UNDERSTANDING THE DETERMINANTS OF CONSUMER DECISION MAKING PROCESS TOWARDS PREMIUM CHOCOLATE CATEGORY IN INDIA

By: Abdur Rahman Roll No - 157

Flow of Presentation Theoretical Framework Conceptual Framework Industry Overview Objectives Research Methodology Findings Recommendations

Theoretical Framework
- Basic Consumer Behavior Consumer behavior can be defined as the behavior that consumers display in searching for purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs (Schiffman & Kanuk, 2004). It is influenced by consumers internal processes in terms of choices and tendencies, for instance, their own thinking, feelings, and desires. It is also affected by some environmental factors, for example, social forces, economic, situational, retail, and promotional considerations.

Willingness to buy
Dodds et al. (1991) defined the willingness to buy as the probability linked to a purchasers intent to purchase a product. Purchase intention is thus synonym with willingness to buy. Purchase intention can be defined as a consumers intention to purchase a product or service.

Perceived Value for Money

When consumers make a purchase decision about one foreign-branded product, they not only consider the price of the products, but also the product characteristics, quality and perceived value (Smith & Sparks, 1993; Omar, 1995; Burt & Sparks, 1995). Consumer demonstrates an anticipation of expected or purchase perceived value from the purchase of a foreign product or service based on future benefits and sacrifices.

Country Image
Academics studying consumers willingness to buy foreign-branded products have paid much attention to the influence of country image on a product (e.g. Amine et al., 2005; Hsieh et al., 2004; Laroche et al., 2005; Lee & Ganesh, 1999; Mossberg & Kleppe, 2005; Peterson & Jolibert, 1995; and Pereira et al., 2005). Consumers tend to have a favorable attitude toward products made in foreign countries. And many of them base their evaluations of products on the country image factor. Pereira et al. (2005) pointed out that country-of-origin is rooted in the country image construct. Country image can be defined as the total of all descriptive, inferential, and informational belief about a particular country (Martin & Eroglu, 1993).

Product Beliefs
Product beliefs with respect to a given origin are considered to have a positive effect on consumers willingness to buy products of foreign origin (Hsieh et al., 2004; Laroche et al., 2005; Orbaiz & Papadopoulos, 2003). Typical and somehow stereotyped - reactions to foreign products include:
German, Swedish and Japanese cars are excellent French wines are superb Japanese home electronics are reliable (Liefeld, 1993), which are quite different from the perception and evaluation say of Russian cars (unreliable and outdated), Brazilian electronics (unsafe and flimsy), or Israeli fashion (unglamorous)

In addition, a positive country image could result in positive beliefs about the countrys products, and positive beliefs could result in positive willingness to buy, product beliefs in a given origin is regarded to have positive effects on ones willingness to buy products of origin.

World-Mindedness
World-mindedness can be defined as a mixture of cultures with an appreciation for world sharing and common well-being(Sampson & Smith, 1957). As Barnes and Curlette (1985) argued, realistic patriotism and a global perspective are not diametrically opposed. Most Indian consumers have a greater tendency to tolerate other cultures. Their consumption tends thus to be open and does not limit itself to domestic products, all the more as consumers do travel more and more, experiencing thereby attitudes and lifestyles in other countries directly.

Conceptual Framework
As the literature review suggests, many variables can impress a shoppers willingness to buy and modify his/her behavior. The main relationships between the variables operate as follows:
value for money directly affects willingness to buy product beliefs are strongly influenced by country image In the meantime, product beliefs in a given source have a constructive influence on ones willingness to buy products of origin If customers have high levels of world-mindedness, they are inclined to give higher quality ratings to foreign products

Consumer Behavior Model

Country Image

Product Belief

Perceived value for money

Willingness to buy

World-mindedness

Industry Overview
According to industry estimates, the chocolate market is worth Rs 5,500 crore, of which the premium segment accounts for 30% share. Cadbury India continues to lead with 67% market share, Nestle has a market share of 23.5%, while other players including Ferrero International make up the remaining. Interestingly, the premium chocolate category is growing at a much faster rate that is, 30% annually compared to that of the regular category. The chocolate category has grown at a healthy 21% over last year, and the premium segment with 43% value growth is the driving force behind it. The growth of the premium category is attributed to the manufacturers focused efforts within modern trade, and the sustained used of investments in efficient cooling systems in traditional trade.

Major Players in Premium chocolate segment

Premium refers to those products whose average price is Rs 100 and above. And average weight of less than 50 gms Major players include :
Lindt Godiva Ferrero Mars M&M Nestle Alpino Cadbury Dairy Milk Silk and Bournville

Objective
To study the factors affecting the consumption of premium chocolates. To predict the type Premium Chocolate consumers prefer based on their age, gender and annual family income. Based on this study it will be easy for the manufactures as well as marketers of premium chocolates to target the right audience with the right product which would help in increasing the revenue as well as market share.

Research Methodology
Secondary research has been done by analyzing the data available in various journals and research papers. Based on the secondary research a model has been designed to study the consumer behavior Sampling Element: Men, Women and Children Sampling Technique: Random Sampling Sample Size: 360 The questionnaire shall consist of both structured and unstructured questions. 5 point likert scale shall be used for scaling purpose. Factor Analysis and Discriminant Analysis shall be used to analyse the primary data.

