Distribution channel of Cadbury India A report submitted to Delhi Business School, New Delhi as a part fulfillment of MBA+PGP Graduate program (industry integrated) in entrepreneurship and business Submitted to: Submitted by: Director Academics Name of student: Sudhir Chauhan Delhi business school Roll. No: 160 New Delhi Batch: Spring09 Semester: 4 th University PTU Faculty: Smriti Sharma Dbs delhi business school Delhi Business School B-II/M.C.I.E., Mathura Road, New Delhi Website: www.dbs.edu.in 1
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Distribution channel of Cadbury India
A report submitted to Delhi Business School, New Delhi as a part fulfillment of MBA+PGP Graduate program (industry integrated) in entrepreneurship and business
Submitted to: Submitted by:Director Academics Name of student: Sudhir ChauhanDelhi business school Roll. No: 160New Delhi Batch: Spring09 Semester: 4th University PTU
Faculty: Smriti Sharma
Dbs delhi business school
Delhi Business School B-II/M.C.I.E., Mathura Road, New Delhi Website: www.dbs.edu.in
1
TABLE OF CONTENTS
Title Page No.
Acknowledgement 3
Preface 4
Company profile 5
Rational 12
Scope of the project 13
Review of the Literature 14
SWOT Analysis 20
The Project
• Research Background 22
• Research Objective & Hypothesis 23
• Research Methodology 24
Analysis & Interpretation 26
• Findings 42
• Recommendations 43
• Limitations 44
• Conclusion 45
• Executive Summary 46
• Bibliography 47
• Appendix 48
2
Acknowledgement
I wish to express my appreciation and thanks to whom I have had the
opportunity to work and whose thoughts & insights have helped me in
furthering my knowledge and understanding of the subject.
Every page of this report reminds me about the moral support and guidance
that was bestowed on me by the respected Guide, friends and family
members throughout the duration of the project.
My sincere gratitude goes to faculty Mr. Priyank Azad without whose
valued guidance, encouragement and inspiration the presentation of this
project would ever have been possible.
Last but not the least I would like to express my gratefulness to my institute
and my Lab faculty members of Delhi business school, New Delhi.
I am unable to mention many others who have helped me greatly but it gives
immense pleasure to appreciate and thanks all those without whose
encouragement and help this project would never have been completed.
Preface3
The project “A STUDY ON THE DISTRIBUTION OF THE
PRODUCTS OF CADBURY INDIA TO FIND OUT THE
INFLUENCING FACTORS AND SCOPE FOR FURTHER
IMPROVEMENT” is to analyze the factors which influence to sale of
the Products from the unconventional channel outlets and further scope
for improvement in the unconventional channel. There are three
distributors in NCD who are covering the Delhi area. . In this project I
have to analyze the influencing factors which influence the sale from
the outlets of unconventional channel under NCD and what type of
support the outlet’s owner want from the company .This project also
includes the SWOT analysis, marketing channel theory and suggestions
which will help to understand the needs of the outlets
Company Profile4
Cadbury Schweppes
Cadbury Schweppes is the No.1 confectionery and third largest soft drinks
company in the world. We manufacture, market and distribute branded
chocolates, confectionery and beverages that bring smiles to millions of
consumers across 180 countries.
The origin of the group goes back over two centuries. Some of the most
loved international brands are from the stable of Cadbury Schweppes –
with the acquisition of Adams, brands like - Halls, Clorets, Trident, Dentyne
and Bubbas bubble gum range will now be part of the Group’s portfolio.
55,000 people populate the humming offices of Cadbury Schweppes across
the globe.
The Core purpose of Cadbury Schweppes is "Working better together to
create brands people love".
We are respectful of the social and natural environment in which we operate;
supportive of our consumers, customers and colleagues; proud of our
heritage, and passionate about success.
Cadbury India Ltd.
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Cadbury India began its operations as a trading concern in 1947. The first
taste of chocolate was defined by Cadbury in the Indian sub continent. The
company today employs nearly 2000 people across India.
With brands like Dairy Milk, Gems, 5 Star, Bournvita, Perk, Celebrations,
Bytes, Chocki, Delite and Temptations, there is a Cadbury offering to suit all
occasions and moods.
