Why Lays is the Market Leader

Program & Batch: Term: Course Name: Name of the faculty: Topic/ Title : Original or Revised Write-up: Group Number: Contact No. and email of Group Coordinator: Group Members:

PGDM 2013-15 1st Term Business Statistics Prof. Gunjan Malhotra Why Lays is the Market Leader Original

9 Pranav Puri , pranavpuri31@gmail.com Sl. 1 2 3 4 5 6 Roll No. 1301-152 1301-057 1301-132 1301-224 1301- 315 1301-429 Name Pranav Puri Chinmayi Sharma Neha Mishra Srivenkateswarlu Yenamandra Ankit Mittal Vaibhav Khandelwal

Why Lays is the Market Leader

INDEX

1. 2. 3. 4. 5. 6.

INTRODUCTION.................................................................1-3 LITERATURE REVIEW.................................4-6 METHODOLOGY AND DATA ANALYSIS.....7-22 CONCLUSION .............23 REFERENCES24 APPENDIX..25-28

Why Lays is the Market Leader

1. Introduction
Launched in 1995 as a subsidiary of PepsiCo, Lays has become one of the most valued and savoured snack brand in India. Indian population has always been open to western influences especially in Foods and Beverages Industry where in PepsiCo made the most of it. Introducing Lays with one of the most basic flavours Plain Salted to the most tangy and mouth-watering flavour Magic Masala, Lays has shown tremendous sales across the geography bringing the best of tastes to the consumers. Lays deep insight into consumer behaviour and research brought in variety of tailor-made products to be launched in India. This didnt stop Lays on its consumer relationship but also made the debut of being the first company to give the consumer the freedom to choose the flavour which is most appreciated for a launch. Learning from India, Lays strategies where inculcated across different countries through the PepsiCo and Frito Lays subsidiaries especially in China and Europe Markets. Currently, the growth rate of Snack Industry tends stabilize at a double digit figure making growth opportunities for various Branded and local snack markets to intrude into the Savoury Snacks segment. With the snacking Industry growing with a size of 45-50 billion1 in India, PepsiCo Frito-Lay has swept 37% market share2 in India followed by other brands like Haldirams and ITC.

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Why Lays is the Market Leader

Brand History of Lays: In a chronological order we can list out the Brands Campaigns and strategies that have been invested for a fruitful market share.

No One can eat Just One Fight for your Flavour

Lay's-Be a little Dillogical

With the Campaign called No One can eat just one Lays brought in a sense of curiosity and the thirst for taste across the consumers. This has gone viral across with Brand endorsement of a leading Bollywood actor Saif Ali Khan whose promotions through advertisements and media campaigns brought in thrust to the sales of Lays. In 2008, the Brand Ambassador list of Lays included Mahinder Singh Dhoni making way for a promotional event Fight for your favour bringing in the campaign for most voted choice of flavour across the consumers which would continue to the market. 2009 saw Lays launching the theme Lays- Be a little Dillogical which brought the desire for consumers to be little emotionally attached to a heartfelt moment and the chips of course. Currently, this trend of promotional strategies and brand add campaigns strengthen with the likes of Cricketers, Glam dolls and Actors brings Lays to a raised platform elevating the position of Lays from other brands.

Why Lays is the Market Leader

Flavours Offered by Lays

India's Magic Masala American Style Cream and Onion Classic Salted West Indies Hot and Sweet Chile Lemon French Salt and Pepper Spanish Tomato Tango

Figure: Flavours of Lays offered in Indian Markets

Why Lays is the Market Leader

2. Literature Review
Consumer Analysis 1.) Brand Preference Kumar(May 2012) in a study on brand preference of soft drinks in rural Tamil Nadu by ,using Garrets ranking technique, to rank factors influencing the soft drinks preferred by rural consumer. They found that, the product quality was ranked as first, followed by retail price. Good quality and availability were the main factors, which influenced the rural consumers of a particular brand of a product. Buying behaviour is very much influenced by experience of their own and of neighbour consumers and his own family. The involvements of his own family members were exerting maximum influence on his purchases. Above all, the quality of the product and its easy availability were the primary and the vital determinants of his buying behaviour. Consumers were influenced by touch and feel aspect of any promotional activity. [8]The change in consumption pattern was due to changes in food habits. If income and urbanization increase among consumers, the percentage of income spent on consumption increases. The urban consumers preferred mostly branded products compared to rural consumers. The most significant factors influencing buying decisions were accessibility, quality, regular supply, door delivery and the mode of payment. 2.) Awareness of Consumer towards branded products Chen(2001) in his paper opined that although brand awareness was a necessary asset but not sufficient for building strong brand equity. A brand could be well know because of its bad quality.

