FINAL PROJECTConsumer Behavior

LAYS SNACKS PAKISTAN

Submit to: Sir, Imran Sadiqe

Syed Ali Yaser Bukhari 084621002Naeem Sharif MehmoodWaheed

Submission Date:

Acknowledgement

At the completion of this project we are grateful to Almighty Allah who has bestowed upon us the vision to complete this assignment. We are also thankful to my honorable teacher Mr. Imran Sadiq & Brand Manager Lays MR, Saad Munawar who gave us clear guidance for completion of this assignment?

“Executive Summary”

This is the detailed report about PepsiCo Snacks products in Pakistan Lays, Cheetos, Kukure, Cravys.

It covers the detailed product introduction with respect to the four Ps of the marketing, brief history of the company, marketing environment of the company in Pakistan, product & consumer evaluation that affect the workings of the company. It also includes the detailed competitor’s analysis.

This report also covers the marketing objectives, marketing strategies such as target market, pricing and product strategies & SWOT analysis.

At the end we gave some recommendations which may be useful in the growth and progress of the company. We have tried our best to cover all the topics of report and provide maximum information about the organization.

Frito-Lay, Inc. and PepsiCo, Inc.

In 1945, the Frito Company granted the H.W. Lay & Company an exclusive

franchise to manufacture and distribute Fritos in the Southeast. The

two companies worked toward national distribution and developed a

close business affiliation. In September 1961, The Frito

Company and H.W. Lay & Company merged to become

Frito-Lay, Inc.

In February 1965, the Board of Directors for Frito-lay, Inc. and Pepsi-Cola announced a

plan for the merger of the two companies. On June 8, 1965, the merger of Frito-Lay and

Pepsi-Cola Company was approved by shareholders of both companies, and a new

company called PepsiCo, Inc. was formed. At the time of the merger, Frito-Lay owned 46

manufacturing plants nationwide and had more than 150 distribution centers across the

United States.

Today, PepsiCo is organized into four divisions: Frito-Lay North America, PepsiCo

Beverages North America, PepsiCo International and Quaker Foods North America.

Although products sold in the United States under the Frito-Lay brand name are also sold

internationally, international sales are reported by the PepsiCo International division.

PepsiCo Mission and Vision

At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to

do, but the right thing to do for our business.

Our Mission

Our mission is to be the world's premier consumer Products Company focused on

convenient foods and beverages. We seek to produce financial rewards to investors as we

provide opportunities for growth and enrichment to our employees, our business partners

and the communities in which we operate. And in everything we do, we strive for

honesty, fairness and integrity.

Our Vision

"PepsiCo's responsibility is to continually improve all aspects of the world in which we

operate – environment, social, economic – creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship,

activities to benefit society, and a commitment to build shareholder value by making

PepsiCo a truly sustainable company.

OVERVIEW OF SNAKE INDUSTRY IN PAKISTAN

Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is

described as a small quantity of food eaten between meals or in place of a meal. Snack

food generally comprises bakery products, ready-to-eat mixes, chips, namkeen and other

light processed foods According to the ministry of food processing; the snack food

industry is worth over 150,000 tons in terms of volume.

Though very large and diverse, the snacks industry is dominated by the unorganized

sector. According to an SMEDA survey almost 800 snack items and 170 types of

savories are sold across Pakistan. The branded snacks are sold at least 25% higher than

the unbranded products. Savory snacks have been a part of Pakistani food habit, since

almost ages. Though there is no particular time for snacks, normally they are consumed at

teatime. The variety is almost mind-boggling with specialties from all regions, which

have gained national acceptance.

The industry has been growing around 30% for the last three years, while the branded

segment is growing around 25% per annum, due to various reasons like Multiplex

culture, snacking at home while watching TV, pubs and bars (where they are served free).

AC Nielsen's retail audit shows that the large sales volumes are due to a marked

preference for ethnic foods, regional bias towards indigenous snacks and good value-for-

money perception. Of course the branded segment is much smaller, which is what makes

it so attractive to food Companies that are looking at bigger shares.

Growth rate of ready made snack (Potato chips / Namkeens) industry.

Year Potato Chips/ Namkeens

Growth rate1990-91 to 1996-97 07.061996-97 to 2001-02 06.802001-02 to 2006-07 11.672004-05 to 2009-10 30.632009-10 to 2014-15 25.58

MAJOR PLAYERS

In case of chips manufacturing, Frito-Lay Pakistan is the market leader in the country

with 85% market share in Potato snacks category. The Snack city, which has made a late

entry in to chips processing market, has managed to get a market share of 08% with its

potato chips "Kurleez". There are also the Kolson, Bunnys, Golden, super Crisp, etc in

the competition.

CONSUMER BEHAVIOR

The job of marketer is to meet and satisfy target customer’s requirements and desires.

