A Study on Working of Modern and Traditional Retail Formats

A STUDY ON WORKING OF MODERN AND TRADITIONAL RETAIL OUTLETS: A COMPARATIVE ANALYSIS Thesis submitted to the University of Agricultural Sciences, Dharwad in partial fulfillment of the requirement for the Degree of MASTER OF BUSINESS ADMINISTRATION IN AGRIBUSINESS By HEMASHREE, A. S. DEPARTMENT OF AGRIBUSINESS MANAGEMENT COLLEGE OF AGRICULTURE, DHARWAD UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD-580 005 JULY, 2008 ADVISORY COMMITTEE Dharwad JULY, 2008 (N. N. KARNOOL) MAJOR ADVISOR Approved by: Chairman : ______________________ (N. N.

KARNOOL) Members : 1. ____________________ (L. B. KUNNAL) 2. ____________________ (H. BASAVARAJ) 3. ____________________ (BASAVARAJA BANAKAR) 4. ____________________ (K. V. ASHALATHA) CONTENTS Sl. No. CERTIFICATE ACKNOWLEDGEMENT LIST OF TABLES LIST OF FIGURES 1 2 INTRODUCTION REVIEW OF LITERATURE 2. 1 Procurement and inventory management in modern and traditional retail outlet. 2. 2 Investment pattern in modern and traditional retail outlets. 2. 3 Costs in value addition made by retail outlets. 2. 4 Cost and Returns in the trade by retail outlets. . 5 Factors influencing the consumer behavior in purchase made in retail outlets. 3 METHODOLOGY 3. 1 3. 2 3. 3 3. 4 3. 5 3. 6 4 Description of the study area Sampling design Selection of the products Nature and sources of data Analytical tools and techniques employed Definition of terms and concepts used in the study Particulars Page No. RESULTS 4. 1 4. 2 Cost of procurement and inventory management in retail outlets Investment pattern in retail outlets Sl. No. 4. 3 4. 4 4. 5 Particulars Page No. Cost in value addition made by retail outlets.

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Cost and returns in the trade by retail outlets Factors influencing the consumer behavior in purchase made in retail outlets. 5 DISCUSSION 5. 1 5. 2 5. 3 5. 4 . 5 Procurement management and inventory management Investment pattern in retail outlets Cost of value addition in retail outlets Cost and returns in the trade by retail outlets Factors influencing the consumer behaviour in purchase made in retail outlets 6 7 SUMMARY AND POLICY IMPLICATIONS REFERENCES APPENDICES LIST OF TABLES Table No. 4. 1 4. 2 4. 3 4. 4 4. 5 4. 6 4. 7 4. 8 4. 9 4. 10 4. 11 4. 12 4. 13 4. 4 4. 15 4. 16 4. 17 Title Procurement Pattern of Food Items by Modern Outlets Procurement Pattern of Food Items by Traditional Outlets Cost incurred in Procurement of Food Items by Modern Retail Outlets Cost incurred in Procurement of Food Items by Traditional Retail Outlets Comparison of Mean Value of Procurement Costs between Modern and Traditional Outlets Weekly Inventory Management in modern format Weekly Inventory Management in Traditional Outlet Comparison of Components of Inventory Cost between Modern Traditional Retail Outlets for Food Items and Page No.

Comparison of Mean Values of Inventory Costs between Modern and Traditional Outlets Investment pattern in retail outlets Activities Undertaken in Preparation of the Product for Sale Cost of Preparation of Product in Retail Outlets Value Addition in retail outlets for Selected Products Cost and Returns in marketing of commodities by Modern Retail outlet Cost and Returns in marketing of commodities by Traditional Retail outlet Comparison of Retail Business between Modern and Traditional Outlet Factors influencing on consumer behaviour

LIST OF FIGURES Figures No. 1a Title Components of Procurement Cost of Rice and Wheat by Modern and Traditional Retail Outlets Page No. 1b. Components of Procurement Cost of Greengram and Tur dal by Modern and Traditional Retail Outlets Components of Procurement Cost of Groundnut, Groundnut oil and Sunflower oil by Modern and Traditional Retail Outlets Components of Procurement Cost of Raisins and Cashewnut by Modern and Traditional Retail Outlets Inventory Management in Modern Retail Outlet 1c. 1d. 2. 3.

Inventory Management in Traditional Retail Outlet LIST OF APPENDICES Appendix No. 1. Questionnaire – I Title Page No. 2. Questionnaire – II 1. INTRODUCTION Retailing encompasses the business activities involving goods and services to their consumers for their personal family / household use. Retailing is the largest private industry in the world with total sales of US $ 6. 6 trillion. The retail sectors play a significant role in the world economy because of the contribution that it makes to the economy of the country.

Retail, according to concise Oxford English Dictionary, is the ‘sale of goods to the public for use or consumption rather than for resale’. Retailing is derived from the French word ‘retailer’ meaning ‘breaking bulk’, specifically, breaking bulk quantities into smaller saleable units. Usually, a retailer buys goods or products in larger quantities from manufacturers or importers, either directly or through a wholesaler and then sells individual items in small quantities to general public or the end users.

As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. The world over retail sector has been growing rapidly with increasing sophistication and modernization of the life-style of households and individuals and also with increasing globalization of trade. The retail sector has strong backward and forward linkages with other sectors like agriculture and industry through stimulating demand for goods and through mass marketing, packaging, storage and transport.

Moreover, it creates considerable direct and indirect employment in the economy. Also, the consumers have benefited in terms of wide range of products available in a market. The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. A. T. Kearney, the well known international management consultant, recently identified India as the second most attractive retail destination globally from among Thirty emergent markets. The Retail sectors have become one of the most dynamic growing sectors in recent times.

Retailing has always been an integral part of economic development. Nations with strong retail activity have enjoyed greater economic and social progress. It contributes to the development by matching the individual requirements of the population with the producers and suppliers of merchandise. By bringing the product to the customers, they are helpful in creation of demand of new offers leading to expansion of market. The Indian retail industry is not only one of the most fragmented in the world, but also the most challenging due to its unorganized nature.

The retail sector is broadly classified in to two groups; organized and unorganized retail sector. The organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sale tax, income tax, etc. These include the corporate – backed hypermarkets and retail chains, and also privately owned large retail businesses. It is not just stocking and selling but is more about efficient supply chain management, developing vendor relationships, quality customer service, efficient merchandising and timely promotional campaigns.

