Consumer Behaviour on FMCG sector

ANUSHA:-

• Who is a Consumer?

Explanation:

Consumer is a broad label for any individuals or households that use goods
and services generated within the economy.

=>Introduction – Consumer Behaviour

• Meaning and Definition

• Buying Behaviour

• Buying Decisions

Explanation:

Consumer behavior is the study of when, why, how, and where people do or
do not buy a product. It attempts to understand the buyer decision making
process, both individually and in groups. It studies characteristics of individual
consumers such as demographics and behavioural variables in an attempt to
understand people's wants. It also tries to assess influences on the consumer
from groups such as family, friends, reference groups, and society in general.

Customer behaviour study is based on consumer buying behaviour, with the

customer playing the three distinct roles of user, payer and buyer.

• Changing face of consumer behaviour under the new scenario of

globalization, technological changes, new retailing environment.

“Change is growth, both intellectual and emotional.”

Given by:
“Joyce Brothers”

Possibly the most challenging concept in the marketing is to deal with

understanding the buyer behaviour. The attitude of Indian consumers has
undergone a major transformation over the last few years. The Indian
consumer today wants to lead a life full of luxury and comfort. He wants to live
in present and does not believe in savings for the future. An important and
recent development in India’s consumerism is the emergence of the rural
market for several basic consumer goods.
The Indian middle class has provided a big boost to the consumer culture during
the recent past and it is hoped that their buying behaviour will continue to
change in the coming future. Due to fast growth of the services sector per
capita income of people of India is also increasing. The number of middle class
is increasing due to another fact that people are fast shifting from agriculture
to the services and industry sector where growth prospects are reasonably high
as compared to the agriculture sector which is showing slow growth.
The consumption pattern of a country depends on liberalization of economic
policies, buying habits of the younger generation, financial independence at a
young age, increase in number of nuclear families and increase in media
exposure of the people.
The tastes and preferences of the current generation are changing rapidly.
The current generation does not mind paying extra for better facilities and
ambience.Another major factor that has led to increased consumerism is the
growth of credit culture in India.The Indian consumer does not feel shy to
purchase products on credit and pay tomorrow for what they use or buy
today. This tendency has led to a tremendous increase in purchase of homes,
cars e.t.c.

=>Buying Decision Process:

How do customers buy?

Research suggests that customers go through a five-stage decision-making

process in any purchase. This is summarised in the diagram below:
Explanation:

This model is important for anyone making marketing decisions. It forces the
marketer to consider the whole buying process rather than just the purchase
decision (when it may be too late for a business to influence the choice!)

The model implies that customers pass through all stages in every purchase.
However, in more routine purchases, customers often skip or reverse some of
the stages.

For example, a student buying a favourite hamburger would recognize the need
(hunger) and go right to the purchase decision, skipping information search and
evaluation. However, the model is very useful when it comes to understanding
any purchase that requires some thought and deliberation.

The buying process starts with need recognition. At this stage, the buyer
recognizes a problem or need (e.g. I am hungry, we need a new sofa, I have a
headache) or responds to a marketing stimulus (e.g. you pass Starbucks and are
attracted by the aroma of coffee and chocolate muffins).
An “aroused” customer then needs to decide how much information (if any) is
required. If the need is strong and there is a product or service that meets the
need close to hand, then a purchase decision is likely to be made there and
then. If not, then the process of information search begins.

A customer can obtain information from several sources:

• Personal sources: family, friends, neighbours etc

• Commercial sources: advertising; salespeople; retailers; dealers; packaging;
point-of-sale displays
• Public sources: newspapers, radio, television, consumer organisations;
specialist magazines
• Experiential sources: handling, examining, using the product

The usefulness and influence of these sources of information will vary by

product and by customer. Research suggests that customers value and respect
personal sources more than commercial sources (the influence of “word of
mouth”). The challenge for the marketing team is to identify which information
sources are most influential in their target markets.

In the evaluation stage, the customer must choose between the alternative
brands, products and services.

How does the customer use the information obtained?

An important determinant of the extent of evaluation is whether the customer

feels “involved” in the product. By involvement, we mean the degree of
perceived relevance and personal importance that accompanies the choice.

Where a purchase is “highly involving”, the customer is likely to carry out

extensive evaluation.

High-involvement purchases include those involving high expenditure or

personal risk – for example buying a house, a car or making investments.

Low involvement purchases (e.g. buying a soft drink, choosing some breakfast
cereals in the supermarket) have very simple evaluation processes.

Why should a marketer need to understand the customer evaluation

process?

