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«Distinct positioning in a saturated market requires both, attractiveness for targeted customers and differentiation from competitors (Schmitz 2009, ...»

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Success Factors of Shop-in-Shop – An Empirical Analysis at the Example of a Domestic

Appliances Manufacturer

Marc Kuhn (DHBW Stuttgart, Germany)

Katharina Beine (DHBW Stuttgart, Germany)

Distinct positioning in a saturated market requires both, attractiveness for targeted customers and differentiation from competitors (Schmitz 2009, Trommsdorff 2009). Due to ever more perceived product homogeneity sole product differentiation does not suffice nowadays (Diehl 2004, Schmitz 2009,

Maloney 2007). Brand manufacturers additionally invest in brand-building distribution instruments such as shop-in-shop (Görg 2010, Esch 2005a). The rising costs for such concepts require the identification of specific factors ensuring economic success. The purpose of this paper is to define theoretical success factors of SiS and a research design which allows a feasible and qualitative empirical analysis of such factors. Having applied this research design for one selected domestic appliances manufacturer, this paper will present essential results.

Keywords: shop-in-shop, retail, success factors, purchase intercept technique Introduction POS marketing comprises all efforts that are taken to support sales in stationary retail and to foster brand and store loyalty (Hunstiger 2001). In stationary retail customers more and more frequently come across the POS marketing instrument shop-in-shop (SiS). In the 1970s Porter (1973) has already identified an association between perceived product quality and the image of the retail store presenting the product. Increasing investments in POS presentation and experience orientation in retail store design underline that this transfer of customers’ perception has been recognized by retailers as well as manufacturers (Dräger 2011).

Following the idea of integrated communication programs, SiS is defined as a visually and/or spatially separated sales area of a retail store within which products of one brand are exclusively offered in the corporate or brand design (Byszio 1995, Jerath and Zhang 2010, Kotleret al. 2008, Medla 1987, Berekoven, 1995). While in traditional channels the retailer acts as a gatekeeper for the brand presentation, a SiS designed by the manufacturer degrades the retailer to a mere gate opener (Maloney 2007).

SiS operators aim for increasing customer attention for the presented products, influencing customer behavior in a way desired by the operator - especially cross-selling - and proposing additional value to the customer by providing an exceptional shopping experience (Medla 1987, Pracht 2001, Hunstiger, 2001). The purpose of a presentation in the corporate or brand design is to reinforce a customer’s brand experience which is supposed to be the basis to a stable relationship (Maloney 2007, Esch 2005b).

Reviewing literature for SiS, it is noticeable that respective publications are porcupined with several different terms referring to this concept as well as that most of them lack currency. Inferring from this scientific status quo, the topic seems to be long-since familiar but at the same time neglected nowadays. Yet, recently success factor research for SiS gains importance for brand manufacturers. Facing more and more followers, manufacturers with implemented SiS concepts have to meet the challenge of balancing cost and profit of outstanding POS designs. More followers require more impressive SiSs to attract customers’ attention. Hence, the paper’s research question is how SiSs can still be operated economically.

Success factors of shop-in-shop concepts

The purpose of success factor research is to endeavor regularities or variables in the company’s sphere of influence that are effective in augmenting its success (Ahrholdt 2010). The outlined success factor research for SiS is focused on the customers’ perspective in order to obtain differentiated information about the effect of such factors on customer behavior. Its relevance is underlined by Gòmez, McLaughlin, and Wittink (2004, p. 266) by pointing out that “[d]ifferences in the ‘shopping experience’ between retail outlets … are often as important to the customer as differences in the physical characteristics of the goods offered ….” An impact on customer buying behavior allows for inferences about the economic success of a SiS. All in all ten success factors were derived from SiSspecific literature as well as theoretical research approaches generally conducted in stationary retail.

A SiS’s location refers to its internal position in the overall retail store and is thus connected with considerations about differing value of spaces (Medla 1987, Gretz, 2000). The success factor reachability refers to a customer’s orientation in the retail store which is recommended to be enhanced via in-store guidance systems (Gretz 2000, Pracht 2001). First and foremost, both these factors are crucial for customer frequency within a SiS (Dräger 2011, Byszio 1995). Also defined as success factors due to their impact on customer frequency are a SiS’s entrance and display stand layout. Customers are more likely to attend retail stores if these are associated with openness and spaciousness (Gretz 2000). This research result can also be applied for SiS entrances which in retail reality are frequently formed by display furniture (Gretz 2000, Berekoven 1995).

Furthermore, stemming from its relation to a customers’ perception of quality in a product presentation a SiS’s furnishing is another success factor. Most successful shall be a SiS design in which the emanated visual stimuli - conveyed by the furnishing and layout of the SiS - pull external customers into the SiS and support the ones already in the SiS area in their buying intention (Medla 1987). A research result concerning furnishing is that design aspects of a store have an impact on “the perceived stress involved in shopping” (Baker et al. 2002, p. 136) which can positively affect customer satisfaction.

