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Online Grocery Shopping Website

In this era of modernization, it is becoming very difficult for the grocery shops to sustain without having an online shopping portal. To match with the changing patterns of buyers, Miou Co is planning to open an online shopping website for its grocery products. This report presents the market research of buying patterns and consumer traits of customers with respect to online grocery shopping. It also presents the marketing implications for the company when it opts for opening an online shopping website.

The market research was conducted by both the methods i.e. secondary research (Literature review) and primary research (Focused Group and In-Depth Interviews). The major findings from the research suggest that customers prefer online shopping as compared to offline shopping for grocery products given that some constraints are taken care of. The customers across age-groups have different opinions in terms of their traits for buying online, but indicate one straight forward trait that they are happy to have an online shopping experience as it has many advantages over offline shopping.

The market research findings suggest to Miou Co. Ltd. that it should open an online shopping website. The major marketing implications identified by the research are:

The marketing efforts should focus on building the brand name and brand awareness among the customers as trust is one of the prerequisite of online shopping.

The marketing messages should focus on payment security, information accuracy, fast and safe delivery of products and online shopping advantages.

The company should come up with a marketing campaign for the website to attract the customers to the website.

Introduction

Present era is an era of globalization where the world is considered to be flat. The era of globalization has come into existence largely because of the internet boom and internet is considered to be the fastest way of communication. Through internet a person can have its presence at any corer of the world. In fact, the world of internet is different from the real world and thus it is called as a virtual world. People are living in this virtual world through social networking websites and not even people but several companies have also made their presence in the virtual world utilizing the internet boom (Cohen, Manion & Morrison, 2007). Internet is not only used to spread awareness about the products but now it is also explicitly used for shopping. Online shopping is new shopping address for the customers and now they can do everything on internet whatever they do while visiting a normal brick and mortar shop.

As e-commerce and online shopping is becoming popular and profitable, many companies are now entering this virtual world for opening their online shopping portal. Almost every business in developed countries provides an option of buying products through internet because this helps in increasing the customer base. Same is the case with the Miou Co. Ltd. which is a national supermarket chain in Australia. This company is aiming to open an online grocery shopping website so that customer can also shop through their website. This is a very important step for the company as opening an online shopping portal is a very expensive and complex process unlike a normal street-shop (Creswell, 2002). Internet shops make life of customers more comfortable but at the same time cost associated with opening of internet shops are also high. Thus proper analysis needs to be carried in order to reach a conclusion of opening online shopping website.

This report will include the analysis of customer buying behavior and also analysis of the target segment. This report will majorly deal with the thorough analysis of the customer traits and also the perception of these customers towards online grocery shopping. Secondary research is done by researching scholarly articles and journals on marketing and research. This will help in developing literature review of the presented topic. Then primary research is conducted to analyze the customer buying behavior and perceptions towards online grocery shopping. Analysis of the responses of the primary research conducted helps in deriving on any solution as well as it helps in providing the recommendations to the Miou Co. Ltd. for retaining and acquiring new customers as well as marketing implications.

Literature Review

Internet boom has presented shoppers a new address and companies one more point of contact through online shopping. Online shopping is considered to be inevitable for the companies which directly deal with customers for their daily needs. Thus the main categories which are very successful in increasing the customer bases are fashion products, electronic items, consumer durables, grocery items, computer accessories and peripherals. These are the major categories which have huge number of customers on internet also (Piercy, 2006). Online shopping is thus considered as a very profitable option by the companies which have presence as brick and mortar stores across any region. The customers earlier used to visit local shops for fulfilling all their needs but it was very difficult for those who were very busy in their daily schedules. These customers wanted to have a comfortable life where they don’t have to visit these shops but still they are able to purchase the products. Thus the best solution for these customers is to have shopping through online medium and by accessing internet (Leedy & Ormrod, 2005).

Online shopping websites have seen an exponential growth and there are many companies in this sector which don’t have any brick and mortar shops but exclusive presence on internet. These are the companies which are dedicatedly providing products to customers through internet. There are many advantages for the companies to get involved in the ecommerce and online shopping without having physical presence (Thoits & Virshup, 2007). Some of these advantages are as follows:

There is no investment on land and interior decoration while setting up an online shopping portal as compared to establishing a brick and mortar shop. The major chunk of the money invested in opening a traditional offline shop is invested in acquiring land and developing of shop and its interior design. This cost of acquiring land is absent in the case of online shopping. The cost of land comes in millions if the shop has to make presence at many locations in a country. Whereas in case of online shopping portal, this expense is compensated with few dollars spent on buying a domain name (Lawrence, 2005).

