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CHAPTER4
THEORETICALFRAMEWORK
4.1PurposeofResearch
Theoverallpurposeofthisresearchhasbeentostudyandunderstandtheeffectof
modernretailformatsontraditionalretailformatsinIndia.Itisaknownfactthat
organizedretailingismakingastrongimpactinmanypartsofIndia'sgrowingeconomy.
Withrapidchangeandexpansionintheretailenvironment,ithasbecomeallthemore
necessarytoidentifythedifferentparametersthatdriveoverallsatisfactionofconsumers
formodernretailformatsandtraditionalretailformats.Fastchangingconsumerattitudes
aboutproductshaveencouragedretailerstodevelopnewpositioningstrategiesto
enhancecustomerloyalty(GwinandGwin,2003).Newretailformatsandstoresare
beingcontinuouslyintroducedandtraditionalretailformatneedtofindwaystoretain
customers(Uusitalo,2001).Foodandgroceryretailerstodaymustdifferentiate
themselvesbymeetingtheneedsoftheirretailshoppersbetterthanthecompetition.
Thereisgeneralagreementthatabasicretailingstrategyforcreatingcompetitive
advantageisthedeliveryofhighservicequality.
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Retailersarefacedwithseveralissueslike:
1.Doestheconsumerorderhismonthlygroceryandhouseholditemsfromthe
neighbourhoodkiranastoresinceitiseasyandconvenientordoesheprefertogotoa
modernformatlikeBigBazaarwhichoffershimasuperiorshoppingexperienceand
greatdiscountsonbulkpurchases?
2.Doeshepreferthemodernformatoverthetraditionalmomandpopstoresincertain
circumstances?
3.Canthetwoformatscoexistgiventhattheconsumermayhavedifferentexpectations
ondifferentoccasions?
4.Whatarethechallengesforthetraditionalformatsgiventhatthehousewifetodayis
awareofthediscountsbeingofferedonitemsofdailyconsumptionlikerice,sugar,
edibleoiletc?Arethemodernformatslackingincertainareaslikeeaseofdeliveryof
productsandtrust?
Thepresentstudyfocusedonansweringtheabovequestions.Furtherthepresentstudy
focusedonconsumerratherthancustomeroffoodandgrocerystores.Customersare
oneswhovisitthestorebutmaynotpurchaseanything.Aconsumerontheotherhandis
onewhoutilizesthegoodorservices.Henceconsumershavebeenconsideredforthe
presentresearchsinceitwasrequiredtounderstandstoreattributes,satisfactionwithboth
theformats.

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Econometricsmaybedefinedasthequantitativeanalysisofactualeconomicphenomena
basedontheconcurrentdevelopmentoftheoryandobservation,relatedbyappropriate
methodsofinference(Samuelsonetal,1954).Empiricalresearchatpresenthasstillthe
dominanceoftheclassicalmethodologyofeconometrics,whichproceedsalongthe
followinglines(Gujarati,2006)
1.Statementoftheoryorhypothesis
2.Specificationofthemathematicalmodelofthetheory
3.Specificationofthestatisticaloreconometricmodel
4.Obtainingthedata
5.Estimationoftheparametersoftheeconometricmodel
6.Hypothesistesting
7.Forecastingorprediction
8.Usingthemodelforcontrolorpolicypurposes
GiventheaboveunderstandingofthetermEconometrics,theresearchquestionsand
hypothesisweredevelopedasfollows.
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4.2ResearchQuestions
Whilethepurposestatementgivesdetailsofthegeneraldirectionofthestudy,aresearch
questionstatesthespecificlineofenquirytheresearchwillinvestigateandattemptto
answer.Black(1993)recommendsaspecificresearchquestion,followedbyanumberof
hypotheses.Kerlinger(1986)suggeststhatgoodresearchquestionsshould
expressarelationshipbetweenvariables
bestatedinunambiguoustermsinquestionform
implythepossibilityofempiricaltesting
Accordingly,thefollowingresearchquestionshavebeenlistedbelowandtakenupfor
investigation.
ResearchQuestions:
1.Howhasthemodernretailformatimpactedthetraditionalretailformatson
parameterslikefrequencyofvisits,monthlyspends?
2.Whichofthetwoformatsdoconsumersprefertobuyvariousfood,groceryand
householditems?
3.Whicharetheimportantparametersthatinfluenceconsumersoverallsatisfaction
withthetwoformats?
4.Arethedriversofsatisfactionthesameordifferentfortraditionalandmodernretail
formats?
5.Whatistheoveralldispositiontowardsthetwoformats?
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4.3ResearchObjectives

