BUSINESS MANAGEMENT

Business Management

Business Management

Introduction

The revenue of a grocery store depends on the number of products that customers will purchase. Although most customers have their predetermined item lists before shopping, thirty to fifty percent of sales are created by impulse purchases. From this fact, people can conclude that increasing the likelihood of impulse item purchase by customers also increases the revenue. Many scholars have studied the behaviour of buying impulse items and the way to best attract customers to buy impulse items by different marketing strategies for example, by changing layout shape, promotional sale, and discount. None of them, however, have considered the use of a systematic method to place the product so as to increase the likelihood that “impulse” items are purchased. The current topic addresses this research gap and provides a systematic method for item placement within a store to increase impulse purchase. Customers visiting a grocery store purchase items according to their needs and specific utility of the item. When a customer visits a grocery or convenience store, they typically purchase a basket of items that contains a predetermined item-list which people name as must have items, and are inclined to also buy impulse items which are purchased only if the customer passes by them during his/her visit to the store. Many people define a customer category with reference to a set of must-have items and a set of impulse items, and assume that customer categories are known along with the sale price and potential purchase quantities for impulse items. In the model, there is a need to assume that a customer plans his/her route in the store using a nearest neighbour approach on his/her list of must-have items. The value of the layout is defined to be the total sales from impulse items. Therefore, all the issues and aspects related to Business Management of Grocery Story will be discussed in detail.

Past research on Grocery Stores

There has been a lot of research on and in grocery supermarkets to understand consumer behaviour. There are ongoing as well as completed studies focused on consumer buying behaviour, travel pattern, etc. A customer purchase can be categorized as a planned or unplanned purchase. A planned purchase is characterized by deliberate, thoughtful search and evaluation that normally results in rational, accurate and better decisions. Impulse buying results from spontaneous buying stimuli, prompted by physical proximity to desired product. Beyond spontaneity, impulse buying is an unexpected urge to buy without regard to the consequences of the purchase decision. Impulse buying could be categorized as (1) Pure Impulse Buying, (2) Reminder Impulse Buying, (3) Suggestion Impulse Buying, and (4) Planned Impulse Buying (Stern, 1962). Studies show that almost 90 percent of people make purchases on impulse occasionally and between 30-50 percent of all purchases were classified by the buyers themselves as impulse purchases. The choice of customer travel path has also received considerable attention. The researchers known as Farley and Ring in 1966 developed a model to predict area-to-area transition probabilities for traffic ...