Consumer Behavior Topic: Lays

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Submitted to: Sir Shazif Submitted by:

Saaida Akram (093361) Ghazal Siddique(093362) Bilal Khan(093365) Momin Khan(0933

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Acknowledgement First of all we would like to thank ALMIGHTY ALLAH for giving us the courage to work on this project. Special thanks to our instructor Mr. Shazif Iqbal for his zeal and support. We would also like to thank the people who were generous enough for giving us our required information and their precious time.

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Contents
................................................................................................................... 1 Consumer Behavior................................................................1 Topic: Lays....................................................................................1 Submitted to: Sir Shazif ................................2 Submitted by:.....................2 Saaida Akram (093361).............................................................................................2 Ghazal Siddique(093362)..........................................................................................2 Bilal Khan(093365)....................................................................................................2 Momin Khan(0933...................................................................................................... 2 ................................................................................................................................. 2 Acknowledgement........................................................4 Contents..................................................................................................................... 5 Executive Summary: Introduction ........................................6 ...........................7

Important Issues:..................................................................................................... 10 Secondary Research:................................................................................................11 Primary Research: .....................11 Methods of data collection:......................................................................................12 Theories and models of consumer behavior.............................................................12 Questionnaire........................................................................................................... 24 Questionnaire evaluation.........................................................................................28

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Executive Summary: The project title already proclaims the grounds for this project. In this project we have analyzed the different segments of people concerning their behavior for purchasing LAYS. We have distributed 50 questionnaires among different class and age of people. They were asked to fill the questionnaire. This quantitative research helped us in judging various attitudes and buying behavior of the consumers. After evaluating their results we applied different models and proved different theories relating to it. These models and theories were the basis of our project and helped us in understanding the consumers behavior towards our selected product LAYS.

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Introduction

PepsiCo is a world Leader in convenient snacks, foods and beverages, with revenues of more than $39 billion and over 185,000 employees. The company consists of PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB) and PepsiCo International (PI). PAF includes Frito-Lay North America, Quaker Foods North America and all Latin America food and snack businesses, including Sabritas and Gamesa businesses in Mexico. PAB includes PepsiCo Beverages North America and all Latin American beverage businesses. PI includes all PepsiCo businesses in the United Kingdom, Europe, Asia, Middle East and Africa. PepsiCo brands are available in nearly 200 countries and generate sales at the retail level of more than $98 billion. Some of PepsiCo's brand names are more than 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of PepsiCola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001.PepsiCo offers product choices to meet a broad variety of needs and preference -- from fun-for-you items to product choices that contribute to healthier lifestyles. PepsiCos mission is To be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity. In February 1965, the Board of Directors for Frito-lay, Inc. and Pepsi-Cola announced a plan for the merger of the two companies. On June 8, 1965, the merger of Frito-Lay and Pepsi-Cola Company was approved by shareholders of both companies, and a new company called PepsiCo, Inc.
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was formed. At the time of the merger, Frito-Lay owned 46 manufacturing plants nationwide, had more than 150 distribution centers across the United States, and was listed on the New York Stock Exchange. In 1998, PepsiCo acquired Tropicana; and in 2001 acquired The Quaker Oats Company. Our Mission: Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity. Our Vision: "PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today." Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company. SLOGANS: that's another reason to smile! Lay's Potato Chips (2007) Food for the fun of it! (2007) Lay's, get your smile on! (2006-) Lay's. Want some? Betcha can't eat just one (1960s-present) Lays ka mazaa lo(Lay's Pakistan)meaning-Have fun with Lay's You can't eat just one....Lagi bet! (Lay's India) Har programme ka main food (Lay's India)meaning- The main food for every programmme

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No one can eat just one (Lay's India)

Flavors of lays:

Pakistani chicken achari Australian roasted onion and balsamic vinegar English sour cream and onion South African salsa These flavors are temporary because they are launched for world cup.