“Knowing customer" is not a simple task. Understanding the buying behavior of the

target market for the product is the essential task of the marketing plan. The job of the

marketers is to “think customer” and to guide the company into developing offers, which

are meaningful and attractive to target customers and creating solutions that deliver

satisfaction to the customers, profits to customer and benefits to the stakeholders.

Marketers must study the customer taste, preferences, wants, shopping and buying

behavior because such study provides the clues for developing the new products, price,

product changes, messages and other marketing mix elements.

Consumer has various types of behavior patterns. Few of them are explained as follows;

Picking involves a random choice, here the buyer picks a brand from the available brands,

and is indifferent to the brand he buys. Picking occurs when the consumer has (a) low

involvement in the purchase, (b) there is little uncertainty with untried brands and (c) there

are few differences between the brands.

Variety seeking , another example, also involves low consumer involvement, but it

requires significant differences between the brands. Variety seeking was also found when

(a) purchases are made for more than one consumption period and (b) when the timing of

purchase and the timing of consumption were different.

Impulse buying : Impulse buying occurs when a consumer experiences a sudden, often

powerful and persistent urge to buy something immediately. It is more likely to involve

grabbing a product than choosing one.

Habitual behaviour: Habit generally forms when the consumers are satisfied with the

outcomes of the earlier purchases. Habitual buying is characterised by absence of

information search and evaluation of alternate brands.

Extended problem solving: This occurs when the purchase is of importance to the

buyer. Assael found this process to occur during the purchase of complex, high priced

Picking/Impulse

Variety Seeking

Extended Problem Solving

Habitual

products where brands are perceived to be different and are associated with high degree of

uncertainty. Under the complex decision making, the buyer evaluates the brands using

choice criteria. Various types of choice criteria are used to evaluate the different brands.

O'Shaughnessy (1988) classified the various choice criteria under technical performance

criteria or generated functions.

Pakistani consumer buying behavior analysisBefore 1990, most of Pakistani was in Picking or impulsive buying behavior regarding

the snack industry, as there was not many choices around. I recall that during my

childhood potato chips was considered as Fasting Food (people used to eat during the day

when food was not available). After economic liberalization, multinational companies

such as Pepsi Co and Coke have entered into Pakistani FMCG market and changed the

equation. The major task to market items as potato chips is to bring Consumer from

Picking to Variety seeking and then to Problem solving behavior, to change fasting

Food to Fast Food . Specially Pepsi Co launched Lays in Pakistan in June 2005 and

creates a sense of snacking and also made the consumer flavor conscious.

Pepsi Snacks Pakistan

PepsiCo established its snacks business operations in Pakistan in June 2005 and has

grown to become one of the country’s leading food and beverage companies. One of the

largest multinational investors in the country, PepsiCo has established a business which

aims to serve the long term dynamic needs of consumers in Pakistan.

PepsiCo Pakistan has invested more than USD1 billion since the company was

established in the country. PepsiCo Pakistan provides direct and indirect employment to

50,000 people including suppliers and distributors.

PepsiCo's food division Frito-Lay is the leader in the branded salty snack market and all

Frito-Lay's products are free of trans-fat and MSG. It manufactures Lay's Potato Chips;

Cheetos extruded snacks, Kukure and Cravys. The company’s high fiber breakfast cereal,

Quaker Oats enhances the healthful choices available to consumers.

PEPSICO SNACKS BRANDS IN PAKISTAN

1. Lays

2. Kurkure

3. Cheetos

4. Cravys

We are taking here only one brand (Lays) of PepsiCo snacks Pakistan and our whole

project will on this brand.

LAYS Flavors in Pakistan

French Cheese Masala Ketchup Tango Salt & Vinegar Salted

External Influences

4 P,s of Marketing

1. Product

2. Promotion

3. Price

4. Place (Channels of distribution)

Product

Product Attributes:

1. Quality: Lays are following the concept of Siemens (quality is when customer

come back and our product don’t) as far as quality is concerned. They also not

neglect the two dimensions of quality (performance & conformance) to gain the

satisfaction of the consumer.

2. Features:

3. All the features (like spiciness) and characteristics of Lays are compiled by the

company on the need and want of the customer.

4. Design :

5. Style and design matter a lot on the outcome and response of the product (inside

the pack & outside the wrapper) has much attractive and catchy color style and

design which attract customer. Different product varieties have been given

different designs and styles according to their flavor and ingredients.

6. Branding:

7. Lays has a strong brand image and also brand name is very easy.

8. Size :

9. Lays is available in five different sizes.

Lays 10 gm in Rs, 5

Lays 19 gm in Rs, 10

Lays 48 gm in Rs, 25

Lays 120 gm in Rs, 50

Lays 200 gm in Rs, 75

Nutritional Information

Energy 218 kj, Protein 0.9 gm, Carbohydrate 4.9 gm, Of which sugar 0.2 gm, Fats 3.2 gm, Fiber 0.4 gm, Sodium 0.1 gm.

