CONSUMER BUYING BEHAVIOR & ITS

IMPLICATIONS FOR THE EXISTING COMPANIES IN

THE INDIAN MARKET

COURSE: - PGCBM 18

FACULTY:- Dr Pingali Venugopal

Subject:- PRINCIPALS OF MARKETING

SUBMITTED BY :- Surojit Kumar Saha

SMS ID:- 2406464

CENTRE:-     Patna - South Gandhi Maidan

1 ST STAGE: CHOOSING A PRODUCT CATEGORY WHICH HAS AN INTERNATIONAL, NATIONAL AND LOCAL RESEMBLENCE.

I will take the SOAP CATEGORY as the topic of our POM project.

This category has a Competition among LOCAL, NATIONAL and INTERNATIONAL players.

The Category has presence and acceptation in rural as well as urban markets.

This category is seeing entry of Local and national players and extreme rise in competition.

This category in perusal to the Indian market sees majors like HUL in international players, ITC in emerging national players and Chhattisgarh Soaps in local players.

We will be studying the activities and marketing procedure implemented by these companies to motivate buying behavior of the consumer and increase sales.

INDUSTRY ANALYSIS:

The toilet soaps market is estimated at Rs 15,000 pa approx including small imports.

The market is littered over with several, leading national and global brands and a

large number of small brands, which have limited markets. The popular and

premium brands include Lifebuoy, Lux, Cinthol, Liril, Rexona, and Nirma.

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 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 557611 tonnes. This translates into a share of

about14 to 15%.

Soaps form the largest pie of the FMCG Market with bathing & toilet soaps accounting

for around 30% of the soap market, by value. Currently, the soap industry is divided

into three segments namely Premium, Popular and Economy/ Sub popular.

To fight competition, major players Hindustan Unilever Ltd (HUL), Godrej Consumer

Products Ltd (GCPL) and Wipro Consumer Care & Lighting are now drawing up fresh

game plans. And the accent is clearly on innovation to gain mind share as well as

market share in this overcrowded category.

MAJOR PLAYERS:

Hindustan Unilever Ltd.

With over seven brands — LUX, LIFEBUOY, HAMAM, REXONA, BREEZE, DOVE and

PEARS — has 51.2% volume share of the overall soap market. HUL is India's largest

Fast Moving Consumer Goods Company; its journey began 75 years ago, in 1933,

when the company was first incorporated. The company stirring the lives of two out

of three Indians with over 20 distinct categories in Home & Personal Care Products

and Foods & Beverages and also one of the country's largest exporters. HUL's brands

includes Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic,

Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's

- are household names across the country. They are manufactured in over 40

factories across India. In the Rs 14915 crore by sales soap market, HUL’s market

share has dropped to 51.6% value market share in March 2009 from 55.9% in March

2006.

Godrej Consumer Products

GCPL, India’s second largest soap maker after Hindustan Unilever Ltd, has

nearly9.2% market share. With 11% market share in value terms, it is the second

largest soap maker after Hindustan Unilever. Godrej Consumer Products (GCPL) is a

major player in the Indian FMCG market with leadership in personal, hair, household

and fabric care segments. The company is one among the largest marketer of toilet

soaps in the country with leading brands such as CINTHOL, FAIRGLOW, NIKHAR,

&ALLCARE. Fairglow brand, India's first Fairness soap, has created marketing history

as one of the most successful innovations. It is also the preferred supplier for

contract manufacturing of toilet soaps, some of which are the most well-known

brands in the country.

Wipro

In the Indian market, Wipro is a leader in providing IT solutions and services for the

corporate segment in India. Wipro also has a profitable presence in niche market

segments of infrastructure engineering and consumer products & lighting. Wipro has

made a large acquisition in the Consumer Care business. The presence of Wipro in

the toilet soap industry can be seen through their brands such as SANTOOR and

CHANDRIKA. With industry leading organic growth rates and the acquisition ,

Consumer care business has reached a Revenue run rate in excess of $100 million

per quarter.

