e-shopping trend in india
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Project Report
Study on Global Consumer Behavior 11
th November 2009
Paras Mukesh Shah
(PGP-IBM)
Ahmedabad Management Association
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INDEX
Topics Page No.
Acknowledgement 2
Declaration 3
Management Summary 4
Project Report on Global Consumer Behavior in Online Shopping 5
Introduction 6
Literature Review 7
Research Objectives 9
Research Methodology 10
Online Shopping in India 11
Changing Attitude Towards Online Shopping 13
Proposed Model 15
Limitations of Study 18
Barriers to Growth of Online Market 20
Findings & Analysis 21
Conclusion 27
Recommendations 27
References 28
Project Report on Global Consumer Behavior of Export Company 29
Objective of the Study 30
Scope of the Study 30
Introduction of KEMROCK INDUSTRIES & EXPORTS LTD. 31
Journey from 1981-82 to 2008 32
Strategic Alliances / Collaborations 33
About Products 34
Sector wise Demand of Products 36
Competitors in the Market 37
Differentiation in Products & Services 38
Product Life Cycle 39
Marketing Strategy Implications in Product Life Cycle 41
Distribution Strategy 42
SWOT Analysis 43
Global Consumer Behavior in KEMROCK INDUSTRIES 44
Insights 48
Recommendation 49
References 50
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ACKNOWLEDGEMENT
The satisfaction and euphoria that accompany the successful completion of my project would be
incomplete without the mention of the people who made it possible and whose constant guidance &
encouragement crowned our efforts with success.
I express my sincere gratitude and thanks to Mr. Alan D’souza for his support, guidance and valuable
suggestions without which I would not have been able to complete this project. I am also thankful to all
the respondents for their contribution who helped us in this study specially contributors outside India.
Paras Mukesh Shah
(AMA-PGPIBM 2008-10)
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DECLARATION
I, the undersigned, hereby declare that the project report entitled Study of Global
Consumer Behavior in Online Shopping and Study of Global Consumer Behavior of a Kemrock
Industries & Exports Ltd. has been written and submitted under the guidance of Mr. Alan D’Souza.
I further declare that it is original work done as a part of our academic course and
has not been submitted elsewhere. The conclusions and recommendations written in this project
are based on the data collected by me while preparing this report.
Paras Mukesh Shah
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MANAGEMENT SUMMARY
The growing use of Internet in India provides a developing prospect for online shopping. If E-
marketers know the factors affecting online Indian behavior, and the relationships between these factors
and the type of online buyers, then they can further develop their marketing strategies to convert
potential customers into active ones, while retaining existing online customers.
This project is a part of study, and focuses on factors which online Indian buyers keep in mind while
shopping online. This research found that information, perceived usefulness, ease of use; perceived
enjoyment and security/privacy are the five dominant factors which influence consumer perceptions of
online purchasing.
Consumer behavior is said to be an applied discipline as some decisions are significantly affected
by their behavior or expected actions. The two perspectives that seek application of its
knowledge are micro and societal perspectives.
The micro perspectives involve understanding consumer for the purpose of helping a firm or
organization to achieve its objectives. The people involved in this field try to understand consumers in
order to be more effective at their tasks. Whereas the societal or macro perspective applies knowledge of
consumers to aggregate- level faced by mass or society as a whole. The behavior of consumer has
significant influence on the quality and level of the standard of living.
Throughout the project we will see that how Kemrock Industries and Online Shopping
Study consumer behavior
How they approach in the new market,
What are the problems face by them while accepting local culture and customs,
How they compete with the local competitors
How they respond to the customers‘ behavior towards their products and services.
I have developed a model indicating online shopping behavior and acceptance among customers in
India. The model was tested with a survey sample (n=50). Factor analysis technique was used to classify
these factors which buyers keep in mind while shopping online.
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OONNLLIINNEE SSHHOOPPPPIINNGG
TTRREENNDD IINN IINNDDIIAA ““AAwwaarreenneessss,, FFuuttuurree DDeemmaanndd FFooccuuss ffoorr EEmmeerrggiinngg
MMaarrkkeettss && CCuurrrreenntt IIssssuueess””
Paras Mukesh Shah
Ahmedabad Management Association
11th November, 2009
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INTRODUCTION
Internet is changing the way consumers shop and buy goods and services, and has rapidly evolved
into a global phenomenon. Many companies have started using the Internet with the aim of cutting
marketing costs, thereby reducing the price of their products and services in order to stay ahead in highly
competitive markets. Companies also use the Internet to convey, communicate and disseminate
information, to sell the product, to take feedback and also to conduct satisfaction surveys with
customers. Customers use the Internet not only to buy the product online, but also to compare prices,
product features and after sale service facilities they will receive if they purchase the product from a
particular store. Many experts are optimistic about the prospect of online business.
In addition to the tremendous potential of the E-commerce market, the Internet provides a unique
opportunity for companies to more efficiently reach existing and potential customers. Although most of
the revenue of online transactions comes from business-to-business commerce, the practitioners of
business-to-consumer commerce should not lose confidence. It has been more than a decade since
business-to-consumer E-commerce first evolved. Scholars and practitioners of electronic commerce
constantly strive to gain an improved insight into consumer behavior in cyberspace. Along with the
development of E-retailing, researchers continue to explain E-consumers‘ behavior from different
perspectives. Many of their studies have posited new emergent factors or assumptions which are based
on the traditional models of consumer behavior, and then examine their validity in the Internet context.
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LITERATURE REVIEW The current literature on consumer online purchasing decisions has mainly concentrated on
identifying the factors, which affect the willingness of consumers to engage in Internet shopping. In the
domain of consumer behavior research, there are general models of buying behavior that depict the
process which consumers use in making a purchase decision. These models are very important to
marketers as they have the ability to explain and predict consumers‘ purchase behavior. The classic
consumer purchasing decision-making theory can be characterized as a range extending from routine
problem-solving behaviors, through to limited problem solving behaviors and then towards extensive
problem-solving behaviors. The traditional framework for analysis of the buyer decision process is a
five-step model. Given the model, the consumer progresses firstly from a state of felt deprivation
(problem recognition), to the search for information on problem solutions. The information gathered
provides the basis for the evaluation of alternatives. Finally, post-purchase behavior is critical in the
marketing perspective, as it eventually affects consumers‘ perception of satisfaction/dissatisfaction with
the product/service. This classic five-stage model comprises the essence of consumer behavior under
most contexts.
