premium chocolate market
TRANSCRIPT
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UNDERSTANDING THE
DETERMINANTS OF CONSUMER
DECISION MAKING PROCESS
TOWARDS PREMIUM CHOCOLATE
CATEGORY IN INDIA
By:
Abdur Rahman
Roll No - 157
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Flow of Presentation
Theoretical Framework
Conceptual Framework
Industry Overview
Objectives
Research Methodology
Findings
Recommendations
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Theoretical Framework
- Basic Consumer Behavior
Consumer behavior can be defined as the behavior
that consumers display in searching for purchasing,
using, evaluating, and disposing of products and
services that they expect will satisfy their needs
(Schiffman & Kanuk, 2004).
It is influenced by consumers internal processes in
terms of choices and tendencies, for instance, their
own thinking, feelings, and desires. It is also affected bysome environmental factors, for example, social
forces, economic, situational, retail, and promotional
considerations.
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Willingness to buy
Dodds et al. (1991) defined the willingness to buy as the
probability linked to a purchasers intent to purchase
a product.
Purchase intention is thus synonym with willingness to
buy. Purchase intention can be defined as a
consumers intention to purchase a product or
service.
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Perceived Value for Money
When consumers make a purchase decision about one
foreign-branded product, they not only consider the
price of the products, but also the product
characteristics, quality and perceived value (Smith &
Sparks, 1993; Omar, 1995; Burt & Sparks, 1995).
Consumer demonstrates an anticipation of expected
or purchase perceived value from the purchase of a
foreign product or service based on future benefitsand sacrifices.
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Country Image
Academics studying consumers willingness to buy foreign-branded
products have paid much attention to the influence of country
image on a product (e.g. Amine et al., 2005; Hsieh et al., 2004;
Laroche et al., 2005; Lee & Ganesh, 1999; Mossberg & Kleppe, 2005;
Peterson & Jolibert, 1995; and Pereira et al., 2005).
Consumers tend to have a favorable attitude toward products
made in foreign countries. And many of them base their
evaluations of products on the country image factor.
Pereira et al. (2005) pointed out that country-of-origin is rooted in
the country image construct. Country image can be defined as the
total of all descriptive, inferential, and informational belief about
a particular country (Martin & Eroglu, 1993).
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Product Beliefs
Product beliefs with respect to a given origin are considered tohave a positive effect on consumers willingness to buy productsof foreign origin (Hsieh et al., 2004; Laroche et al., 2005; Orbaiz &Papadopoulos, 2003).
Typicaland somehow stereotyped - reactions to foreignproducts include: German, Swedish and Japanese cars are excellent
French wines are superb
Japanese home electronics are reliable (Liefeld, 1993),
which are quite different from the perception and evaluation say of Russiancars (unreliable and outdated), Brazilian electronics (unsafe and flimsy),
or Israeli fashion (unglamorous) In addition, a positive country image could result in positive
beliefs about the countrys products, and positive beliefs couldresult in positive willingness to buy, product beliefs in a givenorigin is regarded to have positive effects on ones willingness tobuy products of origin.
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World-Mindedness
World-mindedness can be defined as a mixture of
cultures with an appreciation for world sharing and
common well-being(Sampson & Smith, 1957).
As Barnes and Curlette (1985) argued, realistic
patriotism and a global perspective are not
diametrically opposed. Most Indian consumers have a
greater tendency to tolerate other cultures.
Their consumption tends thus to be open and does
not limit itself to domestic products, all the more asconsumers do travel more and more, experiencing
thereby attitudes and lifestyles in other countries
directly.
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Conceptual Framework
As the literature review suggests, many variables can
impress a shoppers willingness to buy and modify
his/her behavior.