Findings
Premium Chocolate segment is a booming market also as the literature review suggests among the chocolate segment premium chocolate segment is growing at the fastest pace. As disposable income is increasing among the Indian Middle class the urge to try new things is also increasing. The other factor which is influencing the buying of premium chocolate manufactures are tapping on the psyche of the Indian Consumers mindset. For example Ferrero Rochere is tapping the market by marketing it extensively during the festive seasons.

Cont
The findings of the study also suggest that people prefer gifting premium chocolates during the festivals. It means that people are breaking away from the traditional way of giving sweets and mithai and preferring giving away Premium chocolates. The reason can be that Premium Chocolates have more shelf life and people feel more classy and stylish for people to give.

Cont
Some of the key findings of the study were: Out of a sample of 313 respondents 62% were male and 38% were female.
Sex ratio

Female 38% Male 62%

 All the respondents were aware about premium category chocolates and they had either tasted or heard of the brands in consideration.

300 250 200 150 100 50 0

266 210 162 118 125 174

ferrero rocher

Godiva

Lint

Hershey's Series1

Nestle Alpino

Mars

 From the study we find that a large number of people prefer white chocolate and crunchy chocolate. They represent 25% and 23% respectively. Indians are known to have a sweet tooth and it was interesting to find out that 16% and 13% of the respondents preferred dark chocolates and Sugar free chocolates. The trend also suggests that young adults are increasingly becoming aware of their health and people are accepting and embracing the fact that chocolates need not necessarily be sweet in taste.

Preference
12% 9% 13% 16% 26%

White Crunchy Dark Sugar Free

24%

Hard Nutty

Factor Analysis
Factor analysis was done to understand what factors affect the buying decision of premium chocolate category. The variables which had been identified for this study were:
Price Packaging Brand Reputation Shape and Design of the product Occasion and Festivities Country of origin Advertising Available information (online) Available information (offline) Ingredients Variety Ease of accessibility

Grouping of Variables
Based on the output of the test the variables were grouped in the following manner:
Factor 1 Variable Price Brand Reputation Occasion and Festivities Product Country of origin Ingredients Factor name

Premiumness

Originality

3
4

Advertising Available information (online)

Shape and Design of Product Variety Packaging

Promotion

Assortment

Ease of accessibility

Availability

Discriminant Analysis
The second objective of the study was to predict the type Premium Chocolate consumers prefer based on their age, gender and annual family income.
For the purpose of this study the type of chocolates were classified into 6 groups namely: Hard Crunchy Nutty Dark Chocolate Sugar Free White Chocolate

The annual income group was segmented based on: Up to 5 lac 5 8 lac 8 10 lac 10 and above
The age group for the purpose of this study was: 15 20 21 25 26 30 31 35 35 and above Gender Male Female

 The Hit Ratio was 72.52% , so we can assume the model to be fit as a hit ratio of more than 70% is preferred. The Eigen value and Wilks Lambda determines how statistically significant is the discriminant function. Eigen value is highest for function 1 (1.297) and Wilks lambda is lowest for function 1 through 3 (0.034). So, we can say that function 1 represents the most statistically significant discriminant function.
Eigenvalues

Wilks' Lambda
Test of Function(s) 1 through 3 2 through 3 3 Wilks' Lambda .058 .236 .968 Chi-square 547.071 150.188 10.148 df 32 15 3 Sig. .000 .000 .017

Function

Eigenvalue

% of Variance

Cumulative %

Canonical Correlation

1 2 3

1.297a .639a .034a

83.9 13.0 3.1

83.9 96.9 100.0

.688 .349 .180

a. First 3 canonical discriminant functions were used in the analysis.

 Discriminant Function obtained : D= -3.614 + 1.239*(age) + 0.681* (gender) 0.210*(annual family income)

At group centroids we can set a scale and place each of the considered attributes on that scale based on their value.
-1.074 Crunchy -0.201 Nutty 0.378 White

Dark

-0.595

Hard

-0.147

Sugar-free

1.809

Recommendations
The study shows us the five factors which the Indian consumers look for when they buy premium chocolates namely Premiumness, Originality, Promotion, Assortment, and Availability. It is therefore recommended to the marketers of premium chocolates to keep into account these factors when they are designing their marketing as well as sales activities. An important finding of the study was that majority of the people were of the opinion that premium chocolates are not as easily available as they would like. It is therefore necessary to have a proper distribution network as well as motivated sales force who are ready to go the extra mile to push the products.

Cont
The marketers need to understand the importance of unorganized retail stores in the Indian context. Kirana stores plays an important part in the whole scheme of things. These entry level premium chocolates are priced nearly the same as other premium chocolates. It therefore becomes necessary to push the premium brands in these types of stores if one wants to boost sales as well as capture the largely untapped market. The premium chocolate market need to focus on advertising. Even though the study shows that most of the respondents dont give much importance to advertisement of premium chocolates, but it becomes important if one wants customers to keep their offerings in the consumers consideration set. Customers buy what they already know about a product. It is necessary to make a footprint in the customer mind space.

Cont
Promotional activities are another recommendation which can be suggested to the marketers. Bundling of chocolates can be done to tempt the customers to buy more. If a particular variety of chocolate is very costly it should be introduced in small pack sizes to encourage people to try the offerings. If consumers like the products they try in small quantity they might become repeat customers also they will encourage their friends and relatives to try such offerings. Premium chocolate companies should start sponsoring college fests and they should open counters where students can taste there offerings for free. Chocolates can be sold at discounted price to students to encourage them to become regular users.

Thank You!!!