Nevertheless, the management of marketing issues at each stage in the virtual environment has to be
resolved by individual E-marketers. It is an early stage in Internet development in terms of building an
appropriate dedicated model of consumer buying behavior. Decision sequences will be influenced by the
starting point of the consumer, the relevant market structures and the characteristics of the product in
question. Consumers' attitude towards online shopping is a prominent factor affecting actual buying
behavior. (Source: Jarvenpaa Journal of Electronic Commerce Research, VOL. 6, NO.2, 2005)
There are several indicators, belonging to four major categories; the value of the product, the shopping
experience, the quality of service offered by the website and the risk perceptions of Internet retail
shopping. There are some nine factors associated with users' perception of online shopping. Among
those factors the risk perception of users was demonstrated to be the main discriminator between people
buying online and people not buying online. Other discriminating factors were; control over, and
convenience of, the shopping process, affordability of products, customer service and ease of use of the
shopping site.
Experts tested a model of consumer attitude towards specific web base stores, in which perceptions of
the store's reputation and size were assumed to affect consumer trust of the retailer. The level of trust
was positively related to the attitude toward the store, and inversely related to the perception of the risks
involved in buying from that store. Researchers concluded that the attitude and the risk perception
affected the consumer's intention to buy from the store.
Consumer risk perceptions and concerns regarding online shopping are mainly related to aspects
involving the privacy and security of personal information, the security of online transaction systems
and the uncertainty of product quality. It is found that trust is interwoven with risk. One of the
consequences of trust is that it reduces the consumer‘s perception of risk associated with opportunistic
behaviour by the seller. Lack of trust is frequently reported as the reason for consumers not purchasing
from Internet shops, as trust is regarded as an important factor under conditions of uncertainty and risk
in traditional theories. Researchers developed a model which combines traditional marketing philosophy
on consumer motivation to buy and the trust model. In this model, trust propensity; which is a
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personality trait possessed by buyers; is an important sign of trust. In Internet shopping, there is not
much information available to the buyer regarding the seller, prior to purchase. A buyer with a high
propensity to trust will more likely be a potential customer than a buyer with a lower propensity. The
ability, generosity and honesty constitute the main elements of trustworthiness. Ability refers to skills,
competencies and characteristics that a seller has in a specific domain. In this context, sellers need to
convince buyers of the competence of their companies in the Internet shopping business. Generosity is
the extent to which the seller is perceived by the buyer as wanting to ‗do good‘. Sellers have to convince
buyers that they genuinely want to do good things for buyers, rather than just maximize profit.
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RESEARCH OBJECTIVES The objective of this study is to see the Awareness of consumers, Future Demand Focus for Emerging
Markets & Current Issues involved in online shopping and behaviour based on an analytical literature
review. In doing so, this study attempts to provide a complete picture of the status of this subfield.
The purpose of this research study is to investigate online consumer behaviour, which in turn provides
E-marketers with a constructional framework for fine-tuning their E-businesses strategies.
Specific Objectives:
1. To identify key factors influencing online shopping purchase behaviour.
2. To identify the factors that can explain the differences in online buying behaviour of Indian Consumer
and Foreign Consumer.
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RESEARCH METHODOLOGY Data for this study was collected by means of a Survey conducted randomly within a period of Thirty
days. The sample size was 50. Questionnaires were filled by sending them on email id of the samples
.The Questionnaire (shown in Annexure) was used mainly to test the model proposed for Attitude
towards online shopping.
The type of research was both exploratory as well as Descriptive. Likert five point scale ranging from
Strongly Agree to Strongly Disagree was used as a basis of Questions.
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ONLINE SHOPPING IN INDIA
It is a fact that a great online shopping revolution is expected in India in the coming years. There is a
huge purchasing power of a youth population aged 18-40 in the urban area.
If we observe the growth of Internet Subscribers from the above graph, it is getting doubled year by
year. The usage of internet in India is only 4% of the total population. This is also getting increased day
by day as the costs of computers are decreasing and net penetration is increasing. The cost of internet
usage is also getting lower, with good competition among the providers. Wi-Fi & Wimax system has
also started in India. This will increase the usage as it goes more on wireless internet. Indians are
proving everytime that they can beat the world when it comes to figures of online shopping. More and
more Indians are going to online shopping and the frequency of India‘s online buying is crossing the
overall global averages.
Factors That Boost Online Shopping in India
Rapid growth of cybercafés across India
Access to Information
The increase in number of computer users
Reach to net services through broadband
Middle-class population with spending power is growing. There are about 200 million of middle-
class population good spending powers. These people have very little time to spend for shopping.
Many of them have started to depend on internet to satisfy their shopping desires.
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Few Facts about Online Shopping
The figures from IAMAI show that the internet users in India will grow to 200 million by 2010. Around
25% of regular shoppers in India are in the 18-25 age groups, and 46% are in the 26-35 year range.
Indian online matrimonial sector is worth around $230 million.
Worldwide E-commerce is only growing at the rate of 28%, since India being a younger market,
the growth of e-commerce is expected at 51% in the coming years.
In line with global trends finally India has also started shopping online these days. As per the
study by IAMAI online shopping in India has rose from $11million in 1999-2000 to $522
million in 2007 and it is expected to rise above $700 million by end March 2010.
Indians are also Shopaholics like other Asians. There is a strong booming young adult population
in India with good levels of disposable income.
INDIA - Over $50 Billion and growing rapidly - Most popular online shopping products include:
There are over 120 million people online in India and this is expected to grow to 200 Million by the end
of 2010.
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CHANGING ATTITUDE TOWARDS
ONLINE SHOPPING “Awareness, Future Demand Focus for Emerging Markets & Current Issues”
Malls malls springing up everywhere and yet people are E-shopping! And not in small numbers
either. Consumers are more rational nowadays and have ability to get the choices from the market.
