ACKNOWLEDGEMENT

First and foremost we thank ALLAH ALMIGHTY who gave us strength and wisdom to complete this project successfully. Words are inadequate in offering our thanks to our instructor Mr.IMRAN ALI. The supervision and support that he gave us truly helped us in the progression and smoothness of this project We are indebted to all those who were helpful in our consumer survey, for their outstanding contribution for making quality work. And great deal of appreciation goes to the manager of RETAIL STORES Finally, yet importantly, we would like to express our heartfelt thanks to our beloved parents for their blessings, my friends/classmates for their help and wishes for the successful completion of this project.

TABLE OF CONTENTS

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PREFACE INTRODUCTION OF TOPIC ARTUCLE SUMMARY INTRODUCTION OF PRODUCTS METHODOLOGY RETAILER INTERVIEW ANALYSIS CONSUMER SURVEY ANALYSIS CONCLUSION QUESTIONNAIRE REFERENCES&BIBLIOGRAPHY ANNEXURES

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PREFACE

This report has been written to explore the consumer behavior in OUT-OF-STOCK situation .Because in today's dynamic and competitive environment there are great possibilities that the required products of the customer get out of stock and it causes frustration not only for customer but also has significant impact on retailers and manufacturers. Our concerned products are Wavy chips, cornetto ice cream, Pepsi, perk chocolate and tuc biscuit The first part of this report consist of article summary .Next part elaborates the product introduction .The third part consist of questionnaire and analysis of consumer survey. The fourth part consist of the results of the interview of the managers of retail store The fifth and last part is the conclusion of our research The related article is attached
We choose five stores for our research survey which are given below 1) Trend 2) Food festival 3) Ideal store and bakers 4) E-mart 5) Javed departmental store and drink corner.

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INTRODUCTION
A stock out or out-of-stock (OOS) event is an event that causes inventory to be exhausted. While out-of-stocks can occur along the entire supply chain, the most visible kind is retail out-ofstocks in the fast moving consumer goods industry (e.g. sweets, diapers, fruits). Stock outs are the opposite of overstocks, where too much inventory is retained. The global average of retail out-of-stocks is 8.3% recent surveys on retail out-of-stocks suggests that instore operations are fundamental to reducing retail out-of-stocks. Around 70-90% of stockouts are caused by defective shelf replenishment practices, as opposed to the 10-30% resulting from the upstream supply chain, such as a shortage of supply from a supplier. Stockouts frustrate shoppers and force them to take a number of corrective actions that are beyond the retailers control. Understanding how consumers respond to stockouts is therefore the starting point for retailers who wish to improve on-shelf availability.[5] When shoppers are unable to find an item that they had intended to purchase, they might switch stores, purchase substitute items (brand switch, size switch, and category switch), postpone their purchase or decide not to buy the item at all. [6] Although these responses differ in severity, each entails negative consequences for retailers. Stockouts cause lost sales, dissatisfy shoppers, diminish store loyalty, jeopardize marketing efforts, and obstruct sales planning, because substitution disguises true demand. Moreover, shopper surveys reveal stockouts to currently be the most prevalent annoyance to shoppers. Shoppers spend a considerable amount of time looking for and asking for out-of-stock items. Shopper response to stockouts has been investigated by researchers with respect to cognitive response (e.g. perceived availability), affective response (e.g. store satisfaction), behavioural response (e.g. brand switching) and aggregated response in terms of category sales effects. Studies find shopper response to out-of stocks depends on brand-related antecedents (e.g. brand equity), product and category-related antecedents (hedonic level), store-related

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antecedents (e.g. service or price-oriented), shopper-related antecedents (e.g. shopper age) and situational antecedents (e.g. purchase urgency). . Finally, various types of technology, such as radio-frequency identification, shelf stoppers and weight or light sensors, can be used to manage inventory and out of stock situation

Consumer response to the Preferred brand out-of-stock Situation (Willem Verbeke et al., 1997)
In this article the researchers have studied the behavior of the customers when their required products are out-of-stock. They conduct study on (Friesche Vlag .Lassie ,Croma ,OMO) in Netherlands The writer says that now a days lot of brands have been introduced and the brand loyalty has been eroded. There is a question mark that when a required brand is out of stock what will its effects on consumer choice and on what factors he/she will make purchase decisions. Researcher has explored this situation by analyzing following factors 1) Is the response to an OOS situation affected by the intensity of retail competition? 2) Are the effects of a temporary OOS (where the shelf of the OOS brand is left empty) different from a permanent change (where the shelf of the OOS brand is filled with a competitors brand) in the assortment? 3) Will OOS responses depend on the degree of store loyalty? 4) Is the OOS response affected by the shopping patterns of the consumer whether the consumers spend a large or small amount of money on a typical store visit? 5) Will consumers spend less in a store because of an OOS situation, or will the effects of an OOS be confined to the brand and category that are being manipulated?