We bring the sweetest of smiles to millions of consumers through our dearly
loved brands distributed through 5.5 lakhs outlets across the country.
Cadbury Schweppes is the No.1 confectionery and third largest soft drinks
company in the world. The origin of the group goes back to over two
centuries. Some of the popular international brands of the company are
Cadbury Dairy Milk, Dr Pepper, Flake, Trebor Basset, Snapple and Motts.
The company also has Halls, Clorets, Trident, Dentyne and Bubbas bubble
gum range in its portfolio with acquisition of Adams in December
2002.Since 1969, Cadbury Schweppes’ has focused on confectionery and
non-alcoholic beverages. In 2004, 60 per cent of the Group’s net sales came
from confectionery and 40per cent from beverages.
Cadbury India is a wholly owned subsidiary of Cadbury Schweppes which
has operated in the country for more than 55 years. It was originally
incorporated as a wholly owned subsidiary of Cadbury Schweppes Overseas
Ltd in 1948. The company today employs nearly 2,000 people across India.
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Cadbury India is the No. 1 confectionery company with a 70 per cent market
share in India.
Cadbury is mainly into three segments:
• Chocolates -Cadbury India is the market leader in the chocolate
confectionery market in India with over 70 per cent market share. The
leading brands in this category are Cadbury’s Dairy Milk, Fruit &
Nut, Crackle, Temptations, 5 Star, Perk & Celebrations Gift boxes.
• Sugar Confectionery – Cadbury Dairy Milk Eclairs is one of the
leading brands in this category. It is amongst the largest éclair brands
in the market in terms of value share. Cadbury also owns Halls (which
was acquired as a part of the global acquisition of the Adams business
from Pfizer in 2003). Halls is amongst the largest brands in its
segment of Minty/ Breath freshness brands in India.
• Food Drinks – Cadbury’s Bournvita is a leading brand in the brown
drinks segment of milk/ malted food products. Cadbury’s other
products include Drinking Chocolate and Cocoa powder. Overall
share in the malted food drinks market is estimated to be around 19
per cent.
The company has recently made a foray into snacking category with
Cadbury Bytes, its sweet snacking brand. The company has been performing
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well in India. The net sales of the company have increased from around US$
131.6 million in 2000 to US$ 166.3 million in 2005.
Cadbury India was recognized as one of the India’s best managed
Companies in 2002 by Business Today and AT Kearney. It was also
adjudged one of the India’s 25 great places to work in 2003 and 2004 by
Business World and Grow Talent.
Factors for Success
Extensive distribution network
Cadbury’s brands are available in over a million outlets across the country.
The distribution network directly covers almost the entire urban population.
The company has invested significantly in building such an extensive
network. The company uses Information Technology to improve its logistics
and distribution competitiveness. Cadbury has improved the distribution
quality of its products with the installation of refrigerators at several outlets.
This helps in maintaining product quality in summer, when sales usually dip
due to the fact that the heat affects product quality and thereby consumption.
Creation of strong brands
Cadbury owes its success to strong brand equity and resultant consumer
preference that it enjoys in India. The company has built strong brand equity
8
through consistently high product quality, relevant, insightful and
entertaining communication. Cadbury has developed new channels for
marketing its brands such as Gifting and Snacking. The company places
great emphasis in ensuring display dominance at the point of purchase
Customization of products for India
Cadbury India has spent time in understanding the Indian consumers.
Leveraging its 55 years of experience in India, the company has customized
its products to the Indian markets. It also offers products at affordable price
points so as to increase its market penetration.
Leveraging the India Advantages
Though, India contributes to less than 5 per cent of the global revenues
today, India is critical to the global strategy of the company
Managerial Talent
Cadbury has begun recruiting management graduates in India to serve its
global operations.
Huge market potential
India offers huge market potential and is a priority market for Cadbury. The
company also leverages India as a manufacturing base for producing
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products for the overseas market. Cadbury India has 4 company owned
factories and as many third party manufacturing contractors. It also has a
wide Sales & Distribution infrastructure consisting of 33 depots managed by
4 regional sales branches across India.
