47179923 Brand Preference of Soap

CHAPTER 1

INTRODUCTION

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1.1 Introduction

Toilet soap industry is one of the oldest Fast Moving Consumer Goods

(FMCG) industry in India. It is among the highest penetrated category

within FMCG sector reaching an estimated 95% urban and 87% of the

rural households. It is also a sector which is characterized by a high level

of intense competition. The competitors in this sector ranges from MNC’s

like Unilever, Henkel, P&G to local bigwigs like Wipro, Nirma and

Godrej.

With an array of products in all category of soap markets HUL is the

market leader in all category. They are the leaders in economic category

with Lifebuoy, in popular category with Lux and in premium category

with Dove. There is a paradigm shift taking place in toilet soap industry.

The economic category which used to be the most popular category in the

past has been experiencing sluggish growth for the past few years. The

premium category and the popular category are the sectors which are

experiencing high growth rate. The popular and economy segments

account for about four-fifths of the entire market for soaps. The future

growth of toilet soap is in the premium category.

To fight competition, major players HUL, GCPL, Dabur India and Wipro

consumer care & lighting are now drawing up fresh game plans. And the

accent is clearly on the innovation to gain mind share as well as market

share in this overcrowded category.

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Toilet soaps, despite their divergent brands, are not well differentiated by

the consumers. It is, therefore, not clear if it is the brand loyalty or

experimentation lured by high volume media campaign, which sustain

them. A consequence is that the market is fragmented. It is obvious that

this must lead to a highly competitive market. Toilet soap, once only an

urban phenomenon, has now penetrated practically all areas including

remote rural areas. The incremental demand flows from population

increase and rise in usage norm impacted as it is by a greater concern for

hygiene. Increased sales revenues would also expand from up gradation of

quality or per unit value.

As the market is constituted now, it can be divided into four price

segments: premium, popular, discount and economy soaps. Premium soaps

are estimated to have a market volume of about 80,000 tonnes. This

translates into a share of about 14 to 15%. However, by value it is as much

as 30%.

Soaps are also categorized into men's soaps, ladies' soaps and common

soaps. There are a few specialty soaps as transparent Glycerine soaps,

sandal soaps, specially flavored soaps, medicated soaps and baby soaps.

Specialty soaps are high valued but enjoy only a small share of the market

in value terms.

The market is growing at 7% a year. This means that the incremental

demand generation is 5% over and above the population growth. With

increasing awareness of hygienic standards, the market could grow at a

rate higher than 8% annually. Interestingly, 60% of the market is now

sourced from the rural sector. This means that the variance between the

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two segments is not very large. Since upper-end market focus is the urban

areas, margins come from the urban sector.

1.2 Objectives of the study

To find out brand preference of customers in a particular town.

To find out category preference.

To find out brand loyalty of customers.

To find out the source of influence of customer purchase.

To rank the various attributes while selecting a brand.

1.3 Scope of the study

This study helps to understand the consumer buying pattern. This

study helps to understand the consumer buying pattern.

The result can be used in deciding the channel selection for

distribution of toilet soap.

1.4 Research Methodology

The present study is carried out among the toilet soap users in Kolenchery

town, to study the consumer buying behaviour with respect to the same.

The task of data collection begins after a problem has been defined and

research design/plan chalked out. While deciding about the method data

collection, the research should keep in mind two types of data viz, primary

and secondary. The primary data are those which are collected fresh and

for the first time and thus happen to be original in character. The

secondary data are those which have already been collected by someone

else and which have already been passed through the statistical process.

Population and size of the sample:

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A sample of 30 respondents was taken for the study. Convenience

sampling method was used.

Data Collection:

Primary Data

A structured questionnaire was prepared and data was collected from

respondents. The sampling technique used in this survey is convenience

sampling.

Secondary Data

Data on industry profile and market profile has been collected from text

books, periodicals, brochures and internet.

Tools used for data collection:

Data was collected by using a self-constructed questionnaire from 30

respondents. The study was conducted for a period of two weeks.

Statistical Analysis:

Percentage analysis has been used for analysis and interpreting data.

Analysed data are displayed in the form of table, pie chart and bar chart.