On the other hand the unorganized retailing refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner managed general stores, convenience stores, hand cart and pavement vendors, etc. This market is characterized by typically small retailers, more prone to tax evasion and lack of labour law supervision. This market is more common in developing countries. 1. 1 Indian Grocery Retail Market Grocery constitutes over 50 per cent of the Indian retail market and has an annual turnover of US $80 billion. There are estimated to be 6. million grocery outlets in the country in various shapes and sizes. Almost all of’ these are unorganized and fragmented. The organized sector represents mere two per cent of the total grocery market in India and this is concentrated in urban locality. The pressures from the consumer demand and range proliferation are impacting the grocery in urban India today. In the past there have been sporadic efforts by the government and the co-operative sector to develop modern formats. These include discount dry grocery shops like Super Bazaar in Delhi and Shakhari Bandar in Mumbai.

Numbers of traditional kirana stores are expanding to become super kiranas. New forms of stores are expanding to include customer walk through space and allow self-service shopping with touch and feel. Food World is the best example for this, where product categories include staples, fresh fruits, vegetables, dairy, bakery, frozen products, processed food, beverages, household cleaning products and general merchandise. The other example includes Subhiksha in Chennai and Bangalore. 1. 2 Global Scenario of Retailing

Retail has played a major role world over in increasing their activity across a wide range of consumer goods and services. The impact can be seen in countries like U. S. A. , U. K. , Mexico, Thailand and more recently China. Economies of countries like Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily assisted by the retail sector. Globally, retailing is a big business and its turnover accounts to US $ 6. 6 trillion. The retail industry in America employs more than 22 million people and generates more than US$ 3. trillion in retail sale annually (www. epwrf. res. in). According to the India retail report 2005, the retail sales was found to be the highest in developed countries like U. S. A. and U. K. , wherein 85 per cent of the retail sector was constituted by organized retailing due to 100 per cent foreign direct investment (FDI) and its contribution of nine per cent to GDP and more than 10 per cent employment in these countries (www. imagesretail. com/ india_retail_report. htm). The share of organized retail is more so in case of developed countries due to the busy life chedule and lack of time for shopping for the common man, high literacy rate, exposure to media, greater availability and penetration of variety of consumer goods into the interiors of the country and better shopping experience. Whereas, the share of organized retail outlets in developing countries was very less, it was 17 per cent in China and very meager, about Three per cent, in India because of the poor literacy rate, lack of exposure to media, non-availability and low penetration of consumer goods to rural areas of the country and lack of shopping experiences.

There are many Multi National Companies (MNCs) operating in the retail business throughout the world. The big four champions in 2004 were Wal-Mart, Carrefour, Home Depot and Target. Except Carrefour, which hailed from France, all three top champions were from U. S. A. The combined sales was US $ 438 billion and were growing at the rate of 10 per cent per annum, there growth came from putting small stores out of business. This is happening in Europe and Asia also in recent times. The Big Box and Hypermarket are operating everywhere.

However, Germany based Metro is operating in 27 countries all over the world including India. The traditional forms of independently owned small business and co-operative have lost significant market share in developed countries and the retail sector in these countries is now characterized by large multiple chains run by powerful and sophisticated organizations. In the globe, the recently existing retail formats are Hypermarkets, Supermarkets, Mass merchandisers, Discounters, Convenience stores, Specialty stores and Mom-and-pops.

The evolving formats with their dealing category of goods and the examples of the type are shown below: Hypermarkets – These are mainly located out of town covering an area over 40,000 Sq. ft, aiming at the monthly bulk shoppers. These markets have spacious parking lots and sell a variety of products such as electronic, clothing, durables and so on apart from groceries. Supermarkets – It is mainly based on the classical self-service system. Its area varies from 4,000 to 20,000 Sq. ft. They mainly focus on one of the primary conditions of grocery, household goods, personal care etc.

Mass Merchandisers – The mass merchandisers have cross country chain operations. They have centralized sourcing hub, spiked distribution and sell almost everything at competitive prices. Discounters – Aimed mainly at bargain buyers, they are different from supermarket. They offer less choice in each category; give discounts, cheap costs and inventories at lower level. Convenience stores – They are located at convenient points like petrol stations that keep open day and night and sometimes do odd jobs for time starved customers (clothes, laundry, medicine prescription, pick up).

They occupy a small area, usually less than 2,000 Sq. ft. Specialty stores – These are moving towards ‘consultative shopping’; where a salesman is well trained in offering specialized advice to customers before they purchase any commodity. Mom-and-Pops – Traditional formats, these are very small (less than 1000 Sq. ft), and family owned corner shops. 1. 3 Indian Scenario of Retailing Retailing is one of the largest industry in India and second largest employer after agriculture. The retailing industry provides employment to over 18 million people.

One out of every 25 families in India is engaged in the business of retailing. Ownership and management are predominantly family controlled. However, in sharp contrast to developed countries, unit average size of retail outlet in India is very small. It is the Tenth largest economy in the world based on GDP. The Indian retail sector is growing at compound average growth rate (CAGR) of 30 per cent over the next five years. However, the share of modern organized retail sector is likely to grow from its current Three percent to 15-20 per cent over the next decade.

More than Eight per cent of the population is engaged in this activity. The Indian retail industry is valued at US $300 billion and is expected to grow to US $427 billion by 2010 and to US $637 billion by the end of 2015. The retail sector is expected to generate employment in excess of 20 lakhs by 2010 of which 5-6 lakhs will be in the organized sector. The country is rated as Fifth most attractive emerging retail sector and ranked second in a Global Retail Development Index of 30 developing countries as drawn up by A. T. Kearney.

Unlike most other countries, Indian retail sector is highly fragmented and bulk of the business is in the unorganized sector (97 per cent) like local ‘wet’ market vendors, roadside pushcart sellers or tiny kirana (grocery) stores. In India, the majority of food consumption is still at home. There are an estimated 12 million retail outlets, of which almost Seven million sell food and grocery products. The vast majority of these are small kiosks (17 per cent), general provision stores (14 per cent) and grocery stores (called kirana; 56 per cent of all rural retail outlets) run by a single trader and his family.

With more than 71 per cent of the population living in small villages and engaged in agriculture, most of Indians still do their food shopping at small-scale vendors in the local village, or at large-scale weekly markets which are often serving several villages in one area, where small individual vendors trade. In the towns and cities, most consumers do their food shopping at the local neighborhood, independent small retailers, kiosks and street hawkers. (Anonymous, 2005). Organized retailing accounts for only Three per cent in India, whereas it is 85 per cent in USA and U.

K. , 75 percent in Taiwan, 55 percent in Malaysia, 35 per cent in Korea and 20 per cent in China. The growth of retail sector in the country is tremendous, both in urban and rural areas. The country has witnessed a retail revolution in recent years. Significant development has been taking place in urban areas in the form of organized retailing , mega stores or malls, more so in the south of the country in the major cities of Bangalore, Chennai and Hyderabad, as well as New Delhi and Mumbai in the North.

