“Factor Affecting Consumer Preference in selecting a fast food retail chain” A report submitted to UKA TARSADIA UNIVERSITY in Partial Fulfilment of the Requirements for the Degree of Master of Business Administration in 040070102 Business Research (Fieldwork) By Group No. Enrolment No. Name of Students 11 201304100710 041 Trivedi Mitesh Jagdish 201304100710 048 Shinde Jainish Dinesh 201304100710 059 Babel Hardik Nemichand Guided by Mr. Sanjay Joshi Assistant Professor, SRIMCA
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Factor Affecting Consumer Preference in Selecting a Fast Food Retail Chain
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“Factor Affecting Consumer Preference in selecting a fast food retail chain”
A report submitted to
UKA TARSADIA UNIVERSITY
in Partial Fulfilment of the Requirements for the Degree of
Master of Business Administration
in
040070102 Business Research (Fieldwork)
By
Group No. Enrolment No. Name of Students
11
201304100710041 Trivedi Mitesh Jagdish
201304100710048 Shinde Jainish Dinesh
201304100710059 Babel Hardik Nemichand
Guided by
Mr. Sanjay Joshi
Assistant Professor, SRIMCA
Department of Management, Shrimad Rajchandra Institute of Management and Computer Application,
Gopal Vidyanagar, Bardoli, Surat.
December 2013
CERTIFICATEThis is to certify that research work embodied in this report entitled “Factor Affecting
Consumer Preference in selecting a fast food retail chain” was carried out by
portion size, nutrition, and price of fast food restaurants influence the consumer preference of fast
food outlets in Australia.
A.Ali Khatibi, V. Thaigarajan and Hishammuddin Ismail (2003) in their research paper titled
“Factors Analysing Consumer’s Preference towards McDonald’s and A&W in Malaysia”. The
objective of the study was to find out the consumer preference towards McDonald’s and A&D in
Malaysia by comparing all the determining factors such as price, quality, service, value-satisfaction
level, etc. A total of 302 respondents was selected .From the study it is concluded that McDonald’s
strategy of providing tasty food with good environment and better ambience, wins well in attracting
the Malaysian consumer.
Anita Goyal and N.P. Singh (2007) in their paper titled “Consumer perception about fast food in
India: an exploratory study” seeks to estimate importance of various factors affecting the choice
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of fast food outlets by Indian young consumers. In this study multivariate statistical tools to estimate
importance of various factors affecting the choice of fast food outlets by Indian young consumers.
Accordingly 200 respondents from the target population were approached to fill in the questionnaire.
Out of 200 only 171 respondent’s data were valid. The study proved that the food habits of youngsters
are influenced by many factors such as environment at home, educational environment, availability
and accessibility to fast food providers, and social environment in their surroundings. In addition,
emergence of traits of independence in their eating habits, nutritional education, divergence of food
preferences at home and at fast food outlets and ambience of place for socializing affects their visit
and liking of fast food outlets
Nazrul Islam (2010) in his paper titled “Factors Affecting Consumer’s Preferences on Fast Food
Items in Bangladesh.” To conduct the study, a total of 250 university students of Dhaka city were
interviewed with a structured questionnaire, the objective of this research was to identify the
preference factors of fast food consumers living in Dhaka city. Multivariate analysis technique like
factor analysis was performed to identify the preference factors of the fast food student-consumers of
Bangladesh. Multiple regressions were run to identify the relationship between the factors identified
and the overall preference of the consumers. This study suggests that the brand reputation, nearness
and accessibility, similarity in taste, and cost and quality relationship should be emphasized to
improve the attraction of the university students towards the fast food items in Bangladesh.
Muhammad Usman Haider, Dr Farzand Ali Jan, Muhammad Farooq Jan, Muhammad Faheem Jan
(2012) in their paper titled “Factors Effecting Brand Preferences: A Comparative Study of
McDonald’s and KFC”. The study was undertaken with an objective to identify factors affecting brand
food products about two major food industries i.e. Mc-Donald’s and Kentucky Fried Chicken (KFC). Factors
included were taste and quality of product, price of product, delivery of product, availability of product,
environment of restaurant, staff of behaviour and value for money. A pre design questionnaire was used to
collect relevant data about these two food industries in Islamabad and Rawalpindi areas. Such questionnaire
was filled by 324 respondents. The study found that the product of KFC were relatively better as compared to
that of Mc-Donald’s in most of the traits studied especially in Taste and quality of food, price of product, staff
behaviour, delivery of product, and environment of the restaurant.
