Essays on Retail Buyer Behavior Vis-à-Vis Contemporary Retail Market Phenomena: Field Experiments among Professional Retail Buyers and Individual Consumers
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Aalto University publication series BUSINESS + ECONOMY, 1/2023
AbstractIn recent years, the market position of retail companies has strengthened substantially in many countries, vis-à-vis product manufacturers and brands. This development has led to the fact that the power of professional retail buyers or purchase managers has grown considerably relative to brand manufacturers and marketers. At the same time, individual, non-professional consumers have also been increasingly rendered into direct customers for brand manufacturers, as the latter has engaged in “encroachment,” launching their own retail channels and stores, both offline and online. Moreover, recent years have also witnessed the emergence and proliferation of many other trending phenomena in consumer retail markets. To name but a few, e-commerce and online retailing have seized a considerable part of the overall retail market, more and more consumers prefer environmentally friendly, green, and organic choices, and a growing amount of business operations of both retailers and brand manufacturers are being automated, robotized, or augmented by artificial intelligence (AI). My primary target with this doctoral dissertation is to investigate the contemporary behaviors of professional retail buyers in 2020s. Secondarily, I also aim to investigate the behaviors of individual consumers, insofar as they act in their new role of being direct customers to brand manufacturers, buying fast-moving consumer goods (FMCGs) through manufacturers’ own retail stores online. Specifically, the goal of article (1) is to examine whether retail buyers’ behavior vis-à-vis brand manufacturers’ marketing efforts—especially price promotions—resembles the behavior of lay consumers or that of professional industrial buyers. Article (1) also addresses one of the aforementioned contemporary phenomena: the role of organic product features and advertising claims in retail buyer behavior. In turn, article (2) aims to investigate how professional retail buyers behave towards products produced by automation vs. handcraft. Finally, article (3) shifts the focus from professional retail buyers to the behavior of consumers, and their role as direct buyers of FMCGs from brand manufacturers. In addition, article (3) also addresses the contemporary retail market phenomenon of organic marketing of FMCGs.In order to get practical, real-market data for my research, I chose field experiments as my primary research method in all the three articles. Conducting field experiments on retail buyer behavior is a noteworthy methodological contribution for the literature as well, as prior research has mostly been limited to surveys and laboratory experiments. To complement the field experiments, I also utilized qualitative pre-studies in articles (1) and (3), in order to inductively develop hypotheses for the main field experiment to test. In article (1), a qualitative survey was conducted among professional retail buyers, while in article (3), we employed a qualitative researcher-introspection method. As to the findings of the studies reported in this dissertation, the field experiment in article (1) revealed that a price promotion, especially for a new FMCG product, had a negative effect on professional retail buyers’ demand for the product. We interpret this effect to be a manifestation of the fact that retail buyers’ purchasing behavior resembles rather that of rational industrial buyers than that of naive lay consumers. The negative effect may also be explained by the fact that retail buyers may have grown increasingly skeptical against continuous new product launches by brand manufacturers, particularly if the new products are promoted with discounts at the very beginning. In article (2) our field experiment, showed that among professional retail buyers, attraction towards products produced with automation vs. handcraft may essentially depend on the type of retailer. Specifically, buyers of independent, non-chain drugstores, as well as buyers of stores that also operated an online store, favored products produced with automation, whereas buyers of chain stores and buyers of stores without online operations favored products produced with handcraft. We interpret this to be potentially due to the fact that the buyers of the latter type of retail stores have grown sceptic and/or tired of the automation/AI hype prominent in markets and media currently. In other words, these buyers may find advertisements that mention the automated production technology behind a given product as some kind of ”robot-washing.” Finally, article (3) reported on a field experiment among non-professional consumers who may also increasingly act as direct customers for brand manufacturers, in manufacturers’ own online stores. While prior research on organic products’ price promotions had questioned the effectiveness of price discounts for organic products, our field experiment in article (3) yielded contrasting results. In our field experiment, a price promotion with an organic advertising claim actually led to greater attraction of consumers to the product than a price promotion of the same product without explicit or implicit organic claims, or the same ad without the price promotion.
retail buyers, consumers, manufacturer encroachment, organic products, green advertising, automation, handcraft, price promotions, price discounts