Pricing

When Lays launched in Pakistan in 2005, there was the Rs, 5 price points in potato chips

category but 1st time Lays introduced the Rs, 15 price points. This price point became

failed and PepsiCo had been changed its price and came at Rs, 10. So this price point

became successful. After it company introduced bulk packs and family packs in the price

point of Rs, 25 to Rs, 75 but 80% contribution of Rs, 10 products.

PepsiCo can’t follow the single strategy straightly because in FMCG product markets

their fluency of competitors based pricing along with a bit effect of customer value.

Their cost includes:

Manpower

Machinery

Electricity

Raw Material

Lays has priced its product to achieve certain percentage return on its sale.

Promotion

Advertising:

Lays advertises through various channels:

Media (FM Media, TV channels, etc)

News Papers & Magazines

Billboards & Banners

Sponsoring various & Matches

Free Samples

Sales Promotions:

Lays does sales on following promotions.

Trade promotions

Consumer promotions

Place

Lays is available almost in all over the Pakistan. Lays distribution channels are very

strong. Lays is operating by the directly PepsiCo. Distributors supply the finished goods

to the market.

SWOT Analysis: Lays

STRENGTH

Distribution

Pepsi Co has launched Lays potato chips in 2005 in Pakistan. By that time, Pepsi Co has

strong distribution network of Pepsi Cola beverages. So PepsiCo snacks have a very

strong distribution network in Pakistan.

Experience

Pepsi Co is backed by vast experience in snack industry world wide. In Pakistan, PepsiCo

had already experience of beverages.

Brand Promotion

PepsiCo’s Lay’s brand is a very popular brand globally. The visibility and position as

Family Product of Lays in Pakistan.

Range

PepsiCo has a very vast range of its snacks in Pakistan. Lays is available in all price

points Rs, 5 to Rs, 75.

R&D / Quality

PepsiCo has a very unique research and development department. Second thing that

quality of product which is the best quality in the snacks category.

WEEKNESS

White Space

Term White space is referred to area where parent organization has never ventured

before. Pakistan food market was white space product for Pepsi Co.

Market Appeal

With Lays is promoted as law fat snack. It is uncertainty about Law fat appeal’s

credibility to traditional Pakistani consumer, for whom Lays is made.

Availability of raw material and season

Being made by agricultural items as potato, Lays supply chain depends on irregular

monsoon.

Price

PepsiCo’s products are expensive the regional snack products due to its high production

and marketing costs.

Brand Loyalty

Typically Pakistani consumer is having la

ow brand loyalty for ready made food products.

OPPORTUNITIES

Changing life styles

Families have become nuclear. Double income earning families have led to higher

penetration of the snacks in food eating habits, packaged ones though.

Globalization

Due to market globalization, PepsiCo is operating in 55 countries. Product such as Lays

can be launched in other potential countries as Sri lanka, Pakistan, Morrocco, Chili.

Emerging Pakistan

Internet and TV media has increased the awareness of different world culture and their

food habits. Pakistani consumer is started looking for new tastes and willing to pay bit

extra price for that. Expanding Mall culture multiplexes and other avenues create new

marketing opportunities for snack industry.

Brand awareness

Due to innovative marking strategies and available platforms for advertisement (TV

channels, news media, Commercial radio channels), Pakistani consumer is slowly

changing, his buying behavior from seeking to problem solving. Brand awareness in

FMCG marketing is increasing.

THREAT

Multinational Product

Being a MNC product, Lays has impact of relationship between host and parent country.

Bad relationship may have adverse impact on Lays brand.

Government legislation

Any harsh government legislation/tax/policy change can disturb the PepsiCo’s products’

business case and profit.

Energy Constraint

In Pakistan there is constraint of energy as well. We can see that there is no electricity

and gas properly available in Pakistan. These both things are the back bones of any

industry.

MARKET UNIVERSE

Market universe defines the targeted audience for the product. It is very essential for

marketer to target specified audience/consumers for the product to keep the product away

from picking buying behavior. For this product should be positioned as brand

differentiator to its competitors. Product should bring some kind of

functional/technical/others advantage to consumer then its competitors.

In our example, following are the attributes that have impact on consumer decision-

making process, while buying snack product. ITC and Pepsi Co have to study each of

these attributes.

PROFILE

The Pakistani consumers are noted for the high degree of value orientation. Such

orientation to value has labeled Pakistanis as one of the most discerning consumers in the

world. Even, luxury brands have to design a unique pricing strategy in order to get a

foothold in the Pakistan market.

Pakistani consumers have a high degree of family orientation. This orientation in fact,

extends to the extended family and friends as well. Brands with identities that support

family values tend to be popular and accepted easily in the Pakistani market.