Chi-square test is conducted to determine the acceptability of the null

hypothesis formulated for the study.

1.4 Limitation of the study

The study was conducted on a small sample size of 30 respondents due to

time and other resource constraints.

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CHAPTER 2

INDUSTRY PROFILE

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FMCG sector is one of the largest growing sectors in Indian market. The

FMCG sec provides largest amt of revenue. In this sec, there are lots of

companies competing with each other. FMCG refers to consumer non-

durable goods required for daily or frequent use [1]. Typically, a consumer

buys these goods at least once a month.

Some FMCG Products are:

Detergents

Toilet soaps

Toothpaste

Shampoos

Creams

Powder

Food products

Confectionaries

Beverages

Cigarettes

Typical characteristics of FMCG products:

1. Individual products are of small value. But all FMCG products put

together account for a significant part of the consumer’s budget.

2. The consumer keeps limited inventory of these products and prefers

to purchase them frequently, as and when required.

3. Many of these products are perishable.

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4. The consumer spends little time on the purchase decision. Rarely

does he/she look for technical specifications.

5. Brand loyalties or recommendations of reliable retailer/ dealer drive

purchase decision.

6. Trial of new product, i.e. brand switching is often induced by heavy

advertisement, recommendations of the retailer or friends.

7. These products cater to necessities, comfort as well as luxuries.

Toilet soap industry in India: [1]

Toilet soap industry is one of the oldest FMCG industries in India. It is

among the highest penetrated category within FMCG sector reaching an

estimated 95% urban and 87% rural households. Soaps form the largest pie

of FMCG market with bathing and toilet soaps accounting for around 30%

of the FMCG market. In value terms the industry is worth Rs 6500 Cr.

And in volume terms it is worth 6 million as of 2008. The Indian toilet

soap industry is growing at approx 3-4 % in volume terms and around 10%

in value terms. Penetration of toilet soaps is high at 88.6%.. However per

capita consumption levels remain low India’s per capita consumption of

soap at 460 gms/ annum is lower than that of Brazil at 1100 gms per

annum. The main characteristics of the industry were severe competition

and high level of brand proliferation. The prod categories can be classified

into 3 segments.

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Premium soap category (>Rs. 25 for 75gm)

- Lux, Dove, Pears etc.

Popular soap category (Rs. 15-25 for 75 gm)

- Cinthol, Dettol etc

Economic soap category (<Rs. 15 for 75 gm)

- Lifebuoy, Godrej No.1, Santoor etc

Raw materials for soap:

Soap requires two major raw materials: [11] fat and alkali. The alkali most

commonly used today is sodium hydroxide. Potassium hydroxide can also

be used. Potassium-based soap creates a more water-soluble product than

sodium-based soap, and so it is called "soft soap." Soft soap, alone or in

combination with sodium-based soap, is commonly used in shaving

products.

Animal fat in the past was obtained directly from a slaughterhouse.

Modern soap makers use fat that has been processed into fatty acids. This

eliminates many impurities, and it produces as byproduct water instead of

glycerin. Many vegetable fats, including olive oil, palm kernel oil, and

coconut oil, are also used in soap making.

Additives are used to enhance the color, texture, and scent of soap.

Fragrances and perfumes are added to the soap mixture to cover the odor

of dirt and to leave behind a fresh-smelling scent. Abrasives to enhance the

texture of soap include talc, silica, and marble pumice (volcanic ash). Soap

made without dye is a dull grey or brown color, but modern manufacturers

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color soap to make it more enticing to the consumer. The steps in the

continuous process of making soap are explained below.

Splitting

The first step of the continuous process splits natural fat into fatty acids

and glycerin. The equipment used is a vertical stainless steel column with

the diameter of a barrel called a hydrolizer. It may be as tall as 80 feet (24

m). Pumps and meters attached to the column allow precise measurements

and control of the process. Molten fat is pumped into one end of the

column, while at the other end water at high temperature (266°F [130°C])

and pressure is introduced. This splits the fat into its two components. The

fatty acid and glycerin are pumped out continuously as more fat and water

enter. The fatty acids are then distilled for purification.