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When consumer confronted with OOS situation his responses differs according to his traits of being store loyal, brand loyal, price consciousness, urgency. The importance it gives to time and distance Whenever a product is out of stock three responses 1) postponement of buying 2) brand switching; and 3) switching stores to get the brand

It has been observed that instead of postponing the purchase or switching to the stores in dominated by the switching of brands (31 to 65%) while 14 to 35% switched the store The purchase decisions differ from product to product and brand to brand, for some products brand loyalty is strong enough that enforces the customer t switch store or postponed the purchase. The responses in OOS situation differed substantially per brand. It seemed that consumers were willing to undertake behavioral efforts in order to obtain their preferred brand Moreover the presence of nearby competing stores and the sign of an assortment change (Shelves filled) versus a temporary OOS (empty shelves) did not influence the OOS response. However, these are only the characteristics of that have an effect that has significant effect on the purchase decision Consumers classified as store loyal more likely to switch stores. Consumers purchasing small amounts per shopping trip were less likely to switch brands and more likely to postpone purchases. Finally, a surprising finding was that a total amount of the spending of the consumers was only slightly affected by the OOS Store loyal switch the store in severe condition just to punish retailer that do not consider their demands and do not make it available Some customers prefer to switch stores just to buy their preferred brands at cheaper brands

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INTRODUCTION OF PRODUCTS 1.

Perk Chocolate

Product: Perk chocolate introduced in 1996 Brand: Cadbury Price: 10/RS (Small size) Manufacturer in Pakistan: Kraft Foods Pakistan Limited Availability All retail stores and super markets

2. Corneto Ice cream

2. Product: Cornetto ice cream Cornetto cones were first produced in 1976 in Naples by an Italian ice-cream manufacturer, Spica. It was at this time that Unilever bought Spica and began to market the product throughout Europe Brand: Unilever Price: 35/RS (small size) Manufacturer in Pakistan:
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Walls Company Availability All retail stores and super markets

3. Pepsi
Product: Pepsi first launched in 1898 Brand: PepsiCo Price: 15/RS (single serving) Manufacturer in Pakistan: Sohail & Sons, Shamim & Co, Availability All retail stores and super markets

4. Wavy Chips
Product: Wavy chips Brand: PepsiCo/Frito-Lay Price: 20/RS (Small size) Manufacturer In Pakistan: ANURIM FOODS PVT. LTD.

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Availability All retail stores and super markets

5. Tuc Biscuit
Product: Tuc Biscuit Brand: Tuc Cracker Price:15/RS (Small pack) Manufacturer in Pakistan: Continental Biscuit Ltd. Availability All retail stores and super markets METHODOLOGY OF RESEARCH We acquire following methodology for research purpose 1. Questionnaire for consumer survey 2. Interview with retailers

ANALYSIS OF RETAIL STORE IN OOS

We choose five stores for our research survey which are given below
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1) Trend 2) Food festival 3) Ideal store and bakers 4) E-mart 5) Javed departmental store and drink corner.

Availability: Our four main products Perk, Cornetto, Tuc biscuit, and wavy chips are mostly available at every store but Pepsi is not because of Coke agreement with the stores because of coke demand and discounts most of the big stores prefer toward agreement so it is one of the reason why pepsi is not available and for those who brand conscious of Pepsi then switch toward those stores where it is available. Distribution: According to the stores managers, mainly in distribution bookers of the distributors play an important role because they book the stock according to the store demands and then distribution companies sent the desired demand to the stores and outlets. Out of stock: Most of the time departmental stores facing the out of stock situation because of shortage of products in a market by a company or distributor are responsible for that. Mainly companies are responsible for that situation and sometimes booker books an order and distributor fail to deliver that required supply so there is fifty- fifty chance of this situation responsibility toward on both company and distributor. Forecasting failure also responsible for the out of stock situation and retail outlet manager fail to forecast the right kind of demand that effect the sales. So because of the human error this type of situation occurs. Consumer behavior toward OOS:
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When products get out of stock consumer annoyed toward that situation e.g according to trend manager once cornetto get out of stock due to late distribution so they have to recommend another store to purchase that so most of the time they have to face these types of situation and bad impact has been placed on a mind of consumer so in order to meet these requirement mostly all stores we visit they say that made a backup of all the products for any emergency situation. Most of the consumer buy substitute like tuc substitute peek freans saltish etc. and most of the time they prefer them to buy substitute.