The answer lies in the kind of information that the marketing team needs to
provide customers in different buying situations.
In high-involvement decisions, the marketer needs to provide a good deal of
information about the positive consequences of buying. The sales force may
need to stress the important attributes of the product, the advantages
compared with the competition; and maybe even encourage “trial” or
“sampling” of the product in the hope of securing the sale.

Post-purchase evaluation - Cognitive Dissonance

The final stage is the post-purchase evaluation of the decision. It is common for
customers to experience concerns after making a purchase decision. This arises
from a concept that is known as “cognitive dissonance”. The customer, having
bought a product, may feel that an alternative would have been preferable. In
these circumstances that customer will not repurchase immediately, but is
likely to switch brands next time.

To manage the post-purchase stage, it is the job of the marketing team to

persuade the potential customer that the product will satisfy his or her needs.
Then after having made a purchase, the customer should be encouraged that
he or she has made the right decision.

SWETHA:--

=>Potential Influences on Consumer Buying

Behaviour

• Influence of Attitudes

• Influence of Personality

• Personal Values

• Life Style Concept

• Influence of Peer Group

• Influence of Social and Economic Class

• Influence of Family

Explanation:

POTENTIAL INFLUENCES ON CONSUMER BUYING BEHAVIOUR

Consumers are constantly being bombarded with marketing information and
promotional messages. These messages could be about new product launches,
special product promotions, and low-price offers.

These appear everywhere from television advertisements to web site banners.

Consumers do not retain much of this marketing information. However, when a
promotional message is targeted to a specific group of consumers, it can prove
very effective indeed.

This is because the marketing message has been developed to appeal specifically
to people in target group of consumers. Further more the marketing message
will have been transmitted using promotional methods that these consumers
have access to e.g. the Internet, T.V., etc.

Before developing a marketing access, a company should first determine the

likely influence on a potential consumer.

The behaviour of consumer is dependent on a number of factors, which may be

economic or non-economic factors and are dependent upon economic factors
such as income, price, psychology, sociology, culture, and climate.

Therefore the study is dependent upon all these sciences and consumer
behaviour scientists study it through research and they believe that behaviour
can be influenced which has been proved by actual sales promotion of a large
number of products.

However there is dispute whether customer should be influenced or not and what
methods should be applied to influence him. In certain cases wrong statements
are made that may influence the buying behaviour.

For instance, producers of certain face creams advertise that with usage of their
creams, complexion will become fair but actually it does not happen. There are
ads for removing baldness by using certain oils or creams, but this does not
happen actually.

Internal influences

Consumer behaviour is influenced by: demographics, psychographics (lifestyle),

personality, motivation, knowledge, attitudes, beliefs, and feelings. Consumer behaviour
concern with consumer need consumer actions in the direction of satisfying needs leads
to his behaviour of every individuals depend on thinking
External influences

Consumer behaviour is influenced by: culture, sub-culture, locality, royalty, ethnicity,

family, social class, past experience reference groups, lifestyle, and market mix factors

=>Several models of consumer behaviour:

1. The Black-box model

2. The Economic model
3. The learning model
4. The psycho-analytical model
5. The sociological model
6. The Nicosia model
7. The Howard Sheth model

Explanaton:
Among which black box model of consumer behaviour is very famous or important.

=> Black –box theory:

ENVIRONMENTAL
BUYER'S BLACK BOX
FACTORS BUYER'S
Marketing Environmental Buyer RESPONSE
Decision Process
Stimuli Stimuli Characteristics
• Problem
recognition

• Information
Economic Attitudes search Product choice
Product Technological Motivation Brand choice
Price Political Perceptions • Alternative Dealer choice
Place Cultural Personality evaluation Purchase timing
Promotion Demographic Lifestyle Purchase
Natural Knowledge • Purchase amount
decision

• -purchase
behaviour
The black box model shows the interaction of stimuli, consumer
characteristics, decision process and consumer responses. It can be
distinguished between interpersonal stimuli (between people) or intrapersonal
stimuli (within people).

The black box model considers the buyers response as a result of a conscious,
rational decision process, in which it is assumed that the buyer has recognized
the problem. However, in reality many decisions are not made in awareness of
a determined problem by the consumer.

In the above model, marketing and other stimuli enter the customers “black
box” and produce certain responses. Marketing management must try to work
out what goes on the in the mind of the customer – the “black box”.

The Buyer’s characteristics influence how he or she perceives the stimuli; the
decision-making process determines what buying behaviour is undertaken.

