CHAPTER-I INTRODUCTION Consumer behavior is the study of how people buy, what they buy, when they buy and why they buy . It blends elements from psychology , sociology , sociopsychology, anthropology and economics. It attempts to understand the buyerdecision processes |buyer decision making process, both individually and in groups. It stu dies cha ra cteri stics of indiv id ua l co ns um er s such as demogr aph ics, psychograp hics, and behavioral 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. Belch and Belch define consumer behavior as 'the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires'. Basic model of consumer decision making also referred to as EB model !Engel" ollat # Black$ell" %&'&( )tage Brief descri*tion Pro+lem recognition The consumer pe rc eiv es a need and becomes m otivated to solve a prob lem. otivation Information searc, The con sumer searches for inf ormation re!uired to make a purchase decision "erception Information ealuation The consumer compares various brands and products #ttitude formation Decision The co ns umer de ci des wh ich br an d to purchase Integration Post-*urc,ase ealuation The co ns umer eval ua tes th eir pu rc ha se decision $earning .Consumer Be,aior and /arketing )trateg0. The stu dy of consum ers he lps firm s an d org ani %a tio ns impro ve the ir marke tin g strategies by understanding issues such as how • The psy cho log y of ho w co nsu me rs thi nk, feel, rea son, an d select betwe en different alternatives &e.g., brands, products( • The psychology of how the consumer is influenced by his or her environment &e.g., culture, family, signs, media( )
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
• The behavior of consumers while shopping or making other marketing decisions(
• $imitations in consumer knowledge or information processing abilities influence
decisions and marketing outcome(
•
*ow consumer motivation and decision strategies differ between products thatdiffer in their level of importance or interest that they entail for the consumer( and
• *ow marketers can adapt and improve their marketing campaigns and marketing
strategies to more effectively reach the consumer.
+nderstanding these issues helps us adapt our strategies by taking the
consumer into consideration. or e-ample, by understanding that a number of
different messages compete for our potential customers attention, company learnt that
to be effective, advertisements must usually be repeated e-tensively. Company also
learn that consumers will sometimes be persuaded more by logical arguments, but at
other times will be persuaded more by emotional or symbolic appeals. By
understanding the consumer, Company will be able to make a more informed decision
as to which strategy to employ.
/ne 0official0 definition of consumer behavior is 0The study of individuals, groups, or
organi%ations and the processes they use to select, secure, use, and dispose of
products, services, e-periences, or ideas to satisfy needs and the impacts that these
processes have on the consumer and society.0 #lthough it is not necessary to
memori%e this definition, it brings up some useful points1
• Behavior occurs either for the individual, or in the conte-t of a group &e.g., friends
influence what kinds of clothes a person wears or an organi%ation &people on the
2ob make decisions as to which products the firm should use.
• Consumer behavior involves the use and disposal of products as well as the study
of how they are purchased. "roduct use is often of great interest to the marketer,
because this may influence how a product is best positioned or how company can
encourage increased consumption. 3ince many environmental problems result
from product disposal &e.g., motor oil being sent into sewage systems to save the
recycling fee, or garbage piling up at landfills this is also an area of interest.
• Consumer behavior involves services and ideas as well as tangible products.
The word 0chocolate0 entered the >nglish language from 3panish. *ow the
word came into 3panish is less certain, and there are multiple competing e-planations.
"erhaps the most cited e-planation is that 0chocolate0 comes from ;ahuatl, thelanguage of the #%tecs, from the word 0chocolatl0, which many sources derived from
the ;ahuatl word 0-ocolatl0 made up from the words 0-ococ0 meaning sour or bitter ,
and 0atl0 meaning water or drink. *owever, as 7illiam Bright noted the word
0chocolatl0 doesn't occur in central e-ican colonial sources making this an unlikely
derivation. 3antamaria gives a derivation from the Aucatec aya word 0chokol0
meaning hot, and the ;ahuatl 0atl0 meaning water. ore recently <akin and
7ichmann derive it from another ;ahuatl term, 0chicolatl0 from >astern ;ahuatl
meaning 0beaten drink0. They derive this term from the word for the frothing stick,
0chicoli0.
Histor0 of C,ocolate
The origins of chocolate can be traced back to the ancient aya and #%tec
civilisations in Central #merica, who first en2oyed 'chocolatl'( a muchpri%ed spicy
drink made from roasted cocoa beans.
Throughout its history, whether as cocoa or drinking chocolate beverage or
confectionery treat, chocolate has been a much sought after food.