Mixing

The purified fatty acids are next mixed with a precise amount of alkali to

form soap. Other ingredients such as abrasives and fragrance are also

mixed in. The hot liquid soap may be then whipped to incorporate air.

Cooling and finishing

The soap may be poured into moulds and allowed to harden into a large

slab. It may also be cooled in a special freezer. The slab is cut into smaller

pieces of bar size, which are then stamped and wrapped. The entire

continuous process, from splitting to finishing, can be accomplished in

several hours.

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Milling

Most toiletry soap undergoes additional processing called milling. The

milled bar lathers up better and has a finer consistency than non-milled

soap. The cooled soap is fed through several sets of heavy rollers (mills),

which crush and knead it. Perfumes can best be incorporated at this time

because their volatile oils do not evaporate in the cold mixture. After the

soap emerges from the mills, it is pressed into a smooth cylinder and

extruded. The extruded soap is cut into bar size, stamped and wrapped.

Glycerin is a very useful byproduct of soap manufacture. It is used to

make hand lotion, drugs, and nitroglycerin, the main component of

explosives such as dynamite.

Distribution Network

Soaps are available in 5 million retail outlets in India, 3.75m of which are

in the rural areas. Therefore the availability of these products is not a

problem. 75% of India’s population is in the rural areas; hence about 50%

of the soaps are sold in the rural markets.

Growth

Rural demand growth is expected to occur mainly with consumers moving

up towards premium products. But in the past, the proportion of premium

soaps to economy soaps has not changed much, in volume terms. This is

because as some consumers move up the value chain with increase in

disposable incomes, some consumers move down looking for cheaper

substitutes as prices move up. This has been the case especially, as growth

in soap prices has generally outpaced overall consumer inflation.

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Indeed innovation has encompassed product. Forms as well as companies

have products that could once be found only on in hand up squeeze tubes

not to mention liquid soaps in pump raising the consumers outlay on

personal hygiene is vast even where usage penetration is high. In village

heat and dust is reason enough to press on. Most soap marketers are busy

making the best; of what they can overall a sharpened consumer focus has

meant better corporate performance.

Overview of the Indian Soap Category [2]

India is a vast country with a population of 1,030 million people.

Household penetration of soaps is 98%. People belonging to different

income levels use different brands, which fall under different segments

(see table below), but all income levels use soaps, making it the second

largest category in India (detergents are number one). Rural consumers in

India constitute 70% of the population. Rural demand is growing, with

more and more soap brands being launched in the discount segment

targeting the lower socio-economic strata of consumers.

Brand Positioning

Soap manufacturers originally targeted their products to the lowest income

strata in urban as well as rural areas, positioning their brands as a way to

remove dirt and clean the body. For some brands, that positioning persists

even today with a focus on removal of body odour and keeping the user

healthy. However, soap positioning is moving towards skin care as a

value-added benefit.

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Consumer Preferences

Consumer preferences are varied and are more regionally specific. India is

divided into four regions: North, East, West, and South.

Consumers in the North prefer pink coloured soaps, which have floral

profiles. Here the fragrance preference is for more sophisticated profiles

reflecting their lifestyles. Freshness soaps with lime and citrus notes are

also popular preferences as the climate in the North is very hot and

citrus/lime scented soaps are seen to be refreshing.

The East is not a big soap market; hence no particular preference skews.

Consumers in the West exhibit preferences for strong, impactful

fragrances and somewhat harsher profiles compared to the North.

Preferences are more for the pink soaps with floral fragrances, primarily

rose, which are positioned on the beauty platform.

In the South, the skew is towards specific soap segments like the

Herbal/Ayurvedic profiles and also the Sandal profiles. Consumers here do

not exhibit high brand loyalty and are ready to experiment and try out new

brands. Hence, most fast moving consumer goods companies tend to

launch their new brands in these markets, which they call test launch

markets.

Marketing

Soap is primarily targeted towards women, as they are the chief decision-

makers in terms of soap purchase. Medicated positioning like germ killing

and anti-bacterial are marketed to families.

Toilet soap market in India is a highly fragmented mkt. there were 45

leading national brands. None of the national brands had more than 5%

market share and many more regional and unorganised sec/local brands.