Nirma

Incorporated as a private limited company, Nirma was converted into a deemed

public company and then to a public limited one in Nov.'93. Nirma has a leadership

presence in Detergents, Soaps and Personal Care Products. To have a greater control

on the quality and price of its raw materials, Nirma undertook backward integration

into manufacture of Industrial Products like Soda Ash, Linear Alkyl Benzene (LAB),

Alfa Olefin Sulphonates (AOS), Fatty Acid, Glycerine and SulphuricAcid. During 1996-

97, Nilnita Chemicals, Nirma Detergents, Nirma Soaps andDetergents, and Shiva

Soaps and Detergents were amalgamated with the company.The company created

'Nirma Consumer Care Ltd.' - a wholly owned subsidiary on22nd Aug.'97, which is the

sole licensee of the brand name 'Nirma' within India. Nirma enjoys a share of 6.74%

in soaps.

ITC

ITC, the country’s largest cigarette maker, entered the segment last year and has

made a strong headway in a short time. According to AC Nielsen, its share has grown

to 1.75% in just five months despite the fact that many of its brands such as Superia,

Fiama Di Wills and Vivel are currently sold in only six states

2 ND STAGE: IDENTIFING THE BUYING BEHAVIOR OF THE IDENTIFIED PRODUCT CATEGORY

WHY DO CONSUMERS BUY?

ANSWER: - TO SATISFY THEIR NEEDS.

How Consumers Buy?

Low involvement products1 Alternatives within the same product class are

similar2 Does not reflect buyers self concept3 Frequent brand switching behavior

E.g. buying a bathing bar (Toilet Soap)

Types of Buying Behavior

HIGH INVOLVEMENT LOW INVOLVEMENT

SIGHNIFICANT DIFFERENCE BETWEEN BRANDS

COMPLEX BUYING BEHAVIOUR VARIETY SEEKING BUYING BEHAVIOUR

FEW DIFFERENCES BETWEEN BRANDS

DISSONANCE REDUCING BUYING BEHAVIOUR

HABITUAL BUYING BEHAVIOUR

What influences consumers to purchase products or services?

The consumer buying process is a complex matter as many internal and external factors have an impact on the buying decisions of the consumer.

When purchasing a product there several processes, which consumers go through?

NEED RECOGNITION

NEED RECOGNITION

INFORMATION SEARCH

INFORMATION SEARCH

SEARCH FOR ALTERNATIVES

SEARCH FOR ALTERNATIVES

PURCHASEDICISION

PURCHASEDICISION

POST PURCHASE BEHAVIOR

POST PURCHASE BEHAVIOR

PURCHASE PROCESSPURCHASE PROCESS

Fig 1.

Fig 2

Analyzing the buying behavior of our selected category

The soap category falls under the low involvement segment and its buying behavior does not always follow the whole purchase process.

Here the NEED RECOGNITION is the most important.

Here after the consumer goes straight to the buying option.

HABITUAL Buying Behavior

1 the consumer is aware of his/her choice

2 decision is based on personal experience

3 spends low or no time in choosing an alternative

4 perceives low risks

VAIRITY SEEKING Buying Behavior

This category shows a change when there is a new launch which leads to a change in the consumer’s decision criteria.

New launches lead to trail purchases

PICKING

The consumer is indifferent to the brands and is motivated by the Place and Time Utility. The behavior is ruled by CONVINIENCE AND AVABILITY.

IMPULSE

The consumer reacts to his/her sudden urge to purchase the product. This behavior is dominated by the AVABILITY of products in the store.

RECALL or RECOGNITION

The consumer is ruled by the marketing activities of a particular brand and the decision has already been made.

NEED RECOGNITION IN SOAP CATEGORY

TYPES OF NEEDS

Basic needs in SOAP CATEGORY

1 Cleanliness2 Freshness

Here a consumer searches for a product which will give him/her a feel of cleanliness and freshness after using it.

The Liril , Vivel-Deo and Cinthol ads shows the fulfillment of this need using the products.

BASICBASIC SECURITYSECURITY SOCIALSOCIAL STATUSSTATUS SELF ACTUALIZATION

SELF ACTUALIZATION

Security needs in SOAP CATEGORY

1 Health Conscious2 Skin Friendly

3 Washing hands before entering kitchen

4 Washing hands before eating

5 Washing hands after using the toilet

Here a consumer searches for a product which gives a feeling of security from germs after using the product. The product should also not have any after use effects.