Pakistani consumers are also associated with values of nurturing, care and affection.

These values are far more dominant that values of ambition and achievement. Product

which communicate feelings and emotions gel with the Pakistani consumers.

Apart from psychology and economics, the role of history and tradition in shaping the

Pakistani consumer behavior is quite unique. Perhaps, only in Pakistan, one sees

traditional products along side modern products. For example, hair oils and tooth powder

existing with shampoos and toothpaste.

Consumer Evaluation

Marketing Segmentation

1. Geographic Segment :

Concerning geographical factor, Frito-Lay is trying to expand its wings to

cover towns, villages, cities; making it available to everybody. The

product Frito-Lay Snacks are specially designed for the Gulf & South

Asian region specially India & Pakistan considering the taste & style of

the traditional foods & flavors.

2. Demographic Segment:

Concerning demographical environment, Frito-Lay will focus on several

variables such as age, gender and income level.

Age: Frito-Lay will focus heavily on children and young people.

Gender: Frito-Lay is generalized product for any sex, male or female.

Income level: Frito-Lay packs are easily affordable and company is trying

to give more for less making it best value of money.

3. Psychographic Segment:

Considering psychographic factors, Frito-Lay will heavily focus on

customer’s life style, tastes, and personal values that best math with the

product usage and distinctive from competitors. Making an image of style,

standardized taste and variety of flavors, Frito-Lay will impact positively

on individual customer satisfaction.

Cultural Factors

As Pakistan is the agriculture based country, 70% of our population is connected directly

or indirectly with the agriculture sector. Potatoes, rice, Corn, Gram & Spices are the main

& basic ingredients of our food. In fact Frito-Lay is such type of item which is specially

designed for this region but it does not have any threat from the subculture of this region.

Market in this region and its culture is extremely favorable for such type of snacks, which

come in the head of extruded item, and people buy snacks frequently in this region.

By understanding the culture company is advertising their product for all age groups

because their product is for everybody’s use. This understanding is also very important

for their purchasing patterns and use. The company is mainly concentrating on upper &

middle class.

Social Factors

The target market of Frito-Lay is generalized including children, young and old people.

In precise target market, Frito-Lay is focusing heavily in children and young segment.

Frito-Lay is such kind of product which is easily affordable for every class of the market

either quality conscious or price conscious, excluding lower lowers and upper lowers.

The main focus of the company is the middle class along with a bit of elite class and also

working class. Middle class is the best responding class for Frito-Lay products.

Economic Factors

The price of the small Frito-Lay products pack is Just Rs.5/-, so it is

affordable to every class of the country although those are not who are

below working class (labors).

Political Factors

Frito-Lay is a legally registered company and applying labor laws and

market laws of Pakistan. But it is known to them that Government

interaction got much importance in every business and if there are some

restrictions on them then it may be a hurdle in their way to success. That’s

why some harsh Government rules may influence a wrong impact on

company’s goals and achievements in future.

Technological Factors

Lays being the product of PepsiCo International and having a good repute

in international market are already using modern technology to enhance

the production and the quality.

Buying Decision Process (Five Stage Model)

CONSUMER BEHAVIOUR ON LAYS

There are several factors affecting consumer behavior. Consumer behavior is

major challenge for every product. Some factors which affect the consumer behavior

on Lays are:

Consumers & Buyers

Basically the Lays is launched for children and teen age but because of its taste and

variety, everyone is fan for Lays. It has fats, soft and crisp. The older people like those

can’t eat hard snacks, are prefer to Lays. The consumer of Lays is not only for

children and also everyone. The buyer’s are almost parents. They prefer the

Lays rather than other chips. Parents believe that Lays is not bad for health, which

does not mean that, it is good for health. 

Influencer& factors

Even though Lays is suitable to everyone, the children are major influencer. The children

mainly influenced by social factors that are friends, family. Perception is also one of the

influencing factors. In this, the people perceived as, it’s made up of corn, rice meal and

others. So that it is not bad for health. Brand is one of the factors. It is come from

PepsiCo. So that people have confident about quality. The following data shows

the influencer.

Influencer Yes No No Idea

Children 80 % 13 % 7 %

Parents 55 % 40 % 5 %

From the above table we can understand the influence of children rather than parents. It

implies that t he ch i l d r en have pe s t e r ed power . We can unde r s t and t ha t ,

a cco rd ing t o Food commiss ion and Advertisement Board, the Lays doesn’t full

the children by its advertisement.

Its advertisement is major part of its success. It believes that, parents are the

main factor and buyer. It is come with different advertisement for each flavor.