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HUL was the market leader with about 30 toilet soap brands with a total

market share of 53.2% in 2007. GCPL continues to be the second largest

toilet soaps player with a market share of 9.4% for the toilet soap category.

Global market of soaps

The global market for soaps is dominated by a small number of

multinational companies with strong brand identity and enormous

advertising budgets. There is cut-throat competition between these

multinationals. The top global players include Unilever, Procter and

Gamble, Colgate Palmolive and Johnson & Johnson.

Rationalization is taking place among large players as a strategy in terms

of the Brand portfolios. This means concentration on a small number of

key brands and dropping non-performing brands. Such streamlining allows

the manufacturers in general to improve margins by lowering costs for

sourcing manufacturing and distribution. Creating a strong brand name

through advertising is a primary strategy used by most companies in the

industry. They then diversify the brand into another sector or sectors,

thereby benefiting from the brand’s consumer image. Despite the

increasing number of brands and products on the global market,

established brands from the key global players such as Unilever, Johnson

& Johnson, Colgate-Palmolive etc. are proving difficult to displace.

Though these manufacturers' brands are more expensive than national

brands and privately labelled products, consumers seem to prefer familiar

trusted brands.

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CHAPTER 3

LITERATURE REVIEW

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Consumer Behaviour

Belch and Belch define consumer behaviour as the process and activities

people engage in when search for, selecting, purchasing, using,,

evaluating, and disposing of products and services so as to satisfy their

needs and desires. The basic model of consumer decision making involves:

Problem recognition

Information search

Alternative evaluation

Purchase decision

Post purchase evaluation

Factors affecting buying behavior

Price is the most important factor which effects the buying behavior of

consumer, by which a consumer goes for the various segment of soap like

premium, popular, sub-popular and carbolic which are basically decided

by the cost factor and fat content in the soap.

The buying frequency is either monthly that is done by the families or in

case of bachelors it is more than once in a month. The occasions when

premium soaps are purchased are usually when there are festivals and

ceremonies. Moti soaps are usually presented during festivals and

occasions for presents and gifts.

The promotional techniques help to boost sales. Various tactics like the

price off’s, buy one get two free, free gifts and other schemes help boost

sales in short run and also help in clearing stocks.

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One of the important points a soap marketer should note is that the soaps

are usually purchased by women in urban areas as most of the day to day

consumption of personal care products are made by women. A point to

note is that women use more personal care product than men do and hence

premium soaps are mostly targeted at them. Men normally make purchase

decisions in rural areas. Hence the marketer has to adopt different strategy

for such a market.

Penetration

One of the factors, which affect the demand of soaps, is the penetration,

which the products have in market. In case of soaps this has not been a

major issue as the penetration in the rural area is as high as 97% and that

for urban area is around 99%. Thus the approximately the penetration is

around 99% for overall India.

Chi-Square Test [15]

The chi-square (I) test is used to determine whether there is a significant

difference between the expected frequencies and the observed frequencies

in one or more categories. Do the numbers of individuals or objects that

fall in each category differ significantly from the number you would

expect? Is this difference between the expected and observed due to

sampling error, or is it a real difference?

Chi-Square Test Requirements [5]

1. Quantitative data.

2. One or more categories.

3. Independent observations.

4. Adequate sample size (at least 10).

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5. Simple random sample.

6. Data in frequency form.

7. All observations must be used.

The chi-square formula used on these data is

X2 = (O - E)2/ E

Where,

O is the Observed Frequency in each category

E is the Expected Frequency in the corresponding category

df is the "degree of freedom" (n-1)

X2 is Chi Square

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CHAPTER 4

DATA ANALYSIS AND

INTERPRETATION

19

The purpose of the questionnaire was to identify the usage and buying

pattern of the consumers of toilet soap. For this, questionnaires were

administered to 30 respondents. The analysis is done on the basis of the

answers given by the respondents to the questionnaire.

4.1 General Information

4.1.1 Age group

This consists of classification of respondents according to age group. The

following pie chart illustrates this.

Age Group Frequency Percentage15-25 1 326-35 9 3036-45 14 47Above 45 6 20Total 30 100

Fig 1: Classification according to age group

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The age groups of the respondents are divided into certain range and the

range is 10. The ages are grouped as 15 to 25, 26 -35, 36-45 and above 45.