Future Plans
Cadbury India expects strong growth in India in future. The company plans
to increase the franchise of its existing brands and continue to explore new
product opportunities including adjacent market opportunities. Cadbury
India is also looking for more opportunities in the SAARC region.
Cadbury India Ltd.: At a glance
• Cadbury: No.1 confectionery and third largest soft drinks company in the
world. Presence across 200 countries. 55,000 employees worldwide
• Cadbury in India: Presence for over 50 years. Market leader in the
chocolate confectionery market.
• Factors for success: extensive distribution network, strong brands,
customization to Indian market.
• For Cadbury, India is: huge potential market, source of managerial talent
• Future plans, India: To explore larger portfolio for growth. To look for
opportunities in
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SAARC region.
Vision:
Cadbury is an organization which impacts and interacts with the
consumers.
• Cadbury is present in most happy occasions in the life of our
consumer.
• Our brands excite our consumer.
• Cadbury is an expression of a consumer's life.
Cadbury Full of Life
• Cadbury as a company is vibrant.
• Cadbury is a fun and energizing workplace.
• Cadbury is robust and alive.
RATIONALE
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The unconventional channel of the Cadbury is to analyze the new way to
improve the movements of the product. The unconventional channel
includes the sweet shops, stationary shops, Archies, school/college and also
Gift Shops. As a winter trainee my objective is to analyze the market
development, facilities provided by the company and to know about the
factors which influence the unconventional outlets. After knowing the
requirement and behavior of customers will help to sort out the problem of
lees customer base. During this project I interacted with the outlets owner
and get the chance to know about marketing and selling of product of
Cadbury. This will help me further in future to make my career.
SCOPE OF THE PROJECT
12
The project was done to finding a reason of the fewer customers base of the
some unconventional outlets. The project will help to know about the state
of mind of outlets owner who are selling the Cadbury products and Find out
the influential factor in the movement of product. The Company will also be
benefited as the Company will know which type of supports the outlet’s
owners want from the company, where they are lacking, So that the
company can cope with it.
Review of literature
13
Channel integration and systems
Distribution channel do not stand still. New wholesaling and retailing
institutions emerge and new channel systems evolve. We look at the recent
growth of vertical, horizontal, and multi channel marketing systems;
Vertical marketing systems: one of the most significant recent channel
developments is the rise of vertical marketing systems. A conventional
marketing channel comprises an independent producer, wholesaler and
retailers. Each is separate business seeking to maximize its own profits.
Horizontal marketing systems: another channel development is the
horizontal marketing system in which two or more unrelated companies put
together resources or programs to exploit an emerging marketing
opportunity.
Multi channel marketing systems: many companies sold to a single market
through a single channel. Today with the proliferation of customer segment
and channel possibilities more companies have adopted multi channel
marketing. Multi channel marketing occurs when a single firm uses two or
more marketing channels to reach one or more customer segments.
For the concern about the Cadbury India has to develop the new way to push
the sales through development of new channel such as sweets shop,
school/college canteen etc. Basically it is unconventional way to sales the
product. Now it is very popular way to enhance its sales.
There is two way for the movement of the products in the
Cadbury India Ltd.
1. Conventional channel , which includes mainly the Retail shop. It is
the base marketing of the company.
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2. Unconventional channel , which includes sweets shops, stationary
shops, school, college, Archies, gift shops and Cyber café. Before five
years the company has started to make market in these areas under the
name of New Channel Development. There is three distributors under
NCD who are covering the Delhi area.
The Purpose of Market Research
Market research is the collection and analysis of data in order to identify and
satisfy consumer needs. The main purpose is to reduce risk and facilitate
decision making. It is particularly useful when launching a new way of
movement of product and ensures that the rights Strategy are developed.
Market research provides information on consumer needs and wants,
competitors, the marketing mix and potential sales.
Consumer needs and wants - individuals have different requirements and
consumers with similar characteristics must be identified. A company can
then choose a target market or section of the market for its products. This
provides a focus for marketing activities.
Competitors - no firm exists in isolation. Competitors must be identified
and their actions monitored. Research must be undertaken on competing
products in order to identify a competitive advantage for the new channel
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development.
