Consumer behavior – decision making

Table of Contents

1.0: Abstract 3

2.0: Introduction. 3

3.0: Literature Review.. 4

3.1: Oral Care Industry in India. 4

3.2: Rural Market 4

3.3: Toothpaste. 5

3.4: Emergence of Indian Rural Market for toothpaste. 5

4.0: Target customers. 6

4.1: Rural Market Growth. 6

5.0: Industry Overview.. 7

5.1: Toothpaste Market in India. 7

5.2: Segments. 8

6.0: Problem definition. 8

6.1: Proposal objectives. 8

7.0: Research methodology. 9

7.1: Research Design. 9

7.2: Sample Size. 9

7.3: Communication method. 9

7.4: Data collection. 10

8.0: Analysis and Discussions. 10

8.1: Respondent’s profile. 10

8.2: Factor Analysis. 11

8.3: Correlation matrix. 11

8.4: Kaiser-meyer-olkin technique. 12

8.5: Test the Sampling Adequacy. 12

8.6: Bartlett’s Test of Sphericity. 13

9.0: Conclusion. 13

10.0: Recommendation. 13

11.0: References. 15

Consumer behavior – decision making

1.0: Abstract

In the contemporary business, the success of any organization solely depends upon customers’ satisfaction. Therefore, as the needs, tastes and preferences of individual consumers become more sophisticated due to changing technology, businesses should move at par with these changes to meet customers’ demands. For any firm to be successful, and knowledge about the behavior of the consumers is imperative. In this context understanding and predicting consumer behavior, may be a challenging task due to changes in technological innovation and lifestyle. Based on this proposal, consumer behavior on toothpaste brands in Indian rural markets is influenced by both intrinsic and extrinsic factors (Chandra 2002).

2.0: Introduction

Consumer behavior describes the behavior that a consumers display while buying, evaluating, disposing of or searching for a service, idea, or product that is meant to satisfy their needs. While studying consumer behavior, it is imperative to understand that the behavior of the consumer is not only concerned with what the consumer purchases, but also when they purchase it, why, how they purchase it and most importantly, how often do consumers buy a product or service (Krishnamacharyulu & Ramakrishnan 2012). Therefore, there is a need for any firm to carry out a comprehensive market research so as to understand the consumer behavior. In understanding the behavior of the consumer, a market researcher should take into consideration every cycle of the consumption process.

Hence, the researcher should study their behavior before the purchase, at the time of the actual purchase and even after the purchase. Similarly, the scope of the behavior of the consumer does not only include the actual buyer and his purchasing act but also incorporates roles taken by various individuals and their influence on the decision of buying the final product (Miryala 2013).

3.0: Literature Review

3.1: Oral Care Industry in India

A significant percentage of the Indian population continues to clean their teeth with conventional products such as neem twigs, tobacco, salt, as well as other traditional herbal ingredients. The average toothpaste consumption per capita is estimated at 82gms which is relatively below the expected consumption level. Similarly, the ratio for the population of the dentists in India is significantly low as it is estimated to be 1:35,000 (Sharma 2001). Hence, most of the Indian populations are not conscious about oral hygiene leading to prevalence of dental diseases. Also, it has been approximated that less than 15 percent of the toothpaste users in India brush two times a day. In the Indian rural market for toothpaste, Hindustan Lever and Colgate accounts for more than 85 percent. On the other hand, Black and Red toothpowder accounts for 35 percent of the market for tooth powder in India. In the market for tooth powders, Dabur and Colgate dominate the rural market for toothpaste.

3.2: Rural Market

In the context of this proposal rural markets are defined as segments of the entire market of a particular economy that are different from other types of markets such as the labor market, stock or commodity market. In every nation, rural markets contribute significantly to the growth of the overall economy. Basically, a rural market constitutes a population of around 2,500 to 30,000 (Krishnamacharyulu & Ramakrishnan 2012).

