UGC-MINOR RE-SEARCH PROJECT EX-

ECUTIVE SUMMARY REPORT

BY DR.UMESH MAIYA

BACKGROUND

The Indian FMCG sector is the fourth largest sector in the economy with a total

market size in excess of $ 13.1 billion. It has a strong MNC presence and is

characterized by a well established distribution network, intense competition

between the organized and unorganized segments and low operational cost.

Availability of key raw materials cheaper labour costs and presence across the

entire value chain gives India a competitive advantage. The FMCG market is set to

treble from $ 11.6 billion in 2003 to $ 33.4 billion in 2015. Goldman Sachs has

estimated that the Indian economic growth could actually exceed that of China by

2016.It is believed that the country has the potential to deliver the fastest growth

over the next 50 years. The emerging trends in consumer’s income and

consumption pattern encourages study towards behaviour of FMCG’s. The

growing prosperity of the Indian consumer, increase in the size of the disposable

income, and the young population of our country, where majority of them are of

the age group of 20-24 years with higher purchasing power, increased

sophistication in the shopping pattern has given rise to new business opportunities.

CONCEPTUAL FRAMEWORK

‘Consumer behaviour’ or ‘buyer behaviour’ has assumed greater importance

under market oriented or customer oriented marketing management .Consumer

behaviour has become the central topic of modern marketing since the ultimate aim

of marketing is consumer satisfaction and profit earning. The term ‘consumer’

refers to a person who buys goods or services for his personal or household use,

and not for resale. On the other hand, the term ‘buyers’ refers to a person who

purchases goods either for resale or for his personal or household use. So strictly

speaking the two terms ‘consumer’ and ‘buyer’ are not synonymous. They are

distinct terms. But in practice these two terms are used interchangeably,

accordingly the terms ‘consumer behaviour’ and ‘buyer behaviour’ are used

interchangeably in marketing.

According to Walters and Paul “Consumer behaviour is the process whereby

individuals decide what, when, where, how and from whom to purchase goods and

services”. According to Webster “ Buyer behaviour is all psychological ,social and

physical behaviour of potential customers as they become aware of, evaluate,

purchase, consume and tell other people about products and services”

From the above definitions it is clear that consumer behaviour or buyer behaviour

is that behaviour exhibited by consumers in planning, purchasing and using

economic goods and services for the satisfaction of their wants.

In older days, marketing was seller oriented; the consumers had no choice or

preference. The importance of the study of consumer behaviour was not realized

by entrepreneurs. Now, things have changed. Modern marketing has become

consumer – oriented. No marketing efforts can be successful, if the choices, tastes

and attitudes of consumers are not properly considered. A buyer does not simply

purchase something; he takes a decision to purchase something only when a

motive makes him buy it. According to W. J. Stanton “A motive may be defined as

a drive or an urge for which an individual seeks satisfaction” .Buyer motives of a

buyer refer to the influence or forces which force him to buy a particular product or

service.

A consumer’s buyer behaviour is influenced by four major factors: Cultural,

social, personal and psychological factors. These factors cause consumers to

develop product and brand preferences. Although many of these factors cannot be

directly controlled by marketers, understanding of their impact is essential as

marketing mix strategies can be developed to appeal to the preferences of the target

market.

According to the Wikipedia dictionary “Fast moving consumer goods are also

known as consumer packaged goods and products that have a quick turnover and

relatively low cost. Though the absolute profit made on FMCG products is

relatively small, they generally sell in large numbers and so the cumulative profit

on such products can be large”

Fast moving consumer goods: - FMCG are products that have a quick shelf

turnover, at relatively low cost and don’t require a lot of thought, time and

financial investment to purchase. The margin of profit on every individual FMCG

product is less. However the huge number of goods sold is what makes the

difference. Hence profit in FMCG goods always translates to number of goods

sold. Fast moving consumer goods is a classification that refers to a wide range of

frequently purchased consumer products including: toiletries, soaps, cosmetics,

teeth cleaning products, shaving products, detergents, other non durables such as

glass ware, bulbs, batteries, paper products and plastic goods, such as buckets.