Awareness among the consumers is spread through internet. The number of internet users is increasing
day by day which attracts people who have an option to buy online.
It was never thought that Indians would go in for e-shopping in such a big way. Ticketing, travel
bookings and even books and movies seem fine to buy online. Knowing that in India sizes vary from
brand to brand and quality is inconsistent, even of some electronic items, how is it that there are people
buying these items online?
The targeted consumers in my research study were from India and also from foreign countries like USA,
UK and Australia.
Descriptive analysis showed that the consumers outside India are more friendly doing shopping on
internet. They have better political system to protect their rights incase of any frauds. Every consumer of
foreign country have chosen Debit Card and Credit Card as their mode of payment. They are more used
to with their system which allows them free flow of number of transactions they make on internet.
While in case of Indians there are some segments of people who have not yet tried purchasing over
internet. The reason found was insecurity of transactions and they also found that the price was similar
to the market price. There was no forcing factor for them to purchase over internet. Also they analyzed
in the way that they had to make payment in advance and have to wait for the delivery which again
restricted them to purchase over internet.
Comparative analysis of Indian Buyers and Foreign Buyers revel that Indians less comfortable
purchasing on internet. In the same way Foreign buyers are mostly purchasing from internet. The
comparative analysis below will make it more clear.
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Point of
Distribution
Foreign Countries India
Demographic
Segmentation
The per capita income of people is
much higher.
The per capita income of people is very
less.
Demographic
Segmentation
The age factor is less important. Every
person is knowledgeable about the use
of Online Shopping.
Only youngsters below the age of 30
are more aware of Internet Shopping.
Other age group people are least aware
of Online shopping
Socio Economic Both Urban & Rural population are
the customers of E-Marketers.
Only Urban population is the customer
of E-Marketers.
Psychographic
Segmentation
People in foreign countries have very
speedy life style that allows them to buy
online and save their time.
People in India are very conscious and
they have a tendency to compare,
analyze, touch and feel and then buy
the product.
Benefit
Segmentation
Well-established govt. system to protect
rights of people making online
purchase.
Govt. is less aware of the online
shopping trend so the legal system does
not fully support the consumers.
Usage Situation Less number of frauds recorded. So
more usage
More number of frauds recorded. So
less usage
Use-related
Segmentation
People are well aware of internet usage. People are less aware.
Payment Mode All people normally use debit cards or
credit cards to make purchase over
internet.
All consumers don’t have their
personal debit cards or credit cards
that restricts them.
Increasing penetration of Internet connectivity and PCs has led to an increase in the Internet users across
India. The demographic segments that have witnessed maximum growth comprise college going
students and young persons. These segments are the users of advanced applications and technologies
online and are most likely to be heavy E-commerce users.
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PROPOSED MODEL
I identified a total of 11 interrelated factors for which the practical evidences show significant
relationships.
Ordinarily Independent Ordinarily Dependent
Variables Variable
Consumer satisfaction is considered to be a separate factor in this study. It can occur at all possible
stages depending on consumer‘s involvement during the online shopping process. The relationships
between satisfaction, attitude, intention, decision making and online purchasing are proposed to be two-
way relationships due to the reciprocal influences of each on the other. In addition, three of the
antecedents, perceived usefulness, perceived ease of use, perceived enjoyment, have been found to have
direct impact on consumer satisfaction.
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ORDINARILY DEPENDENT VARIABLES
Perceived Usefulness
Perceived usefulness is defined as the degree to which a person believes that using a particular system
would increase his or her job performance. It is an important factor affecting acceptance of an
information system, because the ultimate aim of any person is the superior job performance.
Perceived Ease of Use
This is an important factor that affects the acceptance of a particular information system. It is defined as
the degree to which a person believes that using a particular information system would be free of effort.
Hence an application perceived to be easier to use would more likely be accepted by the user.
Perceived Enjoyment
Enjoyment refers to the extent to which the activity of using a computer is perceived to be enjoyable in
its own rights. This is seen as an intrinsic source of motivation to use a particular application.
Amount of Information
Amount of information is defined as the information which is available for the product which a person
wants to buy through online shopping. This factor eases the decision of the user to actually buy the
product or not, or which product to buy. This factor becomes even more important in case of High
Involvement product.
Security and Privacy
Security and privacy are the main factors which hinder the growth of Online shopping. The user is
concerned about his ID and Password which can be stolen by persons with wrong intentions and then
misuse it. At the same time they are concerned that their personal information may be sold to the third
party which poses a serious threat to their privacy.
Quality of Internet Connection
Not only is the presence of internet connection necessary, but also its Quality is important to shop
online. This is an important factor which determines whether the user would shop online or not because
presence of internet is a basic necessity for this mode of shopping.
ORDINARILY INDEPENDENT VARIABLES
Attitude towards Online Shopping
Consumer‘s attitudes toward online shopping have gained a great deal of attention in the empirical
literature. It is believed that consumer attitudes will affect intention to shop online and eventually
whether a transaction is made. It refers to:
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1) The consumer‘s acceptance of the Internet as a shopping channel
2) Consumer attitudes toward a specific Internet store (i.e., to what extent consumers think that shopping
at this store is appealing).
Intention to Shop Online
Consumer‘s intention to shop online refers to their willingness to make purchases in an Internet store.
Commonly, this factor is measured by consumer‘s willingness to buy and to return for additional
purchases. The latter also contributes to customer loyalty. Consumer‘s intention to shop online is
positively associated with attitude towards Internet buying, and influences their decision-making and
purchasing behavior. In addition, there is evidence of reciprocal influence between intention to shop
online and customer satisfaction.
Online Shopping Decision Making
Online shopping decision-making includes information seeking, comparison of alternatives, and choice
making. The results bearing on this factor directly influence consumer‘s purchasing behavior. In
addition, there appears to be an impact on user‘s satisfaction. Though it is important, there are only five
studies that include it. Potential consumers appear to use a two-stage process in
reaching purchase decisions.