Ayesha Tabassum and Tasnuva Rahman (2012) in their paper titled “Differences in Consumer Attitude
towards Selective Fast Food Restaurants in Bangladesh: An Implication of Multiattribute Attitude
Model”. The objective of the research was to explore the consumer attitude towards the fast food restaurants
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in Bangladesh through comparative evaluation among the selective restaurants. A total of 100 respondents
were included in the study. The respondents were selected from two large private universities of Bangladesh.
The study concluded that Consumers in Bangladesh mostly emphasize on quality, price, quick service, and
environment of fast food restaurants as most significant.
RESEARCH METHODOLOGY
12
Problem Statement:
“To identify factors affecting the Consumer preference in selecting a particular fast food chain”.
Research Objective:
To know the prominent factors which affect consumer while they select a particular fast food chain.
To know which brand customer prefers most.
To identify which point customer consider while selecting a particular brand.
To know changes required by the consumer in service, quality or in any other area.
Research Design:
There are mainly three research designs:
1. Exploratory research design
2. Descriptive research design
3. Causal research design
In this research Descriptive research design will be used in order to identify which factors affect the
consumer preference in selecting a fast food outlet.
Type of Data:
For this study primary data will be used
Sources of Data:
Data will be collected through questionnaire.
Sampling Plan:
Sample Size: 300
Sampling Method: Non-Probability (Convenience)
Sampling Unit: Consumer
Tools:
Statistical tools used for this study is Frequencies and Factor Analysis.
Benefits of the Study:
13
From this study a fast food company can identify the factors which affects consumer preference
towards fast food selection,
The company can determine that in which area he needs to improve.
To identify which fast food company is more popular among the consumers.
Limitations:
As only 300 respondents were questioned, responses/results may be bias,
Most of the respondents were students so the effect of income factor was neglected,
Based on the current findings, in future the researchers may take initiative to explore consumer
attitude towards the local and foreign fast food restaurants.
Analysis and Interpretation
14
Frequencies
Frequencies are one of the simplest yet one of the most useful of all SPSS
procedures. The Frequencies command simply sums the number of instances
within a particular category. For eg Number of males and females, number of
respondents within a same age group and so on.
In our Research we have conducted frequency analysis on following criteria or questions:-
Age:
Interpretation:
Respondents were divided into four different age groups and were
asked to select the age group in which they belong. The number of people
in a particular age group and the overall contribution of an age group in the
total sample sized is stated in the table 1.1.
Gender
Frequency Analysis Table 1.2
15
Frequency Analysis
Table 1.1
Frequency Percent Valid Percent Cumulative Percent
Valid 15 to 25 140 46.7 46.7 46.7
26 to 35 116 38.7 38.7 85.3
36 to 45 32 10.7 10.7 96.0
46 and above 12 4.0 4.0 100.0
Total 300 100.0 100.0
Interpretation:
The proportion of male and female in the overall sample size of 300 is stated
in the table 1.2. There were 178 male respondents and 122 female respondents
in the survey.
Occupation
Interpretation:
The respondents were then further classified according to their occupation.
They were asked to select their occupation from four options that is Student,
Employee, Businessmen and Others. The number of people belonging to each
category is shown in table 1.3 along with the contribution of the category in
overall sample in percentage.
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Frequency Percent Valid Percent Cumulative Percent
Valid Male 178 59.3 59.3 59.3
Female 122 40.7 40.7 100.0
Total 300 100.0 100.0
Frequency Analysis
Table 1.3
Frequency Percent Valid Percent Cumulative Percent
student 134 44.7 44.7 44.7
Employee 95 31.7 31.7 76.3
Businessmen 46 15.3 15.3 91.7
Others 25 8.3 8.3 100.0
Total 300 100.0 100.0
Monthly income
Interpretation:
The respondents were asked about their monthly income and to select the income group in which they belong. The number of person in each income can be known through table 1.4.
It can be seen that the number of people belonging to income group of 0 to 10000 are more as most of our respondents were students.
17
Frequency Analysis
Table 1.4
Frequency Percent Valid Percent
Cumulative
Percent
Valid 0 to 10000 154 51.3 51.3 51.3
10001 to 20000 73 24.3 24.3 75.7
20001 to 30000 53 17.7 17.7 93.3
30001 Or More 20 6.7 6.7 100.0
Total 300 100.0 100.0
Which Fast Food Outlet you have visited till now?
Interpretation:
It was a multiple tick question in which the respondents have to select the outlets in which he or she has visited till now.
18
Frequency Analysis
Table 1.5
Responses
Percent of CasesOutlet N Percent
McDonalds 239 20.2% 79.7%
KFC 172 14.5% 57.3%
Pizza Hut 151 12.7% 50.3%
Us Pizza 176 14.9% 58.7%
Subway 87 7.3% 29.0%
Sugar and spice 175 14.8% 58.3%
Dominos 176 14.9% 58.7%
Others 9 .8% 3.0%
Total 1185 100.0% 395.0%
From the table 1.5 it can be seen that McDonalds is the most visited brand by the people followed by US Pizza and Dominos as the second and sugar and spice as third.