It is expected that the Tier II cities would take another five years to absorb modern retailing opportunities. Moreover, the case for Indian retailers to explore rural markets is also strong due to the size of rural population and agricultural income growth in last couple of years. The major formats being followed for organized food retailing in India are supermarkets, discount stores, fresh product outlets, specialty stores, convenience stores and off price retailers. International attention is now increasingly focused on the rapidly growing Indian food retail market.

With the removal of quantitative restrictions on imports, Indian consumers can have access to food from around the world. Market analysts believe that hypermarket will determine the future of organized food retailing over the short to medium term. Traditional grocers are also gradually redefining themselves by increasing floor space and introducing self-service format and value added services such as credit and home delivery (Anonymous, 2004). Food retailing is one of the important part of the present organized retail industry in the world.

Growing at a rate of 30 per cent, the Indian food retail is going to be a major driving force for the retail industry. The changing life styles, tastes and higher disposable income, growing need for convenience, etc. has revolutionalized the food retail scenario of the country and now it has become the largest segment of the retail sector of India. After half a decade of unorganized activity and fragmented “Mom & Pop” stores, organized food retailing in India is developing rapidly, accounting for about 14 per cent of the total organized retail trade in the country.

Although modern formats such as supermarkets and hypermarkets constitutes less than one per cent of the total food retailing, it is fast picking up to be the next major industry as India is experiencing a consumption boom driven by rising incomes, rapid urbanization, etc. The retail sales grew by 10. 5 per cent in rupee terms in 2005. Since food accounts for over 60 per cent of the customers spending, food retailing has greater opportunity to grow. 1. 4 Retailing in Karnataka The study conducted by the Rabo India Finance Pvt. Ltd. ays that south Indian states of Tamil Nadu, Andhra Pradesh and Karnataka have taken a lead role in establishing modern food outlets. The growth of organized retailing has shown particular vigour in Chennai and Bangalore, where an estimated 40 per cent of their grocery requirements are met through modern retail formats. The study pointed out that media exposure, nuclear families and emancipation of women are some of the important demographic reasons for the shift in the decision-making variables from price. The study also estimated that organized food retail sector is set to expand over Ten folds in the next five years to approximately Rs. 5 billion (US $1. 6 billion). The estimate was based on the assumption that 6 million households would spend Rs. 1000 per month through organized retail. Karnataka is one of the leading states in organized retailing in India as there are more than Ten organized retailers (firms) with more than 100 outlets including Metro AG operating in Bangalore city alone. Due to increasing urbanization and expanding service sectors like software, banking, insurance and business process outsourcing (BPO) in Bangalore, which has taken into a metropolitan city status more recently has led to increase in income of the consumers.

Apart from Bangalore, cities such as Mysore, Mangalore and Hubli-Dharwad in Karnataka are also growing rapidly in terms of urbanization, income and organized retailing with local food marketers as they are converting unorganized retail outlets into organized form because of strong demand for convenience products; and better educated consumers concerned about health, nutrition, food safety, and the environment. The establishment of Nilgiris super market way back in 1971 paved way for the starting of the food retail chains in Bangalore.

As there were no new players entering for the next two decades, there was not much growth of food retail chains in Bangalore. But with the entry of Food World in 1996, there has been a rapid expansion of organized food retail chains in Bangalore with many new players like Fab Mall, Subiksha, Trinethra, Namdhari Fresh, Reliance Fresh, etc. entering the market and opening up their outlets in the city. The rapid rise in the super market chains can also be attributed to many international and national players showing interest in Bangalore to start their retail outlets.

Food and grocery items account for a significant 74 per cent of total retail sales across both the organized and unorganized sectors. The increasing competition and rising scale of organized retail distribution network are forcing the players to focus on restructuring of the supply chain to improve productivity and provide a better deal to customers. Keeping these things in mind the present study was undertaken in Bangalore city with the following objectives. 1. To study the procurement and inventory management in modern and traditional retail outlet. 2.

To analyze the investment pattern in modern and traditional retail outlets. 3. To study the costs in value addition made by retail outlets. 4. To study the cost and returns in the trade by retail outlets. 5. To identify the factors influencing consumer behavior in purchase made in retail outlets. 1. 5 Limitation of the study The study was purely based on the data given by the owners/executives of the retailing companies/outlets who are generally suspicious of the motives of any investigation because of fear of taxation and competition. Therefore, the investigation was confronted with various drawbacks in ascertaining the data.

In case of companies having chain of outlets/units, only one unit/outlet data was used to assess the overall objectives of the study. Hence, greater care was taken to collect the data as accurately as possible. 1. 6 Presentation of the study The entire study has been presented in Seven chapters. Chapter I deals with the importance and the current status of the present study was highlighted. The specific objectives of the study as well as limitations of the study have also been indicated. Chapter II deals with the review of the relevant research studies connected with the objectives.

Chapter III outlines briefly the main features of the study area and the study outlets. The nature and sources from which relevant data have been collected and the various statistical tools and techniques employed in the study for evaluating the objectives were included. Chapter IV is devoted to the analysis of the data through a variety of tables into which relevant details have been compressed and summarized under appropriate heads and presented in the tables. Chapter V provides the causal relationship between certain variables and the outcome which they produced.

Chapter VI briefs the summary of the main findings along with the policy implications that emerged from the findings of the study. Chapter VII, the final chapter list the references cited while undertaking the research. 2. REVIEW OF LITERATURE To undertake any study, to look at the previous studies done in the field is of utmost importance. Review of literature would provide a navigation to researcher to take the research work in desired direction. The review of the work done by post researchers in the field are presented under the following heads. 2. Procurement and inventory management in modern and traditional retail outlet. 2. 2 Investment pattern in retail outlets. 2. 3 Costs in value addition made by retail outlets. 2. 4 Cost and Returns in retail trade. 2. 5 Factors influencing consumer behavior to purchase in retail outlets. 2. 1 Procurement and inventory management in modern and traditional retail outlets Dalvi (1989) in his study on processing and marketing of cashew nut in Sindudurg district of Maharashtra concluded that the wholesale dealers, commission agents and farmer growers are the three main sources of procurement of raw materials.

The processing units purchase about 48, 17 and 39 per cent of their raw materials, respectively from the wholesale dealer, commission agents and farmer growers. Amrutha (1994) in her study on processing of paddy in Chitradurga and Dharwad districts revealed that the total cost of procurement by an average size rice mill was Rs. 20. 83 per quintal, of which Rs. 10. 50 (50. 63%) was spent on transportation which was found to be minimum. The market fee and commission charges accounted for 37. 9 per cent of the total cost. Malleshwari (1996) examined the potential infrastructure and constraints of mango processing in Andhra Pradesh. The study showed that mainly three varieties of mango were used for manufacture of pulp viz. , Totapuri, Alphanso and Raspuri. Roughly 55 per cent of pulp was made from Totapuri, 35 per cent from Alphanso and the rest from other varieties of mango in the processing units of Chittor district. Mangoes were purchased both from the markets as well as from the farmers directly.