Initially, consumers typically screen a large set of products in order to identify a subset of promising
alternatives that appears to meet their needs. They then evaluate the subset in greater depth, performing
relative comparisons across products based on some desirable attributes and make a purchase decision.
Online Purchasing
This is the most substantial step in online shopping activities, with most empirical research using
measures of frequency (or number) of purchases and value of online purchases as measures of online
purchasing; other less commonly used measures are unplanned purchases Online purchasing is reported
to be strongly associated with the factors of personal characteristics, vendor/service/product
characteristics, website quality, attitudes toward online
shopping, intention to shop online, and decision making.
Consumer Satisfaction
It can be defined as the extent to which consumer‘s perceptions of the online shopping experience
confirm their expectations. Most consumers form expectations of the product, vendor, service, and
quality of the website that they patronize before engaging in online shopping activities. These
expectations influence their attitudes and intentions to shop at a certain Internet store, and consequently
their decision-making processes and purchasing behavior. If expectations are met, customers achieve a
high degree of satisfaction, which
influences their online shopping attitudes, intentions, decisions, and purchasing activity positively.
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LIMITATIONS OF THIS STUDY
Limitation of the study is the selection of the existing studies. Owing to time limitation, I only searched
a few number of journals. This may leave some other prominent empirical studies out. In addition,
owing to the multidisciplinary nature of online shopping, it would be very interesting to compare IS
literature to other disciplines that study online shopping attitudes and behavior.
Indian E-Comm. Report Finds Heavy Spenders Driving Sales
By Devin Comiskey
August 16, 2007
A Survey by Indian research organization Juxtconsult found that more and more Indian Internet users
are opening their wallets online. While such hurdles as limited broadband access and security concerns
remain, the report finds there are currently more than 10 million shoppers online in India. While current
trends point to increased e-commerce growth in India, the online marketplace in the country of more
than 1 billion people is still relatively small.
Juxtconsult's survey found that 40 percent of all urban Internet users buy online, while 42 percent of the
sales originate through just five percent of consumers. The survey was conducted in April 2007 and
sampled more than 30,000 users.
"This section of buyers spends 5,000 rupees or more per month on the net," states the report. "It is
interesting to note that two out of every three heavy spenders are also 'netholics,' those who are on the
net for more than three hours per day...Of all those who buy online, only 25 percent are spending more
than 1,000 rupees per month while the (remaining) 75 percent bill less than 1,000 rupees per month."
(1,000 Indian rupees is currently equal to approximately $23 US.)
The report also found that buying and search patterns among Indians differ between genders. "While 43
percent of male users buy online, only 31 percent of urban female users are consumers as well. Women
tend to search more. Defying their more common attitude towards shopping, women are more guarded
when it comes to the online market," says Juxtconsult.
"Depending on the product type, nine percent to 25 percent are buying online, whereas 33 to 47 percent
are searching the net for product information," it says.
Security Fears Persist
Juxtconsult says the motivation for Indian users to make purchases online varies, but users fear
compromised personal information is still a great risk when it comes to e-commerce.
"The single biggest motivation for buying online for net users is saving time. Thirty-two percent of them
look to shop online with this purpose. Convenience of shopping '24x7' and home delivery are other
major incentives," says the report. "However, the concern of possible misuse of credit car or personal
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information is extremely significant among online buyers, with almost 55 percent of them voicing their
concern. Clearly, tackling and countering the issue of online
safety figures as an imminent challenge for net marketers."
Books, CDs Top the List
The products that are purchased most online in India, according to Juxtconsult, are books and CDs -
making up 25 percent of all online purchases.
"Ironically, computer hardware and software, despite having the home advantage are among one of the
least bought products online, with only 13 percent buying them," says the report.
"In sum, the online market in India is blossoming but is yet to take off in a considerable way. The
Internet is still being used more for searching than buying products and services. Though a noticeable
proportion of net users are also net consumers, essentially, at present only a small tribe among them is
driving online shopping momentum," says Juxtconsult.
LATEST
A new trend in this space is that of Meta search engines. Ixigo and Ezeego are two players in this
space. A Meta search engine searches all the online travel sites (including the airlines sites as
well) and displays the best deals for the user.
Travel websites, such as Make My Trip India Pvt. Ltd and Yatra Online Pvt. Ltd, are battling to
win over India‘s Rs16,000 crore ($400 million) religious travel market
Opportunity in Online Travel Industry: $2billion
Online travel company MakeMyTrip (MMT) has recorded sales of Rs. 1000 crore for the
financial year ending March 2008, as per a release.
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BARRIERS TO GROWTH OF ONLINE
MARKET
Consumer Bias
Consumers often display a bias for brands that they know well and have had a good experience in the
past. Thus products of brands with a favorable bias will score over the products of less popular brands.
A few would risk buying expensive jewelry from an unknown jeweler online.
Lack of ‘Touch –Feel-Try’ Experience
The customer is not sure of the quality of the product unless it is delivered to him and post delivery of
the product, it is sometimes a lengthy process to get a faulty or the unsuitable product changed. Thus,
unless the deliverables are as per the customers‘ expectations, it is hard to infuse more credibility in the
e-Tailing market.
Mounting Competitive Pressures
To attract customers, the competing online players are adopting all means to provide products and
services at the lowest prices. This has resulted in making the consumers choice-spoilt, who in turn surf
various websites to spot the lowest price for the product. Thus, although the number of transactions is
increasing, the value of the products sold is continuously falling owning to high competition and leaner
margins.
Seasonality
E-Commerce Market is faced by seasonal fluctuations. As told by an Industry player, ―August to
February is the peak seasons for sale, while March to July is the dry seasons for sale‖. During the peak
season, occasions that drive the sales are Diwali, Rakhi, Valentines Day, New Year, Christmas,
Mother‘s Day, Friendship Day etc are. On these occasions younger generations prefers buying and
sending gifts online.
Credibility in Payment System
Online frauds and breach are the biggest barriers to online sales. As a result, prospective buyers prefer
staying away from revealing their credit card and bank details.
Untimely Delivery of Products
It might take a few minutes to search, book and pay for products and services online, but the delivery of
the product may take unreasonable time.
