CUSTOMERS PERCEPTION ON BRICKS AND CLICKS BUSINESS MODEL OF KITEX LTD. KERALA: A SYSTEMATIC ANALYSIS Vignesh Karthik S A 1, Ameer P A 2 1,2

Transcription

1 CUSTOMERS PERCEPTION ON BRICKS AND CLICKS BUSINESS MODEL OF KITEX LTD. KERALA: A SYSTEMATIC ANALYSIS Vignesh Karthik S A 1, Ameer P A 2 1,2 Research Scholars, School of Management Studies, CUSAT Abstract Bricks and Clicks is a business model by which a company integrates both offline (Bricks) and online (Clicks) business operations. This kind of companies can offer customers the benefits of fast online transactions and traditional face to face service simultaneously. The present study has been conducted with the objective of analysing bricks and clicks business model in Kerala in general and to identify factors which are influencing customer s decision to buy online or offline. Based on the data analysis and interpretation, the study found that both kind of customers say, online and offline customers have their own specific reasons to choose mode of their purchase (either offline or online). The study also found that, the variables like comforts of physical atmosphere, salesman s influence and sales experience are the major forces which influence a customer to buy offline while variables such as ease of purchase, convenience, flexibility, time are the major influencing factors which drive a customer to opt online buying mode. The present study has proved that the future of Indian retail business is to be depending wholly on Bricks and Clicks business model. Key words: Brick and Click, clicks and flips, e Commerce, Online and Offline, Kitex Ltd. I. INTRODUCTION Internet & e-commerce shows a tremendous growth in Indian market. It was mainly because of the current online retail trends, availability of more payment options, new technologies & electronic gadgets etc. Online retail in India is estimated to grow over 1200% to $200 billion by 2016, up from $15 billion in 2016, according to a recent report by financial service firm Morgan Stanley. By then, online retail will account for 12% of India s overall retail market, from just 2% last year. A new study by Forrester Research has stated that approximately a fifth of total retail sales will take place online by 2021 in Asia Pacific, 78 per cent from smart phones. The study adds that online retail via mobile will grow at a CAGR of 15.6 per cent, to reach $1 trillion in 2020.The study further shows that Asia Pacific will be the largest region for online retail sales in the world, with China being the largest market for e-commerce with $681 billion in sales. However, the fastest growing e-commerce market in the world, according to Forrester, is undoubtedly India. The Indian Institute of e Commerce states that by 2020, India is expected to generate $100 billion online retail revenue out of which $35 billion will be through fashion e-commerce. Online apparel sales are set to grow four times in coming years. By 2026, Morgan Stanley expects India to have 475 million online shoppers, up from 60 million in It was in this backdrop, Kitex Ltd. decided to launch its online window (Kitex Lifestyle) to expand its reach to far off customers. Kitex Ltd is marketing its processed products like lungies, dhothies, bed sheets and mulls etc. mainly through offline mode. The company is having 2500 dealers spread all over Kerala. Besides, the company is selling their Greige fabrics to various garment exporters in Mumbai, Bangalore, Delhi, Chennai, Calcutta, Ahmadabad etc. Around 75 % of the sales is done through authorized agents on commission basis and through Direct Marketing. The 46