Further factors being identified as influencers of customer buying behavior are the SiS size and portfolio. The former factor is dependent on the number and size of products to be presented on the SiS space. Customers’ requirements are met, if a SiS covers enough space to be recognized as an individual sales area and if this space allows a spacious presentation of a desired amount of products (Berekoven 1995). The portfolio refers to the assortment’s depth and width as well as the choice of models from each product type or category (Byszio 1995). Lam and Mukherjee (2005) justify a wide product range that is required for cross-selling by stating that a well-coordinated shop presentation may have a positive influence on the evaluation of the single product, the store’s image, the customer’s buying behavior, and final sales outcomes.

Additionally being identified as relevant for a SiS’s economic success is the factor product information. Visitors can gather information either via personal contacts with sales staff or via product information carriers being attached to the product or display stand (Turley and Milliman 2000). Besides the required “concrete information about durable goods” (Puccinelli et al. 2009, p. 21), the provision of emotional background information follows the trend of experience-oriented shopping and is therefore recommended (Schmitz 2009, Hurth 2006).

The necessity of social interaction with sales staff - chiefly for brand manufacturers - is underlined by the theory that customers only hardly perceive a difference between sales staff provided by a manufacturer or a retailer. It is reasoned with the widespread consumer belief that “salespeople [...] are the firm.” (Goff et al. 1997, Diller and Goerdt 2005, p. 1212). Maloney (2007) confirms a positive correlation between retailer or sales staff satisfaction on the one side and product or manufacturer contentment on the other. Besides a functional value, the counseling session also entails the benefit of conveying emotional attributes of a brand via social interaction (Kuß and Schuchert-Güler 2004) and is therefore defined as a success factor of SiS.

The relevance of experience orientation for brand manufacturers stems from the fact that most decisive differences between brands of the same product category are perceived in differing experiences rather than features (Weinberg and Diehl 2005, Schmitz 2009). For success factor research experience orientation is narrowed down to atmosphere which is the sum of environmental cues - both tangible and intangible - causing and influencing an individual shopping experience (Berekoven 1995, Puccinelli et al. 2009). A store atmosphere emerges from a combination of several other success factors such as lighting, colors, and music and is individually experienced either consciously or unconsciously by each customer (Sirgy et al. 2000, Berekoven 1995). The importance of atmosphere for economic success in retail is pointed out by several research studies revealing an effect on resting time and spending among customers (Babin and Attaway 2000, Donovan and Rossiter 1982).

Field research in form of an empirical analysis has to be applied in order to scrutinize the success factors’ applicability as well as their relevance for economic success in reality. Due to a lack of differentiated perspectives on the derived success factors the following two hypotheses are taken as basis to

the empirical investigation:

H1: The SiS presentation influences customer buying behavior in favor of the pres ented products.

H2: All derived success factors are of the same importance for influencing customer buying behavior.

Research methodology

Given a lack of information regarding the customers’ perspective on SiS, a concept for primary research is inevitable to answer the question which factors of SiS contribute to its economic success (Schiffmann et al. 2010). Having this sufficiently defined research question, available research methods are observations and surveys (Malhotra 2010).

The research design is supposed to shed light on customers’ perceptions, attitudes, and behavior in order to make inferences about the influence of success factors of SiS. According to Kroeber-Riel et al.

(2009), surveys are applicable in consumer behavior research assuming that with a certain extent of activation consumers are able to remember their response to certain stimuli (Silberer 2009). This argumentation complies with Büttner’s (2009) recommendation to support the requested memory performance about a store visit with a research situation providing as many stimuli of the situation to be remembered as possible.

Observations are independent from the customer’s level of activation since the observable behavior does not have to be reproduced by the customer to be captured (Schiffmann et al. 2010). This method is used to obtain information about customers’ in-store as well as handling and information behavior (Berekoven et al. 2009).

Considering these aspects of consumer behavior research, the purchase intercept technique (PIT) is an expedient way of obtaining the needed information. The PIT is a combination of both discussed descriptive research instruments consisting of an in-store observation and a follow-up face-to-face survey (Aaker, 2011). The research instrument is applied in a specific shopping situation in which immediately after being observed - the test person is intercepted (Aaker 2011). Supporting the recall with still being in the same surrounding and a minimum delay between experience and measurement is the only way of obtaining valid information about customers’ shopping perceptions (Silberer 2009).

Moreover, a high involvement is accompanied by a more conscious perception of stimuli and an enhanced ability of remembering shopping activities and perceptions (Puccinelli et al. 2009, Büttner 2009, Salzmann 2007). Customers are highly involved in the purchase of a comparatively expensive products, durable consumer goods or products that reflect personality (Rossmann 2008, Esch 2005b).

In general, this research design is thus supposed to be more valid for SiS concepts meeting the requirement of high customer involvement. For SiSs in the domestic appliances retail this prerequisite is supposed to be met.

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