Our research project studied the influence of price as the major factor in the purchase behavior of Indian consumers by studying the purchase behavior of soap in a sample of students. As price is traditionally considered as one of the most important of 4 P’s of marketing, and a review of past literature showed an existing link between price and the purchase behavior, the topic was chosen to study.
A convenient sample of 40 students was asked to respond to questionnaire containing multiple choice, scale and dichotomous questions with a focus on price of soaps. The results were analyzed with the emphasis on finding the important attributes of soap considered by consumers and how they ranked of price among the most important attributes in soaps. Gender analyses of the results were also done to find the change of the perception of price among men and woman. Respondents were also tested on their knowledge of the phenomenon of hidden pricing. The results were analyzed and were plotted in graphs to arrive at the proof for testing our hypothesis. A. Introduction 1. Problem Statement
The Study Of Consumer Behaviour
Consumer behavior is a complex, dynamic, multidimensional process, and all marketing decisions are based on assumptions about consumer behavior. The 4 P’s (Price, promotion, product and place) are considered to be the marketing-mix variables that influence the consumers of a product. From a seller’s view, these four are the marketing tools available to influence buyers. From a buyer’s point of view, each of these marketing tools is designed to provide a customer benefit. Out of the marketing-mix variables, traditionally, price has been the major determinant of a buyer’s choice. This is still in case with large segments of buyers across the globe.
Although non-price factors have gained a lot of importance in the last few decades, price still remains an important factor in determining sales and profitability. Price exerts its influence in FMCG (Fast moving consumer goods) and marketers have tried to introduce new factors such as superior packaging, better advertisements, and increased number of choices to reduce the influence of price. The increased efforts are more visible in this product category as there is more competition for all segments in this market. Despite the extensive research, marketers still have poorly understood pricing and pricing strategies have become very important in determining the success of a product and a company. 2.
Research Objectives/Hypotheses The objective of this research is to provide the insight into the degree of influence of price as the most important factor in the purchase decision of soap by a consumer, in order to provide a clear insight into the effect of price and the change of price in product sales which will help marketers to develop better pricing strategies and to plan for the optimum mix of the marketing-mix variables. Null hypothesis: Price is the most important attribute that influences the purchasing decision of soaps. Alternate hypothesis: Price does not play a significant role in the purchase decision of soaps. 3. Rationale for Approach
The study started with collecting and reviewing existing literature in consumer behavior to ascertain the various factors of influence. Pricing related studies are also taken into account to find and conclude the presence of a research gap in studies relating FMCG sector (soaps in particular) and price to the behavior of consumers in southern India. 4. Value: in terms of Possible Outcomes The outcomes will provide the answer to the research questions of whether price plays a role in consumer’s minds while evaluating soap as a product and how much of an influence does price play in the buying decision. It will also give us an insight into whether price has the effect of overcoming customer loyalty and change habits and buying pattern. 5.
Limitations of the study 1. The sample was fairly homogenous in terms of education level and income level. 2. The shopping behavior of the sample was not varied. 3. The study did not focus on the discount offers given on soaps. B. Methodology/Approach 1. General Research Design 2. Specific Research Questions 1. What are the factors that play a role in consumer’s decision of purchase of soaps? 2. Is price the most important attribute on which the consumer bases his purchase decision? 3. Will a change in price of the soap influence the buying decision? 4. Will a price change lead to shift in the customer loyalty to particular brand? 3. Data Collection Population – The shopping population of the campus and surrounding areas • Sample Design – 40 (Convenience sample). • Measurement methods – Survey using personal, structured questionnaire composed of be multiple-choice, dichotomous, scale questions. 4. Questionnaire Format: This Questionnaire was structured in such a way that it includes the profile of the consumer and the following factors related to the consumer behavior. 1. Product/brand attributes 2. Buying pattern/behavior 3. Purchase frequency/ quantity 4. Price of the product 5. Influence of price on the purchase 6. Shift in customer loyalty due to price change 5. Research Schedule: Task |Proposed date of completion | |Collecting responses to questionnaire |30/11/2009 & 1/12/2009 | |Interpreting the responses from the questionnaire |03/12/2009 | |Discussion regarding analysis of data using statistical tool |05/12/2009 | |Application of the statistical analysis to the data collected. |09/12/2009 | |Forming the results and conclusion |11/12/2009 | C. Literature review: An Exploratory Study of Sales Promotion Activities in Toilet Soap Category: An Insight into Consumer and Retailer Perceptions – Kureshi Sonal and Vyas Preeta. In this research paper, an attempt has been made to examine the nature of sales promotion activities in toilet soap category in India, study retailer perceptions with respect to these activities and also get an insight into consumer perceptions of these activities. Findings indicate that with respect to the nature of the schemes, premiums (free gifts) were found to be the most frequently used in both premium and popular toilet soap category, followed by price offs. Retailers’ perceived price offs had relatively greater impact compared to any other forms of sales promotion.
