determinants of consumer behaviour towards branded ...ejsit.org/journal/dec8.pdfdeterminants of...

SIT Journal of Management

Vol. 2. No. 2. December 2012. Pp. 122-138

0 Krishnan, Pande, & Mule

ISSN: 2278-9111

Determinants of Consumer Behaviour towards Branded & Unbranded Products

Mahalaxmi Krishnan*, V S Pande**

& Mayuresh Mule***

ABSTRACT

Economic liberalization, globalization, developments in ICT, changing demographics, emergence of

women power, and rising middle class have led to more disposable incomes in both urban and rural India.

Spending patterns have changed from being frugal to indulgence. Discretionary incomes are going into

television, two wheelers, automobiles, cell phones, etc. Interestingly, while sale of branded products have

increased significantly, grey market continues to thrive. Unbranded PCs are still found in affluent houses.

Middle class consider the unbranded PC makers as their friendly neighborhood suppliers, who offer

personalized support services. Cell phones are enticing people to the grey market. While people buy

branded bath soaps, they do not mind buying local or unbranded soap for washing utensils. This research

based on field study as well as desktop analysis of the available literature was done with the objective of

ascertaining the determinants for consumer preference for branded and unbranded products. This study

would help in brand strategy and positioning especially in the vast expanding rural areas where there is

pronounced tilt towards local or unbranded products. The challenge before the manufacturers and

marketers is whether Indian consumers purchase products or brands. Their key task is to convert

consumer preference and loyalty towards brands.

Keywords: Brand Equity, Brand Awareness, Brand Positioning, Brand Loyalty, Retail Market,

Consumer Behaviour

*Dr Mahalaxmi Krishnan, Associate Professor, Department of Commerce, K J Somaiya

College of Arts & Commerce, Mumbai , PhD Guide in Management Studies, SNDT University.

e-mail : [email protected]. M: +91(0)989200920.

**Prof V S Pande, Head, Department of Commerce, K J Somaiya College of Arts &

Commerce, Mumbai, e-mail : [email protected]. M: +91(0)989200920.

***Dr Mayuresh Mule, Vice Principal , K J Somaiya College of Arts & Commerce, Mumbai, e-mail : [email protected]. M: +91(0)9892009201.

mailto:[email protected]






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1. Introduction

The rapid evolution of communication and mobile technology has resulted in seamless flow of

information across all consumer segments. This together with the progressive liberalization of

the Indian economy has brought fundamental shifts in Indian consumer behaviour. They are a

lot more discriminatory in their choice of products and services and preferences. Their spending

habits have changed and they do not mind splurging. While they are brand conscious, they

continue to buy non branded products. The challenge for the marketers today is creating brand

awareness, brand building and positioning. Branding helps establish company‟s strategy.

Successful brands provide competitive advantage in terms of brand loyalty and brand extensions.

The vast Indian consumer market covering the rural and urban areas is heterogeneous where both

branded and unbranded products co-exist. Creating Brand equity is a critical success factor in

today‟s competitive market. Successful brands provide competitive advantage in terms of brand

loyalty and brand extensions. This study based on field study and published research and

literature on the subject aims to fathom the trend and consumer preferences to branded and

unbranded products and services.

Entry of foreign brands has intensified the brand war. The young work force is brand conscious

and has no qualms in shifting to newer brands. They are more demanding and choosey on the

basis of extrinsic features and intrinsic values. FMCG market comprising of the large number of

low priced daily use non durable products fall prey to the unpredictable behaviour of the youth

population whose brand loyalty changes with their moods. While some brands like blue lagoon,

apache, etc. failed, many like Cadbury‟s, Maruti, Amul, Lux could withstand competition for

long periods of time due to innovations sustaining customer attention and loyalty.

2. Rationale of the Study

Kotler (2000) says branding is “a major issue in product strategy.” Even after two decades of

economic liberalization and entry of many foreign brands in India , unbranded products continue

to compete with the branded ones. This research study examines the consumer behaviour




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towards branded products in the midst of the paradigm changes taking place in the Indian

economy.