Forecasting: All the stores make a backup plan for this situation, they store a stock of at least one week in order to meet the out of stock situation .When things get out of stock many of the customers come up with the complaints so stores manger know about the time span when these items back in a stock so they made a backup plan of 7 to 15 days Most of the companies like Unilever LU Pepsi etc. give discounts percentages for the special shelves placement of their products like in E-mart there is whole shelf of LU products and Pepsi Walls chillers.

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ANALYSIS OF CONSUMER BEHAVIOR IN OOS

We have developed a questionnaire to access the buying behavior of consumers in out of stock situation (OOS). By floating this questionnaire to 16 different people we got a complete picture about purchasing behavior of customers. These questionnaire we developed normally describe the preferences of the consumers that whether they are brand loyal consumers, shop loyal customers, price conscious, how many go for the substitute products if the specific brand product is not available, how many delay the purchase and wait until the specific retailer provide that particular brand product or go to the other nearby shops to find that product. In general most of the people are brand loyal because they consider brand importance while decision making. They dont want to switch to any other brand because the satisfaction level by consuming that product brand is high and they dont like to try different brand every time. Most of the brand loyal customers dont find themselves easily move towards alternative brands.

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But in case of FMCGs the turnover of fast moving consuming goods are very high because they are consuming on daily basis. So most of the time these products may not available in one retail store. Then most of the consumers switch to the alternative brands and consumes the substitute brands product which fulfills the same need. Out of 16 responses 15 replied that sometimes the out of stock situation may arise but most of the time products are available at the retail store. Some says that they become frustrated and some says that it makes no difference for them. In case of shop loyalty, the responses of the questionnaire, there is equal ratio of customers who prefer to go to the same shop every time to purchase FMCGs and the customer who visit different shops to get the required product. It means that if one product is not available then they prefer to go to other nearby shops to purchase the particular product because they dont want to consume any other alternative product. Most people are price conscious and they buy low price product. Out of 16 responses, 9 consumers says that they are price conscious and they like to visit various shops to get required product at minimum price level and 7 replied that they are indifferent. If one product is out of stock then 100% respondents says that shopkeeper openly asked to wait and give assurance to the customers that required product will be available as soon as possible.9 out of 16 respondents says that they ever delay the purchases until the specific retailer provide that product.50% respondent feels uncomfortable in switching from one retailer to another and 50% respondent says that they dont bother by changing the retailer.

We have selected 5 different product brands Perk chocolate Cornetto Pepsi Wavy chips Tuc biscuit

There is two major questions we have asked to 16 respondents regarding these products.
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Q: How often they purchase the particular product? Q: If they go to the shop and retailer told that this specific product is out of stock what they will do then? In case of Perk chocolate Chocolate is becoming a favorite product for children, young girls and boys and now consuming by old ones also. Out of 16 responses 5 respondents says that they consume it on daily basis, 6 respondents says that they consume it on weekly basis and 5 says on monthly basis. 11 consumers replied that if perk chocolate is not available at a particular shop then they buy any other chocolate and 1 replied that he delay the purchases and wait until that specific retailer provide the specific product. And 4 consumers go to the nearby shops in order to purchase Perk chocolate. In case of Cornetto (ice cream) Normally people consume ice creams on weekly basis. The consumption depends on weekly basis. Consumption depends on the mood of the consumers, events, and depends mostly on weather. If the weather is too hot then people used ice creams just is order to get refresh themselves and to reduce the tendency of hot weather. In contract people used ice cream in cold weather and in rainy day just to get chill full feelings. Out o 16 respondents, 10 respondents say that they consume Cornetto on weekly basis and 5 says that they eat it on once a month and 1 person say that he consume it daily. The responses of 2nd question are that out of 16 responses 8 people buy any other ice cream it may be Walls ice cream, Omore ice cream etc., 1 replied that he delayed the purchase and 7 persons say that they go the nearby shops in order to get just Cornetto.