Ballappa (1997) in his study production, marketing and processing of red gram in Gulbarga district revealed that the purchase price of red gram by the dal miller was Rs. 1881. 27 per quintal and the sale price was Rs. 2277. 04 per quintal, of which the cost incurred for purchasing red gram was Rs. 81. 27 per quintal. Bouvier (1998) in his study on contractual forms between retailers and their suppliers in the food sector reported that vertical integration and contractual relations are the two main features of the French food-retailing sector. The economic weights of these are more or less similar.

However, in the long run it seems that (a) the contractual side is more important than the integrated one and that (b) contractual forms related to high quality tend now to be dominant. Patil (1998) in her study on performance evaluation of fruit and vegetable processing units in north Karnataka observed that out of the total quantity of raw material purchased the major share was of fresh fruit and vegetables in case of both the private sector and cooperative sector processing units. The quality of fruits and vegetables purchased by private sector units was comparatively high (valued at 8. 7 lakhs), than that of co-operative sector unit (valued at Rs. 6. 22 lakhs). Dev (1998) in his study on management appraisal of cashew nut processing industries in Uttara Kannada revealed that overall, total cost of cashew nut procurement was Rs. 324. 16 per quintal. The total cost of procurement per quintal worked out to be higher through interstate imports – processor at Rs. 434. 41 followed by grower-traders-processor growers, small dealers – processor, growers, processors and international imports processor at Rs. 379. 63, Rs. 342. 45, Rs. 23. 33 and Rs. 299. 99 per quintal, respectively. Shobha (1998) in her study on performance of fruit and vegetable processing units in co-operative and private sector in Uttara Kannada district found that the private sector processing unit procured fruits and vegetables to the tune of 187. 098 metric tones values at Rs. 8. 37 lakhs. The procurement of fruits and vegetables by the co-operative sector unit was 161 metric tones values at Rs. 6. 22 lakhs. Fresh fruits and vegetables accounted for 12. 42 per cent of the total raw materials purchased.

Veena and Tajinder (2000) has studied performance analysis of Bhogpur and Jargoan sugar mills in Punjab. The procurement pattern of these two sugar mills, the Jargaon mill crushed 2238. 67 thousand tones of sugarcane and produced 191. 93 thousand tones of sugar. Thus, the quantity of cane crushed and production of sugar were higher for Jargoan mill compared to the Bhogpur sugar mill. The quantity of cane crushed and the quantum of sugar production was higher by the Jargoan mill by 38 and 35 per cent, respectively. The percentage recovery of sugar for Jargoan mill was 8. 38 being lower compared with 8. 7 for the Bhogpur sugar mill. Woods et al. (2000) examined the supply chain concept for horticultural products which were characterized by perishability, heterogeneity and lags in production response to market signals, producer’s profits were vulnerable to quantity, timing of supply and product specification. Many supply chains in smaller industries were loose, fragmented, interwoven, unstable and unique. Hence, he suggested the firms operating within these environments need an acute understanding of the chains, the hierarchy of channel members and their relative position.

Effective business strategies for individual firms and supply chains need to be developed and redeveloped to accommodate the dynamic nature of horticulture. Lehtinen et al. (2002) in their study on contract manufacturing in Finnish food industry, found that in the future, direct deliveries from the contract manufacturer to retail stores will increase, the delivery times will shorten and thus, more flexibility is needed from the contract manufacturer. Weindlmaier et al. (2002) conducted a survey in the Bavarian (Germany) food industry (with 153 respondents).

The study showed that from the point of view of the processors, in the near future quality management system in agricultural firm might be a prerequisite to deliver raw materials to the food industry. Narayana Reddy (2004) in his study reported that most (61%) of the retailers get their requirements from wholesalers, 15 per cent from the large and other retailers. Over 17 per cent of the selected retailers get their goods from more than one source, but a small percentage of retailers get some of their requirements from producers.

From the point of view of the terms of supply 67 per cent of retailers get their requirements by paying cash. Only 13 per cent of the retailers get their requirements on credit and 19 per cent get credit partly from the suppliers. Apart from this, the study also shows that the organized retailers/hyper malls and super marketers get wholesales’ margin plus concession as they buy in bulk from the producers. Anonymous (2006) reported that in USA food retailing, labour was the largest single marketing cost, accounting for half the industry’s expenses beyond the farm.

Food retailers employ more than 3. 5 million workers. The industry’s next highest costs were for packaging (8. 0%), and transportation and energy (a combined 7. 5%). Recent trends such as high energy costs and the rising demand for more convenient packaging have increased all these expenses. McCool (1996) study described the challenges that make inventory management a problematic issue for in-flight caterers’ financial management practices. In-flight kitchens are a logistics operation, and effective inventory management and detailed product usage controls were essential for overall cost control.

They were most efficiently operated as large production food factories with assembly line production of passenger trays. The different requirements of individual airlines, which may have an account with the caterer, add considerably to the caterer’s costs and must be reflected in the pricing offered to the airlines. A pricing system was developed which eliminates product food cost as the basis of pricing and which places new emphasis on actual labour requirements to produce, package, store and distribute the products and menu items selected by each airline.

Dev (1998) in his study on cashewnut processing units in Uttar Kannada district of Karnataka found that storage cost, cost of maintaining the stock and interest on investment carrying the inventories as the main components of cost of inventory management. Further, he observed that the total per quintal costs on carrying the inventory to be about Rs. 536. 42, Rs. 558. 33 and Rs. 545. 60 for small, medium and large units, respectively. In overall inventory carrying cost, about 99. 73 per cent was contributed by interest on inventory capital and remaining 0. 27 per cent was contributed by storage cost and stock maintenance cost put together.

Kamat (1999) in his study on different strategies for inventory management opined that demand forecasting and just-in-time method were helpful in reducing the inventories in store, sales and in process. Further, he also stated that the demand forecasting strategy can be executed within 14 to 21 weeks while the just-in-time strategy can be executed within 5 to 10 weeks. The study also give a general conclusion that the costs associated with inventory management can be attacked only with the help of proper and long-term strategies particularly in the field of supply chain management.

Bhattacharjee (1999) in his study on strategies for supply chain management by Hindustan Lever Ltd. (HLL) in India found that on an average about 20 to 24 per cent of turnover to be located in as inventories annually in the traditional strategy for the supply chain management. Further, she also stated that to overcome this problem, the HLL came out with a net strategy of ‘zero’ working capital and near zero stock, which ultimately led to reduction in inventories located into a mere 5 to 6 per cent from the earlier 22 to 24 per cent of annual turnover.