Salted French cheese Masala Tango ketchup

Salt and vinegar Hot and spicy barbecue Classic potato Sweet chili Chili lemon Baked lays There are few flavors which are available in Pakistan. In India lays have so many flavors. They should introduce those flavors which are not available in

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Pakistan. Important Issues: The consumer behavior issue that we are trying to solve is quantity, quality, fake products and availability of flavors. Based on these issues a survey was conducted based on a questionnaire sample. These are the issues that we are trying to solve: Fake products: Fake lays make their way to consumers through retailers as retailers are promised higher returns on the sale of these products then the original ones. Retailers mix original and fake which in turn is hard for a normal consumer to distinguish as the factor of impulse buying is included in these purchases. Quality: Misuse of brand name leads to the decrease in quality as Pakistani LAYS is using the PEPSICO brand name to increase its market share and providing low quality chips in the packing creating an unfavorable attitude towards the people.

Quantity: AS the increasing price as an inflation rate in Pakistan Lays decides to decrease the quantity by 10% to 15% inflation to avoid the unfavorable consumer attitude as consumers would be noticing the cost increase more than the quantity decrement. Availability of flavor: Limited flavors are driving consumer towards dissatisfaction. As compared to India Las Pakistan is not launching enough flavors to meet up the rising demand of the market as consumers are fed up with the current flavors. They need something to pair up with their lifestyles.

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Secondary Research: Before we conducted this research it was a vague perception, probably a rumor that the quality and quantity of LAYS was decreasing and some consumers doubted that there are fake lays in the market as well but there wasnt enough evidence of anything to prove that. Whereas the availability of flavors was word of mouth for every one as consumers new that there are various flavors around the world that did not make their way to the Pakistani markets. Before these issues there was issue of Halal & Haram and most of the groups & individuals focused on that issue. Thats the reason we could not find any more information about our current issues. As these issues have not been discussed before so consumer needs to understand that there are issues about the product and they must be careful about their purchases of LAYS as some individual & groups are also taking profit in the name of LAYS. Primary Research: Main objective of our research were: Consumers preference towards the brand To find out the demand of the current flavors To find out how many flavors are needed more To find out the quality difference To check up the quantity To check up consumers recommendations

Target population: The target which we identified through analysis is youth of today special the age group of 6-26. Out of the universe of 500 approximate our sample size is 50.

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Target population was observed and we asked those people who were consuming lays or at the time of conducting the survey people were interested to fill out the questionnaire.

Sample Size: The sample size of 50 was selected for the quality research as we could have given the questionnaires to every one for solution but the quality was an important issue to maintain Methods of data collection: Research design is the basic framework which provides guidelines for the rest of research process. It specifies the methods for data collection and data analysis .In this research project we have used the survey method of data collection, to be more specific questionnaire method. Respondents in the sample size were asked to fill the questionnaires to gather the data. An in-depth Interview with the LAYS Brand manager, Saad, was conducted at his office as a primary search source to know whether the issues we have discussed are known to LAYS and what are they doing to solve this issue. Theories and models of consumer behavior Consumer involvement

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Low consumer involvement and peripheral route to persuasion is consumers preference in this kind of purchase.

Brand and features preference As this is impulse buying so there is a possibility that in this kind of buying consumers might prefer French cheese flavour as their sensory stores informs them off. Plus no other brand is offering French cheese flavour s consumer will prefer this brand on others.

Attitude model: Cognitive: Lays is part of the Frito lays which is multinational firm, which shows that consumer belief about lays is positive, hence consumers have a positive attitude towards lays but the customers have a highly positive attitude towards super crisp. Affective: Consumers who are loyal to our brand are attached to it, and ads give a feeling of freshness, happiness and healthiness. This is seen in the case of large companies that prefer to buy. Conation: Buying intentions towards lays is due to quality, reliability, and price and due to consumer trust in lays. Large companies have higher intention to buy.