An online shopping portal can be accessed from any place wherever internet penetration is available. This means that simultaneously, the portal of online shopping can be accessed anywhere and anytime. Whereas in the case of traditional shops it is highly difficult for the owner to open shop at every city in the country. This has huge cost implication and even if a store has a chain of stores then also the owner cannot think of opening more than 100 stores simultaneously.

Online shopping is accessible to the customer for 24 hours and 365 days in a year. Whereas this is not possible with the traditional stores as the stores remain closed on holidays and majority of the stores are closed in night (Denzin and Lincoln, 2004). This gives huge benefits and freedom to online shopping stores as they a customer is free to purchase anything around the clock.

Overhead cost which consists of electricity, maintenance and staff salary is very high of the traditional stores whereas it is very less in the case of online shopping portals. This increases the profit margin of the online shopping portals several folds when compared to the traditional stores and also the breakeven is reached at faster rate.

These are some of the major benefits which are reaped while starting an online shopping portal as compared to starting of traditional shops. Thus these benefits and advantages acts as motivational tools for encouraging online shopping business. These are the benefits for the businessmen who start their own online shopping portal (Hinton, 2004).

There are certain more factors which need to be thoroughly checked to analyze and conclude whether it is necessary for the company to have their own online shopping portal. In the era of internet and globalization, almost every country is present in the virtual world but the online ecommerce presence is also dependent upon the type of product to be sold and the characteristics as well as buying pattern of the prospective customers. May be the product can be successfully catered to the customers through online but the buying pattern of the customers would not allow them to buy these products online. In developing countries like Bangladesh, India, Pakistan, Thailand, Philippines and many under developed countries, the penetration of internet is very less (Ridgeway & Johnson, 2000). Hence the products which are successfully selling in developed nations like United States of America and United Kingdom will not sell properly in developing and poor nations. Thus from the above example it can be clearly attributed that there are several other factors which needs to be observed while deciding on the parameters which are very crucial for the success of the online shopping portal. Some of the major parameters which have been considered as crucial for the success of the online shopping portals are discussed in detail as follows (Loken, Kim & Monga, 2006):

Customer Buying Behavior: This is the most important and impactful parameter which is part of the decision of opening of an online shopping portal as end customers are the persons who will earn the business and revenues. The buying pattern is highly important to be analyzed properly and without bias so that the feasibility of the portal can be calculated. Customer buying behavior is composed of the propensity of the customers to buy products online. This propensity is rises because of several reasons which can be:

Customer want to compare and check about the product at several different place and then he makes his buying decision after choosing from several other alternatives which are present. This decision is based majorly on comparing the prices as well as reviews. Currently most of the online shopping websites have a reviews section for the product and these reviews are written by the users (Tsushima & Burke, 2009). Thus customers are highly dependent upon the reviews of the customers who are using that product.

Other buying decision factor is price which can be compared across several other online shopping websites. It is a general opinion that customers tend to purchase same product from any store which is offering least price or the same product at cheapest price. On internet websites, the shoppers have wide array of websites offering products and thus the customers choose the product which is available at least price (Johnson, Garbarino & Sivadas, 2006).

The customer also checks about the verification as well as credibility of the online shopping portal. There are many cases where the online shopping websites are fraud and thus customers end up losing their money. This is very prevalent deception or scam in many countries because it is easy for the website owners to conceal their identity and thus cheat the customers. In fact the customers should also verify whether the product being sent by the company is same as described in the website else they will end up paying higher cost for a local material made product.

These are some of the critical parameters which modify the buying behavior pattern of the customers. Hence any company while launching their website should be able to analyze their customer buying pattern.

Brand Awareness: Shopping on internet is very easy if the brand or company from which is the shopping is being done is a well known brand. Thus it can be said that customers feel comfortable if the corporate name is a well known name in the country and thus the credibility issues are properly captured (Khare & Inman, 2006). It is very easy for the customers to shop on the online shopping website of the brand which is known to them and they have even used the product by purchasing it from traditional store. Hence a national supermarket chain which is a known in any given country will definitely have mass audience to follow the online shopping too same as they visit the brick and mortar shop.