3. Objective of the study

i) Determinants for customer preferences for branded and unbranded products from

primary data analysis

ii) Strategies and Conclusions based on primary data and secondary published literature

and research studies.

4. Literature review

The American Marketing Association (AMA) defines brand as “a name, term, sign, symbol, or

design, or a combination of them, intended to identify the goods and services of one seller or

group of sellers and to differentiate them from those of competitors.” Kotler (2000) defined

brand as “the name, associated with one or more items in the product line that is used to identify

the source of character of the item(s)”. According to Davis and Dunn (2002) focusing on the

latest and greatest advertising campaign meant focusing on the brand. It was always referred to

as a series of tactics and never like strategy.

According to Cobb-Walgren et al. (1995), high brand equity levels lead to higher consumer

preferences and purchase intentions. Farquhar (1989) concludes that high brand equity enables

successful extensions, resilience against competitors‟ promotional pressures, and creates entry

barriers to competitors. Cunningham (1956) in his study on brand loyalty and store loyalty

attempted to find out whether the consumers who are brand loyal are also store loyal. Shopping

proneness is another characteristic that has been related to brand loyalty. According to Goldman

A. (1976) consumers with relatively lower income do not indulge in extensive shopping as there

means are limited. They also make less use of the shopping available.

Agarwal A. K. (1983) observed that consumers in general were found to be quite loyal to the

brands of frequently purchased items. The store loyalty was also observed to be high albeit




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lower than brand loyalty. Albert Merunka (2008) looked at 11 dimensions of consumer love for

a brand and brand relationship. Mattilla and Andrew (2008) looked at the influence of emotions

on satisfaction and loyalty. Thomson and Park (2005) developed a scale for consumer

attachments that included affection, passion and connection. It did not however examine other

dimensions and the impact on brand switching. Bravo Fraj Martenez (2007) observed that more

serious and responsible roles make consumers switch over to the brand used by their parents.

The available literature and research reveal that brand preference and loyalty is the interplay of

factors including emotional and psychological ones. The reviews highlight that in a dynamically

changing world, organizations would need to do research on consumer behaviour in a continuous

basis more so at granular level to perceive the small imperceptible changes at the incipient stage.

In India the pitch is further queered because the urban and rural markets are extremely different

and in both the markets people continue to indulge in non branded or local products.

5. Research Methodology

5.1 Coverage of Study

This study examines the consumer behaviour towards branded and unbranded products and

services and retailers‟ perception of the same with the help of a field survey using structured

questionnaire followed by interviews.

5.2 Sampling Design, Sample Size and Data Sources

Data and information were gathered from primary source by means of field survey using

structured questionnaires containing dichotomous and multiple choice questions covering retail

consumers and retailers on random sample basis in Mumbai and Thane and from secondary

published sources. The sample size consisted of 50 consumer respondents on a random sample

basis.

Primary sources included personal interviews for open ended questions. The consumers were

interviewed at their homes and offices and on shop floors. Secondary sources included books,




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journals, newspapers, websites, and research studies. They are used for literature review and

conceptual reference.

5.3 Data analysis

A critical qualitative analysis of the data and information were made keeping the objectives of

the study in mind. The collected primary data were classified, tabulated and analyzed using

statistical techniques. Analytical tools like percentage, cross tabs, graphs and pie-charts were

used for analysis and interpretation.

6. Findings of the Study

6.1 Primary Data Analysis

6.1.1 Demographics: Demographics of the sample respondents are as follows.

i. Age Group

Table 1: Age Profile of Respondents

Age Group No. %

15-25 yrs 9 18.00%

26-35 yrs 17 34.00%

36-45 yrs 10 20.00%

46-55 yrs 2 4.00%

56-75 yrs 12 24.00%

Total 50 100.00%

Age-wise distribution of the respondents is given in Table 1 and Fig 1. 18% of respondents were

in the age group of 15 to 25 years, 34% in the age group of 26 to 35 years; 20% belonged to the

Fig 1: Age Profile

15-25

18%

26-35

34%36-45

20%

46-55

4%

56-75

24%




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36 to 45 years age group, 4% belonged to the group 46 or 55 years and the remaining 24%

belonged to the 56 to 75 years age group. The sample design is thus fairly wide-spread across all

age groups.

ii. Educational Qualification

Table 2: Educational Qualification

Qualification No. %

Undergraduate 22 44.00%

Graduate 21 42.00%

Post graduate 7 14.00%

Total 50 100.00%

Distribution of sample respondents‟ Educational Qualification is given in Table 2 and Fig 2.

