Premium chocolate market

8/12/2019 Premium chocolate market

1/28

UNDERSTANDING THE

DETERMINANTS OF CONSUMER

DECISION MAKING PROCESS

TOWARDS PREMIUM CHOCOLATE

CATEGORY IN INDIA

By:

Abdur Rahman

Roll No - 157


2/28

Flow of Presentation

Theoretical Framework

Conceptual Framework

Industry Overview

Objectives

Research Methodology

Findings

Recommendations


3/28

Theoretical Framework

- Basic Consumer Behavior

Consumer behavior can be defined as the behavior

that consumers display in searching for purchasing,

using, evaluating, and disposing of products and

services that they expect will satisfy their needs

(Schiffman & Kanuk, 2004).

It is influenced by consumers internal processes in

terms of choices and tendencies, for instance, their

own thinking, feelings, and desires. It is also affected bysome environmental factors, for example, social

forces, economic, situational, retail, and promotional

considerations.


4/28

Willingness to buy

Dodds et al. (1991) defined the willingness to buy as the

probability linked to a purchasers intent to purchase

a product.

Purchase intention is thus synonym with willingness to

buy. Purchase intention can be defined as a

consumers intention to purchase a product or

service.


5/28

Perceived Value for Money

When consumers make a purchase decision about one

foreign-branded product, they not only consider the

price of the products, but also the product

characteristics, quality and perceived value (Smith &

Sparks, 1993; Omar, 1995; Burt & Sparks, 1995).

Consumer demonstrates an anticipation of expected

or purchase perceived value from the purchase of a

foreign product or service based on future benefitsand sacrifices.


6/28

Country Image

Academics studying consumers willingness to buy foreign-branded

products have paid much attention to the influence of country

image on a product (e.g. Amine et al., 2005; Hsieh et al., 2004;

Laroche et al., 2005; Lee & Ganesh, 1999; Mossberg & Kleppe, 2005;

Peterson & Jolibert, 1995; and Pereira et al., 2005).

Consumers tend to have a favorable attitude toward products

made in foreign countries. And many of them base their

evaluations of products on the country image factor.

Pereira et al. (2005) pointed out that country-of-origin is rooted in

the country image construct. Country image can be defined as the

total of all descriptive, inferential, and informational belief about

a particular country (Martin & Eroglu, 1993).


7/28

Product Beliefs

Product beliefs with respect to a given origin are considered tohave a positive effect on consumers willingness to buy productsof foreign origin (Hsieh et al., 2004; Laroche et al., 2005; Orbaiz &Papadopoulos, 2003).

Typicaland somehow stereotyped - reactions to foreignproducts include: German, Swedish and Japanese cars are excellent

French wines are superb

Japanese home electronics are reliable (Liefeld, 1993),

which are quite different from the perception and evaluation say of Russiancars (unreliable and outdated), Brazilian electronics (unsafe and flimsy),

or Israeli fashion (unglamorous) In addition, a positive country image could result in positive

beliefs about the countrys products, and positive beliefs couldresult in positive willingness to buy, product beliefs in a givenorigin is regarded to have positive effects on ones willingness tobuy products of origin.


8/28

World-Mindedness

World-mindedness can be defined as a mixture of

cultures with an appreciation for world sharing and

common well-being(Sampson & Smith, 1957).

As Barnes and Curlette (1985) argued, realistic

patriotism and a global perspective are not

diametrically opposed. Most Indian consumers have a

greater tendency to tolerate other cultures.

Their consumption tends thus to be open and does

not limit itself to domestic products, all the more asconsumers do travel more and more, experiencing

thereby attitudes and lifestyles in other countries

directly.


9/28

Conceptual Framework

As the literature review suggests, many variables can

impress a shoppers willingness to buy and modify

his/her behavior.