Psychographics: The Psychographics is the study of the characteristics of the personality, traits, values and lifestyle of the customers. This is a highly important parameter which is utilized by the marketers for segmentation of the target market. The major area which is being focused by Psychographics is interests, activities and opinions and these parameters help in analyzing the lifestyle and values of the customers. For example, People of South Korea are considered to be world’s most hardworking people on earth. They want to save time wherever it is possible. Thus their lifestyle does not allow them to spend much time in grocery supermarkets in turn they want to keep them busy in work. Thus one of the national supermarket chains in South Korea came up with an idea of selling grocery products on the go to the customers through mobile application. This was one of the brilliant strategies to increase the customer wallet’s share and also retaining as well as acquiring new customers (Goebert & Rosenthal, 2002). This strategy was purely based upon the lifestyle of target segment and hence it can be said that the psychographics study was nicely conducted.

Internet usage frequency: For the success of online shopping portals, the customers should have high internet usage frequency (Miles and Huberman, 1994). It never happens that any customer will use internet just for shopping. Thus internet penetration and internet usage is also a known and crucial factor in deciding the fate of online shopping portal.

Security concerns: Majority of the population are aware of the fraudulent practices on internet like hacking and phishing which make a user prone to some form of cyber attack. While purchasing any product on internet, a user has to give information about credit or debit card number or internet banking passwords which are highly confidential information (Couper, 2008). If this information is accessed by some other person then he can monetarily harm the user. Thus the majority of the online shopping websites have secured network line and even certified SSL lines provided by different gateways. These gateways provide secure form of transaction of money from one account to another. Thus users should be made aware of these security standards and also all the online shopping websites should strictly follow all the security measures in order to maximize customer wallet share.

These are some of the major parameters which help in deciding the success of online shopping portals and thus marketing managers should consider analyzing all the above parameters very carefully while developing online shopping portals.

Research Methodology

The research is being conducted by the marketing manager of Miou Co. Ltd. which is a national supermarket chain in Australia. Considering the emergence of online shopping websites, Miou Co. Ltd. also wants to establish its own online grocery shopping portal.

Research Problem: The research is being conducted for Miou Co. Ltd. to understand the marketing implications of opening of online shopping website. The research will mainly analyze the customer buying behavior and perceptions towards online shopping.

Research Objective: The research objective sets a path for the research conduct and this objective helps in clarification about the core reason which needs to be brought out by this research. In this report the research objectives can be identified as:

To know the customer perception towards online shopping of grocery items.

To analyze Customer buying behavior when they turn internet shopper.

These research objectives are the core focus of this research and it will help in observing the target audience as well as increasing the new and retained customers.

Research Proposition: The research proposition or research plan/ proposal describes about the overall scenario of the research. The research is based on the primary research i.e. data is gathered directly from the customers (Leedy & Ormrod, 2005). The market research tools being employed in this report is focused group discussion and depth interviews to know the customer characteristics as well as buying behavior.

Significance of Market Research

The market research is conducted to understand the customer buying behavior and their decision making patterns while shopping on internet. The customers are also analyzed to know the personality traits so that the company can target the appropriate audience. This market research will clear all the confusions from top managements regarding the feasibility as well as profitability of the online grocery shopping portal.

Focus Group Design

The focus group is a group discussion conducted among a group of 15-25 people who represents the target segment of the company (Deaux, 2002). In the focused group discussion, there is a moderator who presents the questions which needs to be discussed in focus group. These questions are relevant to the research objectives. All the respondents are then free to discuss their opinion in the discussion and the moderator analyses the discussion as well as information.

For this research, there were 3 focus group discussions held and there were 20 members representing the same target segment but different age group. 1st focus group discussion happened between people from age 18-25 years, 2nd happened between 26-40 years and 3rd discussion happened with people above age of 40 years.

The questions asked in the focus group were as follows:

How often you all shop online and what are the most selling categories?

What level of security should be present in the online shopping websites?

What are major advantages as well as disadvantages of using online shopping website?

Why will a person buy grocery products through online shopping website?

What are the chief factors which presents resistance while buying products online?

