Report On Impulse Buying

Research Report on Impulse Buying SUBMITTED TO: SIR ANIS HASSAN

PREPARED BY: QURATULAIN RIAZ MEHREEN RAZA SIDRA TANWEER NAJMA JAVED

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Research Report on Impulse Buying

INTRODUCTION Pakistan is a growing economy with a real GDP growth rate of 5%. The real private consumption expenditure has grown at an average rate of 7.4 percent per annum during the last four years resulting in the emergence of a strong middle class with growing purchasing power. This has resulted in people vying for a more comfortable and urbanized lifestyle. The mushroom growth of coffee houses, eateries, supermarkets, etc., is a proof of that. In the past three decades, much research has been conducted internationally to define to understand the psychological, economic and retail implications of such a trend. One area of interest has been “impulse buying”. Impulse buying occurs when a consumer experiences a sudden, often powerful and persistent urge to buy something immediately. The impulse to buy is hedonically complex and may stimulate emotional conflict. Also, impulse buying is prone to occur with diminished regard for its consequences.Marketers and retailers tend to exploit these impulses which are tied to the basic need for instant gratification. Recently several supermarkets have been established in the urban cities of Pakistan. The most prominent ones in Karachi are Imitiaz, Agha’s, EBCO, Naheed, Shaz, DMart. However, no study has been conducted in Pakistan to study the buying behaviour of shoppers and what factors influence their decisions. Hence, the researchers have decided to conduct an exploratory research to understand the general nature of impulse buying in four main supermarkets of Karachi. This research will lay the foundation for future researches.

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Research Report on Impulse Buying

LITERATURE REVIEW Pakistan: The Research Context According to the Economic Survey (2006-07), the real GDP growth rate of Pakistan has been 7% per annum in the last 5 years and the per capita income has grown by 11% to $ 925. The real private consumption expenditure has grown at an average rate of 7.4 percent per annum during the last four years resulting in the emergence of a strong middle class with growing purchasing power and with increase in the working population and simultaneous decrease in the share of dependent population has declined, the disposable incomes and current consumption has increased. This increase in consumer spending has led to more shopping and consequently has justified a research into the incidence and nature of impulse purchases. Also, with changing demographic trends, gender roles in purchase behaviour have changed considerably in urban Pakistan with women being more active in shopping now. Most of the researches on impulse buying behaviour have been conducted in the Western society which is considerably more advanced than Pakistan. The objective of this research paper is to explore the incidence of and difference of impulse buying behavior in supermarkets in Karachi, with respect to factors such as product category, grocery bill and number of products bought, and the shopper’s gender. More importantly this paper will help lay a foundation to build upon for future studies on impulse buying behavior in Pakistan. Conceptual Framework Cobb and Hoyer (1986) and Kollat and Willet (1967) have defined impulse buying simply as unplanned purchasing. Rook (1987) gave a narrow and more specific meaning to impulse buying, which included behavioral elements. The definition of impulse is as follows “Impulse buying occurs when a consumer experiences a sudden, often powerful and persistent urge to buy something immediately. The impulse to buy is hedonically complex and may stimulate emotional conflict. Also, impulse buying -3-

Research Report on Impulse Buying is prone to occur with diminished regard for its consequences.” (Rook, 1987, p. 191). The understanding of impulse purchasing was greatly improved through Stern's (1962) identification of four distinct classifications of impulse purchasing: planned, pure, reminder and suggestion impulse purchasing. The four categories are as follows: (1) Pure impulse buying is a novelty or escape purchasing which breaks a normal buying pattern; (2) Reminder impulse buying occurs when a shopper sees an item and remembers that the stock at home is exhausted or low or recalls an advertisement or other information about the item and a previous decision to buy; (3) Suggestion impulse buying occurs when a shopper sees a product for the first time and visualizes a need for it, even though he has no previous knowledge of it; and (4) Planned impulse buying occurs when a shopper enters the store with some specific purchases in mind, but with the expectation and intention to make purchases that depend on price specials, coupon offers, and the like. Conceptual Definition Based on the extant literature reviewed we have defined impulse buying as done by Engel, Kollat, and Blackwell (1968) (as cited in Piron, 1991). Impulse buying is defined as a buying action undertaken without the problem having been previously recognized or a buying intention formed prior to entering the store Operational Definition Based on the literature review we plan to follow the following definition for the purpose of our research. Shoppers are asked upon exiting the store what items they purchased. For each item, they are then asked some variant of the question when they decided to buy; before or after entering the store. The items purchased whose decisions were made after entering the store are impulse purchases (Bellenger, Robertson, and Hirschman 1978).