Marketing mix - marketing involves having the right product at the right
price in the right place using the right promotion. These are the 4Ps of the
marketing mix. It is necessary for the right combination of these to be used
in order for a product to be successful. For instance there is no point
advertising nationally if research shows the product is only sold in the local
area.
Potential sales - by knowing the likely level of sales a firm will be able to
estimate the correct amount to produce/supply. This reduces the financial
risk involved and ensures the maximum return from the firm’s investment.
Methods and types of market research
There are two main methods of market research – desk
research and field research.
Desk research, also known as secondary research, is making use of
information that is already available. Internally the firm can draw on its own
records. Different departments can provide information on sales trends,
customers and castings, which are useful in the development of new
products. Extensive published material can also be sourced externally. In
addition the development of new technology such as the internet provides
information at the touch of a button.
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Field research or primary research is carried out by contacting potential
consumers directly. It may include surveys, questionnaires and general
observation.
Surveys involve questioning people directly about their attitude to a
particular product or service. Surveys are usually carried out using a face to
face interview or by telephone. Because it is impossible to survey all target
customers, sampling is used. A representative group or sample, whose views
will accurately reflect the target population, is chosen. Questionnaires are
lists of prepared questions which potential customers are asked to fill out.
They are often used in conjunction with surveys. Careful attention must be
given to the design of questionnaires so that the answers received are of
value for decision making. Information can be gathered by observing people
making purchases. A particular store, for example, could be chosen and a
study made of how many people buy a particular product.
There are two types of market research - quantitative and qualitative.
Quantitative research provides numerical data. At the completion of a
quantitative project it is possible to say (for example) what proportion or
percentage of the population fall into different groups – those that want
something, those that would be likely to buy something, those that are in
favaor of a particular policy or plan, etc. The essence of quantitative
research is that every respondent is asked the same series of questions.
Quantitative research can be carried out in various ways including face-to-
face interviewing, by telephone, by post and self-completion questionnaires.
17
Qualitative research provides an understanding of how or why things are as
they are. It can be used on its own or to help in the development of a
questionnaire for a quantitative study. There are no fixed set of questions
and therefore no assumptions about what is, or is not, important. Instead
there is a list of topics, problems, or
possibilities to be explored. The informant’s own concerns or assumptions
heavily influence the form and nature of the discussion.
Qualitative research can be used for everything from testing reaction to a
potential new advertising campaign, to exploring staff attitudes to a new
management structure or procedure. There are various sorts of qualitative
research, including unstructured interviews and focus groups (group
discussions).
New Channel Development Process
Idea generation
Method screening
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Concept development
Feasibility study
Test marketing
Launch
Segmentation:-
Company has sound background apart from that they are looking for another
segment to enhance their sales. Apart from the retail they develop the new
unconventional channel of school/colleges; sweets shop Archie’s etc.The
range of Product provided by Cadbury has been segmented as a premiere
product for the people who want better taste and quality.
Target:-
For this purpose they are approaching the premiere school and colleges in
the Delhi as well as they are also looking for sweets shops such as Agrawal
19
sweets where they they preferred to sale the 90% Cadbury product. Cadbury
India Ltd has been targeted to the young generation as well as children.
Positioning:-
They are promoting their product through Advertisement by the Super Star
which attracts the kids and also young generation. Cadbury India has been
positioned as a premium product to serve school or college group of people.
SWOT ANALYSIS
STRENGTH
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Experience of more than 50 years of business in India.
Strong Customer base among School/College Students.
Market leader in the chocolate confectionery market.
Extensive distribution network, strong brands, customization to Indian
market and huge potential market.
WEAKNESS
Less Movement of product in unconventional outlets compare to Retail Market
OPPURTUNITIES:-
Emergence of new channel development.
Introduction of new way to promote their product.
