Cb Report.pdf

A Research on Consumers’ Buying Behavior towards Biscuits

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A Research on Consumers’ Buying Behavior towards Biscuits

Table of Contents S.No.

Particulars

1

Executive Summary 1.1 Indian Biscuit Industry 1.1.1 Challenges Biscuit Manufacturers Will Face 1.2 Competitive Landscape

2.

3.

Problem Definition

Page No. 3 4 5 7 9

2.1 Objective of the Study

9

2.2 Scope of the Study

9

Research Design

9

3.1 Type of research

9

3.2 Information Needed

10

3.3 Collection Procedure

10

3.4 Scaling Technique

10

3.5 Fieldwork Issues

10

4.

Data Analysis

11

5.

Results

16

6.

Suggestions

18

7.

Limitations

19

8.

References

19

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A Research on Consumers’ Buying Behavior towards Biscuits

1. Executive Summary Consumer behaviour is defined as the acts of individuals (consumers) directly involved in obtaining, using and disposing of economic goods and services including the decision processes that precede and determine these acts. The biscuit and cookie industry in India has been given an industry attractiveness rating of 6.7 due to the increasing disposable incomes, changing lifestyles, growth in organised retail and increasing consumption of processed and packaged food. Its major participants are: -

1. Britannia Industries Limited is an Indian food-products corporation headquartered in Kolkata, West Bengal. It sells its Britannia and Tiger brands of biscuit throughout India. Britannia has an estimated market share of 38% 2. Parle Products Private Limited is an Indian food products company. It owns the famous biscuit brand Parle-G. As of 2012, it had a 35% dominant share of the Indian biscuit market. As of 2011, as per Nielsen, it was the largest selling biscuit brand in the world. 3. ITC Ltd. Majorly ventured into 5 product areas, Sunfeast is ITC’s packaged food division. Launched in 2003, Sunfeast has quickly become one of the top performers for the country, and with the third largest market share. 4. Surya Food & Agro Ltd is the official trading name of the brand that we know as Priyagold. The brand has been there since 1994 and has made a special place in the heart of its consumers.

This study has been done with an objective of studying the consumer behaviour of the Indian biscuit market and find the top performing and non-performing brand. Further, the non-performing brand has been analysed and suggestions have been provided on the basis of the analysis.

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A Research on Consumers’ Buying Behavior towards Biscuits

1.1

Indian Biscuit Industry

India is currently the largest consumer of biscuits and cookies in the world. The biscuit market of India is driven by factors such as increasing income of consumers, shift to premium biscuits, more manufacturing facilities set up, growing health awareness, innovation in biscuits, attractive packaging, etc. There is a significant market of biscuit in India. The industry has flourished in India immensely over the years and is still growing remarkably. The 12,000 crores biscuit industry provides an enormous opportunity for growth in India.

The biscuit industry has emerged in later parts of the 20th century and now it has become the most loved snack enjoyed by every age group. The variations in the biscuits like cholesterol free, healthy, tasty

and

easiness to carry at a reasonable cost have attracted lots of people making the industry grow at a larger pace.

Consumers even prefer higher value products and low-cost branded products

over

unbranded items as their disposable income has become high. And keeping all these points in view, the manufacturers are providing the best products at lower costs.

The industry has several players, the topmost being the Britannia and Parle which accounts for 70% of the industry’s volume and revenues. Other companies dealing in this sector include ITC, Anmol Biscuits, Surya Food Agro Ltd., Glaxo SmithKline Consumer, Unibik Foods.

The volume of biscuits market stood at $3.9 billion in 2016 and is projected to reach $8.2 billion by 2023 In the next financial year, the growth is targeted to be at 14% and will reach approx. $4.65 billion.

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A Research on Consumers’ Buying Behavior towards Biscuits

Production volume of Biscuits across India 630

PRODUCTION VOLUME IN THOUSAND METRIC TONS

640 623.7 630

620 2015 600.3

610

2016 2017

600

2018

588.4

590

580

YEAR

To sustain in the field with future growth prospects many players are trying to innovate various options. Glaxo SmithKline is promoting Horlicks. It is trying to make it stand for various breakfast products & biscuits. the other companies like ITC top in cream biscuits while Britannia tie-up with Kotak results into benefit from improvements in its manufacturing efficiency and distribution and better profitability. Thus, companies are taking prominent steps to grow and become the industry leaders.