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Research Report on Impulse Buying Pretest questioning is not used as it forces the shopper to recite formed intentions and commit the shoppers to their intentions (Pollay 1968). The problems with the postpurchase operational definition are that the incidence of impulse purchases may be understated by the shopper in an effort to appear rational. However, this definition is easier to operationalize because shoppers will be willing to give interviews once rather than twice (before and after shopping) and it does not create the bias in the mind of the shoppers to follow the intention that they stated in the pre-shopping interview. Factors Affecting Impulse Buying Behavior Marketers have long recognized the significance of impulse buying. Empirical studies such as Consumer Buying Habit Studies (1965) and Drugstore Brand Switching and Impulse Buying (1965) have investigated the extent of unplanned buying in supermarkets and drugstores and showed how different the incidences of impulse purchasing are (as cited in Prasad, 1975).The incidence of impulse buying is increasing mainly because consumers have accepted and adapted the methods of buying to certain merchandising innovations and due to this interrelationship of buying to merchandising, impulse buying will only grow significantly (Stern, 1962). We offer the following proposition. Many researches have been carried out to study the nature of impulse buying and various factors that affect it. Impulse buying is influenced by a variety of economic, situational, personality, time, location and even cultural factors. Previous researches have measured the impulse buying tendency in regards to buying “things” not specifying product categories (Beatty and Ferrell, 1998; Puri, 1996; Rook and Fisher, 1995). Researches have also been conducted to understand the underlying motivational factors behind impulse buying. Similarly researches have been conducted to study factors that moderate impulse buying behavior. Consumers engage in impulse buying to satisfy hedonic desires for fun, novelty and variety; also impulsiveness is correlated with consumer’s desires to fulfill self esteem and self actualization needs (Hausman, 2000). Mai, Jung, Lantz and Leob (2003) found that individualist orientation was truly related to impulse buying. Hausman (2000) has also suggested that more impulsive consumers tend to view their buying decisions as more laborious. Consumers’ normative evaluations moderate the

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Research Report on Impulse Buying relationship between impulse buying trait and consumers’ buying behavior (Rook and Fisher, 1995). Here normative evaluation may be understood as consumers’ judgments about the appropriateness of making an impulsive purchase in a given buying situation. Gender Differences in Impulse buying Several previous researches on impulse buying have paid some attention to the role gender plays in determining this behavior. These researches show that men’s and women’s shopping behaviour differs on many levels. Peter and Olson (1999) discuss that men and women have been found to process information differently (as cited in Coley and Burgess, 2003), relate to and value material possessions differently, purchase different items for different reasons (Dittmar, Beattie and Friese 1995; Dittmar, Beattie and Friese, 1996) and approach shopping task differently (Berni, 2001; Chiger 2001). Kollat and Willet (1967) found that women tend to engage in more impulse buying as compared to men. It is also argued that women because of their propensity to shop more in general, make more impulsive purchases (Dittmar et al., 1996; Rook and Hoch, 1985). On the other hand Cobb & Hoyer (1986) stated that women are more likely to exhibit some element of planning before entering the store, whereas men are more likely to be impulse shoppers. Hausman (2000) did not find significant correlation between gender and impulse buying behavior. Transaction Size affecting Impulse Buying Stern (1962) has hypothesized circumstances that appear to be associated with the occurrence of the behavior. Kollat and Willet (1967) used two measures of transaction size: number of different products purchased and the grocery bill. They found out that the increase in size of the grocery bill and number of purchases made resulted in an increase in unplanned impulse purchases. Therefore, we offer the following propositions. Shopping List and Impulse buying Studies conducted by Kollat and Willet (1967) indicated that one of the factors that affects impulse buying is the presence of a shopping list. This however only holds true if the transaction size is greater than 15. When more than 15 or 20 products are purchased,

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Research Report on Impulse Buying shoppers having a list make a smaller percentage of unplanned purchases. However, when less than 15 or 20 products are bought, the shopping list does not affect the percentage of unplanned purchases. This was also studied and confirmed by Abratt and Goodey (1990). In order to study the effects on the presence of a shopping list on impulse purchase behavhior, we present the following proposition.