FMCG goods are popularly named as consumer packaged goods. FMCG sector is

one of the most important sectors for each and every economy. It plays a vital role

being a necessity and inelastic product which touches every life in one or the

other aspect.

India’s FMCG sector is the fourth largest sector in the economy and creates

employment for more than three million people in downstream activities. Its

principal constituents are house hold care, personal care and food & beverages.

The total FMCG market is in excess of Rs 85,000 crores. It is currently growing

at double digit growth rate and is expected to maintain a high growth rate. FMCG

industry is characterized by a well established distribution network, low

penetration levels, low operating cost, lower per capita consumption and intense

competition between the organized and unorganized segments. There is huge

growth potential for all the FMCG companies as the per capita consumption of

almost all products in the country is amongst the lowest in the world. .According to

Credit Rating and Information Services of India Ltd.(CRISIL) anticipation FMCG

sector could touch around Rs 140,000 crores by 2016. The key players in FMCG

industry are Hindustan Unilever Limited, Dabur India Limited, Procter & Gamble

Hygiene & health Care Limited, Nirma Limited, Emami Limited, Colgate

Palmolive India Limited, Godrej Consumer Products Limited to name a few.

FMCG – Evolution

There was low investment in the FMCG sector between 1950 & 1980.The

purchasing power of the people, in those days was lower compared to the present.

Then the government emphasized more on the small scale sector. In the post

liberalization era many multinational companies entered India. Most of the FMCG

companies focused on the urban population. While some shifted the focus to

getting to rural consumers first, the latest fad to hit the market is the ‘Sachet Bag’.

India’s rural markets have seen a lot of activity in the last four years. Since

penetration levels are pretty high in most urban areas, future growth can come only

from deeper rural penetration and higher consumption. The rural consumers spend

around 13 % of the income, the second highest after food on fast moving consumer

goods as per a Rural Marketing Association of India (RMAI) study. The industry is

volume driven and is characterized by low margins. The products are branded and

backed by marketing, heavy advertising, packaging and strong distribution

networks. Despite the strong presence of MNC players, the unorganized sector has

a significant presence in this industry.

PERSONAL CARE SECTOR : Personal care category in India is valued at

Rs.17054.6 billion. An average Indian spends 8 % of his income on personal care

products. Personal care mainly consists of hair care, skin care, oral care, personal

wash (soaps) cosmetics and toiletries and feminine hygiene. Till 2002-2003

personal care products, except those in oral care category, were regarded as luxury

and attracted a high excise duty of 120 %, but the taxation reforms in India after

1991 have lowered the excise duty rates that make these products more affordable.

It is divided into two segments. The premium segment & the popular segment. The

premium segment caters mainly to urban high class and upper middle class and is

more brands conscious and less price sensitive. The popular segment caters to mass

segments in urban and rural markets, prices here are around 40 % of the premium

segment prices. The personal care products industry consists of four major sub-

sectors manufacturing a range of products. These sub sectors and their products are

highlighted below.

Skin Care/Face Care products Face is the reflection of an individual’s physical

appearance .Generally the beauty of a person is described by the look of one’s

face. To enhance the beauty of the face, people uses face care products whose

market is growing at double digits. The industry manufactures products like

astringents, face creams, face scrubs, face toners, moisturizers, cleansers, fairness

creams etc.

Hair Care Products: Hair care was the largest market segment both in 2004 and

2005 with sales reaching 350 million dollars; the price had its impact on the

shampoo and styling categories. Consumers are willing to buy special, more costly

products because these products are used for many purposes like hair cleansing,

hair conditioning, and hair colouring. Some important hair care products are

mentioned below:

Hair shampoo

Hair conditioner

Hair Oil

Hair styling gel

Hair spray

Hair colours

Hand and foot care products: As the name suggests, these products are used to

enhance the beauty of hands and feet. Hand and foot care products can be broadly

categorized into cuticle care products, foot scrubs, hand and feet creams, hair care

products etc.