Thefollowingaretheobjectivesoftheresearch:
1.Tostudythesatisfactionlevelsofshoppersamongtraditionalformatsand
modernformatsandidentifythekeydriversofsatisfactionamongthetwo
formats
Tostudytheconsumerssatisfactionlevelswithvariousattributeslike
location,convenientstoretimings,promotionsanddiscounts,ambience,
freshnessofproductsstockedetc.forbothtraditionalandmodernformats.
Furthertoderiveahierarchyofattributessothatretailerscanfocusonthe
rightmixwhichwouldresultinhigherchancesofbeingpatronized.
2.Tounderstandtheshopperneedsbetteranddelvedeeperintoinnerneedsto
gobeyondfunctionalneedsandarriveatahierarchyofneeds.
Aquestioninmindwaswhenaconsumershopsdoeshelookatindividual
parametersordoabundleofparametersgovernhisoverallsatisfactionwith
thetwoformats?Hencethepresentstudyattemptedtogroupwillgroupthe
differentattributesintoafewmanageabledimensionssothatretailerscould
focusondeliveringonabundleofattributes.
3.Tounderstandtheprimarytriggersofvisitingamodernretailformat.What
aretheothertriggersthatmayhaveledtoashiftfromtraditionalformatsto
modernformat?
Anattemptwasmadeheretostudythesourcesofawarenessofmodern
formats.Tofindoutwhetheradvertising,orbrandnameorrecommendation
byfriendsandfamilywasthemainreasonofvisitingmodernformats.
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4.Tounderstandifmodernretailstoretodayisanalternativethatisattractive
enoughtogetshopperstoshift?
Thefocusofthestudyherewastostudytheoveralldispositionofconsumers
towardsthetwoformatsandsegmentthemarketbasedontheirattitude
towardsthetwomarkets.
5.Toidentifythereorientationneededbythetraditionalretailoutletstoretain
theirplaceandconsolidatetheirsurvivalandgrowthwhichcantakeplace
despitetheestablishingofthemodernretailformats.
4.4Hypotheses
Storeattributesareevaluativecriteriathatinfluencesconsumersattitudetowardsastore
(JinandKim,2003),whostatethattheinfluenceofstoreattributesoncustomerloyalty
dependsonconsumerspurposesofshoppingandperceptionsofstoreattributes.Previous
researchhadidentifiedstoreattributesasamultidimensionalconstructincluding
locationofstore,natureandqualityofstocks,instorepromotions,salespersonnel,
physicalattributes,convenienceofstore,atmosphericsandloyaltycardsthatinfluences
consumerbehaviour(Miranda,KonyaandHavrila2005).Inthisstudy,storeattributesis
measuredusingvariablessuchasambience,offersandpromotions,locations,convenient
storetimings,availabilityofcredit,freehomedelivery,andlongassociationwiththe
storeasthesevariablesaremorerelevanttoIndiancontext.

Ahypothesisisapropositionabouttherelationshipbetweentwovariablesthatcanbe
testedforassociationorcausalityagainsttheempiricalevidence.
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Thefollowingwerethehypothesesproposedbytheresearcherinthisstudy:
Hypothesis1:Consumersmakefrequentlowerexpendituretripstotraditional
formatsandlessfrequenthigherexpendituretripstomodernformats.
Theobjectiveofthehypothesiswastofindouthowfrequentlyconsumersvisited
traditionalformatsandmodernformatsinamonth.Furtherhavingvisitedthetwo
formatshowmuchdidtheyspendonanaveragepervisitonfoodandgrocery?
Hypothesis2:Consumersinformationoftraditionalformatsandmodernformatsis
fromdifferentmedia.
Theobjectiveofthehypothesiswastofindtheroleofdifferentsourcesofinformation
thathelpsconsumersgainknowledgeofthetwoformats.
Hypothesis3:Thereexistsarelationshipbetweentypesoffooditemspurchasedand
choiceofformats.
3a.H1:Consumersprefertopurchaseprocessedfoodsfrommodernformats.
3b.H1:Consumersprefertopurchasefreshproducefromtraditionalformats.
Theabovehypothesissoughttoestablisharelationshipbetweentypeoffoodand
preferredformatofstorefromwhereitispurchased.Itwashypothesizedthatconsumers
prefertopurchasefreshproducelikefruitsandvegetablesfromtraditionalformatsand
processedfoodslikebiscuits,juices,etc.frommodernformats.
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Hypothesis4:Storesatisfactionisstrongerformodernformatsthantraditional
formats.
Theobjectiveofthishypothesiswastoinvestigatewhetherconsumersweremore
satisfiedwithmodernformatsorwithtraditionalformats.
Hypothesis5:Satisfactionlevelsvaryforthedifferentattributesintraditional
formatsandmodernformats.
Heretheobjectivewastofindoutwhichofthevariousattributeslikeconvenientstore
timings,location,freehomedelivery,ambience,availabilityofwiderangeofproducts,
attractivediscounts,schemesandpromotions,courteousandwelltrainedstaffetc.,are
consumersmoresatisfiedwithandwhetherthesatisfactionlevelsforalltheparameters
varyamongthetwoformats.Hereitiswishedtodiscernthedifference,ifany,between
customerperceptionsofgrocerystoreattributesfortraditionalformatsandmodern
formats.
Fortheabovemainhypothesis,subhypothesis5ato5jhavebeendevelopedandtested
forassociationbetweenoverallsatisfactionandindividualattributeswhichinclude
freshnessofproductstocked,promptnessofhandlingcustomercomplaints,long
associationwithstore,etc.