Why Lays is the Market Leader

3.) Purchase Behavior of Consumers Nagaraja(2004) in a study conducted to determine the buying behavior opined that the consumption pattern is very much influenced by the experience of their own and of neighbor consumers and its family. The quality of products and its easy availability is were the most important factor in influencing his buying behavior. 4.) Factors Influencing brand Preference Singh and Singh(1981) in a study conducted on brand loyality found that Brand choice and store loyalty were important factors that affect the brand loyalty of consumer.Quality of product, Habit of use, Ready and Regular availability are the factors that affected and strengthen loyalty to brand.

Competitor Analysis
The Indian Snack industry which is estimated to be of around 9400 crore.Pepsico under its flagship snack company Frito Lay is the dominating player in this sector but as per recently release data it has started loosing share to local players like Balaji,Yellow Diamond,Crax etc.. In a study conducted by Nielsen in 2010-11 it concluded that PepsiCo Foods(FritoLay India) share in overall western snacks has slipped to 40% from 48% in 2009-10.

Why Lays is the Market Leader

Source:- The Economic Times

Why Lays is the Market Leader

3. Methodology and Data Analysis

For the Market interpretation of why and how Lays is projected to be the dominant player in Snack Industry, we made analysis using a survey of People aged 20~30 their responses regarding the interest on Chips they prefer. About 400 responses are recorded to analyse the different aspects of selecting a particular product which categorize under the consumers interest. The Survey questionnaire has been included in the List of Supported articles section, by which the finding are determined. The Most Consumed Product The figure below describes the most consumed product in the survey conduct through a Pie Chart which clearly indicates Lays as the most popular brand.

Consumer Preference on Chips

6% 4% 2% 4% Lay's Uncle Chips

15%

Haldirams Bingo Pringles 69% Hippo

Fig 1: A Pie Chart describing consumer preference on selecting a brand of Chips As the pie chart explains that consumers preferred buying Lays variety of Chips more than the other competing brands like Uncle Chips, Haldirams,

Why Lays is the Market Leader

Bingo, Pringles and Hippo. This shows on a fair sample of 400 people that Lays has the market advantage of being the best player in Chips Industry. Not only being the highest market value player but also holding a huge consumer area is a big positive for Lays to diverge and grow substantially. Why do consumers prefer Lays?

The figure below describes the diagrammatic representation of the interests behind the consumers for picking lays as one of the desired product.

What Drives Consumers to Pick Lay's

1% 2% 2% 2% 15% Taste Price

Availaibility
78% Offers/ Sales promotions It has zero trans fat

Fig 2: Representation of Desire of Consumer to choose Lays. Taking the major factors which drive consumers to choose a particular product, the survey classifies the preferences as below: 1. 2. 3. 4. 5. Taste of the Product. Pricing of the Product. Availability of the Product. Sales and Promotional Offered by the Product. Fat free content etc...

Why Lays is the Market Leader

The survey which was performed on 400 individuals provided the analysis sufficient data to understand that the consumers tend to choose to buy and rebuy the product which they get accustomed to. But acclimatization is a process which takes place only when the customer has the desire to experience the taste of the Product again and again. Lays being picked for the preference of Taste is a strong advantage to the Brand as Lays offers wide range of Chips in its market segment and are the most convenient in availability. As the other preferences follow like the Availability and Price, we can narrow down the possibility of being a market leader only on the basis of Availability and Price independently. Lays being Pure Vegetarian product and having Zero Transitive Fat add to the quality of the product which most of the consumers appreciate while making a purchase. Last but not the least, the Brand endorsements that Lays pitched in with Saif Ali Khan, Mahinder Singh Dhoni made the only Chips brand to have celebrities in their promotional campaigns. A brief description on the preferred Flavours of chips by the survey of consumers taken is given below.

Flavour Preference in Lays

India's Magic Masala

2% 2% 3% 1% 5% 10% 11%

American Cream and Onion

29%
Classic Salted

Spanish Tomato Tango

37%
West Indies Hot n Chilli Lays Chile Limon Flavour

Fig 3: Representation of Flavour Preference

Why Lays is the Market Leader

The survey reveals that the most preferred flavours to be American Cream and Onion and Indias Magic Masala with Classic Salted and Spanish Tomato Tango following the leaders. These clearly indicate that a wide variety of flavours are offered by Lays unlike other brands which have only one major product flavour. The opportunity to explore into vast varieties of taste are being exercised by Lays which is being reported from the survey. Introduction of new flavours bring different responses from customers who are new as well as the retained ones, where detailed analysis of this flavour differentiation is quite complex. Customer retention is made only by the leading flavours which are in demand in the market, where Lays place an important strategy in making the leading flavours available to customers even at remote of the places in India.

