Synopsis

on

Effects of Demonetization on Customer Buying

Behavior in FMCG Sector

Synopsis submitted in partial fulfillment of requirements for

Bachelors of Business Administration
Logistics management

Mentors Name-
Dr. Neeraj Anand

UPES- Dehradun

706+0338144

Submitted by-
PARNICA MAHESHWARI
500035841
R380214041
BBA Logistics Management
2014-2017
College of Management & Economics Studies, UPES

Table of Contents
Chapter TOPIC
1 Introduction to Demonetization
What is demonetization
Major reasons of Demonetization
Government goal to Achieve
Current Scenario drawbacks of Demonetization
2 Introduction to FMCG
Categories of FMCG goods
Criterias of FMCG goods
Top companies in FMCG Sector
SWOT Analysis
Buying Behaviour of Customers
Process of Buying Behaviour
3 Literature Review
Impact of Demonetization on Global Scenario
Countries who tried Demonetizing their Currency
Impact of Demonetization on Indian Scenario
History of Pulling Bank Notes from Circulation
4 Research Methodology
Business Problem
Research Problem
Research Objective
Source of Data
Tools
Limitations of Data Collection
5 Bibliography

Chapter1- Introduction to Demonetization

 1. What is Demonetization?
Demonetization is the act of stripping a currency unit of its status as legal tender.
Demonetization is necessary whenever there is a change of national currency must be
retired and replaced with a new currency unit.

Major reasons of Demonetization

Activities that has Lead to the Demonetization
To combat Corruption.
To combat Inflation.
To discourage the cash system.

Government Goal to Achieve

Fight Tax Evasion
Eliminate Black Money
Eliminating Terrorist Financing Activities
To Recover Black Money from Abroad
Eradicate Counterfiet Currency

Current Scenario Drawbacks of Demonetization

Common man in the country is facing problem to obtain the new notes
because of the shortage of supply.
The newly introduced higher denomination notes of 2000 in span of few years
will get accumulated in the same hands.
The cost to maintain and replace the new notes is more costly.
Only replacing the money (notes) will not able to curb the black economy as
most of the black money is in the form of Land, Gold and Foreign investment.
The present move is effective in its own way but a strong law or actions to
address the black money can make changes in the lives of poor and can bring
equality to a certain extent.

Chapter 2-Introduction to FMCG

Introduction to Fast Moving Consumer Goods

Fast Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are
products that are sold Quickly and at a Relatively Lower Cost.

FMCG Goods have short shelf life because of high consumer demand and Perishable
Nature.

Profit Margin made on FMCG Products is Relatively Small.

FMCG Goods are generally Sold in Large Quantities so the cumulative profit on such
products can be substantial.

FMCG Industries Deal with Low Margin and High Volume Business.

There are three categories of FMCG Goods-

Household Care- Example

Fabric Wash
Household Cleaners
Personal Care- Example
Oral Care
Hair Care
Skin Care
Toiletries
Food and Beverages-Example
Soft Drinks
Chocolates
Juices
Sugar
Flour
Rice
Fruits and Vegetables

FMCG Goods Depend on two Criteria

From the Consumers Perspective

 Frequent Purchase
Low Involvement
Low Price
Short Shelf Life
Must Use for Daily Consumption

From the Marketers Angle

High Volumes
Low Contribution Margins
Extensive Distribution Network
High Stock Turnover

Top Companies of FMCG

Hindustan Unilever ltd.
Nestle India
ITC (Indian Tobacco Company)
GCMMF (AMUL)
Dabur India
Asian Paints
Cadbury India
Brittania Industries
Proctor and Gamble
Marico Industries

SWOT Analysis

Strength
 Low Operational Costs
Presence of Establishes Distribution
Presence of Well Known Brand in FMCG Sector
Deep roots in Local culture and great Understanding of Consumer needs

Weakness
Lower scope of Investing in Technology and achieving economies of scale
Low exports level
Counterfeit Products

Opportunity
Untapped rural market
Rising Income Level
Large Domestic Market
Export Potential
High Consumer Goods Spending

Threats
Slow down of Rural Demand
Tax and Regulatory Structure

Indian FMCG Market Segment

Products Percentage
Food Products 43%
Personal Care 22%
Fabric Care 12%
Hair Care 8%
Others 5%
OTC Products 4%
Household 4%
Baby Care 2%
50

45

40

35

30

25

20

15

10

Customer Buying Behavior

Consumer buying behaviour is the sum total of a consumer's attitudes, preferences,

intentions, and decisions regarding the consumer's behaviour in the marketplace when
purchasing a product or service. The study of consumer behaviour draws upon social science
disciplines of anthropology, psychology, sociology, and economics.
Process of Customer Buying Behavior
1.Problem Recognition

Put simply, before a purchase can ever take place, the customer must have a reason to believe
that what they want, where they want to be or how they perceive themselves or a situation is
different from where they actually are. The desire is different from the reality this presents a
problem for the customer.