The main relationships between the variables operate
as follows:
value for money directly affects willingness to buy
product beliefs are strongly influenced by country image
In the meantime, product beliefs in a given source have a
constructive influence on ones willingness to buy products of
origin
If customers have high levels of world-mindedness, they are
inclined to give higher quality ratings to foreign products
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Consumer Behavior Model
Country Image
Product Belief
Willingness to buyPerceived value
for moneyWorld-mindedness
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Industry Overview
According to industry estimates, the chocolate market is worth Rs5,500 crore, of which the premium segment accounts for 30%share.
Cadbury India continues to lead with 67% market share, Nestle hasa market share of 23.5%, while other players including Ferrero
International make up the remaining. Interestingly, the premium chocolate category is growing at a much
faster rate that is, 30% annually compared to that of the regularcategory.
The chocolate category has grown at a healthy 21% over last year,and the premium segment with 43% value growth is the drivingforce behind it.
The growth of the premium category is attributed to themanufacturers focused efforts within modern trade, and thesustained used of investments in efficient cooling systems intraditional trade.
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Major Players in Premium
chocolate segment Premium refers to those products whose average price is Rs
100 and above. And average weight of less than 50 gms
Major players include :
Lindt
Godiva Ferrero
Mars
M&M
NestleAlpino
CadburyDairy Milk Silk and Bournville
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Objective
To study the factors affecting the consumption of
premium chocolates.
To predict the type Premium Chocolate
consumers prefer based on their age, genderand annual family income.
Based on this study it will be easy for the
manufactures as well as marketers of premium
chocolates to target the right audience with the
right product which would help in increasing the
revenue as well as market share.
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Research Methodology
Secondary research has been done by analyzing the dataavailable in various journals and research papers.
Based on the secondary research a model has beendesigned to study the consumer behavior
Sampling Element: Men, Women and Children Sampling Technique: Random Sampling
Sample Size: 360
The questionnaire shall consist of both structured and
unstructured questions. 5 point likert scale shall be usedfor scaling purpose.
Factor Analysis and Discriminant Analysis shall be used toanalyse the primary data.
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Findings
Premium Chocolate segment is a booming market also as the
literature review suggests among the chocolate segment
premium chocolate segment is growing at the fastest pace.
As disposable income is increasing among the Indian Middleclass the urge to try new things is also increasing.
The other factor which is influencing the buying of premium
chocolate manufactures are tapping on the psyche of theIndian Consumers mindset. For example Ferrero Rochere is
tapping the market by marketing it extensively during the
festive seasons.
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Cont
The findings of the study also suggest that people prefer
gifting premium chocolates during the festivals. It means that
people are breaking away from the traditional way of giving
sweets and mithai and preferring giving away Premium
chocolates. The reason can be that Premium Chocolates havemore shelf life and people feel more classy and stylish for
people to give.
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Cont
Some of the key findings of the study were:
Out of a sample of 313 respondents 62% were male and
38% were female.
Male
62%
Female
38%
Sex ratio
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All the respondents were aware about premium category chocolates
and they had either tasted or heard of the brands in consideration.
266
118
162
125
210
174
0
50
100
150
200
250
300
ferrero
rocher
Godiva Lint Hershey's Nestle
Alpino
Mars
Series1
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From the study we find that a large number of people prefer white
chocolate and crunchy chocolate. They represent 25% and 23% respectively.
Indians are known to have a sweet tooth and it was interesting to find out
that 16% and 13% of the respondents preferred dark chocolates and Sugar
free chocolates. The trend also suggests that young adults are increasingly
becoming aware of their health and people are accepting and embracingthe fact that chocolates need not necessarily be sweet in taste.
26%
24%16%
13%
9%12%
Preference White
Crunchy
Dark
Sugar Free
Hard
Nutty
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Factor Analysis
Factor analysis was done to understand what factors affect thebuying decision of premium chocolate category.