In line with the retailers’ perceptions, the findings of consumer perceptions indicated that price offs were the most preferred type of sales promotion. • Supplier Attributes That Impact Institutional Buying Behavior – A study on FMCG supplies to Hotel Industry – Githa S Heggde and D. Sudharani Ravindran. The study on the functional gap implied how and why a particular buyer or a group reacted to the decisions of the producer in selecting a particular product and its utilization. The study of this functional gap proved that effective positioning of the product made the market place work better so that the buyers make better decisions to buy the product.
The study involved the consumer involvement in the decision making process through the involvement theory. This theory is about consumer learning, which presumes that the degree of interest in purchase of an item depends upon the risks involved. The involvement is also dependent on nature of the product or service and the psychology of the customer. • Consumer buying behavior in Asian markets – Mark Speece. The findings of this study indicated that Asian middle-class was primarily value-orientated. The specific criteria for choice that Asian consumers used was different for various product characteristics. There was strong value orientation for product quality issues and price.
Asian consumers looked more closely at product characteristics to ensure a purchase was worth the price they were being asked to pay. Consumers ‘balance off’ quality and price, which means that they wanted good products, but not necessarily the best which they consider too expensive, or the cheapest which they do not trust in quality terms. Within that, how consumers across Asian markets reach their decisions is not so different from how western consumers reach theirs. • Consumer Buying Behavior of, and Perceptions towards, Retail brand baby products – Adelina Broadbridge and Henry Morgan. For some consumers, retail brand products were regarded as superior to well known manufacturers brands (Gallup, 1997).
A successful brand was perceived as possessins sustainable unique added values (de Chernatony and McDonald, 1998) or representing a variety of ideas and additional attributes (Gardner, 1955)and this was extended to many retail brand products. A higher risk tolerance usually occurred when the consumer required greater assurance about quality rather than price although for high priced items, social and performance risk slowed the growth of retail brands. D. Analysis of results: [pic] Fig 1. Ranking of soap attributes in purchase of soap Finding 1: Contrary to the assumption, Quality was ranked first by the majority of the people. [pic] Fig 2 Ranking of price by customers while purchasing soap Finding 2: 41. 6% of the respondents ranked price as the second most important attribute they consider while purchasing soap. The price sensitivity of the sample was checked. There were asked to identify for which price range increase they would change their brand. As shown in the bar chart below, most people said that they would change the brand only for a price increase of greater than 15%. [pic] Fig 3 Price sensitivity of consumers buying soap Segmenting the sample on the basis of the gender, the price sensitivity was checked again. It was seen that females showed greater price sensitivity towards higher levels of price increase, while the males showed greater price sensitivity at lower levels of price increase. [pic]
Fig 4. Soap price sensitivity difference in males and females. Another aspect that was evaluated was if the respondents were aware of the phenomenon of hidden pricing in soaps. While a majority, i. e. , 85% knew about hidden pricing, a surprising percentage of only 68% said that they would change their brand due to hidden pricing. [pic][pic] Fig 5. Knowledge of hidden pricing among consumers and change in purchase behavior E. Summary: 1. After the analysis of results, we come to conclusion to reject the null hypothesis and accept the alternate hypothesis. 2. Hence, “Price is not the most significant factor in the purchase decision of soaps. “
We can also see a number of other interesting conclusions – We can see that in the purview of soaps based on the considered sample, they are • Majority of the respondents felt that quality is a stronger deciding factor than price. • Most of the respondents were price sensitive only to the higher levels of price increase. • Females are more brand loyal than males in the lower price ranges. They change brands only for a higher price increase. • Though a majority of the respondents knew about the phenomenon of hidden pricing, some of them still don’t view it as a reason strong enough to change brands. F. Conclusion: G. Scope for further studies: