RESEARCH PROPOSAL impacts of visual merchandising on foreign trade university students’ purchasing decisions towards supermarkets in hanoi

FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION RESEARCH PROPOSAL Impacts Of Visual Merchandising On Foreign Trade University Students’ Purchasing Decisions Towards Supermarkets In Hanoi Instructor : Assoc Prof Cao Đinh Kiên, Ph.D Student’s name : Đặng Vũ Lam Mai Student ID : 1712280036 Class : English 01 – Advanced Program Batch 56 Dang Vu Lam Mai - 1712280036 Contents INTRODUCTION 1.1 Objectives of this study 1.2 Contribution 1.3 Profiles of supermarkets in Vietnam 1.4 Vietnamese consumer responses towards modern retail formats LITERATURE REVIEW 2.1 Visual Merchandising 2.1.1 Store layout 2.1.2 Store Design 2.1.3 Colors 2.1.4 Lighting system 2.1.5 Background music 2.1.6 Cleanliness 2.1.7 Product Shelf Presentation 2.2 Customer’s Buying Decisions 2.3 Conceptual model and Hypothesis METHODOLOGY 3.1 Data Collection 3.1.1 Research approach 3.1.2 Type of research 3.1.3 Survey development 10 3.1.4 Sampling method 10 3.2 Data analysis 11 EXPECTED RESULTS 11 REFERENCES 12 Dang Vu Lam Mai - 1712280036 INTRODUCTION Visual merchandising plays a crucial role in retailing It is a significant factor for retail industry in general and supermarket in specific, to catch the customers’ attention towards the products, trigger their buying eagerness and then lead to purchasing decision In the other way, customer buying decision can be influenced by merchandising Besides, it is considered as a way to silently communicating with customers The seven key elements of visual merchandising I will go into details in this study are store layout, store design, color, background music, lighting system, cleanliness and product shelf presentation 1.1 Objectives of this study The main objective of this research paper is to measure the extent to which visual merchandising of supermarkets in Hanoi, Vietnam affects the customers purchasing decisions of Foreign Trade University students The reason why I focus on this group is that FTU students are the potential target market of supermarkets and retails, who are modern, adaptable to changes and not hesitate to give comments for what they really want The output obtained from this study will show you in detail each potential element of visual merchandising and their impacts on customers’ decisions, thanks to the help of consumers’ behavioral response proposed previously by researchers from various sources 1.2 Contribution Although the importance of visual merchandising has been recognized and digged into many times by researches and reports in several countries, there has been a scarcity of specific researches directing to the Vietnamese emerging market of retailers, especially in supermarket chains in Hanoi Therefore, the finding of this study contributes to the understanding of this affair by providing a welldescribed insight into factors of visual merchandising which affect this behavioral responses of Vietnamese consumers, in this case, the buying decisions of FTU students Dang Vu Lam Mai - 1712280036 Through the results of this research, which shows how and to what extent our target groups behave in response to influential factors in visual merchandising, marketers can make use of these factors in the strategy of not only supermarkets, but also retailers, to fit the demands of their target customers and therefore push up their profits 1.3 Profiles of supermarkets in Vietnam From a few small-size and mini supermarkets opened back in 1990s, Vietnam has about 600 supermarkets up to 2013, and commercial centers with modern forms of retailing, utilities, commodity-price stability, high-quality merchandise that attracts consumers of all social classes (AC Nielsen, 2013) British Business group Vietnam (2016) found out that a decade recently, Vietnam’s retail market has welcomed many big international retailers such as Circle K, Shop&Go, FamilyMart, BigC, Fivimart, Citimart, Simply Mart, Aeon, Lotte, Parkson, Takashimaya As a consumer, we think that the variety of the market provides us more options and modern shopping habits, but as a marketer and from competition perspective, the “invasion” of many foreign giant retailers can become a threat to domestic retailers Currently, there are supermarket chains in Hanoi which are dominant to other smaller ones, which are Vinmart, Co.opmart, Big C and Lotte Mart 1.4 Vietnamese consumer responses towards modern retail formats The rapid economic growth over the past decade has mostly changed the consumption behavior of Vietnamese people As supermarkets are mushrooming all over the country, Vietnamese consumers have gradually shifted from shopping habit in traditional wet markets to shopping in modern shopping formats and supermarkets Moreover, Vietnam social demographic profile features half of its population as younger than 30, working-class, who represent a powerful and more demanding consumer force (Nielsen, 2013; Huong & Jean-Paul, 2005); so they are willing and adaptable to this change Modern Vietnamese shoppers increasingly prefer Dang Vu Lam Mai - 1712280036 shopping in supermarkets where are suitable for busy working people who have little time for shopping as all the commodities is available in one place Though traditional wet markets and small independent stores still dominant the Vietnam retail market, the modern retail food sector has had a faster growth rate (USDA, 2018) We can say, supermarkets are gradually replacing traditional markets in the near future LITERATURE REVIEW 2.1 Visual Merchandising The term “Visual Merchandising” has various definitions from different authors Visual Merchandising is a technique to visually making the brand attractive and highlights the unique features of the store (Yasir, Sana, Javeria, 2017) Walters & White (1987) define visual merchandising as the “activity which coordinates merchandise selection with effective merchandise display.” Besides, Bastow-Shoop et al (1991) define this term in another perspective as “everything the customer sees, both exterior and interior, that creates a positive image of a business and results in attention, interest, desire and action on the part of the customer” Philip Kotler (1974), an American marketing author, consultant, and professor, stated that the quality of store atmospheric elements of retail environment are considered to be part of visual merchandising Eight years later, Donovan and Rossiter (1982) extended