1.1.1

Challenges Biscuit Manufacturers Will Face

Biscuits, in India, saw a moderate increase in retail sales of over 8% in 2017, which is at par with 7.8% CAGR from 2012 – 2016. The growing maturity of this product category and shift in consumer preferences could be the possible factors for slow-to-moderate growth of the product categories. Premiumization and healthier product options are the megatrends observed in the market among the working population and young adults in the country which could be the key target audience for biscuit suppliers. Pocket-friendly packs, availability across channels, aggressive promotion strategies and maintaining efficient supply-chain are few of the prominent focus areas for players operating in the market. However, biscuits manufacturers are poised to witness some major challenges which will force them to change the way they work in 2018.

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A Research on Consumers’ Buying Behavior towards Biscuits

Challenge 1: Volatility in Raw Material Prices The wholesale prices of the raw materials such as Wheat flour, sugar, butter, cocoa, etc., which are key ingredients in the manufacturing of biscuits, are highly volatile. For instance: Sugar and milk prices in India has risen at a CAGR of over 4.5% & 5.5%, respectively, during 2013-2017. Similarly, global cocoa prices witnessed a rise at a CAGR of over 4% during 2013-2017. This, in turn, has led to an increase in the average selling price of biscuits. India is a highly price sensitive country, manufacturers face difficulties to increase prices due to which value chain stakeholders are expected to witness shrinking profit margins. A biscuit manufacturer can’t control raw material price fluctuations but can adopt tools to help formulate an effective business strategy to remain steady during the fluctuations in raw material prices.

Challenge 2: Low acceptance of Mid & Premium segment biscuits in Rural Areas of the country which constitutes around 65% of the population Majority of the demand for mid & premium segment biscuits comes from the Urban population in India. Acceptance of such products is very low in the rural part of the country on account of high prices. Rural consumers prefer glucose biscuits because of the low price and more quantity. The demand for these economy segment biscuits in rural India is anticipated to get further affected in the coming years due to problems like a deficit in monsoon, etc. resulting in lower income due to which marginal consumer whose income growth does not keep pace with inflation are not able to spend on non-necessity items. In a highly price sensitive environment of the country, customer seeks value-for-money. Understanding a customer w.r.t. to their spending preferences, expectations, aspirations, etc. is the need-of-the-hour for an FMCG company.

Challenge 3: Highly Fragmented Market The biscuit majors operating in India are expected to face high competition from regional players like Unibic, which has deeply penetrated roots in southern part of India. For instance, in cookies segment, Unibic has witnessed the highest growth in southern states when compared to other marquee names in the country. Moreover, key players in the market have diversified brand portfolio further fragmenting the biscuit market. Due to this, the companies are not able to focus on the sales of a single brand. Also, this results in higher expenditure on marketing and other promotional activities, eventually, shrinking the profits. In addition to regional penetration of brands, an Unorganized SBPPSE, AUD

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A Research on Consumers’ Buying Behavior towards Biscuits

segment of the biscuit market, which accounted for over 40% share in 2017, is another area of concern for the players operating in India. Although organized players have an impressive reach in a rural part of India, low priced unorganized biscuits are hindering the sales of branded biscuits and this unorganized sector takes advantage of the price sensitivity of the Indian consumer. Amongst this grey area of the market, it is very important to identify a local partner to familiarize yourself with the ground reality. The unorganized sector of the market can be seen as an untapped opportunity and a market participant should use market intelligence to leverage this opportunity. Understanding a customer’s perception can be the key to establish the footprints and penetrate deeper into this area of the market.

Challenge 4: Lack of Exclusive Retail Distribution Channel Biscuits, being a low-priced product, offers limited margins across the value chain. Unlike small bakeries across the country like Frontier which have their exclusive retail outlets, key players lack exclusive retail channel resulting in sharing their margins throughout the value chain. An effective distribution strategy is what it takes to reach to your customer efficiently. For a product like a biscuit, managing a distribution network is a challenge. On one hand, an exclusive retail outlet could be a much expensive option for a rural area and on the other, selling a product in the traditional store is what the crowd is following blindly. With more than ever developing the modern retail format, increasing consumer awareness across the country, etc. making the product visible in the market should be the prime focus area.