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Research Report on Impulse Buying

MANAGEMENT PROBLEM TRANSLATED INTO RESEARCH OBJECTIVES Research Problem  To study the incidence of impulse purchase decisions with respect to five factors.

Research Questions  What is the incidence of impulse purchase in supermarkets of Karachi?  How does incidence impulse buying vary due to the presence of a shopping list?  Does increase in the size of grocery bill increase the incidence of impulse purchase decisions?  Does impulse buying increase as the number of products purchase increase?  Is the incidence of impulse buying higher among males than females?

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Research Objectives  To study the incidence of impulse buying in supermarkets of Karachi.  To study whether purchase intentions are influenced by factors such as the gender of the shopper, presence of a shopping list, the number of products purchased and the size of the grocery bill.

Research Report on Impulse Buying

HYPOTHESES Based on our discussion & literature review, we arrived at the following hypotheses which we would be testing. Hypothesis 1: There is atmost 20% incidence of impulse buying in Supermarkets of Karachi Hypothesis 2: There is association between gender and impulse buying behavior.. Hypothesis 3: Rate of Impulse buying increases with the size of the bill Hypothesis 4: Rate of Impulse buying increases with the number of different products bought. Hypothesis 5: There is association between presence of shopping list & impulse buying behavior.

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Research Report on Impulse Buying

RESEARCH DESIGN Type of research The research was of exploratory nature and involved conducting in-depth interviews of shopper leaving supermarkets to crystallize and better understand the problem at hand and a few factors that affect it. Data Collection Method Secondary Data Research papers were studied and online libraries such as JSTOR, EBSCO Host and Palgrave Mcmillan were visited. Primary Data We collected information from the subjects by means of a survey. Furthermore the major technique that we used to approach our subjects was the intercept technique i.e. approaching them without prior notification or appointment. Personal intercept interviews were used to collect information in a face to face situation. The supermarkets covered were: 

Agha’s



Naheed



Imitaz



EBCO

Measurement Technique A questionnaire was designed by the researchers to be administered during the personal interview. Care was taken to avoid loaded, double barreled, biased questions.

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Research Report on Impulse Buying

SAMPLING PLAN Population Definition Men and women of age 18 and above who have shopped in super markets in Karachi in November during day time. Sampling Frame Four supermarkets in Karachi were selected namely Aghas, Naheed, Imtiaz, EBCO. The shopping parties represent SEC A classification. Sampling Unit One shopping party. Sampling Method Non-probability convenience sampling (unstratified, single stage) - any shopping party leaving the Super store after making some purchases.

Sample Size 20 respondents from each super market – aggregating to a total sampling size of 80. Sampling Plan The four researchers were spilt into two interviewing teams. One of the two interviewers was stationed at the super market exit to select a shopping party leaving the super market after making some purchases. The respondent was qualified by determining whether they were carrying any shopping packages and their willingness to participate in the research. After introduction the second researcher administered the questionnaire through a personal interview. The questionnaire was completed and filled by the researcher herself. The interview was terminated by thanking the respondents for their participation.

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Research Report on Impulse Buying

LIMITATIONS 1. People in our country are not very used to research hence they were not very receptive or did not know how to respond to certain questions. 2. As students, the researchers had limited amount of resources (time, money, etc) to spend on this research. 3. This research has been conducted in a four supermarkets of Karachi the findings cannot be extended to all the supermarkets in Pakistan. Hence the findings are only applicable to Karachi. 4. This research focuses on the incidence of impulse buying and a few factors affecting it such as gender of the shopper, size of the shopping bill, presence of a shopping list and the number of items purchased. This does not suggest that these are the only factors that influence impulse buying decisions. 5. Some other influencing factors such as in-store stimuli (communication mix, shelf placement), consumer traits other than gender, situational factors (mood, time, money) and normative traits of decision making have not been studied. Hence, the findings of this study cannot be extended to those areas.