The Lifebuoy and Dettol Ads show fulfillment of the security need.

Social needs in SOAP CATEGORY

1 One wants to be clean and odorless to be accepted in the society 2 One wants to look fresh and attractive

Here a consumer wants to satisfy his/her own self as well as the socially accepted by the people.

The Superia “Father Baby” Ad shows the fulfillment of this Social need.

Status needs of SOAP CATEGORY

1 Feeling proud when demanding the product 2 Pricing

Here a consumer looks at the ingredients of the product, the after effect and the feel after using the product. The pricing of the product also stirs the need.

Self Actualization need in SOAP CATEGORY

1 Brand loyalty 2 Post used satisfaction

3 Feeling more than using a soap

4 Feeling of Beauty and admiration .

Here a consumer gets more than what are the basic needs from soap. Here he/she feels or gets more.

The Dove Soap Ad and Godrej No 1 fulfills the self actualization need by making a woman feel more complete by using the product

Rebel Need in SOAP CATEGORY

1 Soaps for men2 Soaps restricting body odour

A category which thinks above the basic need and is a very small category.

The Park Avenue Ad projects to fulfill the need of people in this category.

In the SOAP Category the Buying Behavior is often dominated by the

PRICE SEGMENTS AND CLASSIFICATIONS.

CLASSIFICATIONS EXAMPLES

Medical Medimix,Chandrika

DISCOUNT Breeze,Superia,Nima,Dyna

POPULAR Lifebuoy,Santoor,Vivel,

PREMIUM Lux, rexona,Liril,

SUPER PREMIUM Dove, Fiama Di Wills

3 RD STAGE: UNDERSTANDING THE IMPLICATIONS OF DIFFERENT COMPANIES.

India is a fascinating country where people of many different communities and religions live together in unity. Indian Population is polygenetic and is an amazing amalgamation of various races and cultures.

The territory of India, represents a geographical amalgamation of various features with its mountain ranges, valleys, desert regions, tropical rain forests, fertile plains, dry plateaus, coastal areas etc.

The population split between RURAL and URBAN areas in INDIA is 72% and 28% respectively. So the Buying Behavior and the Marketing strategies differ for the respective areas.

A few charts to explain the contributions before understanding the implications by different companies.

CATEGORYWISE CONTRIBUTION OF INDIAN MARKET

19%

14%

3%

28%

5%

13%

11%2% 5%

Washing Powders Dets Cakes Bars Soaps Cakes Bars

Toilet Soaps Shampoos Skin Creams+Talc

Toothpastes Toothbrushes Utensil Cleaners

Rural Urban Contribution in the SOAP Category

Urban – 37% and Rural – 63%

Strategies of different companies in RURAL Markets

1 Rural Haat Activation

Communicate in media dark regions.

2 Salience in the haat

Brand Communication.

Selling.

Retailer branding for multiplier.

Cinema in the evenings.

3 Interweave brand communication

Pre-publicity for the same in neighboring villages.

Lucky Draw against wrappers.

STANDEES

BANNERS

CALENDERS

VISIBILITY IS DONE BY COMPANIES IN BOTH RURAL AND URBAN

1 CLUTER BRECKING VISIBILITY & SHOP BRANDING

2 EYE LEVEL VISIBILITY

ON GROUND ACTIVATIONS1 CONSUMER SCHEMES

Retail activation where the consumer is benefited on purchase of the product.

2 Wholesale Activity

These type of activities attract retailers from the wholesale outlet.

To Attract traders different types of schemes, like trade discounts , QPS and STPRs are run . these schemes help to sell in depth and block the traders capital.

CONSUMER PROMOTIONS

To attract customers Consumer promotions are also run. it gives a advantage to the product over its competitor.

Consumer Wrapper redemption and coupon Schemes.

Consumer coupons and wrapper redemption schemes are an important way of holding and increasing market share.

It also helps in increasing the customer base and helps in increasing the purchase quantity and frequency of loyal customers.

SAMPLE PICTURES OF PRODUCTS WHOSE NAMES HAVE BEEN USED IN THE PROJECT

Sources. AC Nielsen ,HUL Internal research .