1.2

Competitive Landscape

• Premium offerings initiated by sweet biscuit manufacturers Parle Products Pvt Ltd under its new division Parle Platina Collection heavily advertised its premium biscuits especially in its cookies and filled biscuits range, similarly, Britannia Industries Ltd entered with the extension of its premium range of cookies un der the brand name Pure Magic Deuce. Parle Products Pvt Ltd set an achievable target within premium biscuits during the forecast period. Middle-class consumers are willing to pay extra for the right value products and are consuming more filled biscuits and cookies, slowly shifting from plain biscuits. SBPPSE, AUD

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A Research on Consumers’ Buying Behavior towards Biscuits

Even lower income groups are shifting to filled biscuits and cookies as many companies are offering such biscuits at affordable prices compared to some of the premium brands. Strong demand is expected from the lower middle-class population for premium biscuits as there are equal opportunities for lower income groups living in India to earn more in the forecast period. • Healthy living trend drives snack manufacturers to focus on healthy snacks Naturelle India Pvt Ltd, which is the country’s biggest manufacturer of snack bars, is focusing on healthy snack options for its healthconscious consumers. The company’s Rite Bite brand encompasses a variety of snack bars for various consumer needs. Meal replacement snack bars, protein replenishment and snack bars made from herbal ingredients are some of the products available under its portfolio. Similarly, KBB Nuts Pvt Ltd under the brand name Tulsi has an assortment of dried nuts that are available in various pack sizes that can be consumed on the go. These nuts are usually consumed between meals to prevent hunger and offer the correct proteins and nutrients for consumers. Many regional snacks manufacturers and private label are also following the healthy living trend by offering various fruit snacks, which is expected to create better growth opportunities during the forecast period • Future Consumer Enterprises Ltd rapidly expanding in snacks Future Group’s subsidiary Future Consumer Enterprises Ltd aggressively promoted its snack products including sweet biscuits and fruit snacks amongst other packaged food in India. The company is heavily stocking its products in its own supermarkets and hypermarkets to attract more consumers. Selling under the brand name Tasty Treat the company is offering strong competition to other snack manufacturers with its wide range of products at different price points. Future Consumer Enterprises Ltd also promotes its brands through various media from attractive advertisements to reach a wider audience, resulting in good growth in 2018. SBPPSE, AUD

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A Research on Consumers’ Buying Behavior towards Biscuits

2. Problem Definition The study was conducted to analyse the consumer buying behaviour towards biscuits. The basic questions addressed were: •

Why do people buy biscuits?

•

How often do they buy?

•

From where do they buy?

•

What are the factors influencing the consumer's purchase decisions for biscuits?

2.1

The objective of the Study

•

To find out which is the most and least preferred brand for biscuits

•

To find which factor most affects the consumer’s decision to buy a particular biscuit.

2.2

The scope of the Study

The main objective of the study was to find out the most and least preferred brand of biscuits by the consumer in Delhi NCR, the capital city of India. This study can be helpful to the producers to identify the consumer perception, taste, beliefs and behaviour for improving their products to introduce new tactics in order to increase their sales.

3. Research Design 3.1

Type of Research: The study used is descriptive research. Descriptive research involves collecting data that explains events and then organizes, tabulates, depicts, and describes the data collection (Glass & Hopkins, 1984). The research has used various aids like graphs, charts and cross-tabulation techniques to assist the reader in appreciating the data distribution thus offering a better clarification on attitude towards biscuits brands based on different parameters like taste, preferences and availability.

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A Research on Consumers’ Buying Behavior towards Biscuits

3.2

Information Needed:

The information needed for the study was consumer

consumption of Biscuits in Delhi recorded under various parameters considered by while buying biscuits. •

Preference based on parameters like Taste, Availability, Price, Packaging etc.

•

Preference based on the type of biscuit i.e. Cream Biscuit, Marie, Glucose Biscuit etc.

•

3.3

Demographic Details

Collection Procedure: The procedure used for collection of data for the study was communication method involving personal interviews with the help of a structured questionnaire, where primary data for more 50 respondents from all across Delhi was collected, divided into two segments: •

Children- Below the age of 18 years

•

Mothers- 25 years and above

Apart from the primary data, numbers of books and report through the internet are used as the source of secondary data. The questionnaire had open-ended questions to guide the respondent while filling the questionnaire as well as investigate them for further details.

3.4

Scaling Technique: The study has utilized both nominal and ordinal techniques to compute a range of factors responsible for establishing the buying behaviour of biscuits in Delhi NCR region.

3.5

Fieldwork Issues:

As the study was done using personal interview, fieldwork

issues faced were critical. Some of the major issues faced were getting respondents to fill the survey questionnaire as people tend to ignore or pretend they are busy, so getting respondents to answer your questions was the major task.

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A Research on Consumers’ Buying Behavior towards Biscuits

4. Data Analysis The data collected through the questionnaires was segregated and cross-tabulated, wherever necessary. The following are our answers to questions framed.