Ethical Issues relevant to Focus Groups

The major ethical issue with focus group discussion is that identity of respondents is revealed and thus this is an impediment for unbiased response (Cooley, 2009). Respondents are unsure whether they should respond honestly or they should say whatever moderator wants to hear. In this research, this ethical issue is handled by telephonic focus group discussion. This is a new form of discussion where it is not necessary that respondent is present physically thus it helps in unbiased opinion flow in the discussion.

Findings from Focus groups

Majorly the responses from all the three focus groups were coherent with slight change. The major points which emerged are as follows:

In Australia, majority of the population has awareness about the internet and hence they are aware of using internet for shopping.

The major factors while choosing online shopping website is brand name, reviews and quality of product and security.

Almost everyone has an opinion that they will opt to buy only packaged products from online grocery store because they don’t want to stay in billing queues and want to spend their time in other recreational activities.

Apart from the convenience and comparison of prices instantly the major advantage of online shopping is home delivery. But the major drawback of e-commerce is that customer cannot touch or feel the product before the ownership, hence chance of fraud is high.

In-Depth Interviews

These are the type of interviews which are conducted to have confidential, secure and personal information regarding the research objective (DeVellis, 2003). These interviews are generally carried out at the home of interviewee to get natural surroundings for unbiased opinions. In-Depth Interviews in this research was conducted over 15 respondents by going in their home and taking almost 1.5 hrs to complete. Respondents were given ample amount of time to reply to the questions and forming their opinions.

The major points which were asked in the interview are as follows:

Are you comfortable with online shopping and if yes then what are the categories you prefer. If no, then what are the reasons for not being comfortable?

Major advantages and disadvantages related to online shopping?

What are the benefits from shopping online?

Why would you prefer or not prefer shopping grocery products through website?

You like to go traditional shops for shopping or like to shop on internet?

Ethical Issues relevant to In-Depth Interviews

The major ethical issue in the In-Depth Interviews is that the interviewer should conceal the information about the respondent and also about the information (Gaines, 2005). He should provide the analysis of the interview rather than giving raw information which was carefully handled in this research.

Findings from In-Depth Interviews

The findings from these interviews were almost same as that of focused discussions but the depth of information is much more in this case. Findings are as follows:

Almost all the respondents were comfortable with online shopping format because of high internet penetration. The majority of the categories for online shopping are electronic items and fashion as well as clothing products.

The major influencer for online shopping is lifestyle and the choice of product is very high in online shopping format. But the disadvantages in case of online shopping are security issues, credibility of the product offered. Also the touch and feel factor is missing in this case.

The major benefit is that respondents don’t have to visit physically for buying even a single item as well as they can devote saved time to do other beneficial activities.

Majority of the respondents would prefer to shop online grocery to save their time but they will prefer shopping only from established corporate names as it helps in building credibility.

Marketing Implications

According to the findings, the company should definitely launch the online shopping portal. This will help them in increasing the customer base. But several things which need attention are:

The brand name of the online website should be relevant to the corporate name “Miou Co. Ltd.” as it will develop credibility. Marketing efforts need to be directed to achieve this.

The marketing campaigns should focus on the benefits like 100% secure transaction and fastest way of purchasing grocery while doing other activities.

Company should also come up with several offers which will benefit the end customers and thus de-motivate them to go other grocery stores. Price plays a major role in buying decision making.

Limitations of Research Methods

The research work being conducted was driven very carefully but then also there are certain limitations which are as follows:

The sample size for the interview and focus group was less and thus the sampling population cannot be attributed as complete target segment characteristics (Linville, 2007).

The moderator and interviewer are the only persons responsible for the data quality as well as unbiased opinions. Thus there may be chances that the inferred information might be wrong or biased as per opinion of researcher.

The environment for focus discussion was artificial as it was conducted through telephone (Kollock, 2004). Thus there are chances that this artificial environment has modified the response of the respondents.

Conclusion

The research is being conducted for the company Miou Co. Ltd. which is national supermarket chain. This research aims to analyze the customer buying pattern as well as their perceptions towards online shopping and specifically online grocery shopping. The research is conducted as primary research and the data gathering tools employed is focus group discussions as well as in-depth interviews. This helped in gathering the information about the customer perception, characteristics, advantages and disadvantages of online shopping and the points which acts as an obstacle to online shopping. Depending upon the analysis, marketing implications are carved which will help the top management in designing the marketing campaigns for success of online grocery shopping website.

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