While 44% of respondents were undergraduates, 42% were graduates with the remaining 14%

Post Graduates.

iii. Composition of Respondents

Fig 2: Profile of Educational Qualification

Undergraduate

44%

Graduate

42%

Post graduate

14%




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Table3: Composition of Respondents

Sex No. %

Male 20 40.00%

Female 30 60.00%

Total 50 100.00%

The sample respondents comprised of 40% males and 60% females.

.iv. Category of Respondents

Table 4: Category of Respondents

Category No. %

Students 5 10.00%

Working men 16 32.00%

Working women

22 44.00%

Housewives 7 14.00%

Total 50 100.00%

Table 4 and Fig 4 give the category-wise frequency distribution of the sample respondents. 10%

of respondents were students, 32% were working men, 44% working women and the balance

14% housewives.

6.2 Primary Data Analysis of Customer Respondents

6.2.1 Customers’ Responses to Branded Products

Fig 3: Composition of Respondents

Male

40%

Female

60%

Fig 4: Category of Respondents

Students

10%

Working men

32%

Working

women

44%

Housewives

14%




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i. Motivation for Purchasing Branded Products

Table 5: Motivators for purchase of

Branded Products

No. Percenta

ge (%)

Quality 39 78.00%

Price 1 2.00%

Friends, relatives,

neighbors

10 20.00%

Total 50 100.00%

Motivating factors for purchasing branded products are given in Table 5 and fig 5. Among the

respondents, the primary reason for purchase of branded products is Quality (78%), followed by

advices from friends, relatives and neighbors (20%).

ii. Information Sources for Branded Products

Table 6: Sources of Information for Branded

Products

Respond

ents*

Percentage

(%)

Newspapers 13 26.00%

Television 28 56.00%

Internet 11 22.00%

Friends, relatives,

neighbors

15 30.00%

Total 50 100.00%

* Multiple sources

Fig 5: Motivators for purchase of Branded products

Quality

78%Price

2%

Friends,

relatives,

neighbors

20%

13

28

11

15

0

5

10

15

20

25

30

Newspapers Television Internet Friends,

relatives,

neighbors

Fig 6: Source of Information about Branded

Products

Respondents*




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Customers get information about the branded products from multiple sources. While television

(56%) is the major source of information about branded products, the other sources are friends,

relatives and neighbors (30%), newspapers (26%) and internet (22%).

iii. Legal Protection for Branded Products

Table 7: Legal Protection for Branded

Products

Legal

Protection

No. Percentage

(%)

Yes 35 70.00%

No 0 0.00%

Neutral 15 30.00%

Total 50 100.00%

From Table 7 and Fig 7, it can be seen that 70% of the respondents are affirmative to legal

protection to branded products with the remaining 30% remaining neutral.

iv. Company fulfilling customer expectations related to Branded Products

Table 8: Fulfillment of Customer

Expectations

Customer

Expectations

No. Percentage

(%)

Yes 29 58.00%

No 5 10.00%

Neutral 16 32.00%

Total 50 100.00%

It is interesting to note that while 58% of the respondents stated that branded products fulfill their

expectations, 42% were either neutral or say „No‟ to meeting their expectations.