2 garments manufactured by the group under the brand name Kitex are accepted all over the world. It is in this context, the present study is an attempt to collect and analyse the data on perceptions of customers regarding offline and online or bricks and clicks modes of kitex marketing, and to understand what are the factors which are influencing a customer to buy online or offline. II. LITERATURE REVIEW According to Reddy (2003), Marketing is one of the business function most dramatically affected by emerging information technologies. Internet is providing companies new channels of communication and interaction. It can create closer yet more cost effective relationships with customers in sales, marketing and customer support. Companies can use web to provide ongoing information, service and support. It also creates positive interaction with customers that can serve as the foundation for long term (Reddy, 2003) Dannenberg and Kellner (1998), in their study, overviewed the opportunities for effective utilization of the Internet with regard to the banking industry. The authors evaluated that appropriate application of today s cutting edge technology could ensure the success of banks in the competitive market. They evaluated the services of banks via internet as websites provide sophisticated line of products and services at low price. The authors analyzed that transactions via internet reduce the risk of data loss to customers, chance to cut down expenses, higher flexibility for bank employees, re-shaping the banks image into an innovative and technologically leading institutes, etc. The researchers found that banks could move one step further by entering into a strategic alliance with internet service provider. So, the bank of tomorrow stands to be feasible with today s technology( Dannenberg and Kellner, 1998). McCabe (2009) highlighted the necessity of understanding how to get access to the customer to deliver the marketing message and the organization s products and services. Hudson (2008) agreed with him and stressed the importance of designing a distribution system to work as a framework for making the organization s services available for customers. Armstrong and Kotler (2000) named five functions for the distribution channel: information; promotion; contact; matching; negotiation. Hudson (2008) added financing to these functions which should help the organization in bridging the gaps of time, place and possession between itself and the customers (Armstrong and Kotler, 2000). According to Scott (2009), grow your business' including market research, advertising, publicity, sales, merchandising and distribution. With traditional marketing techniques all of these things are delivered in print format or in person. Internet marketing however, uses the power of online networks and interactive media to reach your marketing objectives...no paper, no telephone calls, no in person appearances. Internet marketing can save your time, money and resources. Electronic versions of catalogues, brochures, white papers, data sheets etc. don't have to be printed, stored or shipped to your customers resulting in an enormous savings in printing and storage costs. And what about manpower (or lady power) costs? It is no longer requires as many people to handle mailing and distribution of your marketing collateral...more savings Updating catalogues, brochures and any other marketing collateral you produce can be accomplished as needed online and in lightning speed. There's no need to send revised material out to a printer and then have to wait for a revised version, a great savings in time. And, time is money. More information can be provided to customers with little if any additional cost. Adding more pages to a document online involves virtually no expense compared to the additional cost and space required to deliver the same thing in print format. You can reach more customers than ever before and it doesn't cost a penny more. There's no postage or courier charges to pay. Distribution costs are the same whether you reach one or one million. Finally, for little or no cost you can have several electronic versions of the same catalogue customized to meet the needs of different audiences. The difference between traditional and Internet marketing is money and Internet marketing improves your bottom line (Scott, 2009). III. OBJECTIVES OF THE STUDY 1. To identify the factors affecting online distribution channel of Kitex Ltd. 47

3 2. To study the demographic characteristics of customers of Kitex Ltd. 3. To identify the reach of the company s online channels among the customers. 4. To suggest improved online channel distribution models for Kitex Ltd. IV. RESEARCH DESIGN The study has adopted Descriptive Research Design as the main aim is to identify and describe factors affecting online distribution channel of Kitex Ltd.. The population of the study is online-offline customers of Kitex Ltd in Ernakulam District. Based on convenience sampling technique, the researcher has collected primary data from 100 sample respondents Table: 1 Age Wise Distribution of Samples through questionnaire and with the help of interview and Secondary data has been collected from standard textbooks, Newspapers, Magazines and Internet. V. DATA ANALYSIS AND INTERPRETATION In this section the researcher has made an attempt to analyse the data collected from respondents through questionnaire and result of percentage analysis are presented in tables below. SPSS has been used to analyse the collected data. V.1.DEMOGRAPHIC REPRESENTATION The following four tables show that the demographic representation of samples which will help us to understand how demographic factors are distributed among the sample data. under Above Table: 3 Education Level of Respondents SSLC HSE Graduation PG Other

4 Table: 3 Gender wise Distribution Male Female Table: 4 Occupation wise Distribution Govt. Employee Pvt. Employee Business Student Other V.2. FACTORS INFLUENCING BRICK PURCHASE MODE The tables under this heading will summarise, how factors such as Comfort of Physical Atmosphere, Shopping as an Experience and sales man s influence are influencing a buyer to choose offline mode of buying. Table: 5 Purchase from Showrooms Always Often Sometimes Rarely Never Table: 6 Comfort of Physical Atmosphere Strongly agree Agree Neutral Somewhat disagree