THREATS:-
Competitor like imported Chocolates and local brand
Research Background
21
With opening up the boundaries in the country for private players many
multinational players entered in the market which gives rise to the cut throat
competition. It forced the FMCG organization to define a need based
strategy to survive in the market. Many FMCG organizations have made
enormous investments in relationship-based strategies in recent years,
hoping to increase profitable revenue growth through improved customer
interaction. But major initiatives – such as customer relationship
management, needs based selling and segmentation – often fall victim to
front-line execution in the outlets, in contact centers, online and in other
channels, causing potentially huge opportunities to be lost.
Success of any relationship strategy is subject to the satisfaction of the
customers. We also understand that customer satisfaction and loyalty is
intrinsically coupled to the well-being and long term growth of the company.
In other words, the success of your company depends on how satisfied and
loyal your customers are. We are also aware of the fact that acquiring new
customers is about ten times more expensive than servicing existing
customers. Very simply put, loyal customers decrease acquisition costs and
increase profitability. Also in this era, when cut throat rivalry exists in
FMGC sector, players in this industry are now seriously concentrating on the
feasibility of the concept of virtual marketing.
In this framework I have done a research work to find out to what extent the
development based strategy of Cadbury India is successful in New Delhi.
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Research Objective & Hypothesis
Objective:
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Conducting a study on the distribution of products in the Development of
Cadbury India Limited, New Delhi to find out the influencing factors and
scope for further improvement.
Timely delivery of orders to the outlets
Distributors are giving the good service to the owners of the outlets.
Sales Executives of the company are not visiting the outlets at regular
interval.
Variation in sale of products due to change in the season
Internal factors & attitude affected the sales
Research Methodology
24
Research design:
My research was exploratory one. I have collected the required information
about the development of Cadbury India from different sources at “Business
Intelligence Unit” of Cadbury India located at New Delhi. Apart from that I
did a survey to analyze the success of the Development of Cadbury India.
Sampling unit:
My research sample will be Owners of Unconventional channel of Cadbury
India, New Delhi. These are the Non random sample given by the company
itself.
Sampling Procedure:
I went to outlets located in Delhi and to know their views and opinion.
Data collection method:
In order to collect the required data I will use a structured and pre-tested questionnaire.
Data Analysis:
The data are analyzed with the help of following statistical tools:
a) One pair T-Test, by which I implemented these statistical tools on my
questionnaires and then I analyzed the effect of the test tools.
b) Linear Regression: With the help this Tool I implemented it on the sales
of the outlets as a dependent variable depends on the internal factors such as
25
visit of sales executive, behavior of the RDSM etc apart from marketing
forces.
Apart from that I have used graphs and tables to get the clear picture of the survey.
Analysis & Interpretations
Hypothesis1: Timely delivery of orders to the outlets
Null Hypothesis: Not timely delivery of orders to the outlets.
One-Sample Statistics
N Mean Std. Deviation Std. Error Meandelivery on time 160 1.16 .364 .029
One-Sample Test
Test Value = 0
t df Sig. (2-tailed)Mean
Difference
95% Confidence Interval of the Difference
Lower Upperdelivery on time 40.154 159 .000 1.156 1.10 1.21
26
yes no
ontimedelivery
0
20
40
60
80
100
Percent
Timely delivery of the order
Interpretation
Out of 160 respondents of the outlets, we see that around 82% respondents
are getting their order on time from distributor of the company and around
18% 0f the respondents are not getting their order on time from distributor of
the company. By applying one pair T-Test, the significance level is less than
.05 which means Our hypothesis is being accepted and null hypothesis is
being rejected. So we can say that orders are being delivered on time to the
outlets from the distributors of the company.
27
Hypothesis 2: Distributors are giving the good service to the owners of the outlets
Null Hypothesis: Distributors are not giving the good service to the owners of the outlets
One-Sample Statistics
N Mean Std. DeviationStd. Error
MeanSatisfied with distributor’ s service
160 1.19 .396 .031
One-Sample Test
Test Value = 0
t df Sig. (2-tailed)Mean
Difference
95% Confidence Interval of the Difference
Lower UpperSatisfied with distributor’s service
38.085 159 .000 1.194 1.13 1.26
28
yes no
satisfiedwithdistributor
0
20
40
60
80
100
Percent
Satisfied with the Distributor's service
Interpretation:
Out of 160 respondents of the outlets, we see that around 80% respondents
are Satisfied with the distributor of the company and they are getting good
service from the distributor and around 20% 0f the respondents are not
Satisfied with the distributor of the company and they are not getting good
service from the distributor. By applying one pair T-Test, the significance
level is less than .05 which means Our hypothesis is being accepted and null
hypothesis is being rejected. So we can say that a large numbers of owners
29
of the outlets are being satisfied with the service given by the distributor of
the company.