Fig 7: Should Branded products have

Legal Protection

Yes

70%

No

0%

Neutral

30%




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v. Product Demand and Brand Extension

Table 9: Product Demand and

Brand Extension

No. %

Yes 26 52.00%

No 8 16.00%

Neutral 16 32.00%

Total 50 100.00%

Brand extension increases the life span of the branded products. 52% respondents agree that

product demand increases with Brand additions while 16% respondent are of the opinion that

brand does not lead to product demand. A significant 32% are neutral.

vi. Unbranded Products

Fig 9: Demand increase with extension

Ye s

5 2 %

N o

16 %

N e utra l

3 2 %




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Table 10: Unbranded Products

Unbranded

Products

No. Percentage

(%)

Yes 11 22.00%

No 31 62.00%

Neutral 8 16.00%

Total 50 100.00%

22% of respondents purchase unbranded products while 62% do not. 16% were neutral. Not

meeting the high expectations of the customers from branded products could be reason for

consumers continuing to buy unbranded products.

vii. Product Preference

Table 11: Product Preference

Preference of

Products

No. Percentage

(%)

Branded 43 86.00%

Unbranded 7 14.00%

Total 50 100.00%

Ye s , 11

No , 31

Neutra l, 8

0

10

20

30

40

No. of Respondents

Fig 10: Purchase of Unbranded Products

Fig 11: Product Prefrence

Branded

86%

Unbranded

14%




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86% of the respondents prefer to buy branded products while 14% prefer unbranded products.

viii. Factors Influencing Purchase of Unbranded Products

Table 12: Motivators for Purchase of

Unbranded Products

No. Percentage

(%)

Easy

availability

23 46.00%

Price 13 26.00%

Quality 6 12.00%

Any other

specify

8 16.00%

Total 50 100.00%

The two chief motivators for purchase of unbranded products were „easy availability‟ and

„price‟.

ix. Comparison of the Factors Influencing Purchase of Branded and Unbranded Products

Fig 12: Factors influencing purchase of

unbranded products

46%

26%

12%

16%

Eas y ava ilability P rice Quality Any o ther s pec ify




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Table 13: Normalized comparison of Branded

and Unbranded Products

Branded (%) Unbranded

(%)

Quality 78 12

Price 2 26

Friends,

relatives,

neighbors

20

0

Easy

availability

0

46

Any other

specify

0

16

100 100

Figs in percentages

A comparison of the factors influencing purchase of branded and unbranded products indicate

different motivators. While „quality‟ (78%) is the prime motivator for branded products, „easy

availability‟ (46%) and „price‟ (26%) are the reasons for people going for unbranded products

6.3 Discussions

Many people interviewed have one or few unbranded products in their homes. Unbranded PCs

are still popular in middle class and in affluent houses. Main attractions for unbranded home

PCs are price and availability of freebies. Middle class consider the unbranded PC makers as

their friendly neighborhood suppliers, who offer personalized support services. Cell phones are

enticing people to the grey market. Many of them have one branded cell phone and for their

spouse and children, they buy from the grey market. It is revealed during the personal interviews

with respondent consumers that some of them buy branded bath soaps, but for washing utensils

and clothes they buy unbranded or local brands. It also emerges from the field survey that while

consumers prefer branded luxury products, for items of daily consumables they prefer unbranded

products.

78

2

20

0 0

12

26

0

46

16

0

10

20

30

40

50

60

70

80

Branded (%) Unbranded (%)

Fig 13: Branded v/s Unbranded

Motivators

Quality

P rice

Friends , re la tives ,

ne ighbo rs

Eas y ava ilability

Any o ther s pec ify




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Closer examination of the responses of customers to the questionnaire and personal interviews

reveals the following:

„Quality‟ is the prime determinant for purchase of branded products by consumers.

„Ease of availability‟ and „Price‟ are the major motivators for purchasing unbranded

products.

Only 58% of the respondent customers felt that branded products fulfill their expectations;

this could be one of the reasons for unbranded products continuing to be in demand.

A significant 30% of respondent consumers feel legal protection is lacking for branded

products.

A significant segment of consumers (42% of the respondents) feel that branded products do

not fulfill their expectations.

Another interesting revelation from the field study is that brand extension does not lead to

product demand.

Company reputation helps sell branded products.

Most of the retailers in both organized and unorganized segment stock and sell both branded

and unbranded products.

Retailers continue to offer discounts and free offers to sell unbranded products.

Consumers said that unbranded products are priced lower.

Not meeting the high expectations of the customers from branded products appears to be one

reason for consumers continuing to buy unbranded products.