Characteristics that affect customer behaviour

The first stage of understanding buyer behaviour is to focus on the factors that
determine he “buyer characteristics” in the “black box”. These can be
summarized as follows:
SWATHI:-
=>Consumer behaviour with the focus on FMCG SECTOR

What is FMCG ?

Fast Moving Consumer Goods refers to consumer non-durable goods

required for daily or frequent use. Typically, a consumer buys these goods at
least once a month.

FMCG Products include:

• Detergents

• Toilet soaps

• Toothpaste
• Shampoos

• Creams

• Powders

• Food products

• Confectioneries

• Beverages

• Cigarettes

Typical Characteristics of FMCG products

• Individual products are of small value. But, all FMCG products put together account for
a significant part of the consumer’s budget

• The consumer keeps limited inventory of these products and prefers to purchase them
frequently, as and when required

• Many of these products are perishable

• The consumer spends little time on the purchase decision. Rarely does he / she look for
technical specifications ( in contrast to industrial goods )

• Brand loyalties or recommendations of reliable retailer / dealer drive purchase decision

• Trial of a new product i.e brand switching is often induced by heavy advertisement,
recommendations of the retailer or neighbors / friends.

• These products cater to necessities, comforts as well as luxuries

• They meet the demands of the entire cross section of population

• Price and income elasticity of demand varies across products and consumers.

What are Fast Moving Consumer Goods (FMCG)?

Products which have a quick turnover, and relatively low cost and don't
require a lot of thought, time and financial investment to purchase are known
as Fast Moving Consumer Goods (FMCG). FMCG products are those that get
replaced within a year. Examples of FMCG generally include a wide range of
frequently purchased consumer products such as toiletries, soap, cosmetics,
tooth cleaning products, shaving products and detergents, as well as other non-
durables such as glassware, bulbs, batteries, paper products, and plastic goods.
FMCG may also include pharmaceuticals, consumer electronics, packaged food
products, soft drinks, tissue paper, and chocolate bars.

A subset of FMCGs are Fast Moving Consumer Electronics which include

innovative electronic products such as mobile phones, MP3 players, digital
cameras, GPS Systems and Laptops. These are replaced more frequently than
other electronic products.

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer
packaged goods. Items in this category include all consumables (other than
groceries/pulses) people buy at regular intervals

White goods in FMCG refer to household electronic items such as Refrigerators,

T.Vs, Music Systems, etc.

Indian FMCG Sector

The Indian FMCG sector is an important contributor to the country's GDP.

The Indian FMCG sector is the fourth largest in the economy and has a market
size of US$13.1 billion. Well-established distribution networks, as well as
intense competition between the organised and unorganised segments are the
characteristics of this sector. FMCG in India has a strong and competitive MNC
presence across the entire value chain. The middle class and the rural
segments of the Indian population are the most promising market for FMCG,
and give brand makers the opportunity to convert them to branded products.
Most of the product categories like jams, toothpaste, skin care, shampoos, etc,
in India, have low per capita consumption as well as low penetration level, but
the potential for growth is huge.

The Indian Economy is surging ahead by leaps and bounds, keeping pace with
rapid urbanization, increased literacy levels, and rising per capita income.

The big firms are growing bigger and small-time companies are catching up as
well. According to the study conducted by AC Nielsen, 62 of the top 100 brands
are owned by MNCs, and the balance by Indian companies. Fifteen companies
own these 62 brands, and 27 of these are owned by Hindustan Lever. Pepsi is at
number three followed by Thums Up. Britannia takes the fifth place, followed
by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures the
soft drink and cigarette companies have always shied away from revealing.
Personal care, cigarettes, and soft drinks are the three biggest categories in
FMCG. Between them, they account for 35 of the top 100 brands.

Outlook

There is a huge growth potential for all the FMCG companies as the per capita
consumption of almost all products in the country is amongst the lowest in the
world. Again the demand or prospect could be increased further if these
companies can change the consumer's mindset and offer new generation
products. Earlier, Indian consumers were using non-branded apparel, but
today, clothes of different brands are available and the same consumers are
willing to pay more for branded quality clothes. It's the quality, promotion and
innovation of products, which can drive many sectors.

=>Study of consumer preferences for Brands and their sales promotion

schemes in FMCG sector.

Whenever a marketer increases the value of its product by offering an

extra incentive to purchase a brand it is creating a sales promotion. There
has been an immense increase in the demand of Fast moving consumer goods
in India as also high proliferation of brands in various categories.

In order to differentiate their offer companies are allocating more and

more budget to sales promotion activities to attract the customer.