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Research Report on Impulse Buying

RESULTS Hypothesis 1: Incidence of Impulse buying We used proportion test to test the significance of impulse buying in four supermarkets in Karachi. Since we have a sample greater than 30, the Central Limit Theorem allows us to conclude that the distribution of sample means is approximately normal and this sample Z-test is used to measure the significance of impulse buying in the four super markets of Karachi. According to Abratt and Goodey (1990), one in five unplanned purchase incidences must be considered managerially significant. This was used to establish and phrase the first null hypothesis. Our results showed that the incidence of impulse buying is significantly greater than 20%. (The hypothesis testing is shown in Appendix)

Hypothesis 2: Association of Unplanned Purchases with Gender

13 21

Female 36 10

Column Total 49 31

34

46

80

Male Impulse Planned Row Total

Table 1 According to the Chi-square statistical technique used to find the association between gender and impulse buying behavior, we found that women have more tendencies to buy on impulse as 78 per cent of our female respondents were found to be impulse purchasers where as only 38 per cent of the male respondents showed impulse buying tendency. This indicates that men plan well ahead before entering shopping markets than females. They economize on their time and efforts and stick to their needs and decisions. Females do not plan extensively before entering and are more inclined to be attracted to in-store stimuli.

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Research Report on Impulse Buying F / Pl 13%

M / Im 16%

M / Pl 26%

F / Im 45% Figure 1 Kollet and Willet (1967), women purchase a higher percentage of products on an unplanned basis because they make more purchases. When the number of purchases is held constant, men and women have the same degree of susceptibility to unplanned purchasing. However, our analysis indicates that in Karachi supermarket, the number of products purchased by respondents has no affect on impulse buying tendency. Thus, the impulsive behavior in our research can be attributed to solely to gender. Women are more susceptible to engage in impulsive behavior in supermarkets. This finding is contrary to what was found in the study of Impulse Buying Behavior in Vietman by Mai, Jung, Lantz & Loeb (2001). They found that men exhibited a higher impulse buying tendency because women needed to plan all expenses carefully so that their families’ modest income could be spent “wisely”. We did not see this happening in Karachi probably because our respondents mainly belonged to SEC A classification having income comfortably above the “modest” level. Hypothesis 3: Shopping bill and impulse buying behavior Shopping bill is also a measure of transaction size. The Figure 2 depicts that there is no relationship between unplanned purchasing and shopping bill. This was further proved by regression analysis which gave a P value of the bill to be as high as 60 per cent hence we can confidently reject the null hypothesis that impulse buying increases with the size of the bill.

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Research Report on Impulse Buying

Percentage of Unplanned Purchases

Relationship between Shopping Bill & Percentage of Unplanned Purchases 40% 30% 20% 10% 0% 0-500

501-1000

10011500

15012000

20012500

25013000

30013500

Over 3501

Shopping Bill (Rs)

Figure 2 From our data we see that the correlation between impulse purchase and shopping bill less than Rs. 1,000 is 25%. The correlation for bill between Rs. 1,000 and 3,000 is 7% – almost no correlation. However for a bill size above Rs. 3,001 the correlation is negative. This is for a bill size up to Rs. 6,000. For bill size greater than Rs. 6,000 we can extrapolate from the observed pattern that the correlation would have been more negative. This is line with our findings relating to the number of products purchased in which we found no correlation between the number of products and the impulse buying behavior (details given below). Generally we can conclude that people who buy more will have more shopping bill and will be engaging in less impulse buying. Hypothesis 4: Number of Products bought and Impulse buying The percentage of unplanned purchases has no significant correlation with the number of different products bought by shoppers in super markets in Karachi as can be seen in the Figure 3. This was also proved by regression analysis which had R 2 of 5 per cent and high errors.

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Research Report on Impulse Buying

Percent of Unplanned Purchases

Percent of Unplanned Purchases 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0

5

10

15

20

25

30

35

Different P roduct s Bought

Figure 3 Our findings explain that as the number of different products a customer intends to purchase increases, the difference between actual and intended purchase decisions do not vary. Even though the greater the number of products purchased, the greater the exposure to in-store stimuli but the number of products bought on impulse do not increase. Hence, we conclude, that in instances where customers shop for a larger number of items they plan well ahead and there are little chances of impulse buying. This can be because as customers plan for larger items they try to economize on their time and effort – hence little or no impulse purchases. However, when customers shop for a few needed items or engage in random shopping, they are more inclined to engage in impulse buying. This is contrary to what was found in previous researches (Kollet & Willet 1967) which indicated that as purchased items increase the level of unplanned impulse purchases also increases. We found no such pattern in supermarkets in Karachi.