A Matter of Availability: Can Lays be available everywhere, well the survey says Yes! The availability of the product is the most important factor which governs the demand, supply and sales of a particular product. Through consumer survey it is analysed that Lays are available at the consumers convenience. Taking three major hotspots for the consumers to buy products, considering the sample age group we have divided the availability spots as below. 1. Colleges and Canteens. 2. Retail Stores across geographies. 3. Supermarkets and Mega Sales Marts. The consumer viability is as follows.

Why Lays is the Market Leader

MOST AVAILED AREAS

College/Canteen Retail Stores SuperMarkets

HALDIRAMS UNCLECHIPS BINGO 0 2 2

2 20 10 12 6 58

4 28

4 12 6 10 8 202 26

PRINGLES
HIPPO LAYS

Fig 4: Representation of Different Brands in Area wise distribution

Following up with the Brands like Haldirams, Uncle Chips, Bingo, Pringles and Hippo, Lays has captured the consumers eye with vast availability across the different hotspots which makes products reachable. This brings in huge demand and speedy sales for company like Lays and a chance to expand into vast and deep rural areas. Although urban and SemiUrban have transformational luxuries, rural facet has the transportation and consumer awareness inadequacy which brings supply chain of any product narrowed. As Chips are a part of FMCG (Fast moving consumer Products) the availability of different products in urban and semi-urban are in plenty. Considering the survey taken, we can summarize that Lays has its presence felt in all the Areas mentioned above, surpassing the other Brands in all areas with a huge margin. Highest affect felt in Retail Stores gives the notion that Lays highest sales of its products come from the Retail sections of the market which are quite close to the dwelling consumer populations in India.

Why Lays is the Market Leader

Is Lays rightly priced? Well, the survey conducted shows enough statistics to say that most of the competitor brands are in the same price range. To differentiate the products, the survey examined the consumers to pick the price range which is usually preferred. These price ranges are as follows. 1. 2. 3. 4. Products at Price tagged Rs. 5 Products at Price tagged Rs. 10 Products at Price tagged Rs. 20 Products at Price tagged Rs. 30

The following are the details of the distribution in accordance to price. PRICE FACTORS

Haldirams UncleChips

Rs5
Bingo Pringles Hippo Lays 0% 20% 40% 60% 80% 100% Rs10 Rs20

Rs30

Fig : Shows Price Differentiation with units brought on different Brands.

The graph clearly indicates that in the number of units purchased by the customers Lays dominate all other Brands though all the Brands are marked at similar price ranges.

Why Lays is the Market Leader

This survey proved to be unique which proves that pricing is a valid factor for the Product to survive but Lays has made the survival for other Brands difficult. With majority of the units sold for Lays are in the Price Range of Rs 10 to Rs-20 , Analysis proves that irrespective of the pricing of other Brands in the same range cannot effect the consumer tendency towards Lays products. Looking at the Consumption Chart of Lays indicate that Lays are taken by customers very frequently. Segregating the Consumption for different purposes for a Normal Consumer, we distribute into following: 1. Self-Consumption 2. Occasions and Parties 3. Gifts and Presents The below chart indicates though the highest need fulfilled to be for selfconsumption but Lays are also popular to serve different purposes like Parties and Gifts, which make them souvenirs in this context of survey conducted.

Purpose of Consumption Lay's

6% 28% 66%

Self Consumption Parties/Occasions As gifts for children

Fig: Purpose of Consumption of Lays

Why Lays is the Market Leader

Determination of Gender Bias with respect to choosing Lays With the survey consisting of both the male and female population we analyse the data using CHI-SQUARE TEST goodness for Fit. We will initially consider a Hypothesis that H0- The male and female population are not biased in buying Lays chips. To disprove the above and prove the below Hypothesis H1- There is a difference in the buying of Males and Females for Lays chips. With the data available regarding the Female and Male opinions we generate the dataset in the following manner using the help of SPSS tool. SPSS tool is an IBM Product stands for Statistical Package for Social Science which helps in determining the Chi-square test of goodness of Fit and ANOVA experiments. With the percentages of Males and Females choosing to prefer Lays the Chi-square analysis is performed on the Dataset below.