Here majority of the respondents belong to the age group of 36 to 45 and is

about 47%. 30% of them are from the age group of 36 to 35.

4.1.2 Gender wise classification

The respondents group includes males and females. 57% of the

respondents are females and 43 % are males. There is high proportion of

females.

Gender Frequency PercentageFemale 17 57Male 13 43Total 30 100

The following bar graph will illustrate the gender wise classification.

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Fig 2. Gender wise classification

4.1.3 Marital Status

The respondents are classified into married and single to see any

difference in the usage pattern and the buying behaviour. The respondents

are 10% single and the rest 90% are married which shows a comparable

distribution for the analysis. The data analysed is shown in the table below.

Marital Status Frequency

Percentage

Single 3 10Married 27 90Total 30 100

Hence majority of the user base lies in the married youth but the unmarried

people also forms a comparable share in the bar graph.

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Fig 3: classification based on marital status

4.1.4 Occupation

The respondents group includes 3 categories of people- employees,

professionals, self-employed and others. The employed group forms the

chunk of the user base as per the research with 44%. Professionals form

37% of the population. The data in table format is shown below.

Category Frequency PercentageEmployed 13 44Self-Employed 4 13Professional 11 37Student 0 0Others 2 6Total 30 100

The analysed data is illustrated in the following bar graph.

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Fig 4: classification based on occupation.

4.1.5 Usage pattern of soap

The usage pattern has been divided as per the frequency and includes

alternate days, once a day, twice a day and others.

Usage Pattern FrequencyOnce a day 11Twice a day 17Alternate days 0Others 2Total 30

The percentage of respondents who uses soap twice a day forms the

maximum. This is illustrated in the bar graph shown below.

Fig 5: based on usage pattern.

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4.1.6 Using Specific Brand

Frequency of the people using a specific brand for a considerable period of

time constitutes 34% of the population. The remaining doesn’t have a

specific brand preference. This is illustrated in the following bar graph.

From the bar graph we can find that more than half of the respondents are

those who does not use a specific brand for a considerable period of time.

This shows that brand loyalty among soap buyers in Kolenchery is very

low.

Fig 6: specific brand preference

4.1.7 Brand Preference

The most popular soap brand among the customers is Lux. Pears is the

second popular soap among the respondents. The preference is shown in

the bar diagram shown below.

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Fig 7: brand preference.

4.1.8 Category of soap

Popular category soaps forms the most popular among the respondents.

More than 50% of the customers favours popular category. It includes

brands like lux, pears, cinthol, hamaam etc. The following bar graph will

illustrate this.

Fig 8: category preference.

4.1.9 Buying behaviour when brand is not available

When a brand is not available in the store the possible events from the

consumer side can be- select another brand, go to another outlet for

purchasing that particular brand or postpone the purchase to buy that

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particular brand. The buying behaviour is illustrated in the bar graph

shown below.

Fig 9: buying behaviour when brand is not available.

4.1.10 Preferred Packet size

Out of the sample surveyed majority of the people purchase 75 gm

packets. The second position is for 125 gm packets. This is illustrated in

the bar graph shown below.

Fig 10: Packet size preference.

4.1.11 Store preference

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From the survey it’s found out that majority of the people prefer to buy

soaps from supermarkets. This may be due to the popping up of large

number of supermarkets across Kolenchery town. Thus it is essential for

soap companies to formulate strategies focused on customers who buy the

product from supermarkets. This is illustrated in the bar graph shown

below.

Fig 11: store preference.

4.1.12 Purchase decision

Purchase decision of the consumers is governed by different factors. Prior

experience of the product is the major factor that influences purchase

decision. Majority of the respondents subscribed this as the major factor.

This is illustrated in the bar graph given below.

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Fig 12: factors affecting purchase decision.

4.1.13 Factors to be considered in soaps for ranking

From the survey it is found that quality of soap is the paramount criteria

while selecting soap. Brand name of the product is another criterion along

with the fragrance of the soap. Price is another criterion which is rated

high but is found to have less rating than quality.