The variables which had been identified for this study were:
Price
Packaging
Brand Reputation
Shape and Design of the product
Occasion and Festivities
Country of origin
Advertising
Available information (online) Available information (offline)
Ingredients
Variety
Ease of accessibility
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Grouping of Variables
Based on the output of the test the variables were grouped in
the following manner:
Factor Variable Factor name
1 Price
Brand Reputation
Occasion and FestivitiesPremiumness
2 Product Country of origin
Ingredients Originality
3 Advertising
Available information (online)Promotion
4 Shape and Design of Product
Variety
Packaging
Assortment
5 Ease of accessibility Availability
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Discriminant Analysis
The second objective of the study was to predict the type Premium Chocolateconsumers prefer based on their age, gender and annual family income.
For the purpose of this study the type of chocolates were classified into 6 groups namely:
Hard
Crunchy
Nutty
Dark Chocolate
Sugar Free
White Chocolate
The annual income group was segmented based on:
Up to 5 lac
58 lac
810 lac
10 and above
The age group for the purpose of this study was:
1520 2125
2630
3135
35 and above
Gender
Male
Female
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The Hit Ratio was 72.52% , so we can assume the model to be
fit as a hit ratio of more than 70% is preferred.
The Eigen value and WilksLambda determines how
statistically significant is the discriminant function.
Eigen value is highest for function 1 (1.297) and Wilkslambdais lowest for function 1 through 3 (0.034). So, we can say that
function 1 represents the most statistically significant
discriminant function.
Wilks' Lambda
Test of Function(s) Wilks' Lambda Chi-square df Sig.
1 through 3 .058 547.071 32 .000
2 through 3 .236 150.188 15 .000
3 .968 10.148 3 .017
Eigenvalues
Function Eigenvalue % of Variance Cumulative % Canonical
Correlation
1 1.297a 83.9 83.9 .688
2 .639a 13.0 96.9 .349
3 .034a 3.1 100.0 .180
a. First 3 canonical discriminant functions were used in the analysis.
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Discriminant Function obtained :
D= -3.614 + 1.239*(age) + 0.681* (gender)0.210*(annual
family income)
At group centroids we can set a scale and place each of the
considered attributes on that scale based on their value.
-1.074 Crunchy -0.201 Nutty 0.378 White
Dark -0.595 Hard -0.147 Sugar-free 1.809
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Recommendations
The study shows us the five factors which the Indian
consumers look for when they buy premium chocolates
namely Premiumness, Originality, Promotion, Assortment, and
Availability. It is therefore recommended to the marketers of
premium chocolates to keep into account these factors whenthey are designing their marketing as well as sales activities.
An important finding of the study was that majority of the
people were of the opinion that premium chocolates are not
as easily available as they would like. It is therefore necessary
to have a proper distribution network as well as motivated
sales force who are ready to go the extra mile to push the
products.
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Cont
The marketers need to understand the importance of unorganizedretail stores in the Indian context. Kirana stores plays an importantpart in the whole scheme of things.
These entry level premium chocolates are priced nearly the same as
other premium chocolates. It therefore becomes necessary to pushthe premium brands in these types of stores if one wants to boostsales as well as capture the largely untapped market.
The premium chocolate market need to focus on advertising. Even
though the study shows that most of the respondents dont givemuch importance to advertisement of premium chocolates, but itbecomes important if one wants customers to keep their offerings inthe consumers consideration set. Customers buy what they alreadyknow about a product. It is necessary to make a footprint in thecustomer mind space.
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Cont
Promotional activities are another recommendation which can
be suggested to the marketers.
Bundling of chocolates can be done to tempt the customers to
buy more. If a particular variety of chocolate is very costly it
should be introduced in small pack sizes to encourage peopleto try the offerings.
If consumers like the products they try in small quantity they
might become repeat customers also they will encourage their
friends and relatives to try such offerings.
Premium chocolate companies should start sponsoring college
fests and they should open counters where students can taste
there offerings for free. Chocolates can be sold at discounted
price to students to encourage them to become regular users.
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Thank You!!!