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5a.H1:Freshnessofproductstockedispositivelyrelatedtostoresatisfactionfor
bothmodernformatsandtraditionalformats.
5b.H1:Therelationshipbetweenfreshnessofproductstockedandsatisfactionis
strongerfortraditionalformatsthanformodernformats.
Theobjectiveherewastoestablishthatstoresatisfactionandfreshnessofproduct
stockedhaveadirectcorrelationandtherelationshipbetweenthetwovariableswas
strongerfortraditionalformatsthanformodernformats.
5c.H1:Promptnessofhandlingcustomercomplaintsispositivelyrelatedtostore
satisfactionforbothmodernformatsandtraditionalformats.
5d.H1:Therelationshipbetweenpromptnessofhandlingcustomercomplaintsand
satisfactionisstrongerfortraditionalformatsthanformodernformats
Theobjectiveherewastoestablishthatstoresatisfactionandpromptnessofhandling
customercomplaintshaveadirectcorrelationandtherelationshipbetweenthetwo
variableswasstrongerfortraditionalformatsthanformodernformats.
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5e.H1:Longassociation/relationshipispositivelyrelatedtostoresatisfactionfor
bothmodernformatsandtraditionalformats.
5f.H1:Therelationshipbetweenlongassociation/relationshipandsatisfactionis
strongerfortraditionalformatsthanformodernformats
Theobjectiveherewastoestablishthatstoresatisfactionandlongassociationhavea
directcorrelationandtherelationshipbetweenthetwovariableswasstrongerfor
traditionalformatsthanformodernformats.
5g.H1:Attractivediscounts,schemesandpromotionsispositivelyrelatedtostore
satisfactionforbothmodernformatsandtraditionalformats.
5h.H1:TherelationshipbetweenAttractivediscounts,schemesandpromotions
andsatisfactionisstrongerformodernformatsthanfortraditionalformats.
Theobjectiveherewastoestablishthatstoresatisfactionandlongassociationhavea
directcorrelationandtherelationshipbetweenthetwovariableswasstrongerformodern
formatsthanfortraditionalformats.
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5i.H1:Hasslefreeexchangepolicyispositivelyrelatedtostoresatisfactionforboth
modernformatsandtraditionalformats.
5j.H1:Therelationshipbetweenhasslefreeexchangepolicyandsatisfactionis
strongerfortraditionalformatsthanformodernformats.
Theobjectiveherewastoestablishthatstoresatisfactionandhasslefreeexchangepolicy

haveadirectcorrelationandtherelationshipbetweenthetwovariableswasstrongerfor
traditionalformatsthanformodernformats.
Hypothesis6Performanceofthetwoformatsonthedriversofsatisfactionare
different
Heretheobjectivewastofindoutwhichofthe22attributesdrivestoresatisfactionand
whetherthedriversofsatisfactionwerethesameordifferentfortraditionalformatsand
modernformats.
Hypotheses7Consumersaredividedintheirdispositiontowardstraditional
formatsandmodernformats.
Heretheobjectivewastofindouttheoverallattitudethatconsumershavetowardsthe
twoformats.Dispositionwasgaugedbyelicitingconsumersresponseona7pointscale
indicatingthedegreeofloyaltyfortraditionalformatsandmodernformats.
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7aH1:Modernformatsarehighlyrecommendedbyconsumers
Heretheobjectivewastofindouthowlikelywereconsumerstorecommendmodern
formatstotheirfriendsandrelatives.Recommendationisagoodindicatorofcustomer
commitment.
7bH1:AsIncomeincreasesconsumersshiftinfavorofmodernformats.
Heretheobjectivewastoinvestigatewhetherthereexistsarelationbetweenincomeand
overallattitudetowardsmodernformats.
Hypothesis8Patronsofmodernformatsdifferfrompatronsoftraditionalformats
onvariousdemographicvariables.
Heretheobjectivewastoestablishtheprofileoftheconsumersoftraditionalformatsand
modernformatsonvariousdemographicvariablesandownershipofdurables.