This shows a shift in consumer taste from being price conscious to quality

conscious. This data shows that customers tend to have a liking for quality

products and for famous brands. The various factors are ranked from 1 to

7. The highest rank, i.e. 7 is for quality and the last rank, i.e. 1 is for

packaging. This is illustrated in the following diagram.

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Fig 13: ranking of factors.

4.2 CHI-SQUARE Test

4.2.1 Age group and specific brand preference

Age group Using specific brand

Yes No

Total

15-25

26-35

36-45

Above 45

0

4

5

1

1

5

7

7

1

9

12

8

30

Total 10 20 30

Null Hypothesis (H0):

The brand preference is independent of different age groups.

Chi-square test:

Observed Value Expected Value (Oij – Eij )2/Eij

0

1

4

5

5

7

1

7

0.333

0.666

3

6

4

8

2.666

5.333

0.333

0.1675

0.333

0.1666

0.25

0.125

1.0410

0.5210

df= (c-1)(r-1)= (2-1)(4-1)=3

χ2 = Σ (Oij – Eij )2/Eij [14]

= 2.937

The table value of χ2 for 3 degree of freedom at 5 per cent level of

significance is 7.815. Since the calculated value of χ2 is much less than the

table value the null hypothesis is accepted.

4.2.2 Age group and usage

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Age

group

Alternate

days

Once a

day

Twice a

day

Others total

15-25

26-35

36-45

Above 45

Total

0

0

0

0

0

0

1

6

4

11

1

7

8

1

17

0

1

0

1

2

1

9

14

6

30

Null hypothesis (H0):

Soap usage pattern is independent of different age groups.

Chi-square test:

χ2 = Σ (Oij – Eij )2/Eij = 8.488

Degree of freedom is 9 and level of significance is 0.05. The table value of

χ2 for 9 degree of freedom at 5 per cent level of significance is 16.919.

Since the calculated value of χ2 is much less than the table value the null

hypothesis is accepted.

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CHAPTER 5

FINDINGS AND SUGGESTIONS

5.1 Findings

1. It is found that the people in the age group of 36-45 form the major

chunk of customers. They form about 47% of the customers.

2. More than half of the customers use soap twice a day.

3. Only 10% respondents use specific brand for a considerable period of

time.

4. The popular category soaps forms the most selling category of soaps.

5. 75 g was found to be the most popular volume among customers.

6. Supermarkets are preferred by majority of the respondents to buy soaps.

7. The experience from the product in terms of its quality, value for

money etc has a higher say in purchase decision.

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8. For a customer the quality of the soap is the paramount criteria while

selecting soap. Brand name of the product is another criterion along

with the fragrance of the soap.

5.2 Suggestions

For soap:

Reduce burning sensation

Adopt aggressive marketing strategy for toilet soaps.

Smaller size of toilet soap’s to enable the travelling people to be

brand loyal

For sales:

Attractive Packaging

Incentive to dealers/ distributors

TV commercials telecasted especially during prime time

Advertisements through Radio channels during morning and evening

Outdoor media: billboards at railway stations, buses etc

Since advertising has a critical role in purchasing decision in store

promotions, offers and discounts, media advertisements etc for toilet

brands should be increased. Efforts should be made to improve the

purchasing volume of the customers. For that discounts can be given for

multi packet purchase. Special measures must be taken to woo the

customers.

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CHAPTER 6

CONCLUSION

The average consumer has become sensitive to value offered by brands,

either in terms of price or in terms of the intrinsic benefit offered at a

higher price point. The emergence of several discount brands and higher-

priced improved offerings can be seen in the soap category. Godrej No. 1

is an example of how the brand initiated the strategy of offering several

variants (like sandal) in the lower segment when such variants have been

associated with higher segments in the category.

Apart from expecting value, the consumer is also caught in generic

competition which may force him/her to downgrade in a few categories

while testing other categories. For instance, the consumer, in order to

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balance her household budgets, may alternate between a good brand of

soap and a low-priced soap [8].

Balancing functional benefits, symbolic appeals and timing the right

combination of good functional attributes and symbolic brand orientation

(which can be beyond advertising like an event associated with beauty

care/hair care) within a price band is likely to be a conceptual approach to

get over the complexities of the FMCG markets.

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