Cosmetics: The global market continues to benefit from a combination of strong

macroeconomic trends creating opportunities for new product niches. Cosmetics

are items that are used to enhance or protect the appearance of the human body.

The products included in this category are:

Eye makeup products

Face make up products

Lip make up products

Deodorants /Perfumes:

Major Cosmetic Companies (World Wide)

1. L’oreal

2. Procter and gamble

3. Unilever

4. Estee Lauder

5. Shiseido

6. Avon

7. Beiersdorf

8. Johnson and Johnson

9. Alberto - Culver

10.Henkel

11.Kao

12.Limited

13.L V M H

14.Colgate – Palmolive

15.Kandro

16.Coty

17.Yves Rocher

18.Alticor

Major Indian Cosmetic Companies: These include regional, national and

multinational companies

1. Hindustan Unilever Limited

2. Godrej Consumer Care

3. Emami

4. ITC

5. Dabur

6. Procter and Gamble

7. Calvin Care

8. Hankel India Ltd

9. Marico

10.Reckitt Benckiser ( India ) Limited

11.Colgate and Palmolive Private Limited

12.Cholyil Private Limited

13.J .K. Helen Couties Ltd

14.J L Morison India Ltd

15. Modi Revlon Ltd

1) Hindustan Unilever Limited

Product Range: Lux, Lifebuoy, Hamam, Liril, Breeze, Dove, Pears, Rexona, Fair

and Lovely, Ponds, Vaseline, Avience, Sunsilk, Clinic, Axe, Ayush, Lakme.

2) Godrej Consumer Products Limited

Product Range : Cinthol, Fair Grow, Evita No 1,Vigil, Shikakai, Colour Soft,

Nupur ( mehandi ) No 1, Powder Hair Dye, Renew ( Hair Colour ) Cinthol

( Shampoo, Deo ,Talc, Shaving Gel)

3) Emami

Product Range : Boro Plus, Fair & Handsome, Hair Life, Malai Kesar Cold

Cream, Navaratna Oil ( Oil, Lite, Extra, Thanda, Cool Talc ) baby massage oil.

4) ITC

Product Range : Essenja De Wills, Inizio, Femme, Fiama ( 5 varieties soap and

shampoo ) Vivel , Superia ( Soap and Shampoo)

5) Dabur

Product Range : Amla Hair Oil, Amla Light Oil, Vatika Anmol Sarson Amla,

Crème Lotion.

6)P & G

Product Range: Pantene, Head & Shoulders, Gillette, Safeguard, Zest, Old Spice,

Olay, Aussie ( shampoo)

7)Marico

Product Range: Parachute, Mediker, Hair & Care, Nihar Cemelia, Kaya Lite,

Kaya Skin Care, Aromatic.

8) Cavin Care

Product Range: Chick, Nyle, Indica, Meera Badam Shampoo, Karthika, Fairever,

Spinz ( talc & deo ) , Nyle Cold Cream.

Fast moving consumer goods are broadly categorized into three groups they are:

1) House hold care

2) Personal Care

3) Foods and Beverages

Household Care: It includes products like dishwashing soaps and liquids, laundry

detergents, washing powder, disinfectants, and these products are used every day

for maintaining the household in good condition.

Personal Care: It includes products like cosmetics, skin creams, colour cosmetics,

hair care, perfumes, deodorants, tooth paste, toilet soaps etc. These products help

people to feel good and look good.

Foods and beverages : These products include ice creams, tea powder, coffee

powder, squashes and jams, salt and atta, biscuits, chocolates, and soft drinks.