1. Why do people buy biscuits? To deduce why people buy biscuits, we went on to find out when it is that people consume biscuits. The question framed by our audience was “When do you prefer eating biscuits?”. Consumption was found maximum during having their tea/coffee. Therefore, it can be concluded that people prefer consuming biscuit or a substitute product as a compliment to their beverage. Further, cross-tabulation with the results of the question “Which brands do you like?” told us that most people prefer to have cookies with their beverage.

COUNT OF WHEN DO PEOPLE PREFER EATING BISCUITS AND WHICH TYPE

No. of respondents

20

Between meals

6 3 1

2

Cookies

3 1 1 Crackers

3 1 1

2

Cream biscuits

1

2

Glucose biscuits

Whenever I have the packet with me Whenever with friends With Tea/Coffee

1 1 1 Marie

Type of Biscuits

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A Research on Consumers’ Buying Behavior towards Biscuits

2. How often do they buy? The question was asked directly, as framing it such way, gave us the best results. It was found out that people generally buy biscuits weekly (42%) or bi-monthly (34%).

COUNT OF PEOPLE HOW OFTEN DO THEY BUY

No. of Respondents

21 17

6

Daily

6

Once in a month

Twice in a month

Weekly

Time

3. From where do they buy? Most of our respondents buy from Kirana stores or baniye ki dukaan. This stipulates that biscuit is a function of normal purchasing habits of consumer and is purchased just like any other item purchased from a store

Count of people from where do they buy

No. of Respondents

50

16

40 Supermarkets 30

27

20

Kirana stores Canteen/Food courts

10

7

0 Total Type of store

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A Research on Consumers’ Buying Behavior towards Biscuits

4. What are the factors influencing the consumer's purchase decisions for biscuits?

‘It was found that out of 50 respondents, the most important factor influencing the consumer’s purchase decision for biscuits is Price and Taste, and the least affecting factor is the peer recommendation.

Factors influencing the consumers purchase decisions

39

36 32

30

27

16

RANK Price

Packaging

Availability

Brand

Fellow/Seller Advice

Taste

5. Which is the most preferred brand for biscuits? Parle Hide and Seek were seen to be the most preferred choice of our target audience.

No. of Respondents

Count of People preferring different brand of Biscuits 29 9

7

8

12

8

14

12

16

12

5

16

1

1

1

1

Brand of Biscuits

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A Research on Consumers’ Buying Behavior towards Biscuits

6. Which is the least preferred brand for a biscuit? Out of 50 respondents, 14 people dislike Oreo,13 people Britannia Bourbon, 12 people Britannia Treat which results in that people dislike Cream Biscuits the most.

Least preferred Biscuit No. of respondents

14

13

12 10

10

11

9

8

3

1

8

4 1

2

2

Least preferred biscuit Parle Marie

Good Day

Hide & Seek

Oreo

Unibic cookies

Britania Treat

50 50

Sunfeast Dark fantasy

Britannia Nutri Choice

Parle G

PriyaGold Marie lite

Parle Milano cookies

Britannia Bourbon

Krackjack

Britannia Marie gold

7. What quantity do you buy? Most people typically believe in buying bulk, for an average consumption of about 2-3 weeks. While the type of biscuit and biscuit brand had much effect on the same.

14%

22%

Family size packet (400 grams) More than one packet

24%

40%

Single medium packet (250 grams) Single small packet (100grams)

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A Research on Consumers’ Buying Behavior towards Biscuits

8. How do you typically find about a new/existing biscuit brand? The question, for the interest of understanding the consumer information channels, was kept inclusive, and the results concluded that TV commercial has a better reach than other sources.

Count of how people find about new/existing products?

100 90

10 Word of mouth

No. of Respondents

80 70

TV commercial 41

60 50 40 30 20 10

Social Media Shopping in stores

8

Online commercial

21 11

0

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A Research on Consumers’ Buying Behavior towards Biscuits

9. Age group Though the biscuits are consumed by all age groups, the purpose however with this study was to get answers from two strata, first being children (below 18), for whom innovations are being made continuously, and experiments are taking place with tastes and textures. The second strata are of adults above 25 years, the aim here is to target the ‘buyers for the family’ as they perfectly reflect the preferences of their respective families.

No. of Respondents

17

9 6

6

25 years and above Below 18 years

3

3

2

2 1

Cookies

Crackers

Cream biscuits

1

Glucose biscuits

Marie

Type of Biscuits

5. Results The following are the key pointers that we arrived at through the study: -

• The preferred occasion for consumption ❖ Most people prefer to have biscuits during Tea breaks, followed by social gatherings, such as sitting with friends.