Depends on Availability of   product to customers

It is food products. So the product should be very hygienic and available to

everywhere. It is major task for every product. In this case, Lays is available

everywhere in market. That is the major success factor. Lays is available

from small petty shop, small bakery to big malls and multiplexes. When I met the

people for survey, I can realize that it is available everywhere. I met the people who

purchase the product from reliance fresh and small bakery shop. There is no specific

season or time for to purchase the Lays. Most of the people purchase as the

daily evening snakes. But, during any special program like watching cricket

matches, then the sale may increase. Otherwise it is available product to everyone.

Perception about the product

The perception is different for everyone. Perception means that how the person receive

the data and how he use in different situations. In this case, the perception

varied according to people, culture, demographic. Some people believe that, it is

made up of corn, rice meal. So, it is healthier than other products.

Social factors on product

The social factors are mainly family and friends. According to me, the initial

advertisement and promotions were attracting the parents and all age peoples.

But, the product is more dependent on the children. From that we can understand

the influence of the family on product. S imi l a r l y , f r i ends a r e a l so ma jo r

soc i a l i n f l uence f ac to r s . They a r e t he r e a l p romote r s o f t he product.

Life style influences the product

A c c o r d i n g t o u s t h e l i f e s t y l e m u s t i n f l u e n c e t h e p r o d u c t .

W h e n I w e n t t o s t o r e , t h e o l d e r   generation people go for low cost snacks,

more quantity products. But, younger generation does not wor ry abou t t he p r i c e o r

quan t i t y . They a lways p r e f e r t a s t e . Even t hough o ld gene ra t i on l i ke

Lays than other packed snacks, they give first preference to local or  other

product which satisfies the needs.

Demographic factors

We already mentioned that different flavors like French Cheese, Salted,

Tango and etc. why they give different things because of demographic

factors. Normally the people in Karachi prefer very spicy and hard.  For them,

plain Masala or Tomato Tango is suitable. Similarly, the Punjabi people

prefer differ from others. Lays is mostly fulfilling the needs according to

demographic this not only for those state people, it’s also uses all other people

Launched a s a na t i ona l b r and , i t was a cha l l enge fo r t he company t o

dev i s e f l avo r s t ha t wou ld appeal to regional taste buds. However, the

focus on developing hot and tangy flavors that suit Pakistani taste palettes has

helped win the hearts of Pakistani consumers.

MOTIVATION

Maslow's hierarchy of needs

As a consumer we put our product Lays in two stages of Maslow's hierarchy. 1st is

Belonging / Love & 2nd is Self Actualization.

Love and belonging

After physiological and safety needs are fulfilled, the third layers of human needs are

social and involve feelings of belongingness. The need is especially strong in childhood

and can over-ride the need for safety as witnessed in children who cling to abusive

parents which is sometimes called Stockholm syndrome. The absence of this aspect of

Maslow's hierarchy - due to hospitalize, neglect, shunning, ostracism etc - can impact

individual's ability to form and maintain emotionally significant relationships in general,

such as:

Friendship

Intimacy

Family

Self-actualization

“What a man can be, he must be.” This forms the basis of the perceived need for self-

actualization. This level of need pertains to what a person's full potential is and realizing

that potential. Maslow describes this desire as the desire to become more and more what

one is, to become everything that one is capable of becoming. This is a broad definition

of the need for self-actualization, but when applied to individuals the need is specific. For

example one individual may have the strong desire to become an ideal parent, in another

it may be expressed athletically, and in another it may be expressed in painting, pictures,

or inventions. As mentioned before, in order to reach a clear understanding of this level

of need one must first not only achieve the previous needs, physiological, safety, love,

and esteem, but master these needs.

Lays is an impulse buying product and we often consume it or eat it on picnic or

entertainment. When we go out with family or children we show our love or cool

belonging with them. So with our friends during the studies when we eat snacks (Lays)

we show again our love or belonging. Before 2000 AC there is no much trend of

snacking in Pakistan. But with the passage of time public places developed in Pakistan

and the awareness of snacks product became happened so, now its become the part of

hospitality which shows thee love and belonging as well.

Due to freshness of Lays and being a multinational brand of PepsiCo we feel self

actualization when we eat it. Almost all the potato snacks are available in Rs, 10 but

when we buy a best brand of the world we feel proud on it and self actualization.

A Trio of Needs

Here are the three elements of Trio Needs Theory.

Power

Power need relates to an individuals desire to control his or her environment.

Affiliation

Affiliation is a well-known and well-researched social motive that has far-reaching

influence on consumer behavior.

Achievement

The achievement need is closely related to both the egoistic need and self-

actualization need.

We see as a consumer that Lays is matching with Affiliation. In Pakistan Lays is

market leader in the potato snacks category. Physiologically every person wants to

buy premium product. Lays is a best product of the world in the snacks so, we are

affiliated with this product as well.

PERCEPTION

Positioning

In marketing, positioning has come to mean the process by which marketers try to create

an image or identity in the minds of their target market for its product, brand, or

organization.

Re-positioning involves changing the identity of a product, relative to the identity of

competing products, in the collective minds of the target market.