Chandrashekar (1999) in his study on estimation of storage costs for a multicrore, multi product and multi locational firm found that there existed three different systems of storage namely company owned, company leased and dealer owned warehousing facilities. Of these three different facilities, he found that dealer owned system to be the cheapest and the company owned system to be the costliest facility. Sarkar (1999) suggested a pull type inventory management strategy equipped with automatic replenishment system and made for an order kind of system over the traditional push type to cut down the costs associated with inventory management.

Ashraf Ali (2000) in his study on business performance of co-operative oil mills observed that the interest on capital locked in carrying the inventory, store maintenance and storage costs and material losses were the major components in the overall cost of the inventory management for both large and medium scale units. Lichtenberg and Zilberman (2000) developed a model to examine storage technology choices in the inventory management of commodities that are relatively highly perishables, and their impacts on resource allocation, prices, the environment, and the economic welfare of consumers or producers.

The model was used to derive the socially optimal level of spoilage reducing input use and to examine the effects of alternative policies for addressing environmental damage on supply, market equilibrium and consumer and producer incomes. It was shown that storage technology choices affect total output as well as the temporal distribution of supply, consumption, and prices. Vickener et al. (2002) found that investment in supply chain management technology in US food industry was extensive, particularly so in the restaurant or food–away-from–home (FAFH) sub sector.

From 1980 to 1995, inventory turns in the restaurant sub sector have effectively doubled, increasing from 26 to 51 per cent. This means FAFH inventories were entirely replenished once a week, down from the 14 days supply maintained two decades ago. Over the same period, total market capitalization grew at a compounded annual growth rate of 17per cent from $ 5 to $53 billion. Based on the co-integration model estimated, they found that for every one unit increase in inventory turnover, market capitalization increased by $479 million in the FAFH industry over the analysis period.

Thus, the equity capital market places a premium on the efficient management of inventories in the food system and rewards those firms that develop, adopt and implement supply chain technologies. Farsad and LeBruto (2003) reported that the consequences of overstocking items or under stocking were undesirable. Overstocks absorb money and invite waste. Under stocks risk disappointing customers with unavailable menu items or add to food costs by requiring emergency runs to the cash and carry.

Through analysis of daily item use and an application of risk, managers could calculate when to reorder; that is, when there is sufficient stock to cover typical demand until the next delivery. To account for unexpected demand, some safety stock must be included (by calculating the standard deviation of each day’s use for the past time period, say, a week, and factoring that with the Z score of the service-level probability that management is willing to absorb).

By factoring the lead time (delivery and foodpreparation), the standard deviation of the usage, and the acceptable probability of a stock out, managers can use a formula to determine precisely when to reorder. Nein PiChu and Roan ShiiWen (2004) reported that as computers are more and more widely used in livestock production and farmers manufacturing their own feed were growing more popular in Taiwan. This study was conducted to design a package which included simple feed formulation and ingredient inventory management to meet the farmers’ needs.

The inventory management system could facilitate the managers in monitoring the inventory to make the most effective adjustment and usage of the ingredients. The managers could, therefore, load their ingredients at the right time to avoid wastage and to reduce their ingredient costs. 2. 2 Investment Pattern in Retail Outlets Muralidharan (1981) compared the establishment costs of three processing units namely sugar, gur and khandsari units in Mandya district of Karnataka. He found that establishment cost of the three units to be in the order of Rs. 4, 40, 28, 322. 03 lakhs for sugar units, Rs. 46, 329. 83 lakhs for gur nit and Rs. 9, 16, 722. 38 lakhs for khandsari unit. Ipte and Borude (1982) studied on the economics of marketing and processing of cashew nut in Ratnagiri/ Sindhurdurga districts of Maharashtra state observed that capital investment in different groups of factories was Rs. 18, 54,710 lakhs of which 12. 96 per cent was fixed capital. The important items of fixed capital were investments on building and roasting machinery, while the items of working capital were raw nuts, wages and salaries, fuel, containers, packing and packaging. The capital investment was lowest (Rs. 5. 21 lakhs) in small factories and highest (Rs. 1. 70 lakhs) in large size factories. It was also found that there was positive relationship between the size of the factory and capital invested. Srivastava (1989) indicated that with subsequent secondary and tertiary processing of various raw materials, the value added as well as the price of finished products would be increased. He observed that agro-processing units’ accounted for 39 per cent of all factories (agro-based and non-agro-based industries), 12 per cent of fixed capital, 13 per cent of working capital and 15 per cent of total capital employed in the industry in the organized sector.

This 15 per cent of capital investment generated 25 per cent of the total employment, 26 per cent of the output and 21 per cent of the net value added. He noticed that capital productivity in agro-industries was 0. 35, while labour productivity was less than half when compared to non-agro based industries. Nagesh (1990) in his study on investment in production and marketing of cashew in Karnataka, indicated that the capital investment was the highest in building (72. 81%) followed by machinery and equipments (15. 42%) and land (11. 77%) at an overall level of the units.

Further, it was observed that the processing units utilized only 55. 80per cent of their capacity. Singh et al. (1994) while studying the economics of marketing and processing of pulses in Bundelkhand region (Uttar Pradesh), estimated that of the total cost, land/building accounted for the highest share being (51. 97%) followed by machinery and equipment (40%), electricity fitting (4. 72%) and other fixed capitals (3. 31%) in arhar processing plant. In case of grain processing unit land/building, machinery, electricity and other fixed capital accounted for 50. 26, 42. 19, 4. 77 and 2. 78 per cent, respectively. Maurya et al. 1995) in their study on economics of production and processing of Aonla in Varanasi district of Uttar Pradesh worked out the cost of Aonla processing plant and its establishment. The total establishment cost (fixed cost) per quintal was Rs. 8. 00. It was the highest for depreciation, (Rs. 3. 40/q) followed by interest on fixed capital (Rs. 2. 50/q), insurance (Rs. 1. 00/q), maintenance cost (Rs. 0. 60/q) and electricity and water charges (Rs. 0. 50/q). Kalse et al. (1996) found that the initial investment for the establishment of oil industries, dhal mills and cotton ginning industries was Rs. 3. 19 lakh and 5. 3 lakh respectively. The cost of machinery was the major item contributing 61. 43 and 59. 12 per cent in dhal mill and cotton ginning industry respectively. The average capacity utilization of oil industry, dhal mill & cotton ginning industry was only 41. 67, 71. 20 and 47. 79 per cent, respectively. Rachhpal and Darshan (1996) conducted the study to examine performance of cooperative sector infrastructure in Punjab market canneries. The study showed that the gross value of the fixed assets stood at Rs. 152. 77 lakhs. The depreciation accumulated was Rs 92. 13 lakhs. The present value of fixed assets was computed at Rs. 0. 64 lakhs. Sakia and Talukdar (1996) studied the economic potentialities of commercial processing firms at farm level for major spices in Nagon district of Assam. It was observed that the average capital investments in commercial processing units were Rs. 1. 20 lakh, Rs. 0. 94 lakh and Rs. 0. 78 lakh and investment in machinery and equipment shared the highest followed by opportunity cost of own land. Dev (1998) in his study on management appraisal of cashew processing industry in Uttar Kannada and found that the total capital investment directly varied with the size of the unit.