How frequently do you visit a fast food outlet?
Frequency Analysis
Table 1.6
Interpretation:
19
Frequency Percent Valid Percent Cumulative Percent
Valid Rarely 62 20.7 20.7 20.7
Often 97 32.3 32.3 53.0
Occasionally 112 37.3 37.3 90.3
Regularly 21 7.0 7.0 97.3
Daily 8 2.7 2.7 100.0
Total 300 100.0 100.0
In this question the respondents were asked about the frequency of their visit to the fast food outlet. That is within how much time gap they visit a fast food outlet. The objective of this question was to know their fast food consumption level.
Most of the people answer that they visit a fast food outlet occasionally that is either to celebrate birthdays, anniversary or certain festival that can be seen in table 1.6.
Why do you go to eat fast food?
20
Interpretation:
In this question the respondents were asked about the reason they visit a fast
food outlet to eat. Most of the respondents that is 102 answered that they visit
a fast food outlet as it saves time. The answer of respondents on the can be
known through table 1.7.
Which fast food outlet you prefer most?
21
Frequency Analysis
Table 1.7
Frequency Percent Valid Percent Cumulative Percent
Valid for change 74 24.7 24.7 24.7
saves time 102 34.0 34.0 58.7
family outing 59 19.7 19.7 78.3
for fun 65 21.7 21.7 100.0
Total 300 100.0 100.0
Interpretation:
The respondents were asked to select their most preferred fast food outlet
from the given outlet and also to mention other if there. The objective behind
asking this question was to know that which fast food outlet is more popular
among the customers and which fast food outlet is less popular.
KFC was the most popular or preferred brand followed by McDonalds and
then Pizza Hut. The information about other outlets and the number of person
who selected a particular outlet is shown in table 1.8.
Why do you select this brand?
22
Frequency Analysis
Table 1.8
Frequency Percent Valid Percent
Cumulative
Percent
Valid KFC 78 26.0 26.0 26.0
McDonalds 69 23.0 23.0 49.0
Pizza Hut 48 16.0 16.0 65.0
Dominos 38 12.7 12.7 77.7
Us Pizza 35 11.7 11.7 89.3
Sugar And Spice 20 6.7 6.7 96.0
Subway 11 3.7 3.7 99.7
Others 1 .3 .3 100.0
Total 300 100.0 100.0
Frequency Analysis
Table 1.9
Frequency Percent Valid Percent
Cumulative
Percent
Valid Quality 101 33.7 33.7 33.7
Location 70 23.3 23.3 57.0
Price 39 13.0 13.0 70.0
Service 32 10.7 10.7 80.7
Brand Name 30 10.0 10.0 90.7
Variety 24 8.0 8.0 98.7
Physical Facilities 4 1.3 1.3 100.0
Total 300 100.0 100.0
Interpretation:
This question was related to previous question and was asked to know the
reason for selecting the outlet as most preferred one. The respondents were
given various factors which affects the selection of fast food outlet as options.
The frequency of the factor as selected as the reason behind the selection of
the fast food outlet is described in the table 1.9.
From the above table it can be seen that Quality is the most important factor
which affects the selection of fast food outlet and Physical Facilities is the
least important factor.
Ranking
23
Ranking Table
Table 1.10
Interpretation:
The respondents were asked to rank the most important factor which affects
the selection of a fast food outlet. They were given a list of seven factors and
they have to rank them from 1 to 7.
For selecting the overall rank of an Factor the frequency achieved for each
ranked was multiplied by the rank and the Factor which had the lowest total
was given the first rank and the Factor which had the highest total was given
the last rank.
From the table it can be seen that Quality is the most important factor which
affects the selection of a fast food outlet as compared to price which is second
important factor, which means that consumers are ready to pay a higher price
if better quality of products are provided by the outlet.
Factor analysis is a data reduction technique used to reduce a large number of
variables to a smaller set of underlying factors that summarise the essential
information contained in the variable.
KMO
and Bartlett's Test
Interpretation:
The value of KMO test is 0.678 (higher than .6) and the p value of
Bartlett’s test is .000 (less than .05), factor analysis can be under taken
using this dataset.