Because cocoa beans were valuable, they were given as gifts on occasions such as a
child coming of age and at religious ceremonies. erchants often traded cocoa beans
for other commodities such as cloth, 2ade and ceremonial feathers.
C,ocolate Across Euro*e
#n Italian traveller, rancesco Carletti , was the first to break the 3panish monopoly.
*e had visited Central #merica and seen how the Indians prepared the cocoa beans
and how they made the drink, and by )9 chocolate was well established in Italy.
Drinking C,ocolate
The secret of chocolate was taken to rance in ))D, when #nne, daughter of "hilip II
of 3pain, married Eing $ouis FIII of rance.
The rench court enthusiastically adopted this new e-otic drink, which was
considered to have medicinal benefits as well as being a nourishing food. =radually
the custom of drinking chocolate spread across >urope, reaching >ngland in the
)D9s.
9irst C,ocolate for Eating
+p until this point all chocolate recipes were based on plain chocolate. It was an>nglish doctor, 3ir *ans 3loane, who after travelling in 3outh #merica focused on
cocoa and food values, bringing a milk chocolate recipe back to >ngland. The original
The chocolate market in India has a production volume of 89,G99 tonnes. Thissegment is characteri%ed by high volumes, huge e-penses on advertising, low
margins, and price sensitivity.
C,allenges
The ma2or challenges faced by the players in chocolate industry are1
• "erishable nature of the product
• "oor distribution network
•
3carcity of milk• 6ising prices of milk
/a:or Pla0ers
The ma2or players in the chocolate market are1
• Cadbury India $td.
• ;estle India $td.
They both account for H9 of the market share.
Ot,er *la0ers are;
• ITC
• *$$
Cad+ur0
Cadbury is a leading global confectionery company with an outstanding portfolio of
chocolate, gum and candy brands. Company employ around D9,999 people and have
direct operations in over 9 countries, selling our products in almost every country
or the first one year the ads made statements of some kind or the other but they had
not yet ac!uired the topical tone. In )HJ, 3ylvester decided that giving the ads a solid
concept would give them e-tra mileage, more dum, so to say. It was a decision that
would stand the daCunhas in good stead in the years to come.
In )HH, when the city first saw the beginning of the *are 6ama *are Erishna
movement, 3ylvester daCunha, ohammad Ehan and +sha Bandarkar, then the
creative team working on the #mul account came up with a clincher '*urry #mul,
*urry *urry'. Bombay reacted to the ad with a fervour that was almost as devout as
the Iskon fever.
That was the first of the many topical ads that were in the offing. rom then on
#mul began playing the role of a social observer. /ver the years the campaign
ac!uired that all important #mul touch. India looked forward to #mul's evocative
humour. If the ;a-alite movement was the happening thing in Calcutta, #mul would
be up there on the hoardings saying, 0Bread without #mul Butter, cholbe na cholbe na
&won't do, won't do. If there was an Indian #irlines strike #mul would be there again
saying, Indian #irlines 7on't ly 7ithout #mul.
There are stories about the butter that people like to relate over cups of tea.
0or over )9 years I have been collecting #mul ads. I especially like the ads on the
backs of the butter packets, 0says rs. 3umona ?arma. 7hat does she do with these
adsN 0I have made an album of them to amuse my grandchildren,0 she laughs. 0They
are almost part of our culture, aren't theyN y grandchildren are already beginning to
realise that these ads are not 2ust a source of amusement. They make them aware of
what is happening around
them.0
<espite some of the negative reactions that the ads have got, <aCunhas have
made it a policy not to play it safe. There are numerous ads that are ris!ue in tone.
0Company had the option of being sweet and playing it safe, or making an impact. #
fine balance had to be struck. Company has a campaign that is strong enough to make
a statement. I didn't want the hoardings to be pleasant or tame. They have to say
something,0 says 6ahul daCunha.
0Company ran a couple of ads that created !uite a furore,0 says 3ylvester daCunha.
0The Indian #irlines one really angered the authorities. They said if they didn't take
down the ads they would stop supplying #mul butter on the plane. 3o ultimatelycompany discontinued the ad,0 he says laughing. Then there was the time when the
;estlQ India is a multinational company with its worldwide
operations in over J9 countries. The founder of ;estlQ 3. #.
was *enry ;estle who from a modest beginning founded
the company in )G at 3wit%erland for manufacturing milk
powders for babies. #t that time 3wit%erland faced one of
the highest infant mortality rate and the milk formula saved
the lives of many infants whose mothers were unable to
breast feed successfully.#t present ;estlQ is the worlds largest food company with its international
head!uarters at ?evey, 3wit%erland. 7ith almost D99 factories worldwide it employs
more than 4 $ac people.