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FINDINGS & ANALYSIS
Most of the consumers were found frequent users of Online Shopping. The study evaluates that most of
the frequent buyers were outside India. Indian Consumers were less buying on internet.
Indian Consumers made occasional purchases over internet. The highest share of frequent purchase was
done by overseas buyers. There were 8 consumers from India who had not done online shopping before.
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Most of the people who had a good hand over internet found online shopping more convenient and also
substantial amount of people found it similar to offline shopping or less convenient. Convenience
depends upon how you perceive your requirement with the help of good sites.
More number of samples recorded online shopping and offline shopping quite similar. The reason could
be access to proper sites. There are numerous sites which provide online shopping and all have different
pricing strategy. It is necessary that you access to a genuine site which are reputed.
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The respondents outside India were highest at buying more than 10 times till now. India has a emerging
market and people have tried approx 2-5 times purchasing on internet.
Credit card and Debit card mode of payment is found most suitable and convenient to the overall
respondents. People in India are curious about the security of transaction so they have preferred Cash on
Delivery as the suitable mode of payment.
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People who while accessing over internet come across to many advertisements, search engines, special
offers where they get attracted towards making a purchase. Personal recommendations within friends are
also helping in deciding the site for online shopping.
In this research study it was seen that Indians are lacking in getting information or proper knowledge
about the online products & services. Many people gave a neutral response and some of them have
denied of having any information. Global consumers are ahead of having full information & knowhow.
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Online shopping has proved to be useful after getting 60% positive replies. People are able to evaluate
compare and take decision. Online shopping saves time and money both.
No doubt the procedure in making an online purchase is hassle free. Again 62% of the respondents feel
that online shopping is very easy to do and also very convenient.
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Very important measure is security of transaction. Very less people have rated online transaction secure.
There were some bad feedback given by the respondents who paid for the product but didn‘t received or
got a low quality product. Only overseas buyers recorded proper security as they have a very strong
legal system to protect their interests.
There are certain factors which you have to face while you are making a purchase over internet. People
according to their experience have to wait for delivery, significant discounts are there, buyers want to
touch and feel the product but they can‘t, they are also not able to negotiate or bargain, also buyers are
neutral about quality of the product.
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CONCLUSION
Increased Internet penetration, a hassle free shopping environment and high levels of Net
savviness see more and more Indians shopping online. But at the same time the companies need to
reduce the risks related to consumer incompetence by tactics such as making purchase websites easier to
navigate, and introducing Internet kiosk, computers and other aids in stores.
The goal is not to convert all shoppers to online purchasing, but to show them it‘s an option. In addition
to above, efforts need to be taken to educate the online buyers on the steps that need to be undertaken
while making an online purchase. Moreover, the feedback of an online buyer should be captured to
identify flaws in service delivery. This can be done through online communities and blogs that serve as
advertising and marketing tools and a source of feedback for enterprises. I found that it is a challenge for
E-marketers to convert low frequency online buyers into regular buyers through successful website
design and by addressing concerns about reliable performance.
Thus, the online retailing raises more issues than the benefits it currently offers. The quality of products
offered online and procedures for service delivery are yet to be standardized. Till the same is done, the
buyer is at a higher risk of frauds.
RECOMMENDATION
Efforts need to be taken to educate the online buyers on the steps that need to be undertaken
while making an online purchase.
Proper security should be assured to the people making online purchases.
Government should play a bigger role in encouraging online shopping.
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REFERENCES
Journal of Electronic Commerce Research, VOL. 6, NO.2, 2005
Research report By: IAMAI
DoT
Indian E-Comm. Report Finds Heavy Spenders Driving Sales by Devin Comiskey
www.ebay.com
www.homeshop18.com
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GGlloobbaall CCoonnssuummeerr BBeehhaavviioouurr
iinn KKEEMMRROOCCKK IINNDDUUSSTTRRIIEESS &&
EEXXPPOORRTTSS LLTTDD.. Understanding and analyzing the importance of consumer
behavior behind the success factor of the company
Paras Mukesh Shah
Ahmedabad Management Association
11/1/2009
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OBJECTIVE OF STUDY
To know what companies in India do to understand global consumer behavior when they export their
products.
SCOPE OF STUDY
KEMROCK INDUSTRIES is a 100% EOU since last many years. My study will help me to know
the way global consumer behavior affects the sales of the company.
This will also help me in understanding:
1) Different global behavior in different product categories.
2) Marketing Strategies in different countries.
3) Cross Cultural Behaviors
4) Post Purchase Behavior
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INTRODUCTION
TO
KEMROCK INDUSTRIES & EXPORTS LTD.
Kemrock entered in the field of composites in early 1980‘s with a modest manufacturing
facilities in Vadodara.
Under the leadership of its creator, Shri Kalpesh Patel, Kemrock has created possibly the World‘s most
comprehensive and integrated FRP composite manufacturing facilities. With composite being well
accepted as the new age material, the growth of the composites industry globally has been exponential.
Kemrock with its global scale facilities is well established in the global markets. Today, with over
100192 sq meters of plan area, on the land area of 796283 sq meters and road area of 57199 sq meters.
Kemrock has spreadsheet India‘s FRP revolution. At Asoj, in its sprawling grounds, it has a state of art
manufacturing facility, 20kms from Vadodara. Facilities also include sophisticated Quality control and
testing facilities and an extrusive product development centre.
Kemrock Industries and Exports prides itself on its infrastructural facilities such as the state-of-the-art
Application Development Center and the Design and Engineering Unit, both of which play a pivotal role
in the innovation and research undertaken in Kemrock Industries and Exports.
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JOURNEY FROM 1981-82 TO 2008
1981-82 Production started at Vadodara
1995-96 Entry into Wind Energy market with Suzlon Energy
1996 The first global tie up with creative pultrusion
2003 Strategic alliance with Stoncore group
2003 Production of gratings and Pultruded structural shapes for Fibergrate
Composite Structures, USA
2004 Commenced production of Phenolic resins under licensed to Georgia-Pacific
Resins, USA
2005 Joint venture with Top Glass for manufacture of high end Pultruded products
and lighting poles.