Positioning: the essence of successful marketing is the image that a product has in the

minds of consumer. That is its positioning. Positioning is more important to the ultimate

success of a product then or its actual character. Although the product that are poorly

made will not succeeded in the long run on the basis of image alone. The core of effective

positioning is unique position that the product occupies in the minds of the consumer.

As for as the lays is concerned, we position it under the umbrella positioning technique.

Where a product can be featured individually, its ingredients product and packaging.

PepsiCo is a company and Frito-Lay its business unit. PepsiCo is using Frito-Lay as an

umbrella brand, under this there is lot of brands in different countries. For example in

India and Pakistan LAYS, in South Africa SIMBA, in England WALKERS and in USA

there is DORITOS.

In Pakistan Lays position it self “Khao or ruk k dikhao”. Its main focus on quality and

freshness.

2 Packaging as a positioning element :

Packaging conveys the image that the brand communicate to the buyer, like color,

weight, attractive packaging, and shape or all important. Lays packaging is very

convenience for the customers and specially the colors scheme of the package is very

attractive and customer feel very familiar with the packaging of the lays.

Lays give different colors for different flavors. For example French Cheese in Orange

color, Salted in Yellow color, Masala in Redish Maroon color, etc. If any illiterate person

wants to buy Lays he or she can judge the flavors on the color basis.

Second the sizes of packaging are different according the price point. It also play very

important role in this element.

3 Perceived price and perceived quality :

Perceived Price

How a consumer perceives a price as high, as low, as fair has a strong influence on both

purchase intentions and purchase satisfaction. like what did the lays customers think

about the price of Lays whether it is high or low price.

Before 2005 AC there is almost 90% contribution of Rs, 5 price points but Lays came in

to Rs, 15 price points. Lays realized that he should come back on Rs, 10 and than it

clicked. Now almost 70% share in the snacks is Rs, 10 price point.

Lays positioned it self at the low price or economical price with premium product.

Perceived quality:

Consumer often judges the quality of a product on the basis of a

variety of informational cues that they associate with the product. Lays positioned on the

premium product. Lays freshness and crispiness is the key of success. Consumer wants

good and quality product. Lays ran his advertisement ad on different channels in which

production process had been shown. Lays use 100% Hilal raw material, fresh potato,

Malaysian palm oil, etc.

As a consumer quality is very important and it act positive role on buying behavior.

LEARNING

Reinforcement

Reinforcement increases the likelihood that a specific response will occur in the future as

the result of particular cues or stimuli. If a consumer is reward, by enjoying a product or

service purchase, that consumer has learned to associate the purchase with a pleasant

felling and therefore, is likely to repeat the learned behavior and become a loyal customer

Now we relate above concept with our product like lay, initially in Pakistan lays come

with few flavors like salt and Masala so these flavors give better enjoyment to the

customers and in return good response to company sale that’s why lays launch new

flavors like French cheese ketchup, vinegar,etc as a reward and for positive reinforcement

Classical conditioning

Classical conditioning is consist of

Unconditioned stimulus (food)

Conditioned stimulus (bell)

Unconditioned response (salivation

In Consumer behavior context an unconditioned stimulus might consist of a well known

brand symbol and conditioned response would be consumer trying these products

because of the beliefs that embody the same attributes

Now we apply classical conditioning concept on lays, as we discus lays is used mostly all

types of people like children, Parents and old age people. When matches series started all

segments mostly children and teen agers enjoying matches or events with lays so when

matches starting children and teen agers need for Lays with Pepsi or Coke

So we can say lays is an unconditioned stimuli while match is conditioning stimuli

Same case with teen agers when they meet together in their friend’s home or in an other

enjoy able places

So finally if we talk about the after repeated pairings when matches series or events start

(conditioned stimulus) then conditioned response (salivation) starts.

Instrumental (operant) conditioning

A behavioral theory of learning based on trial –and-error process, with habits forced as

the result of positive experience (reinforcement ) resulting from certain response or

behavior

In consumer behavior context, the consumer who tries several brands that fits with

consumer and he or she will continue to buy e.g. lays, now we are going to relate this

theory with our brand like lays

We

apply

lays in above model let suppose Ahmed is a customer, health plus quality conscious and

need for snakes so he try fist brand which is not crispy so he will try second brand which

is not having good taste, he will shift towards third brand which having huge amount of

fats and showing threat for his health so finally he decided to purchase lays snakes and it

full fill his requirement and he give preference and repeat purchase in future.

PERSONALITY

Consumer Innovativeness

Some consumers are who that open to new ideas and be among the first to try new

product. For example when Lays launch any new flavor or new product in the market

than almost customer buy it and this is the innovation by the customer because Lays is

impulse buying product.