Further, he concluded that the total capital investment was Rs. 117. 5 lakhs for large scale units and 36. 32 lakhs for small scale units, wherein the marketing capital accounted for about 25 per cent of the total capital investment with the majority of the fixed capital investment of about (80 per cent) was in building and machinery. Joshi et al. (1999) studied the capital investment in the home, cottage, small and large scale of mango pulp processing units. Fixed capital accounted for 1. 01, 1. 6, 1. 8 and 20. 7 lakhs and the working capital was 2. 25, 11. 35, 4. 34 and 21. 03 lakhs, respectively.

The working capital was of more proportion than fixed capital in all the categories. Analysis also indicated processing of mango pulp was more economical as indicated by higher scale efficiency than all the other categories. 2. 3 Cost in Value Addition made by retail outlet Muralidharan (1981) compared the processing of sugarcane into sugar, gur and khandsari on Mandya district of Karnataka. It was found that the processing cost per quintal was Rs. 70. 51, Rs. 43. 05 and Rs. 116. 66 for sugar, gur and Khandasari, respectively. Share of fixed cost in the total processing cost was 64. 24 per cent in sugar units, 30. 8 per cent in gur units and 17. 29 per cent in case of khandasari units. Whereas, variable cost formed 35. 76, 69. 22 and 82. 71 per cent for sugar, gur and khandasari, respectively. Ipte and Borude (1982) in their study on economics of marketing and processing of cashewnut in Ratnagiri/Sindhudurg district of Maharashtra found that the per quintal cost of processing worked out to Rs. 161. 42. The major items of cost were the container (14. 44%), labour (21. 92%) and interest on capital (46. 03%). The value addition due to processing of raw nuts was Rs. 350. 72 per quintal which worked out to 52. 6 per cent. Singh and Ali (1985) studied economics of mustard and rapeseed marketing in the western region of Uttara Pradesh. They found that the cost of processing was Rs. 20. 98 per quintal. They suggested for establishment of expellers in co-operative basis. Hassan and Raghuram (1987) in their study on cashew processing and marketing in Prakasam district of Andhra Pradesh observed that drying of nuts, roasting of nuts, shelling of nuts, drying of shelled kernels, peeling of kernels, grading of kernels, conditioning of graded kernels and packing of graded kernels were the major stages in processing.

The study reported that 80 kg of raw nuts when processed resulted in 22 kg of kernels (28% recovery). The processor incurred Rs. 87. 06 as processing cost of which labour constituted 56. 6 per cent and material cost stood at 42. 5 per cent. Within the labour cost shelling accounted for higher proportion followed by peeling. Verma (1989) studied the economics of processing and marketing of gur in Indore (Madhya Pradesh) and found that the average cost of processing of sugarcane under power kohlu units of gur was Rs 6. 80 per quintal.

Further it revealed that the cost of processing varied from mill to mill according to the level of capital investment, power and sugarcane crushed during the year. Hemachand (1989) in his study on economics of processing units of arhar pulse in Narasighaper district (Madhya Pradesh) revealed that the fixed and variable costs accounted for 45 per cent and 55 per cent, respectively. The costs of processing of arhar dal worked out to Rs 61. 62per quintal. Nagesh (1990) in his study on investment in production and marketing of cashew of Karnataka found that the overall cost of processing per quintal of raw nuts worked out to Rs. 53. 54, out of which interest on capital itself formed 53. 62 per cent of the total cost. This was followed by wages for piece rate workers (20. 36%). The costs incurred on other items like administrative, overheads, salaries, depreciations, utilities, factory overheads and cost of packing material were found to be the least. The overall cost of production of kernels was found to be Rs. 1976. 55 per quintal of raw nuts processed. The cost of raw material (Cashewnut) was the major component in cost of production of kernels accounting 71. 99 per cent (Rs. 1423. 01) of total cost. Dalvi et al. 1992) studied economics of processing of cashewnut in Sindhudurg district of Maharashtra state and found that the cost of processing per quintal of cashewnut was Rs. 331. 35 at an overall level. Out of the total cost, the major cost was the interest on fixed and working capital, accounting Rs. 21. 55 (6. 51%) and Rs. 148. 16 (44. 72%), respectively. The other items of costs were labour (13. 74%) and tin containers (15. 84%). The overall gross increase in the value of nuts worked out to Rs. 500. 70 (45. 96%) per tin and net increase was Rs. 174. 50. Net added value worked out to 29. 4 per cent. This was possible due to processing of raw nuts. Venkatsheshaiah (1992) in his comparative study on groundnut processing units in three different categories viz, 3-chamber, 2-chamber and baby-expeller oil mill noted that the per quintal total processing costs amounted to Rs 2696. 18, Rs 2606. 13 and 2536. 126 for baby expeller, 2-chamber and 3-chamber oil mills respectively. The average processing cost for these three categories amounted to Rs 2551. 32 per quintal. Further he revealed that of the total processing cost (average) total fixed costs accounted for about 0. 3 per cent while the total variable costs accounted for about 99. 47 per cent. The fixed cost was comprised of salaries, depreciation and interest costs while the variable cost was comprised of raw material, labour wages, power and fuel packaging and incidental charges. Singh et al. (1994) in a study on economics of marketing and processing of pulses in Banda district (Uttar Pradesh) observed that per quintal cost of processing of arhar, gram, and lentil was Rs. 831. 67, Rs. 823. 47 and Rs. 752. 05, respectively. Balasubramanian et al. 1996) in their study on pricing and transaction trend of raw cashewnut in India observed that the cost of production of kernel per quintal of cashewnut was maximum on raw cashewnut (70%) followed by processing labour (10. 50%), purchase tax (5%), handling charges (5%), packing material (4. 50%) and so on. The minor item of costs were transportation cost, fuels, factory overhead, administrative overhead and depreciation (0. 10% each). The study indicated different stages of processing for different commodities, percentage of value addition and the cost of production of finished products.

The cost of production consists of the cost of raw material, which is a major item of cost accounted up to 75per cent, interest on working capital and fixed capital (wages, salaries, packing material) and other miscellaneous costs. However, researcher did not clearly delineate the different costs incurred in processing. Gajanan and Subrahmanyam (2001) studied the marketing and exports of lemongrass oil in Kerala. The processing involves filtration to remove sediments, moisture and blended for standardizing citral content, the processor observed shortage/loss of around one per cent during filtration of oil.