However, for the marketer, this creates an opportunity. By taking the time to create a
problem for the customer, whether they recognize that it exists already or not, youre
starting the buying process. To do this, start with content marketing. Share facts and
testimonials of what your product or service can provide. Ask questions to pull the potential
customer into the buying process. Doing this helps a potential customer realize that they have
a need that should be solved.

2. Information Search

Once a problem is recognized, the customer search process begins. They know there is an
issue and theyre looking for a solution. If its a new makeup foundation, they look for
foundation; if its a new refrigerator with all the newest technology thrown in, they start
looking at refrigerators its fairly straight forward.

As a marketer, the best way to market to this need is to establish your brand or the brand of
your clients as an industry leader or expert in a specific field.

3. Evaluation of Alternatives

Just because you stand out among the competition doesnt mean a customer will absolutely
purchase your product or service. In fact, now more than ever, customers want to be sure
theyve done thorough research prior to making a purchase. Because of this, even though they
may be sure of what they want, theyll still want to compare other options to ensure their
decision is the right one.

4. Purchase Decision

Somewhat surprisingly, the purchase decision falls near the middle of the six stages of the
consumer buying process. At this point, the customer has explored multiple options, they
understand pricing and payment options and they are deciding whether to move forward with
the purchase or not. Thats right, at this point they could still decide to walk away.
This means its time to step up the game in the marketing process by providing a sense of
security while reminding customers of why they wanted to make the purchase in the first
time. At this stage, giving as much information relating to the need that was created in step
one along with why your brand, is the best provider to fulfill this need is essential.

If a customer walks away from the purchase, this is the time to bring them back. Retargeting
or simple email reminders that speak to the need for the product in question can enforce the
purchase decision, even if the opportunity seems lost. Step four is by far the most important
one in the consumer buying process. This is where profits are either made or lost.

5. Purchase Decision

This is the fourth stage, where the purchase takes place. The final purchase decision can be
disrupted by two factors: negative feedback from other customers and the level of motivation
to comply or accept the feedback. For example, after going through the above three stages, a
customer chooses to buy a Nikon D80 DSLR camera. However, because his good friend, who
is also a photographer, gives him negative feedback, he will then be bound to change his
preference. Secondly, the decision may be disrupted due to unanticipated situations such as a
sudden job loss or the closing of a retail store.

6. Post-purchase Behavior

These stages are critical to retain customers. In short, customers compare products with their
expectations and are either satisfied or dissatisfied. This can then greatly affect the decision
process for a similar purchase from the same company in the future,mainly at the information
search stage and evaluation of alternatives stage. If customers are satisfied, this results
in brand loyalty, and the information search and evaluation of alternative stages are often
fast-tracked or skipped completely. As a result, brand loyalty is the ultimate aim of many
companies.

On the basis of either being satisfied or dissatisfied, a customer will spread either positive or
negative feedback about the product. At this stage, companies should carefully create positive
post-purchase communication to engage the customers.

Chapter 3- Literature Review

Impact of Demonetization on Global Scenario

Dr. V. Aditya Srinivas spoked briefly about the impact of demonetization. The recent U.S.
presidential elections will have of world economy. He said U.S. contributes 223% of the
worlds GDP and because its share is the highest of any other country, the current political
instability there will have severe consequences on global economy.

Countries who tried demonetizing their currency

Zimbabwe- Due to chronic hyper inflation in Zimbabwe the government was at one
point printing a currency note with a face value of 100 trillion dollars. This obviously
renders lesser denomination obsolete which were taken out of circulation in 2010.

USA- In 1969, the president of Unites States Nixon had in one go demonetized 1000
dollars and 10000 dollars bill. He kept only 100 dollars as legal tender.

Australia- In 1996 became the first country to have a full cease of circulating
polymer bank notes after replacing the paper based notes which the government
systematically made non-tender for legal purposes to stop wide spread counter feting
reserve bank of Australia and release the worlds first long lasting and counter feet
register polymer plastic bank notes.