;estlQ is often !uoted by most as Rmultinational of multinationals.S There is a good
reason, as less than 4 of the turnover comes from the domestic market in
3wit%erland.
;estlQ is very decentrali%ed in its operations and most of the markets are givenconsiderable autonomy in its operation. It is more of a people and products oriented
company rather than systems oriented company There are R unwritten guidelinesS
which are to be followed, based on common senses and a strong set of moral
principals emphasi%ing a lot of respect for fellow beings.
NE)T4< PHI4O)PH1
7hen *enri ;estle introduced the first commercial infant formula in )GJ, he alsocreated a symbol of the Birds nest, graphic translation of his name, which personifies
the companys business. The symbol, which is universally understood, evokes
security, motherhood and affection, nature and nourishment, family and tradition.
Today it is the central element of ;estlQs corporate identity and closely parallels the
;estle has been a partner in Indias growth for the past time decades and has
built a very special relationship of trust and commitment with the people of India. The
culture of innovation and renovation within the company and access to the ;estle
=roups proprietary technology 5 Brands, e-pertise and the e-tensive centrali%ed
6esearch and <evelopment facilities helps the company to create value that can be
sustained over the long term. ;estle India manufacturers products of truly
international !uality under internationally famous Brand names such as ;escafe,Cerelac, aggi, ilky Bar, ilo, Bar/ne, ;estea and EitEat at and in the recent
years the company has also introduced products of daily consumption and use such as
NE)T4E INDIA 4TDD) subsidiary of ;estle 3#, is among the leading branded food player in the
country. It has a broad based presence in the foods sector with leading market shares
in instant coffee, infant foods, milk products and noodles. It has also strengthened the
presence in chocolates, confectioneries and other semi processed food products during
the last few years. The company has launched <airy "roducts like +*T ilk, Butter
and Curt and also ventured into the mineral water segment in 499). ;estles leading
brands include Cerelac, ;estum, ;escafe, aggi, Eitkat, unch and "ure $ife.
INDU)TR1 )CENARIO
The processed foods sector, which currently accounts for less than 4 of total
food consumption in the country, is slated to grow at a fast pace. The Indian
=overnment has identified ood "rocessing as a high potential industry and has been
creating a policy environment conducive to its growth. *istorically, the policy
framework favored small and unorgani%ed players while the ;C players were
restricted from adding capacities. This led to the mushrooming of a vast unorgani%edsector. $arge players with strong marketing network and brand e!uity, were forced to
sour@ce from third party producers. <uring the last few years, however, several food
products have been deserved from small U scale sector. ;Cs as well as domestic
players have made aggressive investments in the sector. Vuantitative restrictions on
import of several food products have been lifted, leading to greater availability of
imported products. ;Cs are able to offer a wider product range, without the need to
establish a manufacturing base.CO/PETITION
Baby food and instant coffee are categories where brand loyalties are very
strong and ;estle is the market leader. *$$ is a significant competitor to ;estle in
instant coffee, while *ein% is the main competitor in the baby foods market. The
market for culinary products, semi U processed foods such as noodles, ready mi-es for
Indian ethnic breakfast and sweets, is largely an urban market. *$$ and indo ;issin
oods are the main competitors in these product segments. ;estle has also achieved asignificant 4D share in the chocolate 5 confectionery market. The company has
;estle is focused on product e-pansion and improvement of distribution
efficiency. The dairy business is being e-panded and is e-pected to drive growth in
the long run, although short U term profitability may be impacted in investment stage.
The companys entry into the mineral water segment is a concern, as the segment is
already overcrowded and the company faces stiff competition especially from the
Cola manufacturers. #c!uisition of an established brand could catapult ;estles
position in the segment. In categories like beverages, culinary products and chocolate
confectionery, the company is locking at driving growth through launch of smaller
3E+s thus enabling affordability to a wide section of the population.
EARNIN2) )EN)ITIKIT1 9ACTOR)
3uccess of new category launches &ilk and ineral 7ater which involves
considerable investment for promotional schemes and ad U spend and yield returns
only after a few years.
Continued e-ports to 6ussia, ;estles main market for coffee e-ports.
=ood monsoon ensures ade!uate availability or raw materials,which are mainly
agricultural in nature. 6aw material prices have significant influence on margins.
=overnment policies in terms of licensing, duties, movement of agricultural
commodities etc. arket growth driven by overall economic growth and urbani%ation.
6upee depreciation improves e-port reali%ations.
/ARET PO)ITIONIN2
>ach company and offering must represent a distinctive big idea in the mind
of the target, and each company must dream up new features services and guarantees,
special rewards for loyal users and new conveniences and en2oyments.