NEED FOR THE PRESENT STUDY

The review of relevant literature confirms that only sporadic work has been done

with reference to ‘Buyer behaviour towards FMCG’s in general and personal care

products in particular. No comprehensive and authoritative work has so far been

done in the area covered by the study. The present empirical work aims at

abridging this research gap. FMCG companies comprises three classes of goods

like household care, food and beverages and personal care products but, much

attention has not been paid on cosmetics which comes under personal care

products. There are certain varying and interesting factors which influence the

consumer behaviour towards cosmetics. There is a need to get the knowledge of

how manufacturers can operate under the cloud of uncertainty and at the same time

satisfying consumer needs increasing the market share, appealing to the basic

motivations of the consumers, developing women brands, designing new products,

developing strength to cope with stringent competition. Under these circumstances

it is worthwhile to study the different aspects of consumer behaviour and

marketing in cosmetics. In the light of these facts, the present study is an attempt to

understand some of the emerging dimensions of consumer behaviour towards the

use of cosmetics.

The findings and observations of this survey would go a long way in identifying

and conceptualizing the factors influencing consumer behaviour towards FMCG

goods. The various companies manufacturing and dealing with FMCG goods

obtain useful practical insights into factors that influence the individual consumers

in buying FMCG goods in the country.

OBJECTIVES

The specific objectives of this study are:

1) To present socio-economic and demographic status of female consumers.

2) To study the extent of loyalty of consumer towards cosmetics.

3) To analyze the different factors involved in purchase decision of cosmetics.

4) To analyze the attitude of consumers towards the use of cosmetics.

5) To study the spending pattern of consumer towards cosmetics.

PROBLEM STATEMENT

A Study by Rajesh Faldu (2009) suggests that while designing the advertisements

for various brands of skin care products, certain points need considered to enhance

the advertisement effectiveness. Age groups of different people, different

educational and occupational level of the people should be taken into

consideration.

Dr.Neeraj Kaushik and Deepak Gupta ( 2009) studied the consumer buying pattern

related to the cosmetics in South Haryana. It was revealed by the analysis that the

buying pattern for cosmetics is highly influenced by the demographic

characteristics of the consumers. Age group of 15-20 years was found to be more

frequent users of cosmetics as they use it daily while others ( age group of 20-25

years ) use if often or occasionally. The results of Bijal Zaveri ( 2007) mentioned

that females between the age group of 25-35 years were found to be more beauty

conscious.

Another study by Dr Parmar and Dr Gupta ( 2007) reported that the main reason to

use cosmetics by people was to look attractive, but they prefer to use safe

cosmetics without chemicals in their composition and due to this reason they prefer

homemade cosmetics instead of synthetic cosmetics. Further, it was also found that

brand loyalty does not have a significant influence on the buying behaviour of

consumers when brand of their choice is not available.

Makkar (2007) studied the factors by which consumer attitude and perception are

changing from chemical cosmetics towards herbal cosmetics. The Generation – X

has a strong positive attitude towards herbal cosmetics and is more inclined to

purchase higher-priced products.

It has been observed from the study by Nair and Pillai (2007) that female cosmetic

consumers prefer to purchase cosmetics individually. It also reveals that one of the

main sources of information among the females about different brand of cosmetics

is friends group. Quality is given utmost preference by the women consumers and

they tend to spend Rs.101-300 per month on cosmetics.

Voss and Parasuraman (2003) opined that the purchase preference is primarily

determined by price than quality during pre-purchase evaluation. If quality

information is available, price had no effect on purchase or post consumption

quality perceptions. However, post consumption quality evaluations had a

favourable impact on price evaluations.

Sinha ( 2003) reported that Indian shoppers seek emotional value more than the

functional value of shopping. Their orientation is based more on the entertainment

value than on the functional value and affected primarily by the type of store, the

frequency of buying and to some extent, by the socio-economic classification.

Research suggests that beauty consciousness among people in general is changing.

Vigneron and Johnson (1999) analysed the effect of common features on brand

choice and the moderating role of attribute importance.

Russo and France ( 1994 ) studied the nature of the choice process for commonly

purchased non-durables by tracking eye fixation in a laboratory simulation of super

market shelves. Their findings indicated that the choice process is constructed to

adapt to the immediate purchase environment.

The review of literature discussed above provides the deep insight of the work

done by the experts and researchers on some aspects of consumer behaviour on

cosmetics. However only a few studies have been taken up to analyse the

individual consumer buying pattern particularly in Western part of Karnataka.