In case of Pepsi

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Pepsi is the 2nd most consuming soft drink in the world and people used to consume it mostly on daily basis. On many occasions people consume it and it becomes a basic part in our diet. People consume it while eating food and just in order to refresh themselves and to reduce quench of their thirst. Out of 16, 14 people say that they consume it daily and 2 say that they consume it once a week. The responses of 2nd question show the following results. Out of 16, 7 people say that they buy any other cold drink just like Coca-cola, Sprite, 7up, Marinda etc. 8 people go for any other nearby shops to purchase only Pepsi how have developed their taste towards Pepsi, dont go for any other cold drink In case of wavy chips People consumed wavy chips just to change the taste of their month and for time pass while studying, talking with friends and between unusual eating times. Most people say that they consumed it on daily basis. Because wavy chips is newly introduce product and if they dont find in a particular shop then they go for substitute chips for example Lays, cheetos, Kurlees, kurkure etc 3 say that they delay the purchase decision and 3 say that they go for any another shops to buy wavy chips. In case of Tuc biscuit Out of 16 respondents, 2 people say that they purchase it on daily basis. 7 says that they consume once a week and same 7 says that they eat it in once a week. In case of biscuit there are many substitute of biscuit are available for example Gala, Peanut pick, Chocolate Sandwich etc. out of 16 respondents 14 people say that they buy any other biscuit. 2 say that they prefer to delay their purchases and wait until that specific retailer provide that biscuit, 2 say that they go to other nearby shops in order to purchase Tuc biscuit.

CONCLUSION By the analysis of the questionnaire we conclude that in case of Fast Moving Consumer Goods (FMCGs) most of the people go for substitute product if the specific product is not available
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currently in a shop, in some critical situation. But if they have developed their taste toward the product then they try to go to another shop just in order to get that product if they feel convenient for them.

QUESTIONNAIRES
Retailer Interview:
Name ____________________________________ Store ____________________________________ E-mail____________________________________

1) Availability of the products : Perk chocolate Cornetto ice-cream Tuc Biscuit Pepsi Wavy chips

2) Who are the distributors of these products?

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Perk chocolate Cornetto: Tuc Biscuit: Pepsi: Wavy chips: 3) What are the reasons behind things got out of stock and who is responsible for that in major circumstances? Does it affect your sales too 4) Do you have negotiated a specific shelf place for these products?

5) When things are out of stock what are the consumer behavior toward that? 6) When things are get out of stock do you have any time span that these are again

get in stock?

Buying behavior of consumer in Out-of-stock situation (OOS)

Name ____________________________________ Age ____________________________________ E-mail____________________________________

1. Do you prefer to go to the same shop every time to purchase FMCG's? a) Yes b) No

2. Do you like to visit various shops to get required product at minimum available price? a) Yes b) No

3. Do you like to try different brands every time? a) Yes b) No Page 17

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4. Do you consider brand importance while making purchase decisions? a) Yes b) No you that

5. Dose it happen that you go to a store, ask for your required product and the shopkeeper told your required product is Out-of-Stock? a) Mostly b) Sometimes c) Never

6. How you feel at that time? a) Frustrated b) Indifference

7. Does shopkeeper offer you an alternative product that fulfills the same need? a) Yes b) No

8. Do you easily move toward alternative brand? a) Yes b) No

9. Does the shopkeeper ever say you to wait ,your required product will be available soon? a) Yes b) No

10. Do you ever Delay your purchase until your specific retailer provide you that product? a) Yes b)No

11. Do you feel uncomfortable in switching from one retailer to other? a) Yes b)No

12. Do you prefer to change the shop and stop going to that shop where your retailer offer you alternatives? a) Yes b) No

1.

IN CASE OF Perk chocolate

How frequently you purchase it? A)_daily b )weekly c) monthly

13. If you go to shop and retailer told you that this specific chocolate is out of stock what you will do? a) Buy any other chocolate b) Delay your purchase and wait until that specific retailer provide you that c) Go to other nearby shops 2. IN CASE OF Cornetto (ice cream) How frequently you purchase it? a)_daily b )weekly

c) monthly Page 18

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14. If you go to shop and retailer told you that this specific ice cream is out of stock what you will do? a) Buy any other ice cream b) Delay your purchase and wait until that specific retailer provide you that c) Go to other nearby shops 3. IN CASE OF PEPSI

How frequently you purchase it? a)_daily b )weekly c) monthly

15. If you go to shop and retailer told you that this cold drink is out of stock what you will do? a) Buy any other cold drink b) Delay your purchase and wait until that specific retailer provide you that c) Go to other nearby shops

4. IN CASE OF Wavy Chips How frequently you purchase it? a)_daily b )weekly c) monthly

16. If you go to shop and retailer told you that this chips is out of stock what you will do? a) Buy any other chips b) Delay your purchase and wait until that specific retailer provide you that c) Go to other nearby shops

5.

IN CASE OF Tuc Biscuit How frequently you purchase it? a)_daily b )weekly c) monthly

17. If you go to shop and retailer told you that this biscuit is out of stock what you will do? a) Buy any other biscuit b) Delay your purchase and wait until that specific retailer provide you that

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c) Go to other nearby shops

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