3.3: Toothpaste

In India, the toothpaste market is represented by few large multinational firms such as Colgate Palmolive India Ltd, Procter & Gamble and Hindustan Lever Ltd. Local toothpaste industries in India such as Balsara and Vicco used to produce a range of products from ayurvedic, as well other related products from ayurvedic. In the Indian domestic market for toothpaste, Anchor Company has been widely renowned for producing an array of products and becoming one of the most successful toothpaste industries in this sector. Similarly, other vegetarian toothpaste industries such as Dubur and Baidyanath became widely known in this sector (National Rural Employment Guarantee Act 2005).

3.4: Emergence of Indian Rural Market for toothpaste

In 2008, the rural market for toothpaste in the country averaged at 25%, and the growth has remained steady until then reaching US$ 425 billion in the year 2010 and 2011. At the end of 2014, the figure is expected to double to increased consumer as the demand for toothpaste increases among the rural consumers. This has been attributed to change in consumption behavior of the consumers and increasing purchasing power (Gupta 2009). With the current increase in the Indian population, the rural market for toothpaste has increased significantly hence presenting most companies in this industry with an opportunity for exploring new markets. The trend for new markets in this industry is predicted to continue thriving as most of the Indian populations are between the middle and the low income earners. The rural Indians have different tastes, behavior, needs and preferences as compared to other individual consumers from other countries where most multinational companies that deal with the manufacture of toothpaste originate (Banerjee-Guha 2007).

4.0: Target customers

The toothpaste market in the rural areas in India will target both the low and the middle income earners. Therefore, understanding the consumer behavior is important in determining their decision in consuming a particular product. Hence, this proposal also puts into consideration the amount as well as flow of income among the consumers in determining the market of toothpaste in rural areas. Similarly, the rural population is significantly large, and more than 70% of India population lives in rural areas. Hence, this indicates a significant market share of toothpaste brand in rural areas.

4.1: Rural Market Growth

The consumer behavior in Indian rural areas is characterized by steady rise in purchasing power of the toothpaste brand. The market for the brand has been growing steadily at approximately 3-4 percent yearly attracting more than one million new consumers in the market per annum. This has been estimated to be 50 percent of the fast-moving consumer goods. Thus, the market for fast-moving consumer goods such as the toothpaste has a larger clientele base in rural markets (National Rural Employment Guarantee Act 2005).

However, it is difficult to categorize customers based on conventional demographic factors without taking into consideration their buying behavior, as well as their thought process. Consumers have different tastes, needs and preferences depending on how the product is packed, branded, designed and distributed to the market.

5.0: Industry Overview

The study have shown that the market for oral care India is segmented into toothpaste, toothbrushes, and toothpowder, which are proportioned as 60 percent, 17percent and 23 percent respectively. Out of 60 percent of the toothpaste is mainly purchased by family, while 35 percent of it is sold in the form of cosmetic ingredients. However, toothpowder assumes 52 percent of the market, while red toothpowder 40 percent. Additionally, black toothpowder assumes 8 percent of the market. The penetration of toothpaste brands in urban areas is thrice the penetration in rural areas. Therefore, the market for oral care for the toothpastes remains at penetration level less than 45 percent in India (Majumdar 2001). On the other hand, consumption frequency for the toothpastes in India just one and half times compared to two times consumption frequency in the developed countries. This consumption level implies that the toothpaste consumption per capital in India is the lowest globally (Yesudian 2012). This consumption behavior can be explained by the fact that greater percentage of the population in India live in the countryside where people are not much concerned with their personal hygiene and health.

5.1: Toothpaste Market in India

The market for the toothpaste brands in India is segmented as 39 percent rural market and 61 percent urban market, with average penetration level of 50 percent countrywide (Chandrasekar 2010). Oral hygiene is under constant stiff competition with sales volume increasing by a pace of three percent in current value. Neem sticks, charcoal, salt, powder mixtures and husk are traditional means of oral hygiene commonly consumed at rural level in India. However, these methods are losing consumers’ tastes and preferences due to the commitment of many companies such as Colgate to provide awareness and products which are more effective oral hygiene. Particularly, Colgate Company has succeeded in persuading more than three hundred million people to use refined products for oral hygiene (Babu 2007).