Therefore, the present study was undertaken

HYPOTHESIS

In order to analyze the behaviour of the respondents towards the use of personal

care products the following hypothesis were formulated.

1) Age tend to influence on the reasons for use of personal care products.

2) There exists a significant relationship between upbringing status and use of

personal care products.

3) There exists a significant relationship between occupation and frequency of

using personal care products.

4) There is close association between teenage group of customers and purchase

of personal care products.

5) Brand loyalty has a significant influence on the buying behaviour of

consumers when the brand of their choice is not available.

6) Educational qualification and consumer behaviour towards personal care

products has no positive relationship.

7) There is no significant relationship between marital status and buying of

personal care products.

SCOPE AND LIMITATIONS

This study is confined to female consumers of cosmetics coming within the

jurisdiction of Coastal Karnataka area. However those dimensions are beyond the

scope of this study. Perhaps the inferences and conclusions of this study may not

be fully in conformity with the situations in other cities of Karnataka .Thus this

study though it projects the trends and attitudes of women consumers of Coastal

Karnataka, may not be a fair representation of the facts regarding the other cities of

the country. However a general picture of consumer behaviour towards cosmetics

in general can be had from this study.

RESEARCH METHODOLOGY

The nature of this study is partly exploratory and partly explanatory. The study is

conducted by using the primary data. The study has been conducted by

investigating the users of FMCG’s. No secondary data relating to the subject of

study in the area covered are available. Hence, for this study practically secondary

data are not relied upon. However, certain books and journals were consulted for

the understanding of relevant concepts and aspects of women users. The reference

to books, periodicals and reports are detailed in the bibliography. This study

considers randomly selected women consumers in Coastal Karnataka area. Since

consumer behaviour towards FMCG’s is a broad aspect comprising 1) Food &

Beverages 2 ) Household care 3) Personal care products and personal care products

includes again varieties of products like oral care, hair care, feminine hygiene,

baby products, skin care, shaving needs, fragrances and cosmetics. So in our study

we have restricted to the study of cosmetics only. To generate primary data and

information, a survey was undertaken with the help of a comprehensive and pre-

tested questionnaire.( A specimen copy of this questionnaire is given in Appendix I

at the end of this thesis ) covering 400 women respondents. Sufficient care was

taken to see that the sample is fairly representative of a cross section of the women

consumers of cosmetics. A simple stratified random sampling method was

adopted. The relevant data are presented in appropriate tables in this thesis. Some

of the relevant and interesting data are presented in the form of charts, diagrams

and chi-square tests.

CHAPTER CLASSIFICATION

This thesis entitled “Buyer Behaviour towards FMCG ‘S – A study With reference

to Coastal Karnataka” is coordinated in five chapters.

Chapter I – “INTRODUCTION” intends to provide a brief idea of the nature of

the topic, the area of the study and the objectives of the study. The sources and the

methods used for the collection of the data and information, statistical tools used

and chapter classification have also been detailed.

Chapter II – “PROFILE OF THE SAMPLE” presents the socio-economic,

demographic characteristics of the sample respondents. This chapter is expected to

provide a detailed background against which the thesis is projected.

Chapter III – “VIEWS AND PERCEPTIONS OF BUYERS” projects the views

and perceptions of the respondents. Interesting observations are brought forth and

discussed in this chapter.

Chapter IV – “TESTING OF HYPOTHESIS” presents identification and

evaluation of the factors influencing female users of cosmetics. In this chapter an

attempt has been made to indentify major factors influencing the use of cosmetics.

It also measures and evaluates the relative strength of these factors in influencing

the consumer behaviour. The hypotheses generated in this thesis are also tested and

results of the study are analysed, interpreted and presented with the help of

relevant statistical tools and techniques.

Chapter V – “CONCLUSION” gives the important points observed, inferred and

gathered in respect of consumer behaviour towards use of personal care products.

MAJOR FINDINGS

Most of the respondents ie 57.5% were unmarried.

Majority of respondents surveyed were graduates ie 54.5%

43.5% of the respondents taken for the study were employed

49% of the respondents were earning.