Hypothesis 3: Sales Executive of the company is not visiting the outlets at
regular interval.
Null Hypothesis: Sales Executives of the company are visiting the outlets at
regular interval
One-Sample Statistics
N Mean Std. DeviationStd. Error
MeanVisit of sales executive regularly
160 2.59 1.494 .118
One-Sample Test
Test Value = 0
t Df Sig. (2-tailed)Mean
Difference
95% Confidence Interval of the Difference
Lower UpperVisit of sales executive regularly
21.911 159 .000 2.588 2.35 2.82
30
once in a time once in fortnight never
visitofsalesexecutive
0
10
20
30
40
50
60
Percent
Regular visit of sales executive to the outlets
31
Interpretation:
Out of 160 respondents of the outlets, we see that around 46% respondents
said that sales executive of the company visited their shops/canteen once,
around 1% respondents said that sales executive visited their outlets once in
Yes No0
20
40
60
80
100
Percent
32
Visit of sales executive to the outlets for feedback purpose
a fortnight and 53% respondents said that the sales executive never visited
their outlets. By applying the T-Test, here the significance level is less than .
05, which means our hypothesis is being accepted and null hypothesis is
being. So by the opinion of respondents it can say that a large number of
outlets are not being visited by the sales executive regularly. But in second
graph it is being desired by most of the respondents that Sales executive of
the company should visit the outlets regularly for the feedback., in which
88% respondents desired for the regular visit of the sales executive and 12%
respondent said that there is no need of the regular visit of sales executive.
Hypothesis 4: Variation in sale of products due to change in the season.
Null Hypothesis: No Variation in sale of products due to change in the
season.
One-Sample Statistics
N Mean Std. DeviationStd. Error
Mean
Variation in sale 160 2.58 .949 .075
33
One-Sample Test
Test Value = 0
t Df Sig. (2-tailed)Mean
Difference
95% Confidence Interval of the Difference
Lower Upper
Variation in sale
34.333 159 .000 2.575 2.43 2.72
34
winter summer no variation
0
10
20
30
40
50
60
70
Percentvariation in sale due to season
Interpretation:
Out of 160 respondents of the outlets, we see that around 68% respondents
said that there is variation in sale in the summer means there is decrease in
the sale of product in the summer compare to other season. 30% respondents
said that there is no effect on the sale of the product due to change in the
season and 2% respondents said that there is variation In sale in winter also.
By applying one pair T-Test, the significance level is less than .05 which
means our hypothesis is being accepted and null hypothesis is being
rejected.
35
Hypothesis 5: Internal factors & attitude affected the sales
Null Hypothesis: Internal factors & attitude not affected the sales
Regression
Variables Entered/Removed(b)
a All requested variables entered. b Dependent Variable: sales value
Model Summary
a Predictors: (Constant), good behavior rdsm, visit for feedback, visit of sales executive, easily replacement of product
ModelVariables Entered
Variables Removed Method
1 Good behavior of rdsm, visit
for feedback,
visit of sales executive,
easily replacement
of product(a)
. Enter
Model R R SquareAdjusted R
SquareStd. Error of the
Estimate1 .290(a) .084 .061 1.322
36
ANOVA (b)
a Predictors: (Constant), good behavior of rdsm, visit for feedback, visit of sales executive, easily replacement of productb Dependent Variable: sales value
Coefficients (a)
a Dependent Variable: sales value
Model Sum of
Squares df Mean Square F Sig.1 Regression 24.955 4 6.239 3.571 .008(a) Residual 270.789 155 1.747
Total 295.744 159
Model
Unstandardized Coefficients
Standardized Coefficients
t Sig.B Std. Error Beta1 (Constant) 1.895 .630 3.005 .003