2006 Licensed technology to produce carbon fiber from National Aerospace
Laboratories (NAILS).
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STRATEGIC ALLIANCES / COLLOBORATIONS
Year 1995, witnessed Kemrock entering into licence agreement with M/s Creative Pultrusion, Inc, USA
for acquiring state of art pultrusion technology. Today with over seven pultrusion lines of different capacities,
Kemrock is the largest pultruder in the region
Year 2003, saw M/s Fibergrate composite structure, Inc, USA identifying Kemrock as their manufacturing
partner, to manufacture and offer world- class Pultruded & moulded grating products. Fibergrate is a part of M/s
Stoncore Group Inc, USA, functioning under the umbrella of the huge multi – billion dollar, multi locational
RPM Group. USA
Year 2004, witnessed Kemrock going in for backward integration with a specialized division to
manufacture Hi-tech Phenolic Resin for the composite industries. This time it acquire the a proven world class
technology from M/s Georgia Pacific Resins Inc, USA for the manufacture of this polymer. M/s Georgia Pacific
Resins Inc, being a global leader for a variety of building products, paper products, industrial and specialty
chemicals.
Top Glass SPA, Italy, is recognized the world over as one of the major and most highly qualified
producers of Pultruded composite profiles. Our unique design and production capacities enable us to
furnish, on a daily basis, a large number of profiles in all section, dimensions, and composites for varied
application worldwide.
Youngman, UK, over the years, the Youngman brand has become synonymous with access products.
Products ranges are towers, catwalks, modular access systems etc.
Baja India, Bajaj India group ranks among the top ten business houses in India with a combined
turnover of $3 billion.
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ABOUT PRODUCTS
Kemrock manufactures different kind of product for their suppliers and customers as per their
requirement. They are as follows:
Recently company is also diversifying into the following areas.
PRODUCT
COMPOSITE
FABRIC RESIGN
RAILWAY
GRP/ FRP GRATINGS
GRP/ FRP PIPING
SYSTEM MOULDINGS
GRP/ FRP POLES
HANDRAILS AND
LADDER SYSTEMS
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Carbon Fiber
Wind Mills
Agritech
Diversification in New Areas
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SECTOR WISE DEMAND OF PRODUCTS
Markets Products Applicable
Oil, Gas and Energy Sector FRP Moulded and Pultruded Gratings, FRP Pipes
and fittings, Cable trays, FRP Security fencing
etc.
Chemicals, Fertilizers & Sugar Sector Gratings and Hand Rails, FRP Cable Tray,
Gratings etc.
Minerals Mines and Construction
Industries.
Gratings and Structural Components
Railways and Power Sector Railway interiors parts, Fibre Glass Tubes etc
Projects Consultants, Water Management
Consultants & other Engineering
Industries
FRP Electrical Poles, GRP Pipes, FRP Pipes and
Fittings
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COMPETITORS IN THE MARKET
We are aware of that there are many manufacturer of FRP/ GRP products in India beside other
small manufacturer . But the major Four manufacturer of FRP/GRP Products in India are
Company Name Location
Kemrock Industries Halol, Baroda (Gujarat)
Sumip Industries Ahmedabad (Gujarat)
Ercon Industries Jodhpur (Rajasthan)
Sintex Industries Kalol – (North Gujarat)
Above four companies are manufacturing the same product but they have a different Pricing policy
which make them different from each other. As per my knowledge Sumip Industries has a higher price
for it FRP/ GRP products as compare to other companies producing the same goods.
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DIFFERENTIATION IN PRODUCTS &
SERVICES
FRP Composites are superior to conventional material like metals and woods. Premium grade
Isopthalic polyester or vinyl ester resin systems and a synthetic veil, maintain structural integrity. They
perform in the toughest and most hazardous environments. Moreover, due to ease of fabrication and
installation, virtually no maintenance and longer lifecycles, the composites are cost effective and
economical in the long run.
Corrosion Resistance
FRP composites provide chemical and corrosion resistance with long term durability over conventional
materials.
Light weight yet durable.
Less than one half of the weight of steel, allowing easy access and installation, with no heavy
equipments and less manpower.
Fire Retardant
Fire resistant properties makes than ideally suitable for fire safety applications.
Maintenance Free
Provides low maintenance and high durability due to inherent corrosion resistant properties.
UV Protection
UV inhibitors include in the resin system for optium protection from the effects of weathering.
Easy to Fabricate
Minimal need for lifting equipment or expensive tools, can be readily carried manually and installed at
site.
Electrically and thermally non- conductive
Increase application areas and benefits along with additional safety.
Aesthetically Pleasing
Being self coloured, they are easy to clean and maintain their appearance over very long periods.
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PRODUCT LIFE CYCLE
Like human being, product also passes through the different stages of life cycle. These stages
are known as product life cycle. Stages through which a successful product progresses are
Introduction
Growth
Maturity
Decline
STAGES OF PRODUCT LIFE CYCLE
Introduction Stage
Firm attempts to build demand for its new offering
Promotional campaigns concentrate on features, uses, and benefits
Financial losses are common due to low initial sales and heavy promotional costs
Growth Stage
Sales climb quickly
Firm usually begins to realize profits due to higher sales volume.
Marketing efforts continue to focus on establishing the product in the market and building brand
awareness
Later in the growth stage, the strategy shifts to building loyalty
Additional spending on product adaptation, promotion and distribution, along with lower prices
may be necessary
Maturity Stage
Industry sales continue to grow, but eventually reach a plateau
Companies emphasize market segmentation-often resulting in an oversupply of the product
Competition intensifies, and profits begin to decline
Some firms reduce prices and/or spend heavily on promotion
Decline Stage
Innovations or shifts in consumer preferences cause an absolute decline in industry sales
Industry as a whole does not generate profits, though some firms can prosper
Prices tend to hold steady if a loyal market segment continues to buy the product
If the firm is selling to consumers who are loyal, they can skip most of the usual advertising.
Following is the Example of Product Life Cycle taken directly from the Internet to understand it in a
better way. It shows that Kemrock Industries and Exports limited is at the Growth Stage of the
Product Life Cycle.