Myanmar- Myanmar military invalidated around 80% value of money in 1987. There
step was taken to control the black market. Sadly, this decision led to economic
disruption and it also led to mass protest that guilt many people.

North Korea- The demonetization that happened in North Korea in 2010 left the
people with no food and shelter. This was tend to vanish the black market.

Pakistan- Pakistan was decided to face out all the old currency notes with notification
dated 4th June,2015. However its citizen have nearly a year and half to exchange old
notes. The country had earlier demonetized 5 and 500 denomination notes and from
1st December, 2016 it has been decided to phase out all remaining old designed ank
notes of Rs 10, 50, 100 and 1000.

Nigeria- In 1984 , during the government of Muhammadu Buhari, Nigeria introduced

new currency and banned the old notes. Since Nigeria was debt-ridden and inflation
hit country. The change did not take go well and the economy collapsed.
Ghana- During 1982, Ghana ditch there 50 Cedes notes. This move was taken to
tackle tax evasion and excess liquidity in the market. People were not supportive of
 this sudden move and hence they started investing in physical assets which obviously
made the economy weak.

Soviet Union- The government had ordered a withdrawal of large Ruble bill from
circulation to take over the black market. However, sadly this move did not go well
with the citizens and it eventually led to the Soviet breakup.

Impact of Demonetization in Indian Scenario

Indian National GDP will fall below 6%. In the aftermath of the demonetization said chief
operating officer and chief economist during discussion (Dr. V. Aditya Srinivas)
Indias GDP growth with this Monetization policy will come down as 70% of economy runs
of cash. Daily wages worker are suffering a lot and that real estate industry is badly hit and
demand would be corrected by at least 20% downwards. IT section will boom and provide
employment to more than 80,000 IT people.
He said, the much awaited trigger for making home affordable for end users is here. The
government decision to ban Rs. 500 and 1000 currency notes is expected to hit the real estate
sector hardest because this sector is known of menace of black money. Real estate is now
likely to move towards improved transparency. The current demonetization will help in
development and increasing business opportunities for cashless vendors.

History of pulling bank notes from circulation (History of demonetization

in India)

Paper as legal tender was first issued in the late 18th century

Indian government first set of currency notes were the Victoria Portrait series issued
in denomination of Rs 10, 20, 50, 100.

The Victoria Portrait series were replaced by the under print series in1867.

Rs 1000 and 10000 notes were in circulation between 1938 and 1946, but were
eventually demonetized.

Rs 1000 and 10000 were re-introduced in1954, but were demonetized in 1978 by the
Janta Party-LED coalition government.

Mahatma Gandhi series currency notes were introduced in 1996.

Mahatma Gandhi series currency notes were replaced by MG series 2005 currency
notes.

Government move to go after black money by declaring Rs 500 and 1000 note invalid
as they are no longer treated as a legal tender from midnight of 8th November,2016.

Chapter4-Research Methodology
Business Problem
 1. Dealing with current scenario-Dealing with current scenario in order to deal with
the changing market trends. To estimate the future trends is difficult task.
2. New Markets-With the demonetization all unorganized sectors are coming towards
newer markets of organized sectors.
3. Innovation-To cope up with market trends and the customers demand.
4. Coping with the Cash Crunch- As the currency level is limited so there is the
problem to deal with the demand.
5. Unpaid laborers- People working on wages are not getting their pay on time so this
is creating an imbalance in the economy.
6. Rotten produce- Due to pack of currency the is sale is also less which is creating a
problem while selling the goods to the market.
7. Rules placed on withdrawal- Several limits are made by the government to draw
cash from ATMs and banks. This is creating problem in paying the dues after the cash
crunch.

Research Problem
Wider Field
Current Effects Calculation
Dealing with present scenario

Research Objective

To find the change in behavior on account of demonetization.

To analyze the shift change in the mode of payment used by the customers.

Method of Data Collection

1. Primary Data Collections (Observations, surveys)
2. Secondary Data Collection (Articles, news, various websites)

Tools
1. Questionnaire for organizations and customers.
2. One to one contact via phone, face to face.
Limitations of Data Collection
Observations- Susceptible to observer bias.
Survey and Questionnaire- Size and diversity of sample.
Biased Information by the respondents.
Lack of contact with respondent
Unable to Probe for Additional Details

Chapter 5- Bibliography

www.insightsonindia.com
www.dnaindia.com
www.indiaretailing.com
www.moneylife.in
www.investopedia.com
www.infoshine.com
www.wikipedia.org
www.google.com