The Chi-Square results are as follows: Descriptive Statistics N Mean Sex 137 Indicator

Std. Minim Maxim Deviation um um 1.00 2.00

1.4745 .50118

Why Lays is the Market Leader

Chi-Square Test results

Sex Indicator Observe dN Male 72 Fema 65 le Total 137

Expecte Residu dN al 68.5 3.5 68.5 -3.5

Test Statistics Sex Indicator Chi.358a Square df 1 Asymp. .550 Sig.

Results: The Asymp. Sig. which is .550 indicates a value greater than 0.05 which clearly indicates that Hypothesis H0 cannot be rejected and H1 to be rejected. This shows that the Hypothesis H0 holds true implies that the male and female population equally choose the Lays as the most consumable chips product through the Data quantified from the survey. A statistic from the survey shows that the male and female population responded similarly across the selection of Chips from different options of Quality.

Why Lays is the Market Leader

The Taste Preferences of Consumers differentiated by Gender

11% 10% 30% 34% Texture, crunch and quality of materials Something that is tasty but not fatttening The right flavour, not too overpowering 19% 29% Something that will satisfy my hunger

30%

37%

Fig: Gender Responses to Quality -Male versus Female

Determining Age bias for Choosing Lays: Considering the Age groups from 20-30 we have clubbed the ages into four groups to check for the consistency of consumer buying across different age groups. Hypothesis: H0 Irrespective of age groups buying of Lays exist. H1- Age group bias exists for buying Lays. With the available data for different age groups we have made a Dataset with the following factors of Age groups.

Why Lays is the Market Leader

The Chi-square results for the following dataset is calculated as follows: AgeID Observe Expecte Residu dN dN al Less2 0 20-25 25-30 more 30 Total 39 218 23 6 286 71.5 71.5 71.5 71.5 -32.5 146.5 -48.5 -65.5

Test Statistics AgeID Chi407.84 Square 6a df 3 Asymp. .000 Sig. The Chi-square value is around 407.846 with Asymp Sig nearly 0, indicating that Hypothesis H0 to be rejected and H1 to be accepted which promotes the theory that the Data indicates that to buy Lays, there is an age bias where the more of Age group 20-25 are interested to pick Lays as the most preferred Product among the other age groups. To Find the relationship between the Frequency of Buying and Areas of Availability To test the relationship between the independent factors the Area and Availability for the purchase of Lays. Two variable ANOVA test is used where the Dataset consists of

Why Lays is the Market Leader

1. Area which describes to be College or Retail Store or SuperMarkets. 2. Frequency- ranging between a. 1-2 per week b. 2-4 per week c. 4-6 per week d. 7 or more per week 3. The Dependent variable here is the Units of Lays brought of a specific Flavour. Univariate Analysis of the independent variables is made with the Dataset used below:

Why Lays is the Market Leader

The results are as Below: Between-Subjects Factors N 1to2 16 2to4 12 Eating 4to6 9 Characteristic 7ormo 8 re Colleg 14 e Area of Retail 22 Avaialbility Smark 9 et

Descriptive Statistics Dependent Variable: PreferLays Eating Area of Mean Characteristic Avaialbility College 6.00 Retail 16.63 1to2 Smarket 5.67 Total 11.25 College 4.75 Retail 10.00 2to4 Smarket 1.33 Total 6.08 College 1.00 Retail 1.80 4to6 Smarket 1.50 Total 1.56 College 2.33 Retail 2.50 7ormore Smarket 2.00 Total 2.38

Std. Deviation 7.483 21.037 .577 15.885 3.862 10.368 .577 7.549 .000 .837 .707 .726 .577 1.732 . 1.188

N 5 8 3 16 4 5 3 12 2 5 2 9 3 4 1 8

Why Lays is the Market Leader

Total

College Retail Smarket Total

4.14 9.18 2.89 6.36

4.944 14.536 2.147 10.813

14 22 9 45

Tests of Between-Subjects Effects Dependent Variable: PreferLays Source Type III df Mean F Sum of Square Squares Corrected 1333.386a 11 121.217 1.050 Model Intercept 729.272 1 729.272 6.315 Frequency 394.190 3 131.397 1.138 Area 212.656 2 106.328 .921 Frequency * 236.492 6 39.415 .341 Area Error 3810.925 33 115.483 Total 6962.000 45 Corrected 5144.311 44 Total a. R Squared = .259 (Adjusted R Squared = .012)

Sig.

.428 .017 .348 .408 .910

Why Lays is the Market Leader

The Sig.values frequency and Area are independent where the combination of both Area and frequency create more effect on the consumption of Lays. The frequency of 1-2 and their consumption at Retail Outlets have higher mean than other combinations in descriptive statistics. This clearly justifies the effect of Sig. values of Area and Frequency to be at the higher side of 0.05. The ANOVA test confirms that there is no relationship on Area and Availability of Lays within the specific survey range and both the variables have independent effect on the consumption of Lays.