The main relationships between the variables operate

as follows:

value for money directly affects willingness to buy

product beliefs are strongly influenced by country image

In the meantime, product beliefs in a given source have a

constructive influence on ones willingness to buy products of

origin

If customers have high levels of world-mindedness, they are

inclined to give higher quality ratings to foreign products


10/28

Consumer Behavior Model

Country Image

Product Belief

Willingness to buyPerceived value

for moneyWorld-mindedness


11/28

Industry Overview

According to industry estimates, the chocolate market is worth Rs5,500 crore, of which the premium segment accounts for 30%share.

Cadbury India continues to lead with 67% market share, Nestle hasa market share of 23.5%, while other players including Ferrero

International make up the remaining. Interestingly, the premium chocolate category is growing at a much

faster rate that is, 30% annually compared to that of the regularcategory.

The chocolate category has grown at a healthy 21% over last year,and the premium segment with 43% value growth is the drivingforce behind it.

The growth of the premium category is attributed to themanufacturers focused efforts within modern trade, and thesustained used of investments in efficient cooling systems intraditional trade.


12/28

Major Players in Premium

chocolate segment Premium refers to those products whose average price is Rs

100 and above. And average weight of less than 50 gms

Major players include :

Lindt

Godiva Ferrero

Mars

M&M

NestleAlpino

CadburyDairy Milk Silk and Bournville


13/28

Objective

To study the factors affecting the consumption of

premium chocolates.

To predict the type Premium Chocolate

consumers prefer based on their age, genderand annual family income.

Based on this study it will be easy for the

manufactures as well as marketers of premium

chocolates to target the right audience with the

right product which would help in increasing the

revenue as well as market share.


14/28

Research Methodology

Secondary research has been done by analyzing the dataavailable in various journals and research papers.

Based on the secondary research a model has beendesigned to study the consumer behavior

Sampling Element: Men, Women and Children Sampling Technique: Random Sampling

Sample Size: 360

The questionnaire shall consist of both structured and

unstructured questions. 5 point likert scale shall be usedfor scaling purpose.

Factor Analysis and Discriminant Analysis shall be used toanalyse the primary data.


15/28

Findings

Premium Chocolate segment is a booming market also as the

literature review suggests among the chocolate segment

premium chocolate segment is growing at the fastest pace.

As disposable income is increasing among the Indian Middleclass the urge to try new things is also increasing.

The other factor which is influencing the buying of premium

chocolate manufactures are tapping on the psyche of theIndian Consumers mindset. For example Ferrero Rochere is

tapping the market by marketing it extensively during the

festive seasons.


16/28

Cont

The findings of the study also suggest that people prefer

gifting premium chocolates during the festivals. It means that

people are breaking away from the traditional way of giving

sweets and mithai and preferring giving away Premium

chocolates. The reason can be that Premium Chocolates havemore shelf life and people feel more classy and stylish for

people to give.


17/28

Cont

Some of the key findings of the study were:

Out of a sample of 313 respondents 62% were male and

38% were female.

Male

62%

Female

38%

Sex ratio


18/28

All the respondents were aware about premium category chocolates

and they had either tasted or heard of the brands in consideration.

266

118

162

125

210

174

0

50

100

150

200

250

300

ferrero

rocher

Godiva Lint Hershey's Nestle

Alpino

Mars

Series1


19/28

From the study we find that a large number of people prefer white

chocolate and crunchy chocolate. They represent 25% and 23% respectively.

Indians are known to have a sweet tooth and it was interesting to find out

that 16% and 13% of the respondents preferred dark chocolates and Sugar

free chocolates. The trend also suggests that young adults are increasingly

becoming aware of their health and people are accepting and embracingthe fact that chocolates need not necessarily be sweet in taste.

26%

24%16%

13%

9%12%

Preference White

Crunchy

Dark

Sugar Free

Hard

Nutty


20/28

Factor Analysis

Factor analysis was done to understand what factors affect thebuying decision of premium chocolate category.