The cost of processing of lemon grass oil was observed to be Rs 4. 70 per kg. Kumar et al. (2003) in examined the Indian research efforts in vegetable crops, new niches for vegetable production, and the impact of pest management research. It was indicated that the ongoing research programmes on vegetables addressing many emerging challenges, there is a wide scope for innovative improvements and a sharper focus on vegetable processing, value addition and quality control. 2. 4 Cost and Returns in retail Trade Veerkar (1988) conducted a study on economics of preservation of mango into different products in Ratnagiri district of Maharastra.

The cost of preservation of one quintal Alphanso mango as pulp worked out to Rs971. 26. The cost of preservation of one quintal local types of mango fruits into pickle, chutney and raw slices in brine worked out of Rs 557. 48, Rs 861. 00 and Rs151. 28, respectively. The break even production analysis showed that the actual production handled in all the factories was more than break even point production. Bawa and Kainth ( 1989 ) while analyzing the cost and return of rice milling industry in Amritsar district of Punjab, found that dehusking of one tonnes of paddy yielded a net profit of Rs 45. 67.

Expenses on raw material (86 per cent) constituted the major item. Running expenditure on machinery and repairs and maintenance costs constituted 1. 96 per cent and 1. 10 per cent, respectively. Net returns of the enterprise were 2. 31 per cent of gross output. Subramanyam and Sudha (1992) worked out the costs and returns associated with processing of one tonne finished product of tomato (ketchup). It was observed that the benefit: cost ratio was around 2. 00 showing that processing is profitable. Raw material and packing were the two major items accounting for 67 per cent of the total variable cost of processing.

Singh et al. (1994) studied the economics of marketing and processing of pulses in Bundelkhand region (UP) and revealed that the average cost of processing per quintal including the cost of raw material worked out to Rs. 800. 61. The processing cost of per quintal arhar, gram and lentil dal came to Rs. 831. 67, Rs. 822. 47 and Rs. 752. 05, respectively. Mourya et al. (1995) in their study on marketing of aonla and its product in varanasi district, indicated that the per quintal processing cost of morabba, pickle and chutney came to Rs 2198. 80, Rs 1750. 40 and 3233. 80 respectively.

The processing cost was highest for ional chutney and lowest for aonla pickle. Ramamurthy (1995) studied the economics of hybrid cotton seed production in Coimbatore. The study revealed that the hybrid seed producer of Savitha received a net profit of Rs 2. 37 per rupee invested, where as the variety LRA (5166) seed producing farmers received a net profit of Rs 0. 63 per rupee invested. Raut et al. (1995) in his study on economic feasibility of straw berry cultivation in Nasik district of Maharashtra observed that, the per hectare total cost of production of straw berry was Rs. 4. 27 lakh.

Cost A accounted for 59. 57 per cent of the total cost. Cost of runner (39. 92%) and rental value of owned land (36%) were the important items of total cost. Per hectare gross income obtained from straw berry was to the tune of Rs. 10. 23 lakhs. Naik et al. (1996) studied economics of tomato seed production in Dharwad district. The study revealed that, the total cost of production per acre of tomato seed production increased with increase in the size of holdings. The total return from per acre of tomato seed production was Rs 45,800 for medium farmers, Rs 44,150 for small farmers and Rs. 3,485 for large farmers. Net profit were highest in case of medium category (Rs. 33,215) farmers, followed by small ( Rs. 32,465) and large (Rs. 30,779) category farmers. This was due to lower cost of production and higher productivity in smaller sized firms’ compared to the larger ones. Prasher et al. (1996) in their study on economics of apple cultivation in tribal felt of North Western Himalayan region observed that the total cost of establishment of 1 ha apple orchard was Rs. 6. 057.

Of this orchard had to incur about 31 per cent on layout preparatory tillage and fencing, while cost incurred in digging of pits, purchase of seedlings and manures and fertilizers accounts for 14, 8 and 19 per cent, respectively. The maintenance cost varied between Rs. 6157 to Rs. 16878 per hectare, for various age groups. On an average, the net returns worked out were Rs. 2034 to Rs. 39755 per hectare for different age groups. The net returns were estimated to be high in the age group of 17-22 years whereas were lowest for plants of 19 – 22 years of age. Srinivas et al. 1996) in their study on economics of processing of cashewnut in Andhra Pradesh indicated that the processors have to bear the processing cost of Rs. 124. 22 per 80 kg of raw nuts, out of this total cost, raw material cost of Rs. 50. 77 was incurred which formed 40. 89 per cent and labour cost was Rs. 72. 81 accounted to 58. 61 per cent of total processing cost. Dev (1998) in his study on management appraisal of cashew processing industry in Uttar Kannada district in Karnataka observed that cashew processing units at an overall level gained profits to the tune of Rs. 0. 01/g that is Rs. 0. 02 on every rupee of investment.

Large processing units gained higher profits that is Rs. 0. 04/g as compared to medium (Rs. 0. 008/g) and small processing units (Rs. 0. 06/g). Joshi et al. (1999) revealed that economics of processing of mango pulp in home, cottage small and large units in south region of Maharashtra state. Total processing cost for a single tin (850 g) worked out to be in home, cottage, small and large scale units were Rs. 47. 13, Rs. 41. 95, Rs. 42. 58 and Rs. 33. 70. With in different categories the cost of processing was maximum in home scale and minimum in large scale units. The profit per tin remained at Rs. 4. 8 in home scale, Rs. 6. 89 in cottage, Rs. 5. 59 in small and Rs. 13. 32 in large scale units with overall net profit of Rs. 12. 28. Cost and return indicated that processing of mango pulp was profitable as indicated by input ratio, which was greater than unity. Kakadia et al. (1999) in their study on cost and returns of guava production in south Sourashtra zone of Gujarat, observed that on an average the total establishment cost per hectare of guava was Rs. 22862. 98. The average materials cost contributed the maximum in total establishment cost of guava crop followed by rental value of land and labour cost.

The average annual amortization cost was Rs. 3938. 42 per hectare in guava orchard, while the per hectare average maintenance cost was Rs. 15265. 83. Mohapatra (1999) in his study on production and marketing of onion in Bolangir district of Orissa observed that the average cost of cultivation of onion per hectare was Rs. 17949. 00. The cost of production of onion was worked out to Rs. 97 per quintal. Among various components of operational costs, human labour accounted for more than 33 per cent of the total cost, followed by expenditure on manures and fertilizers (16. 6%), seeds (11. 10%), plant protection chemicals (3. 96%) and bullock labour (6. 94%), total fixed cost constituted 17. 16 per cent of the total cost of cultivation of onion crop. Farooqi et al. (2000) in their study had worked out the economics of Rosemary cultivation at Bangalore and found that the cost of establishment was Rs 64,400 and the average cost of maintenance was Rs. 19,400 per ha per year. It was revealed from the study that expenditure on the planting material ( Rs 50,000) was the single largest item. It was also revealed that expenditure on distillation (Rs. 000), fertilizers(Rs. 4000), plant protection (Rs. 3000) and harvesting (Rs. 2000) were the main items in the maintenance cost of Rosemary cultivation. Jayalakshmy and Abdul (2000) conducted study on cost of establishment and cost of production of cashew apple syrup in Kerala state. On an average, 750 bottles of syrup can be obtained from one tonne of cashew apple. The extracted juice can be preserved for syrup production during the off season as well. The cost involved (the labour and inputs) for processing of one tonne of cashew apple is Rs 1940.