69% of the ladies surveyed were living in nuclear families.

35.5% of the respondents were from urban background i.e., they were

brought up in urban areas.

74.5% of the respondents lived in families of more than three members.

Most of the respondents use cosmetics to look appealing.

Majority of the respondents have brand loyalty i.e., they do not switch over

to other brands because of variety and choice in the products. They also

search in other shops if there is not available in the shop where they had

been to purchase.

A vast number of respondents are satisfied with the available products in the

market. This shows that manufacturers have done extensive market research

before producing cosmetics.

Most of the respondents prefer herbal products than the synthetic products.

63.5% use the face powder Ponds, 44% use the cream Fair & Lovely.

In the lip care and eye care segment the brand Lakme was preferred most.

34% use the deodorant Blue Lady and 39.5% used other brands of perfumes.

The main reason for using a particular product in all segments of personal

care products was personal preference.

76.5% were not particular about shopping on any fixed day.

90.5% of the respondents read the contents of the products.

66.5% of the respondents like both indigenous and imported products.

Most of the respondents i.e., 61% are influenced by special offers.

56% of the respondents daily use cosmetics.

40% of the respondents would like to buy cosmetics in supermarkets.

85.5% of the respondents recommend the products they use to others.

SUGGESTIONSThere are a number of companies marketing face powder, face creams, eye care

products, lip care products, deodorants and perfumes. The manufacturers of

personal care products have tried their best to satisfy customers by undertaking

market research so as to improve the flavour, colour, fragrance, package and

texture of the products. They also keep updating the advertisement in order to be

more effective. The present study elucidates the following suggestions to the

marketers:

1. As the respondents are very conscious about quality and price of the

personal care products they are using, there is a very good opportunity for

new players in this industry, especially herbal ones to grab their market

share by delivering best quality at competitive prices.

2. Most of the respondents look at the contents of the products. So companies

should focus on use of natural ingredients as consumers are of the opinion

that natural substances are harmless to the skin.

3. The producers can popularize their products by participating in trade fairs,

sponsoring college events and sponsoring prizes for cultural events in local

festivals

4. Customer’s attitude towards the herbal cosmetic products is encouraging.

Majority of the customers have shown their inclination towards shift to

herbal products but the success of this requires companies to undertake

appropriate marketing mix, balancing price and quality.

5. The vendors must remember that the customer is the most important asset a

seller can have, he is the hardest thing to get and the easiest thing to lose. So

the vendors must always have sufficient stock of personal care products

and provide good service.

6. While purchasing, two things are considered by the buyers ie the product

and the brand name. The producers must try to make the buyers experience a

feeling of satisfaction when thinking of the product.

7. The manufacturers must not compromise on quality once their brand

becomes successful because word of mouth spreads faster and may tarnish

the image of the brand.

8. Advertising must be carried out effectively to build up brand preference and

brand loyalty, especially by new manufacturers to capture the market share.

9. The success or failure of a product depends on its brand name. A study on

brand preference may help in getting a deeper insight regarding the brand’s

success.

CONCLUSION

“A thing of beauty is a joy forever” – these are the immortal words of John

Keats. Everybody wants to look pleasing. Modern women have a strong desire

and urge for enhancing their beauty. Irrespective of the age, every woman

wants to look young and beautiful. The producers of FMCG’s in the personal

care sector will have a roaring business provided they cater to the needs of all

sections of the women. It is evident from the study that the twin factors which

everybody focuses today are on quality and price. Consumers are more

discerning and demanding today. They want to experiment with the money they

spend. It is said that understanding the consumers is just like climbing a greased

pole. The producers of personal care products need to be vigilant. It is a

challenge for producers to keep the customers loyal to their brands. Since the

consumer is the main focus of all marketing activities, knowledge of her

behaviour and the usage pattern exhibited by her, is one of the important

aspects of marketing. Marketing personnel must constantly analyze the patterns

of buying behaviour and purchase decisions to predict the future trends. Hence,

understanding behaviour of consumers is the key to the success of business

organizations.