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Kemrock Industries
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MARKETING STRATEGY IMPLICATIONS IN
THE PRODUCT LIFE CYCLE
OBJECTIVE COMPETITI0N PRODUCT PRICE PLACE PROMOTION
Introduction
Build Consumer
awareness.
Encourage trial
purchases.
Few Direct
competitors
Highly
standardized
product
Few variations
in Features
Higher price
or lower
price
Set up a
distribution
network
Heavy expenditure
on informative
promotion and
advertising.
Growth
Build brand loyalty
and market share.
Practice market
segmentation
Competition
intensifies as high
profits. Attract new
entries
Differentiated
product for
different
market
segments
Different
prices for
different
segments
Expand
distribution
coverage
Focus on building
demand and
strengthening brand
preference
Maturity
Seek new product
users – and users
encourage
increasing
purchase frequency
Intense competition as
marketers practice
market segmentation
Emphasis on
quality and
cost reductions
Pricing to
maintain
market share
& meet
competition
Emphasize
relationship
marketing to
build dealer
loyalty
Promotion to
wholesalers and
retailers consumer
promotions focus on
persuasive and
reminder advertising
Decline
Consider leaving
the industry if
declining sales
results in loses
Competition begin to
leave the industry
Few changes
in product
features
Stable
prices
resistance to
price cutting
Begin to phase
out marginal
dealers
Minimal promotion
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DISTRIBUTION STRATEGY
Distribution Channel— Path through which products - and legal ownership of them - flows
from producer to consumers or business users.
Physical Distribution— Actual movement of products from producer to consumer or business
users.
Different types of Distribution Channels
Distribution channels adopted by the Kemrock Industries for the supply of goods are
Producer Business User
Business Users
Whole Sellers
Producer
Producer
Producer
Agent / Brokers
Agent / Brokers
Business Users
Whole Sellers Business Users
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SWOT ANALYSIS
STRENGTH WEAKNESS
Competent Manpower Price of the product
Financial Backing Promotional aspects
Brand Image High cost of production
Customers Loyalty Technology
Good coordination among inter-departments Technical persons
Quality certification:-
• ISO 9001:2000 & ISO 14001:2004
Certified
• Currently we hold 18 certifications
with 5+ approvals in progress
• We have various facilities to test resins
as well as composites products in our
technology center.
Ideal setup
Plant located near the sea-shore
OPPORTUNITIES THREATS
Domestic Market Price
Pre- sales Service Technology
Growing demand of Fiber Product Volatile fiber Market
Few Competitors in the same product Increasing Power Cost
Uniqueness in product Government Rules and Regulations
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GLOBAL CONSUMER BEHAVIOR
IN
KEMROCK INDUSTRIES & EXPORTS LTD.
The first step was very necessary to understand the global behavior of the company in different
kind of product categories. In such a case Kemrock mainly deals with contractors. They don‘t supply to
the final users. These contractors deal in a big way. They have different subcontracts. Subcontractors
have their own subcontractors. They supply to main contractors. Not necessarily that he will be in a
particular country but his projects will be in any country. Kemrock have middle man called as
contractors and they are not the final users. The criterion for selection of your contractor depends upon
the market experience you have.
Mr. P.L. Narshimah (DGM - Marketing) said,
“When you are in market since last many years you come to know by your experience about giant
contractors in your field. Your marketing team must be efficient enough to get the contracts from such
people.”
Consumer behavior affects the imports of the country. Kemrock has also come across a diverse behavior
which affects the imports of the country. When a particular customer demands to buy the product made
from the raw material of a particular company, and if there are 4 customers like this, then Kemrock
don‘t buy separately from a different company for the fifth one. It has been observed that domestic
market fails to deliver quality raw material to the company.
Mr. Jayesh Patel (Sr. Manager – Purchase) said,
“If domestic market provides with the same kind of quality and price then it could be bought from the
domestic market”.
For e.g. Rowing is the core raw material behind the finished goods like Fiber Reinforced Plastic. They
purchase in bulk according to their major customer‘s requirement.
Indian market is not potential in the supply of better quality raw materials. In global business you must
meet the quality standard.
Kemrock don‘t target market wise or area wise or region wise. They supply it to the contracts of cooling
towers. There are very less number of contractors (hardly 5 to 6), who are giving them substantial
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business. These contractors might have projects in different countries. Kemrock themselves approach to
contractors.
Mr. P.L. Narshimah (DGM - Marketing) said,
“Contacts develop by your experience in the market and business. As per the market knowledge and
market survey we come to know about the potential buyers.”
They select top buyers and all information is available from the market itself. When you roam in the
market you come to know about these potential buyers. Kemrock has a very strong marketing team who
can give the feedback and reach the target people.
Bandra-Worli Sea Link – Search for a new market.
Kemrock was a substantial contributor in the Bandra-Worli Sea Link Project carried out in Mumbai.
Kemrock had supplied FRP Poles (Lights) to the whole project. The buyer for Kemrock was Bajaj
Electricals who was not the final user. Bajaj Electricals was a sub contractor (a middle man) in this
whole dealing. Bajaj knew about Kemrock that it manufactures quality products. Based on the
information they approached Kemrock. There need a lot of marketing to be done before you get noticed
by your customer.
As far as domestic market is concerned there is a huge potential in the market just you need to have real
marketing personnel at the right place.
Kemrock‘s products are found bit costlier than the substitute goods available in the market. Local
government bodies are not financially sound to use these products in their infrastructure projects. There
are also political barriers restricting the deal to take place. There needs lot of marketing to convert the
non buyers into buyers.
Mr. Ashok Dube (GM - Marketing) said,
“You need to tell them the advantages of your product. Initially the reluctance will be there but you need
to explain them why your product and why not others.”
Like eg. Cement they get cracked, metal they get rusted but fiber glass will last there for 10 times
longer period because it is such a hard product where there will be no rusting, erosion or any sort of
damage to the product.
Nowadays quality products are highly demanded. Emerging cities like Mumbai, Delhi, Ahmedabad, etc
are demanding good quality products. Collection of revenue and wealth power of the govt. bodies
depends a lot for any high quality purchase.