Consumer Ethnocentrism

Lays is non Muslim company brand. Pakistan is a Muslim country but our nation is not

more Ethnocentric. But in some factors we can see the case of Telenor in Pakistan when

we boycotted the Danish products. Another element in our nation that we are too much

brand conscious so we feel proud and self satisfaction when we buy any imported brand

as like Nike, Levies, etc. we observed that the consumer takes Lays with open mind.

Brand Personality

Lays is a brand of PepsiCo. Lays has a strong brand image in all over the world. Almost

we copy the culture of India and also in India the Lays is very strong brand in the snacks

category. Tag line of lays in Pakistan is “Khao or ruk k dikhao”. Lays is focusing on

quality and freshness. So Lays has a very strong image in the Pakistan.

In a recent research by Ac Nilsson the Lays is 5 th largest brand in Pakistan in all over the

categories. The affiliation of customer with this brand is very high.

Lays Personality and Gender

Lays is a strong brand and have a healthy personality. Lays is a product which is for all

genders. Even children, male or female all types of gender eat it.

Product Personality and Geography

Lays product matches with the geographically condition of Pakistan. Pakistani culture

almost matches with India so geographically its raw material also available in Pakistan as

like potato.

Personality and Color

We can take the example of Pepsi Max which had been flopped in Pakistan due to the

color of bottle. Its color was black and in our culture it is our habit that when we drink

any thing we see it. But in Max Pepsi it was not possible.

Lays colors are very attractive and beautiful and also matches with our culture. So there

is no issue regarding the colors of lays packaging.

Self-Image

There are four kinds of self images.

1. Actual Self-Image

2. Ideal-Self Image

3. Social Self-Image

4. Ideal Social Self-Image

Lays is falls in to the Actual Self-Image. Lays is a food item and in food we often like to

eat what we want. So customer or consumer see them infect they want to see them.

ATTITUDE

Attitude of consumer toward Lays

To understand the buyer and to make a customer out of him is the

main purpose of the study of consumer behaviors. Though this

problem has been analyzed from different view points under different

premises, it still remains a complex one. On the other hand the buyer

is a riddle. He is a highly complex entity. His needs & desires are

innumerable. Some are latent, some manifest and some others are

highly dominant. These have different priorities in the scheme of

things. The buyer has his own ideas & plans about realizing these

needs & desires. The first & foremost task of the marketer is to get

close to the buyer and understand his need-structure & priorities.

Attitude

Definition:

Attitude is defined as a mental, emotional or rational predisposition

with regard to a fact, state, person or an object. In the context of

consumer behavior we are studying the attitude of buyers towards all

the relevant attributes of a product or services as well as the marketer

and markets. The study includes the following major areas.

Tri-component model

According to the tri-component model, attitudes consist of three major

components – (1) cognitive (knowledge, leering), (2) affective (feelings,

emotions), & (3) co native (tendency, intention or inclination)

1. Cognitive component – The first part of the tri-component

attitude model cognitive component consists of a person’s cognitions,

i.e., the knowledge & perceptions that are acquired by a combination

of direct experience with the attitude object & related information from

various sources. This knowledge & resulting perceptions commonly

take the form of beliefs, i.e., the consumer believes that the attitude

object processes various attributes and that specific behavior will lead

to specific outcomes.

The tri component model is a good for lays because

it explains every aspect of it from the consumer side and from the

marketer side. If we see in the model in the first of cognition they are

telling about the knowledge and experience people have a good

knowledge about lays and also have a good experience. Lays advertise

him very well and the customer has a good experience because they

provide every thing what they communicate to his customer in the aid

and they provide the taste which the customer likes.

2. Affective component –

The second part of the tri-component attitude model affective

component consists of a person’s emotion or feelings about a

particular product or a brand. These emotion & feelings are frequently

treated by consumer researchers as primarily evaluative in nature, i.e.,

they can be rated with degrees of an attribute – good/bad, favorable /

unfavorable. Additionally the state of mind (emotionally charged states

like happiness, sadness, anger, disgust, distress, shame, guilt, surprise

etc.) also affects the attitudes by enhancing positive or negative

emotions or feelings.

In the second case they are telling about the

customer feeling and emotion .mean what the customer feel and what

is the emotion of him about the product or brand so the customer

feeling and emotion are very positive about the lays because they

provide according to the choices and taste of customer mean what

customer want and like they provide it they study customer

preferences mean what they want and what they like ,what kind of

taste they prefer, these are the all thing which is doing by lays and

getting a good feed back from the customer we can take a recent

example of lays that some one start propaganda against that they are

not using Halal which effect them very much but they replied in a very

polite way and offer his formula on net and also bring some religious

people on media to tell people about it which show that what they are

doing for customer and how they are handling it

These are the some model which is best suited with lays and them

using it for achieving his goal and getting good result.