5.2: Segments

According to a report conveyed by the India Infoline Sector, around sixty percent of the toothpaste sold in Indian market represents toothpaste consumption at family platform (Venugopal, 2010). Furthermore, specialized and imported toothpastes designed to be used by the children are characterized by low usage. The market segment for the 35 percent of the toothpaste is sold in cosmetic products. The marketing of the cosmetic products is mainly targeted to the young consumers and higher social class strata. Moreover, there is an identified market niche for the therapeutic toothpastes in India. The toothpaste is segmented according to the attributes of the products such as Herbal attributes and White attributes. Additionally, there are various toothpaste segments according to Chandrasekar (2010) such as a popular segment (Pespondent Declining and Colgate Dental Cream), low price pack segment (Babool Growing and Cibaca), niche product segment (Sensitive toothpaste Stagnant and Ayurvedic), freshness segment (Close up, Colgate MaxFesh, and Anchor Gel Growing), and price- based segment (low-price and regular sub-segments).

6.0: Problem definition

6.1: Proposal objectives

The objectives of the study is

  • To examine consumer behaviors in India influencing toothpaste purchasing decisions.
  • To evaluate the extent of the consumer awareness on toothpaste brands
  • To determine how attributes of the toothpaste products influence consumer purchasing behaviors.

7.0: Research methodology

7.1: Research Design

The research design for this proposal involves an elaborate blue print to provide guidance to the research proposal to meet its objectives. Therefore, the research proposal uses descriptive design that gathers and organize data into tabulates and depicts to satisfactorily data collection. Moreover, random sampling was employed to choose the respondents.

7.2: Sample Size

The research was carried out using suitable sampling technique around Madurai District due to it infinite the population size. The sample size consisted of 200 respondents drawn from five geographical regions of the Madurai District: East, West, South, North and centre (Madurai city) regions. Each region contributed 40 respondents selected randomly to sum up to 200 respondents.

7.3: Communication method

The respondents are to be contacted using personal interview method since the research sample size is relatively small.

7.4: Data collection

The research proposal involves the application of the primary data. This data is to be collected using questionnaires filled by the respondents. Additionally, the research proposal involves secondary data collection from internet web sites, magazines, and journals. Furthermore, the data collected is organized using statistical methods such as charts and tables.

8.0: Analysis and Discussions

8.1: Respondent’s profile as shown on table 1.0.

Factors            Status  Number of respondents          percentage

Age     < 30 years of age         81        40.5

31-40 years      55        27.5

41-50 years      40        20.0

>50 years         24        12.0

gender male     112      56.0

female 88        44.0

eduacation       Schooling        6          3.0

Diploma          38        19.0

Under Graduate          91        45.5

Post graduate  57        28.5

masters and Phd          8          4.0

occupation       Business          63        31.5

House wives    49        24.5

private employee         42        21.0

government employee 17        9.5

retired  27        13.5

income range   <10000 rupees 63        31.5

100001-300000           93        46.5

300001-500000           31        15.5

>500000          13        6.5

 

8.2: Factor Analysis

Twenty statements (ingredients, color, mouth size, IDA recommended, Dentist recommendation, CAP pattern, flavor, size, whitening, mouth freshner, problems, offers, form, friends/relatives, brand name, taste, price, package, easy to buy, and CAP) had been pre-selected for the purpose of sampling based on the problem analysis using the five-point Likert scale to identify the preference allocated for every statement. The application of the factor analysis was carried out to identify significant factors for the research proposal. Therefore, the factors affecting the consumers’ purchasing behavior of the toothpastes were determined using methods such as correlation matrix (Zhang 2004) and Kaiser-meyer-olkin sampling technique (Amran 2006).

8.3: Correlation matrix

Correlation matrices were carried out using primary data which revealed strong and positive correlation between the factors. Therefore, these factors of the research proposal were considered suitable for the procedure of the factor analysis.