the concept of store atmosphere by categorizing into the physical in-store variables such as store layout, architectural design, wall color and social factors such as how interaction takes place and customer behavioral responses 2.1.1 Store layout Store layout, also known as floor layout (Davies & Tilley, 2004), refers to how the different sections and aisles of a store are organized and arranged with Dang Vu Lam Mai - 1712280036 the basic and final objective of lengthening the customers shopping time and then purchase more Nowadays it is much more easier for retailers or visual merchandiser to plan and choose the most effective layout thanks to computer software so that they can maximize the turnover There are three most common layouts that retailers choose to implement in their store, which are the grid pattern layout, the free-flow layout, forced-path layout Among these types, the grid pattern layout is a layout traditionally favored by supermarkets Peter and Olson (1998) stated that supermarkets are designed with the aim of directing customers to the store’s sides and back walls where the most sought-after and high-margin items are displayed (Cited in S.Ong, 2002) 2.1.2 Store Design For each study, the term “store design” is interpreted and defined in different perspectives It includes both in-store design and product displays By Omar’s findings (1999) (Cited in Kerfoot, 2003), interior or in-store displays can be divided into three different categories as: merchandise display, architectural (artistic display) and point-of-sale display According to a research studying the short-term impact of displays located in four different locations including on back of store, at entrance to first aisle, midaisle in front of checkouts and on front of store gondola end, the displays placed at the entrance of the first aisle seemed to be the most effective, leading to an increase of 363% exceeding ordinary sales revenues (Dyer, 1980) (cited in McGoldrick, 2002) 2.1.3 Colors Color has been proved to have significant impact on consumer attention Many studies and researches have been carried out throughout the years to investigate the physiological and psychological effects of colors Gerard (1957) states that in general, warm colors (red and yellow) have produced opposite psychological effects than cool colors (blue and green), which Dang Vu Lam Mai - 1712280036 are opposite on the color spectrum For example, red or warm colors have been correlated with increased blood pressure, respiratory rate, eye blink frequency (Cited in: Bellizzi and Hite, 1992) Bellizzi et al (1983) discovered and tested the effects of color in retail store design and the results showed the similar explanation He speculated that a red or too vivid color environment may overstimulate buyers both in physiological and psychological way, therefore may weaken the purchasing deliberations and buying decisions (Cited in: Bellizzi and Hite, 1992) However, Solomon, Gary and Askegaard(2006) disagreed with that statement by saying firmly that the preference of color for a store must be done keeping in mind the demand and the ongoing trend as it hugely attracts the customers 2.1.4 Lighting system Lighting has also been a great consideration for retailers and marketers who want to grab consumer attention It is an important factor in the environment’s impact on each individual when they walk in whether retail store or supermarket (Mehrabian, 1976) He explained that brightly lit rooms are apparently more arousing than dimly lit ones (Cited in: Summers and Herbert, 1999) This perspective was also strengthened by Areni and Kim (1994) when they discovered that consumers examined and observed significantly more items under “bright” lighting conditions than under the “soft” ones Generally, customers are super sensitive to the way a store is lit 2.1.5 Background music Music is also considered as an important way influencing customer buying decisions and can be analyzed in two aspects: sound intensity and tempo A study by Milliman (1982) suggests that slow tempo of instrumental background music can significantly slow the pace of in-store traffic flow of supermarket customers, in contrast of fast tempo, so that customers will stay longer or take more products Dang Vu Lam Mai - 1712280036 An early study by Smith and Curnow (1966) found that customers stay longer in the store if the background music was soft compared to when it was loud For further study, Kellaris and Rice (1993) used a decibel meter in comparing the impact of soft (average sound level of 60 dB) and loud music (average sound level of 90 dB) and finally reported that the impact of loudness on musical preference differed by gender, with females reacting to louder music more negatively than males (Cited in: Oakes, 2000) 2.1.6 Cleanliness The statement that both frequent and occasional shoppers across all retail formats considered cleanliness as the most important factor of store visual merchandising was protected and strengthened by a study by Carpenter and Moore (2006) Yun and Good (2007) firmly stated that shopping in a bright and clean store might stay in customer’s mind as an image of cleanliness, satisfaction, or luxury, which every retail or supermarket direct towards Thus, store image (e.g a store is clean, secure, friendly, etc.) can be described as the overall look of a store and the series of mental pictures and feelings it arises within the consumer (Milad & Mahshid, 2012) 2.1.7 Product Shelf Presentation Product shelf presentation can be defined the placement and arrangement of product on shelves It consists of the position that the products are placed (high or low), the height of shelves and the shelf space between products arranged in the shelf row Eye movement studies in stores observed that up to one third of the packages on the shelves are ignored by most of the shoppers (Young, 1987) (Cited in Larson, 2006) This behavior can be explained by Ebster and Garaus’s study in 2011 that customers have known that top positions of the shelves are always filled by top brands in the stores or supermarket This finding emphasizes that it is necessary for retailers to focus on the items they want to sell (Ibid) Dang Vu Lam Mai - 1712280036 Retailers and visual merchandiser divide a gondola into four vertical zones, each zone will receive different degree of attention from customers browsing aisles: Stretch level (>6 ft); Eye level (4-5 ft); Touch level (3-4 ft) and Stoop level (