3. Co native component –

The third part of the tri-component attitude model co native

component consists of a person’s likelihood or tendency to undertake a

specific action or behavior towards the attitude object. Often this

means the actual action or behavior itself, or the intention to buy a

particular product. Buyer intention scales like – “How likely one is to

buy” or “The chance that one will buy” are used to assess the

likelihood / chances that a person buying a product.

In the third model they are telling about the consumer mood mean

attitude about the purchasing of a product. that when consumer like

the product he purchase it and use it frequently so if we relate with

lays you see that the consumer attitude toward lays is positive

consumer like it and

purchase it frequently in

a routine life .the main

advantage of lays it that

it is available in

different packaging and in different t taste and you can purchase that

one which you want and which is needed for you

Factors Affecting Consumer Buying Behavior

Consumer purchase is influenced strongly by the following three factors.

Cultural

Social

Personal

Above mentioned factors are explained in the details as fallows.

Cultural factors

Cultural factors are fundamental determinants for consumer needs and behavior such as

values, perceptions; preferences differ from family to family, region to region, country to

country. Cultural factors include three important factors which affect making decision.

There are:

1. Culture

2. Sub Culture

3. Social Class

Culture & sub culture factors as explained above also include social class factors such as

occupation, Income, wealth, education, brand preferences, leisure activities/habits and

media preferences. All these factors effect the buying decision of buyer and marketing

decision of marketer, as Lays is a snack food product and there are huge varieties are

available in the market for the customer.

Social Factors

Social factors like references groups, family, roles and status affect consumer buying

behavior.

Buying behavior of consumer toward snacks Lays is affected by Primary Groups, as

usually the buying of this product is influenced by even interacting with family, friends,

neighbors, co-workers.

Family is most important consumer buying organization in society, number of members

constitute the most influential primary reference group, Age group of members are all the

factors to be taken into consideration by Lays for marketing its product.

Personal Factors

Personal factors such as occupation and economic circumstances, lifestyles and values

affect buying of Lays.

Economic circumstances such as spend able income, saving and market situations i.e.

like recession brought steep down in sales of product because people lost their jobs, cut

off their salaries so, the buying decision was greatly affected.

Life style is a pattern of living in the world as expressed activities, interests and opinions,

price conscious shoppers’ i.e. “whole person ” interacting with the with the environment,

so the buying decision is affected greatly.

Customer Perceived Value

Customer perceived value is the difference between the total customer benefits and total

customer cost.

Total consumer value is to the perceived monitory value of the bundle of economic,

functional and physiological benefit expects from product service, personnel and image

involved.

Total customer cost is the perceived the bundle of costs customer expect to incur in

evaluating, obtaining, using and disposing of the product.

Image value

Image value refers to the brand value of the product. Lays is very old and international

brand which give consumers image value.

Personnel ValueSocial value given by product or brand to the consumers. Lays is preferred outing snacks

or tea time snacks as well. Lays has no brand ambassador in Pakistan but in India Saif Ali

Khan and Dhoni are their brand ambassadors. But when there were the issue of Hilal

Haram than Lays endorsed the Junaid Jamshed. In Pakistan Lays made its ad in which all

the Lays making process had been shown. It also develops a personnel value in the mind

of customer and consumer.

Product value

Products value refers to the functionality of the product and the feature of product. Lays

is available in lot of flavors and price points like as French Cheese, salted, Masala, and

Tango, also available in World Cup flavors.

Monitory Cost

Monitory cost refers to the price paid to buy a product. Lays is available in Rs, 5, 10, 25,

50 and 75 so it is monitory cost for consumer.

Customer Development Process

Potentials

Those customers who are willing and have capacity to buy product. For lays all are

customers who can afford to buy.

Prospectus

As the price of Lays are available to wide range, so it is the rare that prospectus are

disqualified. They are accepted.

First Time Customer

As the person who are willing to have Lays and trying the first time is first time customer

for the company.

Repeat Customer

Once the customer had started consuming the Lays snacks and again buys then he or she

is repeated customer.

Clients

To who Lays give some special treatment are the clients of the company. Pre-Purchase Decision

We observed from these following stores.

1. Rehman Mart Khokar Chowk2. Askari Store College Road3. Ahsan Mart M Ali Chowk4. Ibrar Store M Ali chowk5. Rasheed Store College Road6. Grocers PIA Society7. Ammys Bakers Samnabad8. Raheem Store Allama Iqbal Town9. Akbari Store Allama Iqbal Town10. Sachi Chaki Allama Iqbal Town

Lays is the best option for salty snacks customer due to its attributes.

Post-Purchase Behavior

After the purchase, the consumer might experience dissonance, or may be not happy with

the product which he actually wants.

As Lays is a FMCG product, after sales services is not available for these products but

the company provides forums and consumer care on toll free number on which the

consumer can present their views or complaints regarding quality, price and packaging.

And the company would be able to come up with the best product as preferred by the

customer.