8.4: Kaiser-meyer-olkin technique

This is a technique that was used as a measure sampling adequacy (MSA) that concentrates on the partial correlation matrix diagonal elements which were found to be higher for the factor analysis. The diagonal elements of the twenty statements include 0.801, 0.677, 0.654, 0.418, 0.623, 0.619, 0.722, 0.543, 0.678, 0.433, 0.329, 0.655, 0.713, 0.654, 0.644, 0.578, 0.777, 0.546, 0.568, 0.640, and 0.523.

Table 1.1

 

Kaiser-Meyer-Olkin Measure of Sampling Adequacy            0.6

Bartlet’s  Test of Sphericity    Chi Sq.            1136.94

Deviation        190

Sig.      0

8.5: Test the Sampling Adequacy

This test was undertaken by summing up the diagonal element values of partial correlation matrix from the first statement to the twentieth statement.

Therefore;

Sampling adequacy = ∑_(1 to 20)^n▒(values of diagonal elements)/23 = 0.68

 

Thus, the statement is sufficient enough to undergo sampling.

8.6: Bartlett’s Test of Sphericity

This test was performed to determine the correlation matrix significance. Therefore, Bartlett’s Test of Sphericity (World Bank 2008; p, 78) was enough proof that the correlation matrix developed was not an identity matrix.

 9.0: Conclusion

The research proposal has indicated that consumer behavior cannot be preciously predicted. However, consumer behavior can be fairly predicted with assistance of research processes. Moreover, market for oral care provides immense potential since per capita consumption and penetration of products for oral care is relatively low in India. Although there is increasing awareness and up surging per capital income that is increasing demand for oral care products, the number of dentists in India is relatively low.

10.0: Recommendation

In order to promote customer behavior on oral care product consumption, the government of India should take the initiatives such as dental health camps. Additionally, manufacturers press on their advertising campaigns so as to enhance toothpaste consumption in rural areas. Therefore, creation of awareness by companies is an integral part of corporate social responsibility. Also, there are vital factors that need to be considered when influencing consumer purchasing and consumption behaviors. These factors include but not restricted to ingredients, color, advertising and brand image. Moreover, the attributes of the toothpaste should be based on consumer’s opinions when deciding for a particular brand. Therefore, companies should evaluate these important factors to come out with the best techniques of promoting their oral care product such as toothpaste in Indian rural areas.

11.0: References

Amran, R. (2006). Data analysis and interpretation: A handbook for postgraduate social scientists. Skudai, Johor: Penerbit Universiti Teknologi Malaysia.

Babu, G. R. (2007). Portfolio management: Including security analysis. New Delhi: Cocnept Pub. Co. p 341.

Banerjee-Guha, S. (2007). Spatial dynamics of international capital: A study of multinational corporations in India. Calcutta: Orient Longman.

Chandra, S., (2002). Textbook of preventive dentistry. New Delhi: Jaypee Brothers Medical Pub.

Chandrasekar, K. S. (2010). Marketing management: Text and cases. New Delhi: Tata McGraw-Hill. P, 523.

Gupta, S. (2009). Branding and advertising. New Delhi: Global Indian Publications.

Krishnamacharyulu, C. S. G., & Ramakrishnan, L. (2012). Rural marketing: Text and cases. New Delhi: Pearson Education.

Majumdar, R. (2001). Product management in India. New Delhi: PHI Learning. P, 248.

National Rural Employment Guarantee Act. (2005). The Mahatma Gandhi National Rural Employment Guarantee Act. Universal Law Publishing, India.

Ramesh Kumar Miryala. (2013). Changing Paradigms of Rural Management. Zenon Academic Publishing, India.

Sharma, S. (2001). Health problems of rural population in India. New Delhi: A.P.H. Pub. Corp.

Venugopal, P. (2010). Marketing management: A decision-making approach. New Delhi, India: Response Books. P 178.

World Bank. (2008). Technology diffusion in the developing world. Washington, DC: World Bank.

Yesudian, S. (2012). India: Acquiring its way to a global footprint. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. P, 41.

Zhang, X. (2004). Sampling correlation matrices and analyzing longitudinal categorical data using a multivariate probit model.