7. Strategies

Brand strategy facilitates marketing efforts. All channels of communication such as

advertisement, public relations, internet and social media become in fructuous without a proper




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brand strategy. Clear and transparent communication is core to developing a brand strategy. It

should help build relationship with the customers.

There has to be holistic approach to marketing for brand building. It should encompass vision

and mission of the organization, employee participation in brand building, media mix, and

product and process innovations.

Retailers and marketers should explore internet marketing tools such as blogs, social media,

email marketing, webisodes, etc. With advancements in mobile technology and spread of mobile

to rural hinterland, mobile marketing tools such as SMS, MMS, etc., can be used to directly

reaching out to the customers.

The above should complement the other media such as advertisements in newspapers, radio,

television, public relations, event sponsorship, etc. Marketers should mix and match marketing

efforts, create synergies and to maximize their individual and collective efforts so as to underpin

the brand assurance.Brand building requires assessment of competition, consumer preferences,

changes in demographics and brand positioning

Marketers and retailers can use blue ocean strategy for brand building. They should identify or

create products and services for which there is no direct competition. For making the blue ocean

strategy more effective especially among the youths, retailers can use personalization tools such

as social media e.g., Facebook, Twitter, Flicker, You Tube, etc. and webisodes. Careful analysis

of customer reactions and responses and participation can help identify customer expectations

and new marketing opportunities. These can lead to product enhancements and product

innovations further strengthening blue ocean strategy.

Webisodes is another source for generating new marketing opportunities as part of blue ocean

strategy. It can be used for engaging readers, converting them into loyal customers and even as

brand ambassadors.




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Other marketing tools for catching the eye of the customers and potential customers are email

campaigns, interactive TV programs where customers are directly engaged in conversation and

SMS competition.Brand management and strategy should encompass a proper mix and

integration of the communication channels to enhance brand positioning and facilitate superior

brand equity

8. Conclusions

Indian retail market is a great paradox where branded and unbranded products co-exist. Even

shops in organized sector stock and sell unbranded products. While the Indian consumers are

becoming brand aware and there is discerning shifts towards branded products, the demand for

unbranded products and services are still significant. Indian consumers are still steeply ingrained

in tradition and use traditional products and practices. Retailers, to withstand competition and

sustain their bottom-line, peddle both branded and unbranded products on their shop floors to

increase turnover and customer base. Consumers being price sensitive sometimes do not mind

compromising on quality. This can become more pronounced during times of inflation.

Indian consumers are maturing and retailers find it increasingly difficult to influence their

purchase decisions merely with promotional offers. They would need to innovate. Retaining

customers has become a challenge due to lifestyle changes, needs and values. Young customers

are more demanding and do not mind experimenting and changing to new brands. Retailers

therefore have to adopt a mix of marketing and promotional strategies leveraging available

technology to withstand competition.

9. Limitations of the Study




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The small sample size and sample design are limitations of this Study. The cost and time

constraints are also limitations of this study. The study is confined to parts of Mumbai and Thane

districts. So the generalization of conclusions of the study may not have universal applicability.

But the findings give empirical inputs for a larger study across different market segments.

10. Significance and Scope for Further Research

The findings and conclusions of the study provide an experiential insight in to consumer

behaviour in an economy that is in the midst of an upswing. Further the changing demography,

socio-economic shifts and upwardly mobile younger generation with shifts in older generation

attitude and thinking and behaviour as well signifies the importance of studies such as this to

throw up the unexplained and unexplored aspects of consumer behaviour. Pan India research

using SPSS and better statistical and sampling techniques would definitely help further

understand the psyche of the Indian consumers who are maturing and becoming increasingly

brand conscious. Consternations in the Indian market and the ripple effect of changes across the

globe and entry of global brands in to India are reasons enough for further scope for detailed

studies into various aspects of behaviour of Indian consumers.

The research of this nature would help in brand strategy and positioning especially in the vast

expanding rural areas where there is pronounced tilt towards local or unbranded products. The

challenge before the manufacturers and marketers is making consumers purchase brands instead

of products. Their key task is to convert consumer preference and loyalty towards brands.

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