25
KMO and Bartlett's Test
Table 1.11
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy..678
Bartlett's Test of
Sphericity
Approx. Chi-Square 457.261
Df 78
Sig. .000
Communalities Table
Interpretation:
This table shows the amount of variance explained by each
variable which is accounted for by the factors in factor solution
26
Communalities
Table 1.12
Variables Initial Extraction
Quality of food 1.000 .482
Price of products 1.000 .593
Varieties of product 1.000 .422
Service of outlet 1.000 .604
Location of Outlet 1.000 .403
Staff Behaviour 1.000 .432
Physical Facilities 1.000 .355
Contains Extra Fat 1.000 .395
Availability of products 1.000 .483
Harmful to health 1.000 .535
food provided is Hygienic 1.000 .578
Manage Brand Name 1.000 .588
Place to Hang Out 1.000 .638
Scree Plot
Interpretation:
Scree plot determines the optimum number of components. It plots the Eigen
value of the components and those components having Eigen value more
than one are extracted and other components are rejected.
From the curve it can be seen that the no of components lying on steep slope
are extracted as their Eigen value is more than 1 and components lying
27
beyond the point where the curve changes its direction are eliminated as
their Eigen value is less than 1.
Total Variance Explained Table
28
Total Variance Explained
Table 1.13
Compo
nent
Initial Eigen values Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 2.692 20.709 20.709 2.692 20.709 20.709
2 1.562 12.017 32.726 1.562 12.017 32.726
3 1.176 9.050 41.775 1.176 9.050 41.775
4 1.078 8.291 50.066 1.078 8.291 50.066
5 .994 7.644 57.710
6 .940 7.231 64.941
7 .883 6.790 71.731
8 .801 6.161 77.892
9 .684 5.259 83.151
10 .633 4.872 88.024
11 .577 4.438 92.462
12 .509 3.915 96.377
13 .471 3.623 100.000
Interpretation:
The total variance explained table displays the total variance, percentage
variance and cumulative percentage variance of components. The cumulative
variance for components is 50.066%.
The first component or factor explains the maximum variance that is 20.7019%
followed by the second component which explains 12.017%, third component
explains 9.050% and fourth variable explains 8.291% of variance.
Factor Matrix Table
29
Interpretation:
Through factor analysis method the 13 variables were extracted and divided into four most important factors and name was given to each factor on the basis of the group of the variable in it.
First Factor - Service and Health
Second Factor - Price
Third Factor - Quality
Fourth Factor - Location
Findings
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Factor Matrix
Table 1.14
Factor
Variables Service & Health Price Quality Location
Service of outlet -.565
Contains Extra Fat -.525
Harmful to health -.520
Physical Facilities .518
Availability of products .514
Varieties of product
Location of Outlet
Staff Behaviour
Price of products .557
food provided is Hygienic -.550
Quality of food .549
Place to Hang Out .561
Manage Brand Name
McDonalds is the brand which is been visited by most number of consumers i.e. 239 people
and Subway is the visited by least number of consumers i.e. 87 people
There are four important factors which affects the selection of outlet which are
1. Service and Health
2. Price
3. Quality
4. Location
Quality is the most important factor which a consumer takes into account while selecting a
fast food outlet.
Personal criteria of consumer such as Age, Gender, Occupation and Income also affect the
consumption and selection of fast food outlet.
People visit a fast food outlet mostly as it saves time.
The frequency of people visiting a fast food outlet on an special occasion increases as they
prefer to eat outside on such occasions.
KFC is the most preferred brand among the customers i.e. 78 consumers Voted for KFC
while Subway was voted by least number of consumers i.e. 11
Conclusion
31
The study was conducted with an objective to find out the factors
which affect the consumer in selecting a fast food outlet and also to
find the most preferred brand by the customer in fast food business.
By conducting various tests and asking respondents various question
which can affect the selection of fast food outlet we came to know
that there are various factor which affects the selection of fast food
outlet and the most important of them all was quality of products
followed by price. That is consumers are ready to pay a higher price
if better quality of products are served.
Service & Health, Quality, Price and Location are the most
important factor affecting consumer preference in selecting a fast
food outlet.
Recommendations
32
They should improve the quality of products provided to the
consumer.
Providing quick and efficient service to consumers
Establishing the outlet at a proper place where it is easy to visit
for the consumer.
Providing special offers on occasions as the frequency of visit at
such times increases.
Most of the respondents were not satisfied with the behaviour of
staff so necessary training should be provided.
Including more products in their menu so that more consumers
are attracted towards the outlet.
Reducing the amount of fat in products as people consider health
as important factor while selecting a fast food outlet.
Zikmund. W.G. (2007) Business Research Method, Seventh Edition, Thomson India George, D., Mallery, p . (2011), SPSS for windows – Step by step, Tenth edition, Pearson
Journals The Journal of Applied Business Research – July/August 2010 Abasyn Journal of Social Sciences Vol.5 No.2, 2007 British Food Journal Vol.109 No.2, 2007 World Review of Business Research Vol.2 No.3, may 2012