A minimum of 750 bottle of cashew apple syrup can be obtained from one tonne of cashew apple. This works out to a cost of Rs 25. 80 per bottle. Of the total cost, 85 per cent forms the input cost (Chemical, bottle, sugar etc. ) and 15 per cent forms the lobour cost. The price of apple and interest towards nonrecurring cost is not included. At sale price of Rs 40 per bottle, the net profit per bottle was Rs. 14. 20. Veena and Tajinder (2000) had studied the performance analysis of Bhogpur and Jargoan sugar mills of Ludhiana district in Punjab.

They found that production cost of sugar in Bhogpur sugar mill was Rs. 12. 37 per kg and Rs 9. 89 per kg in Jargon sugar mill. Expenses on raw material was the major item 77. 2 par cent and 82. 86 per cent of other expenses including manufacturing expenses and maintenance were 22. 78 and 17. 12 per cent, respectively. Gross profit was Rs 2. 67 per kg at Jargoan mill and Rs 0. 58 per kg at Bhogpur mill. Lower per unit cost coupled with relatively higher sales increased the profitability of the Jargoan sugar mill tremendously; it was Rs. 2. 69 per kg compared to only 58 paise per kg for the Bhogpur mill.

Deshmukh et al. (2001) their study stated that the annual net return of mushrooms production were estimated by considering four crops per year. The annual net return obtained were Rs. 1314. 72, Rs, 4998. 84 and Rs. 39014. 60, respectively for small, medium and large sized units. The benefit cost ratio of mushroom production for small, medium and large sized units was 1. 35, 1. 86 and 3. 09 respectively showing all groups of farms were economically viable enterprises. However in size of production unit, the productivity of small, medium and large sized farms were 33. 7 kg, 67. 97 kg and 79. 67 kg per crop respectively. This study suggested that, net return and size of mushroom production unit had positive relationship i. e. as the farm size increased, profitability also increased and vice versa. Singh et al. (2001) in their study on pattern of production and marketing of fruit crop in Punjab estimated the total annual cost of cultivation of grape, guava and peer was Rs. 26,547. 09 per hectare, Rs. 22,381. 22 per hectare and Rs. 24,176. 47 Per hectare respectively. 2. 5 Factors Influencing Consumer Behaviour to Purchase in Retail Outlets

Rees (1992) in his study revealed that factors influencing the consumer’s choice of food are complex and must be added to variables such as flavor, texture, appearance, advertising etc. Demographic and household role changes and the introduction of microwave ovens have produced changes in eating habits, a reduction in traditional cooking, fragmentation of family means and an increase in ‘snacking’. The vigorous sale of chilled and other prepared foods is related to the large numbers of working wives and single people, who require and value convenience.

Developments in retailing with concentration of 80per cent of food sales in supermarkets, is also important. Consumers are responding to messages about safety and healthy eating they are concerned about the way in which food is produced and want safe, ‘natural’, high quality food at an appropriate price. Kainth (1994) in his study on “Consumption of Apples: Consumer’s towards view pattern and determinants” used ranking techniques to understand consumer preference for apples in different income groups. He also used linear multi-variate regression to analyze the factors affecting apple consumption.

Ragavan (1994) reported that quality, regular availability, price, accuracy in weighing and billing, range of vegetables and accessibility as the factors in the order of importance which had influenced purchase of vegetables by respondents from modern retail outlets. Hugar and Vijay Kumar (1996) carried out a study in Dharwad city to identify various factors that influence the consumption of vegetables. A sample of 90 consumers was chosen at random. It was observed that the personal attributes such as educational level and sex had significant influence on the quantity and frequency of purchase.

Price had a high influence on quantity purchased among the lower income group but the effect was not pronounced for high income groups. Sundar (1997) study revealed that the Grocery Department of Saravana Bava cooperative supermarket, Cuddalore was enjoying favourable images of consumers in the attributes such as equality of price, behaviour of sales persons, moving space, location, correctness of weight, packaging of goods, number of sales persons and convenient shopping hours. At the same time, the image is weak in the attributes such as quality of goods, availability of range of roducts, variety of goods, acceptance of returns, credit facility, and door delivery and in sales promotional measures. Chung et al. (1998) study revealed the factors influencing the furniture retailer purchasing decisions in Taiwan. Important factors of the furniture producers in choosing distribution channel were production capacity, salesmanship, type and grade of the products, transportation and storage. Many distribution channels were available to the producers. The retailers were under pressure to reconsider their management style and marketing strategy in order to obtain more profit.

The most important business concerns to the retailers were the product quality and the number of locations selling the same furniture. The salesman in the furniture business agreed that education and training were very important, with 96. 70 per cent of the retailers believing that service metality was the most important requirement for salesman. The factors influencing the retailers decision to purchase furniture were product quality (100%), style of finishing (100%), special functions (90%), assembly functions (90%), cheap price (90%) and the reputation of suppliers (90%).

Sanjaya et al (2000) in their study on buying behaviour for branded fine rice in Chennai and Coimbatore city observed that the quality and image of the brand were important factor for proffering it and also noted that price was not the most important factor for the affluent people in both cities. Burke (2001) has created a brand equity index comprised of three components, best described as brand equity molecule, which is overarching device of brand equity molecule, which is overarching device of retaining and attracting customers.

The three atoms which embedded to molecule were (i) image, (ii) value and (iii) loyalty. Image and value perceptions pull in new customers while loyalty and value retain customer. Sharma and Jaglekar (2001) surveyed 4000 households in the area of Godavari – Cooperative dairy (GCD) in Rajahmundry, Andhra Pradesh. One of the main purpose of this survey was to ascertain the attitudes of consumers towards quality of dairy milk. The results revealed that more than 59 per cent of the families expressed that the milk supplied by the GDC was of medium quality.

About 32 per cent of the families consider that the milk was primarily judged on the basis of level of content. Nandagopal and Chinnaiyan (2002) conducted a study on brand preference of soft drinks in rural Tamil Nadu using Garrets ranking techniques to rank factors influencing the soft drinks preffered by rural consumers. They found th

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