5 Table: 7 Sales man s Influence Strongly agree Agree Neutral Somewhat disagree Strongly disagree Table: 8 Shopping as an Experience Strongly agree Agree Neutral Somewhat disagree Strongly disagree V.3. CLICK MODE OF MARKETING Click mode of marketing means online marketing. The following two tables depicts that there is small portion of customers are preferring go for online marketing (Click marketing) Table: 9 Usage of Online Portal of Kitex for Individual Purchase Always Often Sometimes Rarely Never Table: 10 Use both Online & Offline Mode of Purchase Strongly agree Agree Neutral Somewhat disagree Strongly disagree

6 V.3. FACTORS INFLUENCING CLICK PURCHASE MODE In this section, how factors such as Accessibility, busy lifestyle of customers, Updated and exclusive product information, privacy and internet security, ease of purchase and timely delivery of product influence the customer to buy online is discussed. Table: 11 Accessibility Strongly agree Agree Neutral Somewhat disagree Strongly disagree Table: 13 Busy Lifestyle of Consumers Strongly agree Agree Neutral Somewhat disagree Strongly disagree Table No.14 Updated & Exclusive Product Information Strongly agree Agree Neutral Somewhat disagree Strongly disagree

7 Table: 16 Privacy & Internet Securities Agree Neutral Somewhat disagree Strongly disagree Table: 17 Convenience of Purchase Strongly agree Agree Neutral Somewhat disagree Strongly disagree Table: 18 Ease of Purchase from Kitexlifestyle Agree Neutral Somewhat disagree Strongly disagree Table: 19 Timely Delivery of Products Highly satisfied Satisfied Neutral Dissatisfied

8 VI. FINDINGS OF THE STUDY Based on the data analysis made in the previous section, the researcher has come with the following findings. A comprehensive Internet marketing strategy can increase sales substantially for a business. The Internet marketing strategies of Kitex Ltd. are participation of social media, search engine optimization (SEO), blogs, lists, company website affiliate marketing. Kitex Ltd. has tie up with Amazon & ebay to sell their products in India. DTDC, Fedex & Professional courier are their major courier & distribution partners in India. The factors affecting online distribution channel of Kitex Ltd. are age, gender, occupation, online presence of the people, technology advancement, online presence of the company, quality & simplicity of the website, payment & delivery options, availability of products. From this study, it shows that only 3% of the respondents know all the online channels of Kitex Ltd. and the 58% of the respondents are not aware about none of the online channels of Kitex Ltd. 13% respondents agreed with the statement, 12% respondents somewhat disagreed. 14% of the respondents have no opinion regarding the same. Through this study, it found that the reach of the online channels of Kitex Ltd. is need to be improved. Majority of customers have little understanding about the online channels of Kitex Ltd. The study found out that more than 66% of respondents have not much aware about the Kitex Lifestyle is an e-retailing website of Kitex Ltd. From the study majority of the respondents said that the quality of products of Kitex Ltd. is good. The online channel distribution models of Kitex Ltd. are Face book page, blog, company website & company s e- retailing website (kitex lifestyle), tie up with other e-retailers (Amazon & ebay). VII. CONCLUSION The study was conducted at Kitex Ltd. with the objective of understanding the perceptions of customers regarding online and offline modes of their business operations. It was found that majority of customers are not much aware about all the online channels of Kitex Ltd, especially the Kitex Lifestyle. The demographic result showed that, compared to female, males are more active in buying kitex products especially through online mode. From the study we can understand that only few respondents are used Kitex Lifestyle. The objective of the study is to find out the factors affecting online distribution channel of Kitex Ltd. the variable considered for this study are age, gender, occupation, online presence of the people, technology advancement, online presence of the company, quality & simplicity of the website, payment & delivery options, availability of products. The study found that the reach of the online channels of Kitex Ltd. is limited in the crowded market. So it is suggested that the company has to bring in a sophisticated online channel distribution model to expand the customer reach in future. References: 1. Afuah, A., Tucci, C. L Internet Business Models and Strategies: Text and Cases Irwin/McGraw-Hill: New York, NY. 2. Amit, R., Schoemaker, P Strategic assets and organizational rent. Strategic Management Journal, 14: Porter, M. E Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York, NY. 4. Prahalad, C.K., and Venkat Ramaswamy. The Future of Competition: Co- Creating Unique Value with Customers. Boston, MA: Harvard Business School Press,