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Research Report on Impulse Buying Hypothesis 5: Shopping list and Impulse buying Behavior According to the Chi square statistical technique used to find the correlation between the rate of unplanned purchasing with the presence of shopping list, we found no significant association between the two variables. We interpret that the shopping list contains only basic items and when people enter the super market they engage in impulse buying. Hence we conclude that the tendency of a consumer to engage in impulse buying has no association with the shopping list. Also from the Table 2 we can conclude that majority of the people do not carry shopping list with them (44%) or carry it only sometimes (35%). This shows there is natural tendency amongst shoppers not to carry shopping lists with them.

Never Sometimes Always Total

Aghas 9 8 3 20

Imtiaz 9 7 4 20

Naheed 11 5 4 20

EBCO 6 8 6 20

Table 2

Planned Unplanned

Shopping list 12 11 23

No Shopping List

Table 3

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20 37 57

32 48 80

Total 35 28 17 80

Research Report on Impulse Buying

List / Im 14%

No List / Pl 25%

List / Pl 15%

No List / Im 46%

Figure 4 Kollet and Willet (1967) found that a shopping list influence purchases when more than 15 products are purchased. In our study, amongst those respondents who did buy more than 15 products only 44% could be categorized as impulse buyers and 42 % of these were carrying a shopping list. From this we can conclude no effect as such of shopping list on the rate of impulse buying even when large number of different products is bought.

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Research Report on Impulse Buying

CONCLUSION AND RECOMMENDATIONS Our research shows that impulse buying is a phenomenon common amongst the female shoppers in Karachi. This can be because usually women buy for the whole family, not only for themselves. So as they shop they are reminded of the items needed by others as they come across the products in store and thus buy them. Also women generally have greater time on hand to do shopping as compared to men; hence increasing their tendency to engage in impulse buying. This has important implications for the in-store placement of products. Products with which women can be attracted to buy on impulse, such as frozen food, spices and other household & food items, should be prominently displayed in-store so as to generate impulse purchases. The impact of presence of shopping list, size of the shopping bill and number of products purchased was found to be insignificant. Even the people carrying a shopping list engaged in impulse purchases. This can be because most of the items on the shopping list were collective use items or those needed by other people whereas personal use items were bought on impulse. Some of the people were carrying shopping lists made by someone else (who was not in the shopping party) such as the chef, mother-in-laws and spouses. The bill size and the number of items purchased are two measures to define the transaction size. Overall, both of them turned out to have no significant correlation with impulse buying. This shows that people who come to make large number of purchases plan their shopping beforehand and hence engage in less impulse buying. This maybe because they have already spent so much time spending what they had planned to buy, that there is little time left to make other unplanned purchases. We found high incidence of impulse buying in snacks and confectionaries. This maybe because they are placed near the counter or at visible places in the Supermarkets so as to attract people to buy them. We also found frozen food to be one of the recurring items on the list of unplanned products by the respondents. These incidences of impulse buying

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Research Report on Impulse Buying maybe because the deep freezers with transparent doors carrying the frozen food items are placed right at the entrance of most of the superstores, hence catching people’s attention as they enter or about to leave the store. Thus the importance of in-store stimuli can be inferred from our study as we did not specifically test for their significance. This can be the topic of future researches.

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Research Report on Impulse Buying

FUTURE RESEARCH We have conducted an exploratory research to study the nature of impulse buying in supermarkets of Karachi. However, the study does not extend to providing a causal relationship between the various factors, hence future researches can conducted in those areas. The factors studied in our research include the gender of the shopper, size of the shopping bill, presence of a shopping list and the number of items purchased. Future researches may include situational factors such as mood, time and money; consumer traits and normative traits. Our research suggests no geographical difference in impulse buying. Hence it would be useful to conduct future research in other cities of Pakistan to examine the differences in impulse buying behavior between the different cities of Pakistan. Our study was only confined to the SEC A class. Future researches can explore impulse buying in other socio-economic classes of the population. The findings of our research may be important from a theoretical perspective, because they contribute to a better understanding of impulse buying behavior from the context of a transitional economy. Our research also suggests some managerial implications regarding promotion of impulse buying through increased physical and temporal proximity.

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