Aet even when a company succeeds in distinguishing itself, the differences areshort U lived. Competitors are !uicker than ever in copying good ideas( therefore
companies constantly need to think up new value U adding features are benefits to win
the attention and interest of choice U rich, price U prone consumers.
Companies normally reformulate their marketing strategies and offerings
several times. >conomic conditions change, competitors launch new assaults, and the
product passes through new stages of buyer interest and re!uirements. Conse!uently,
strategies appropriate to each stage in the products life cycle must be developed. Thegoal is to e-tend the products life and profitability, keeping in mind that the product
4ic,tenstein" Neteme0er and Burton !%&&@( e-amined the impact of coupons on
consumers perception of ac!uisition utility and transaction utility. They found that a
coupon had greater impact on transaction utility than ac!uisition utility. Thishappened because the lower price offered by the coupon was contrasted against the
internal reference price. Buyers compared the price at which they were getting the
product to an internal reference price that led to the associated pleasure with the
financial terms of the deal.
2re$al and /onroe !%&==( e-amined the impact of price comparison advertising
&where a high advertised comparison price is compared to a lower advertised selling
pric
e on buyers perception of ac!uisition utility, transaction utility and behavioural
intention. They proposed that comparing a lower selling price to a higher advertised
referred price &e.g. 7as 6s. 499, ;ow 6s.)D9 would enhance buyers psychological
satisfaction or transaction utility obtained from the deal. The result indicated that
comparing a lower selling price to a higher e-ternal referred price enhanced perceived
transaction utility which in turn enhanced buyers perception of ac!uisition utility and
willingness to buy the promoted product.
/onroe !%&&( had proposed a theory called #daptation level theory or internal
referred price theory which said that consumers carry with them an adoption level
price or Winternal reference pricefor a given product. The internal reference price
represents the price a consumer e-pects to pay for a product and is formed on the
basis of post prices paid 5observed either for the same product or similar products.
The internal reference price is a standard against which market prices are compared
and 2udged as high, low or medium.
T,aler !%&=( developed the ental #ccounting Theory, which states that people
practice a form of cognitive bookkeeping or Wmental accounting to keep track of
transactions. ental accounting theory proposes that people set up mental accounts to
evaluate costs &losses and benefits &gains related to particular transactions.
Henderson and Peterson !%&&( demonstrated that people tend to group and label
different sources of income. 6esearchers have shown that people assign income,
e-penses and activities to specific mental accounts.
irst step of research is sample selection, for which respondents were
consumers in 3irsa city. Total consumers covered were )99.
B )A/P4E PROCEDURE
The Consumers are selected by the following methods1
&i Convenience 3ampling1
The researcher selects the most accessible population members from which to
obtain information.
E3*lorator0 Researc, $as used
C DATA CO44ECTION
#fter choosing the sample, the ne-t step in the research program is datacollection to ensure the relevance of the data collected, care is taken to minimi%e the
errors in methods of the data collection.
Primar0 Data;
or the present study, the researcher used the !uestionnaire method for
collecting "rimary data. # structured !uestionnaire was used for the purpose of
conducting the Interviews. The !uestionnaire included multiple choice !uestions.
)econdar0 Data 1
#ny data which is available prior to the commencement of a research study is
secondary data. It refers to the information that has been collected by someone else,
often this include printed or published data. The main source of secondary data for
this pro2ect has been0 0Business Today's M Booklet of various companies of
chocolates.
D ANA41TICA4 TOO4)
The data thus collected was tabulated, interpreted M analy%ed to make the
study meaningful.
OBECTIKE O9 THE )TUD1
The main ob2ect of the survey is to know about the liking for the Chocolates
deterrent people like kids, adults M parents which include students, teachers,
/verruling perceptions of health ha%ardness of the chocolates, all the targeted
respondents echoed in one voice that they can't abstain from the magical taste of the chocolates. #ll the )99 respondents use to eat chocolates time to time.
There is no other factor than its taste behind the sale of chocolates as out of )9
respondents GH admitted that they are slave of taste, however, )9 respondents havehabit of chocolates, only ) respondent told that he use to eat chocolate at the time of
hunger.
= 7,ic, factor makes 0ou to +u0 a *articular +rand of c,ocolate8
?arious factors work for the any particular brand of chocolate, when the
respondents were asked to denote one which effect them to buy a particular brand )respondents admitted that its the taste for which they buy a particular brand, however
44 respondents are influenced by the advertisements, )@ respondents buy any
particular brand considering the price of the product.