The financial risk being low customers don’t mind switching from one brand
to another due to sales promotion offer.

Thus there are several choices in the consideration set of the customer, and
how he/she makes a choice among them is worth studying. Similar to
advertising, sales promotion is one type of marketing communication, which is
primarily focused on creating action.
Top 10 FMCG Companies:
S. NO.

Top 10
Comp
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FMCG FMCG
sector
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consumer behaviour of jobs 2 major industries like britania industries AND Procter nd
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12 slides till here.
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1. Hindustan Unilever Ltd.
ITC (Indian Tobacco
2.
Company)
3. Nestlé India
Dealing with two main
4. companies
GCMMF under FMCG sector:
(AMUL)
5. Dabur India
1. Britannia Industries ltd.
6. Asian Paints (India)
2. Procter and Gamble Hygiene and health care
7. Cadbury India
BRITANIA INDUSTRIES:
8 Britannia Industries
Procter & Gamble Hygiene
Britannia Industries 9.
Limited is an
andIndian company
Health Care based in Bangalore that is
famous for its Britannia and Tiger brands of biscuit, which are highly
10. Marico Industries
recognized throughout the country. Britannia is one of India’s leading biscuit
firms, with an estimated 38% market share. The Company's principal activity is
the manufacture and sale of biscuits, bread, rusk, cakes and dairy products.

Britannia is committed to producing and marketing goods of the highest quality

standards to ensure total consumer and customer satisfaction.

Britannia products include:

Britannia cookies

Tiger biscuits

Britannia cakes

Good day Biscuits

Britannia bourbon

Dairy delights

Britannia nutri choice

Britannia Marie Gold

Competitors of Britannia Industries

***Figure**

Why understanding Customer Behaviour is necessary?

An important part of the marketing process is to understand why a customer or

buyer makes a purchase. Without such an understanding, businesses find it
hard to
respond to the customer‟s needs and wants. Marketing theory traditionally
splits
analysis of buyer or customer behavior into two broad groups for analysis–
Consumer Buyers and Industrial Buyers

FINDINGS OF THE RETAIL MARKET

SURVEY
1.Taste Preference
One of the parameters used to find out the behavior of consumers was Taste.
This was understood by asking the shopkeepers the contribution of sweet and
salted
biscuits in the total sales for biscuits.
In this it was observed that people were more inclined towards biscuits that
were
sweet in taste

Only 4% of the shops surveyed experienced higher sales for salted biscuits.
10% shops experienced an equal amount of sales for salted and sweet biscuits.
And about 86% shopkeepers said that sweet biscuits were liked more by their
customers

Sweet 84
Salt 4
Equal 10

2.Value Trade-Off
Every market comprises of customers having a certain type of judging criteria, one
such criterion for preferring a specific biscuit is the trade off between price and
quality, i.e., price sensitivity.
The markets that I visited had customers driven by quality and were majorly
indifferent to the price at which the products are offered.
The rising quality consciousness among the middle and high income groups has
made the quality and nutrition value of the product of utmost importance for
the
producers.
The focus of Britannia on adhering to strict quality standards has made it the
most
popular brand for biscuits and cakes in the market.

3.Sales influencers
Advertisements act as the major sales influencer for biscuits and cakes. The
youth
and children are attracted by the celebrity appeal created through brand
endorsements by various youth icons, as they can connect to them and aspire to
bethem.
For example, Sachin Tendulkar, Rahul Dravid and many more players of the
Inidan
cricket team endorsing for Britannia.
Families are majorly influenced by various schemes introduced for sales
promotion, (example, family packs and discount offers) which prove to be
economical and cost savers.
Other major factors which act as sales influencers are Age and Income of the
customers.
Ironically, high income groups who buy super-saver family packs end up saving
money on the total transaction. Whereas low income groups buying small packs
pay more for the same quantity.

4.What sells most?

People go for the Brand but develop a loyalty towards the product.
This is evident from the very fact that Britannia‟s GoodDay enjoys a huge
market in cookies segment but Britannia‟s Tiger is overshadowed by Parle‟s
Parle-G in glucose biscuit segment.

Biscuits with highest market share:-

GoodDay (all types)
Marie
Parle-G
Digestive
Bourbon
5-Grain
Monaco
Flavours with major market share:-
Butter
Cream
Glucose
Chocolate
Orange

5. Competition and market share for Britannia

Britannia enjoys the largest market share in cakes and biscuits, capturing
Approximately 70% of the market. Other players of the industry are
Parle
ITC Sunfeast
Priyagold
Anmol
Bikaner
Other local brands

FIGURE***