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A Research on Consumers’ Buying Behavior towards Biscuits

• Preferred type of Biscuit ❖ Most preferred type of biscuit for the population below 18 years of age is cream biscuit. ❖ Most preferred type of biscuit for the population of 25 years and above is cookie. ❖ The strata of age below 18 years were found to be more experimental with the biscuit type, whereas those above 25 years had a definite taste, and were satisfied with the offerings under that particular type. ❖ In unison to that observation, cookies are bought in larger packets or multiple packets, whereas the cream biscuits are preferred in smaller packets. ❖ Cookies, crackers, glucose and Marie biscuits are most consumed with tea/coffee ❖ Cream biscuits are consumed most in social gatherings.

❖ All types have an equally likely chance for impulse consumption.

• Purchase patterns ❖ Consumers like to buy bulk. They prefer to have stock for the period they seem necessary.

❖ Consumers mostly buy either for the whole week or for two weeks. ❖ Supporting this argument, people also prefer to buy from their local kirana shops, as they are perfect for weekly consumed products.

• Factors affecting consumption/purchase ❖ Taste is the most influencing factor, followed by price and then availability. ❖ Peer or seller recommendation affects the consumer’s choice the least. ❖ Therefore, it is not easy to switch a customer just by word of mouth. ❖ TV advertisements are the most influential source to modern day learned consumer. ❖ Also, the brands now not only need to provide the right taste but also the right price and at all preferable times.

• Most Favourite Brand ❖ Parle Hide and Seek is the most favourite brand amongst the list of choices provided. ❖ The brand choice was alike to children as well as adults. ❖ Probable strengths behind such unanimous preference can be the product’s uniqueness in terms of taste. ❖ Moreover, the product has also got its price, packaging and availability right. SBPPSE, AUD

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A Research on Consumers’ Buying Behavior towards Biscuits

• Least Favourite Brand ❖ Oreo has the majority of being the least favoured brand. ❖ Even though the age group of below 18 prefers cream biscuits, they, however, don’t prefer Oreo or Bourbon, the cream biscuits with the traditional chocolate-layered sandwich biscuit taste. ❖ There is an observed reduction in liking for sandwich styled cream biscuits.

6. Suggestions The following are the suggestions for the brand Oreo: •

The brand targets only the higher end customers, it needs to bring packet sizes more accessible to lower income class. (or have more biscuits in ₹10 packets)

•

A certain stratum of consumers complains about the biscuit being too sweet, therefore the brand should experiment with their recipe, given that most preferred use of biscuits is with tea.

•

The brand should bring in variety like its competitors; cream filled biscuits have a higher adoption rate as compared to sandwich biscuits.

•

The biscuit type is most enjoyed by children. Therefore, advertisements targeted towards the same should be brought in.

•

Also, the company can run campaigns and offers that attract children. Like adding a sticker, or a small toy with the packet.

•

The respondents suggested that cream biscuits have a consumption rate of no more than 4-5 biscuits at one go. Therefore, company’s offerings should focus more on impulsive buyers looking for a great taste, rather than the buyers planning their consumption for the next week or two.

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A Research on Consumers’ Buying Behavior towards Biscuits

7. Limitations •

Sample Limitation- The sample size taken was very small.

•

Geographical Limitation- The study is limited to the Delhi NCR region. Hence, the results may not be true for other geographical regions.

•

Awareness- Quality of information is highly dependent upon the respondents, as they may not have exact knowledge about the brands.

•

Time Limitation- There was a paucity of time for conducting more investigation.

8. References 8.1

Literature Review

For the purpose of this market study, various researches on similar grounds were taken into consideration. According to Sofat, Kumar and Amandeep (2016), consumer behaviour is affected by the different types of biscuits of various brands. Brosekhan Abdul et. Al, explore the importance of various factors including lifestyle and its impact on the consumer buying behaviour. Dr M. Arutselvi,( 2012), ”A Study On Consumers’ Preference Towards Various Types Of Britannia Biscuits In Kanchipuram Towns”. Explains the importance of various factors such as quality, quantity, price, taste, advertisement etc.

8.2 Bibliography Kachave, K. (2018, May 02). FnBNews. Retrieved from fnbnews.com: http://www.fnbnews.com/TopNews/indian-biscuit-market-projected-to-reach-725-billionin-next-four-years-42107 MBARendezvous. (2018, April 05). MBARendezvous. Retrieved from mbarendezvous.com: https://www.mbarendezvous.com/general-awareness/biscuit-industry-in-india/ Statista.com. (2018). Statista. Retrieved from statista.com: https://www.statista.com/statistics/762057/india-biscuits-and-cookies-production-volume/

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