The variables which had been identified for this study were:

Price

Packaging

Brand Reputation

Shape and Design of the product

Occasion and Festivities

Country of origin

Advertising

Available information (online) Available information (offline)

Ingredients

Variety

Ease of accessibility


21/28

Grouping of Variables

Based on the output of the test the variables were grouped in

the following manner:

Factor Variable Factor name

1 Price

Brand Reputation

Occasion and FestivitiesPremiumness

2 Product Country of origin

Ingredients Originality

3 Advertising

Available information (online)Promotion

4 Shape and Design of Product

Variety

Packaging

Assortment

5 Ease of accessibility Availability


22/28

Discriminant Analysis

The second objective of the study was to predict the type Premium Chocolateconsumers prefer based on their age, gender and annual family income.

For the purpose of this study the type of chocolates were classified into 6 groups namely:

Hard

Crunchy

Nutty

Dark Chocolate

Sugar Free

White Chocolate

The annual income group was segmented based on:

Up to 5 lac

58 lac

810 lac

10 and above

The age group for the purpose of this study was:

1520 2125

2630

3135

35 and above

Gender

Male

Female


23/28

The Hit Ratio was 72.52% , so we can assume the model to be

fit as a hit ratio of more than 70% is preferred.

The Eigen value and WilksLambda determines how

statistically significant is the discriminant function.

Eigen value is highest for function 1 (1.297) and Wilkslambdais lowest for function 1 through 3 (0.034). So, we can say that

function 1 represents the most statistically significant

discriminant function.

Wilks' Lambda

Test of Function(s) Wilks' Lambda Chi-square df Sig.

1 through 3 .058 547.071 32 .000

2 through 3 .236 150.188 15 .000

3 .968 10.148 3 .017

Eigenvalues

Function Eigenvalue % of Variance Cumulative % Canonical

Correlation

1 1.297a 83.9 83.9 .688

2 .639a 13.0 96.9 .349

3 .034a 3.1 100.0 .180

a. First 3 canonical discriminant functions were used in the analysis.


24/28

Discriminant Function obtained :

D= -3.614 + 1.239*(age) + 0.681* (gender)0.210*(annual

family income)

At group centroids we can set a scale and place each of the

considered attributes on that scale based on their value.

-1.074 Crunchy -0.201 Nutty 0.378 White

Dark -0.595 Hard -0.147 Sugar-free 1.809


25/28

Recommendations

The study shows us the five factors which the Indian

consumers look for when they buy premium chocolates

namely Premiumness, Originality, Promotion, Assortment, and

Availability. It is therefore recommended to the marketers of

premium chocolates to keep into account these factors whenthey are designing their marketing as well as sales activities.

An important finding of the study was that majority of the

people were of the opinion that premium chocolates are not

as easily available as they would like. It is therefore necessary

to have a proper distribution network as well as motivated

sales force who are ready to go the extra mile to push the

products.


26/28

Cont

The marketers need to understand the importance of unorganizedretail stores in the Indian context. Kirana stores plays an importantpart in the whole scheme of things.

These entry level premium chocolates are priced nearly the same as

other premium chocolates. It therefore becomes necessary to pushthe premium brands in these types of stores if one wants to boostsales as well as capture the largely untapped market.

The premium chocolate market need to focus on advertising. Even

though the study shows that most of the respondents dont givemuch importance to advertisement of premium chocolates, but itbecomes important if one wants customers to keep their offerings inthe consumers consideration set. Customers buy what they alreadyknow about a product. It is necessary to make a footprint in thecustomer mind space.


27/28

Cont

Promotional activities are another recommendation which can

be suggested to the marketers.

Bundling of chocolates can be done to tempt the customers to

buy more. If a particular variety of chocolate is very costly it

should be introduced in small pack sizes to encourage peopleto try the offerings.

If consumers like the products they try in small quantity they

might become repeat customers also they will encourage their

friends and relatives to try such offerings.

Premium chocolate companies should start sponsoring college

fests and they should open counters where students can taste

there offerings for free. Chocolates can be sold at discounted

price to students to encourage them to become regular users.


28/28

Thank You!!!

Documents

Premium chocolate market