5: Customer response in out of stock situation of the preferred brand is independent of time of shopping

H6: Customer response in out of stock situation of the preferred brand is independent of promotional offers of other brands

H7: Time constraint affects customer response in out of stock situation of the preferred brand

Research Methodology

Conventional research methodology was followed. After the formulation of objectives and hypothesis, survey was design following exploratory research method. Sample data obtained was then analysed both using descriptive statistics and inferential statistics such as regression analysis, Chi-Square Test and Factor Analysis. Using the findings, the research study provided conclusions and some recommendation.

Method of Research

We conducted a survey to comprehend a customer's behavior in Out-of-stock situation. Our main idea was to see what most customers do when their desired product is not available in the market (i.e. is out of stock) and imposed a few conditions on it to see if their reactions change under certain conditions. The questionnaire for the study comprised three main sections: section one regarding the various background information about their purchasing behavior such as the weekly frequency of their purchase, their preferred market place, their desired time, etc. Section two mostly asks the main question regarding their reaction, in various circumstances.

To begin with, we asked if the person taking the survey is male or female. This may later help us detect patterns of consumer behavior for the different strata. Further we also divided the market place into three, namely the Supermarkets like Big Bazar and Vishal Mega Mart, organized retail stores such as Reliance Fresh, and the local kirana stores. Then we tried to find the time of the day, when people went out to shop and also the time frame. Along with this information, respondents were