When the consumer behavior of any exporting company is studied there arises issues of cross cultural
behavior of different nations when the products are exported to different countries of the world.
Kemrock exports to many countries like USA, UK, UAE, Australia and Canada.
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Mr. Urvish Buch (Sr. Manager – Logistics) said,
“When you sell it to United States then you don’t need to worry at all, but when you sell it to any Italian
Company, then they can create trouble even if it is not. If everything is clear then also they create
problems like shortages and quality.”
Kemrock had bad experience with Italy and other European Countries. Measure thought by Kemrock
under such critical situation is that there should be a very strong internal system to prove yourself. If you
can‘t have a strong internal system then you cannot counter their argument and you just have to provide
them whatever they say. In case of shortages customers demand for urgent supply and Kemrock have to
dispatch it by Air which proves 10 times costly then that by shipment, which not only loses your profit
but also turns your contract into loses. Cost of Air freight is 10 times higher than that of you send it by
ship. Management at Kemrock is working out behind this problem.
Mr. Urvish Buch (Sr. Manager – Logistics) said,
“You must appoint a surveyor in the destination country and who inspects you material, surveys, counts
the product and based on that submit the report. Based on that company decides whether to supply or
not, after finding substantial facts. You can’t always supply what your customer is saying, he might be
saying wrong, or might be he is not having that knowledge also, that this particular material is packed
this way, it might be there in the container, without removing each and every item you cant decide that
particular item is there or not.”
Consumer behavior also focuses on the post purchase behavior of the contractors associated with
Kemrock. With detailed talk with Mr. P.L. Narshimah, there were certain measures which we need to
consider before exporting to any foreign nation.
Issues:
1) They want it very well packed; packing must be upto the international level.
2) They want in time.
3) They want in as per their quality standards.
All these things are mentioned in the purchase order. If you don‘t send material according to their
specifications there are possible chances of your material getting rejected. Then you have to get it
replaced. In some cases International inspection agencies come and inspect the material on buyer‘s
behalf. This is after the order is confirmed.
Mr. P.L. Narshimah (DGM - Marketing) said,
“When the need of the customer is not fulfilled, for e.g. if quality is not found proper customers ask for
higher discounts. There are also possible chances of material getting 100% rejected. Quality is the key
factor and it is very important in international trade.”
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Customers provide samples and according to their specifications Kemrock manufactures the product.
The process does not complete. After manufacturing the product Kemrock sends samples to the buyer
and after his approval material is loaded and sent to the destination.
When the material is rejected it gets sold off to the other customers in the same destination. This is
possible only in the case of standardized products. Products like Square Tubes, Poles, Gratings which
are standard products of Kemrock are going to be used either way in the cooling tower.
Kemrock is into the production of composite products. It has upcoming diversification in areas like
Carbon Fiber, Agritech and Wind Mills.
Mr. Ashok Dube (GM - Marketing) said,
“Research and Development Center always helps in deciding new product development. As per the
demand emerging in the market, you design and product under the available infrastructure you have. As
soon as you have marketing team in the market they give you feedback what kind of products are
developing in the market, what are your competitors moves. If there is any requirement in the market
and you have a scope to get entry you manage doing it.”
Mr. P.L. Narshimah (DGM - Marketing) shared some tips for a new export company. They are as
follows:
1. Check the credibility of your buyer.
2. Have proper payment or banking account system. (For Eg. Letter of Credit)
3. Keep bank as a mediator to avail security of payment.
4. Study the standard trading terms in the market.
5. Big customers never give advance payment. You have to follow the 30 days, 60 days credit
method.
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INSIGHTS
The global consumer behaviour in Export Company threw a lot of insights in my project. The overall
learning was very effective and useful in my future prospects. Throughout the project I have come to
know about the importance of consumer behaviour in the global business.
Global business is surrounded with lots of different combinations of consumer behaviour. After the
completion of the report I have come to know about various aspects which are need to be taken care of
while entering into global business. Consumer behaviour is found different in different nations. The
behaviour of one nation does not necessarily similar to the other nation. I have learnt various measures
which drives the sales of the company resulting to great achievements.
In this whole research project it is seen that there is a huge potential in the domestic market for supply of
quality materials. Depending upon the product category consumer segmentations is done. Marketing
strategies need to be revised on regular basis and the company needs to remain updated in the global
market. New technology development should be done on regular basis so to remain in the competition as
a leader.
Global business is also very controversial with cross-cultural behaviour when there are more than one
country buyers. You must take necessary steps or keep your internal system strong in order to prevent
any sort of intimidation for the organization. Global consumers are highly quality conscious. There must
not be any compromise with the quality of the material.
Research and Development also play a major role for any business unit for its further new product
development. According to the market demand and trend company needs to be updated to grab the
opportunity to develop a new product with the available infrastructure it have. It has been observed that
into any global business the consumers are highly sensitive about the different parameters of the
product. The product should be available according to the mentioned specifications and descriptions.
Any modification with the product may turn losses for the organization.
Developing a market experience is a core part of this research. With the experience in the market you
come to know about the consumer needs, buying behaviour, trends, etc. As soon as experience in the
market is developed consumer‘s potential needs are easily identified and can be fulfilled.
There were certain measures which we need to consider before exporting to any foreign nation.
3 W‘s of Consumers:
1) Want it very well packed; packing must be upto the international level.
2) Want in time.
3) Want in as per their quality standards.
Overall learning during the project was sincerely a great experience.
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RECOMMENDATIONS
Company needs to work on the constant problems with the Italian and other European
Customers. Internal System should be made strong enough to justify the arguments in case of
any hazard.
Kemrock can increase its customer base in the local market by increasing the promotional
measures. Domestic market has a lot of potential demand which can be fulfilled by Kemrock.
Company needs to have their offices and agents in every buying country.
Kemrock needs to work on prices of its products which are very high compared to its
competitors.
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REFERENCES
Kemrock Industries Catalogue
Websites:
www.google.com
www.justdial.com
www.gidcgujarat.com
www.kemrock.co
www.exim.com