Why Lays is the Market Leader

4.Conclusion
With the survey span of 400 consumers, the data analysis reveals that there is no gender bias perspective involved in consumption of Lays. Irrespective of the area distribution of sales of Lays, we find that there is a high demand for Lays compared to other brands. Significant analysis has been made to conclude that the consumption frequency of Lays and Area of availability and together make a huge impact for the Demand of Lays. Through the Chi-square analysis the data provided a bias in Age group for selecting Lays as the preferred brand. Irrespective of pricing bands being on par with the competitor brands, Lays is chosen because of its taste and quality.

Why Lays is the Market Leader

5.References
1. IJRCT.ORG, 2nd May 2012, Buying Behavior of consumers towards instant food products. Balasamy,Kumar,Rao 2012 Available from:http://ijrct.org/documents/1000006.pdf Accessed on : 1st August 2013 2. Customer Based Brand Equity: A literature review .Chieng Fayrene Y.L,Goi Chai Lee Available from: f http://www.researchersworld.com/vol2/PAPER_04.pdf Accessed on : 1st August 2013 3. Nagaraja, B., 2004, Consumer behaviour in rural areas : A micro level study on consumer behaviour in Kavi mandal. Available from: http://etd.uasd.edu/ft/th9670.pdf Accessed on : 1st August 2013 4. Singh, J.D. and Raghbir Singh, 1981, A study of brand loyalty in India Available from: http://etd.uasd.edu/ft/th9670.pdf Accessed on : 1st August 2013

Why Lays is the Market Leader

APPENDIX I

S. Year Author Title No . 1 2012 Kumar Buying Behavior of consumers towards instant food products.

Abstract

Findings

References

Kumar(May 2012) in a They found that, the http://ijrct. study on brand product quality was org/docum preference of soft drinks ranked as first, ents/10000 in rural Tamil Nadu by followed by retail 06.pdf using Garrets ranking price. Good quality technique, to rank and availability were factors influencing the the main factors, soft drinks preferred by which influenced the rural consumer. rural consumers of a particular brand of a product. 2 2001 Chieng Customer Chen did a study on Although brand :Fayrene Based Consumer based brand awareness was a http://www Y.L, Brand equity. The Value for necessary asset but .researcher Goi Equity: A the same and its not sufficient for sworld.co Chai literature repercussions. building strong m/vol2/PA Lee review . brand equity. A PER_04.pd brand could be well f know because of its bad quality. 3. 2004 Nagaraj Consumer Nagaraja conducted a The consumption http://etd.u a, B, behaviour study to determine the pattern is very much asd.edu/ft/t in rural h9670.pdf buying behavior of influenced by the areas : A experience of their people in Kavi micro level own and of neighbor Mandal. study on consumers and its consumer behaviour in Kavi mandal. family. The quality of products and its easy availability is were the most important factor in influencing his

Why Lays is the Market Leader

4 1982 Singh, A study of J.D. brand and loyalty in Raghbir India. Singh

Singh and Singh(1981) conducted a study on brand loyality trying to analyze the factors that affect the brand loyalty of the consumer.

buying behavior. Brand choice and http://etd.u store loyalty were asd.edu/ft/t h9670.pdf important factors that affect the brand loyalty of consumer. Quality of product, Habit of use, Ready and Regular availability are the factors that affected and strengthen loyalty to brand.

Why Lays is the Market Leader

APPENDIX II

Potato Chips Industry : Market Survey

Greetings! Please help us by filling out this survey as we try to understand consumer patterns in the Potato chips industry. May the force be with you.
* Required

What is your age?

< 20

Gender

What is your email address? * Do you eat Potato Chips ? *

If you answer is No, go to Question 14

What do you look for in potato chips

How often do you eat chips in a week ?

Which size of Chips do you prefer the most ?

Why Lays is the Market Leader

Which brand of chips do you like the most?

When do you like to eat chips?

o o o o o o As an accompaniment with meals As a snack At parties While travelling As a midnight snack Other:

What purpose do you purchase chips for?

o o o o Self Consumption Parties/Occasions As gifts for children Other:

Where do you buy chips from? Which flavour of Lay's do you like the most ? Why do you like Lay's ? What among the following would convince you to buy a packet of chips?
o o o o o o Billboards TV advertisements Free taste samples Brand ambassador Sponshorships at events Other:

Why Lays is the Market Leader

APPENDIX III The Survey results excel sheets is saved in the supporting documents folder.