Retail mix instruments influencing customer perceived value and customer engagement: a conceptual framework and research agenda

The COVID-19 pandemic significantly altered consumer behavior, initially driving a surge in online shopping due to safety concerns. However, a subsequent shift back towards physical stores, albeit with less enjoyable experiences, highlights the continuing importance of brick-and-mortar retail, especially in the FMCG sector. Intense competition and economic factors like inflation and decreased consumer spending further emphasize the need for FMCG retailers to develop robust strategies. A key approach involves creating compelling value propositions that drive customer value perception and engagement. While existing research explores the effects of retail mix instruments on either customer engagement or customer value perceptions individually, the interrelationships between these three concepts remain largely unexplored. This study aims to address this knowledge gap by investigating the potential mediating role of customer value perceptions between retail mix instruments and customer engagement using a qualitative approach within the context of FMCG retail in Thailand.

The study's theoretical foundation is the stimulus-organism-response (S-O-R) framework, a behavioral model explaining how environmental stimuli (S) influence an organism's (O) internal processes, leading to behavioral responses (R). In this context, retail mix instruments serve as stimuli, customer value perceptions represent the organism's internal processing, and customer engagement behaviors are the responses. The literature review examines existing research on retail mix instruments in the FMCG context, focusing on various instruments proposed by different studies (e.g., product, price, promotion, place, people, process, physical evidence, incentives, communication). The dimensions of customer value (utilitarian, hedonic, functional, economic, social, epistemic, conditional) and the multifaceted nature of customer engagement (behavioral, psychological, dispositional, process-oriented) are also reviewed. The review highlights the lack of comprehensive research on the interrelationships among these constructs, motivating this study to explore the potential links between retail mix instruments, customer value perceptions, and customer engagement behaviors.

This qualitative study employed interviews with 40 Gen-X and Gen-Y consumers in Thailand who frequented two major FMCG hypermarket chains (Store A and Store B). Participants were recruited using convenience sampling and snowballing techniques. Semi-structured interviews, guided by Spradley's ethnographic interview method, explored participants' in-store experiences, focusing on their perceptions of various retail mix instruments. The interviews were conducted both face-to-face and online. Data were analyzed using thematic analysis to identify recurring themes related to retail mix instruments, customer value perceptions, and customer engagement behaviors. Sales promotions were selected as a case study due to their significance in FMCG marketing. The a priori conceptual framework, based on S-O-R theory, was iteratively refined based on emerging themes from the data. A thematic analysis, following Braun and Clarke's guidelines, was employed for data analysis, progressing from initial coding to category grouping and finally to significant theme identification. Data saturation was reached around the 28th-30th interview, but 40 interviews were conducted to enhance data richness and validity. Inter-judge reliability, calculated using Weber's method, was 90%, demonstrating acceptable levels of consistency in data interpretation.

The study identified twelve retail mix instruments impacting six dimensions of customer perceived value and four engagement behaviors. These instruments were categorized into integrated marketing communication (IMC) tools (sales promotions, advertising, and staff service) and store characteristics (store reputation, product quality, product and brand variety, store layout and shelf arrangement, store ambiance, location and parking facility, store variety, delivery service, and self-service). Findings highlighted the complex interrelationships between these instruments and value perceptions. For example, store reputation influenced perceptions of functional and economic value, while product quality and variety affected functional value. Store ambiance impacted emotional value, and location and parking facilities influenced functional value. The role of sales promotions was complex, positively affecting economic and functional value in many cases, while the negative effect of time-limited promotions on emotional value was also noted. Advertising methods varied in their effectiveness across generations, with Gen-Y preferring digital media. Staff service proved crucial in creating positive customer interactions and influencing economic and functional value perception. Delivery and self-service options increased perceived functional value and contributed to positive engagement. The study also noted the influence of COVID-19, leading to increased demand for hygiene-focused services like drive-through options.

The findings significantly extend existing knowledge by revealing the intricate relationships between retail mix instruments, customer value perceptions, and engagement behaviors within the FMCG retail setting. The revised conceptual framework, incorporating the identified instruments, value dimensions, and engagement behaviors, contributes to a more comprehensive understanding of customer decision-making in this sector. The categorization of retail mix instruments into IMC tools and store characteristics offers a novel perspective on how these elements interact to influence customer value and engagement. The discussion emphasizes the complex interdependencies between different dimensions of customer value and highlights the importance of considering generational differences and situational factors (e.g., the impact of COVID-19) when designing marketing strategies. The application of the framework to sales promotions demonstrates its practical utility for retailers in developing tailored strategies to enhance customer engagement. The identification of both positive and negative impacts of specific retail mix instruments, such as sales promotions and advertising methods, suggests the need for careful strategy formulation to maximize positive outcomes.

This study offers a valuable contribution to the field of retail marketing by developing a comprehensive conceptual framework explaining the influence of retail mix instruments on customer perceived value and engagement. The framework, derived from qualitative data, incorporates 12 retail mix instruments, six dimensions of customer value, and four engagement behaviors. This framework can guide future quantitative research, helping validate the relationships identified. Future research should also explore other retail contexts, demographic segments, and situational factors, extending the framework's applicability and adding further granularity to our understanding of customer behavior in the evolving retail landscape.

The study's qualitative nature limits the generalizability of its findings. The sample, confined to two FMCG retailers in Thailand and focusing on Gen-X and Gen-Y consumers, may not fully reflect the diversity of customer behaviors across different retail settings and demographics. The findings are limited by the subjective nature of qualitative data interpretation, making it crucial to replicate this study with larger, more diverse samples and potentially quantitative methods to confirm the causal relationships. Additionally, the focus on a specific time frame (post-COVID-19) might limit the findings' applicability to other periods without similar circumstances.