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Standard Learning Theory: Cognition Affect Behavior

Cognition:Lays is part of the Frito lays which is multinational firm, which shows that consumer belief about lays is positive, hence consumers have a positive attitude towards lays but the customers have a highly positive attitude towards super crisp. Affect:The effect of lays would be advertisements for e.g. they offer different flavors of lays in Cricket World cup. This affect would motive consumer to buy the product. Behavior:The behaviors of consumer will be positive toward lays. The consumer will behave in positive way and will repurchase lays. Balanced theory:Balanced theory considers how a person perceives relations among different attitude objects. In the case of lays the consumer has a positive sentiment relation especially children. They are connected to this object. Tri-component attitude model:

Conation Affective

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Cognition

Cognitive model: As parent company Pepsi has established a trust among the local people so it wasnt difficult for lays to establish a strong relation among the people. But due to the increasing competitions and inflation in Pakistan substandard commodities have been produced at very cheap rates to cop up with the local market, people feel that lays has decreased its quality which has developed a negative attitude towards the people. Affective model Halal haram issue was one of the major issues of 2008, which acquired the attention almost everyone in that era, and now several issues surround lays which are quality, quantity, flavors and fake products. So people again shifted attitudes but still these are negative towards the lays. Co native component In spite of decreasing quality and quantity lays have managed to made loyal customers that are willing to recommend it to their friends and family. ELM (elaboration likelihood model): Peripheral route to persuasion: Consumers seek low involvement in buying chips as it doesnt involve any cognitive thinking or any alternate evaluation. Mostly it involves impulse buying so consumers give very little thinking for making this decision. Attitude toward ad model:

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Exposure to an ad: Print media is the main exposure point and TV advertisement.

Judgments about the ad (cognition): Since the product is of low involvement consumer who are relatively low in need of recognition are most likely to be attracted to the peripheral aspects of an ad. In case of lays target market is attracted by (money in packet.) Feelings from the ad: Money in the packet gives the target market an emotional feeling that is happiness. Beliefs about the brand: The credibility of Pepsi Company and appearance of celebrity like Mekaal Hassan in ads showing that they have won the money. Attitude towards the ad: As the ad gives positive message hence the attitude towards the ad will be positive. Attitude towards the brand:

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The positivity of brand image and ad campaigns correlates the likeness of consumers and hence the attitude towards the brand would be favorable. How consumer store and retain information:

Sensory Input: The ad campaigns of lays, posters are the main elements of sensory Inputs in case of the consumers. Rehearsal: Continuous exposure of lays including its ads & posters would force consumers to think about the product or recall the ads/posters.

Encoding: Lays promotional strategy of promising money in the packet plays an important role for consumers to recognize the product. Now when the information from the sensory inputs is regular it move into working memory (short-term memory). This moves the consumers to at least think about the product. If either processes or even one is repeated once or twice it moves to

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the long-term memory which make easy for the consumers to retrieve the information about the product. Just Noticeable Difference: (JND) just noticeable difference is a minimum change in sensation necessary for a person to detect it. In this case lays maintained the price and reduced the quantity which is a noticeable difference. Our survey also supported this statement because 70% of respondents agreed that lays have decreased its quantity.

Celebrity Endorsement:

Company target the youth in its advertisement by casting the young popular, beautiful and good looking models or celebrities like Ali Zafar. Who are popular among todays youth. Thats why we see Ali Zafar in a lays commercial. Celebrity endorsement helps to the awareness of brand. People attracts towards the product because a celebrity use the same product in commercial. It is also a good strategy to promote the product.

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Competitors: One cant imagine about a business without competition. Lays has also some competitors. Major threats to Lays are Pringles, Kolson and Golden, Triple Em which has almost45% of the market share. But as quality of the product play an important role that is not up to the standard by the competitors. So, Lays is outstanding in all ways to the competitors like quality, quantity, price and variety of the products etc. Product Attributes Quality: LAYS CHIPS are following the concept of Siemens (Quality is when customer come back and our product dont) as far as the quality is concerned. They also not neglect the two dimensions of quality (performance & conformance) to gain the satisfaction of consumer. Features: All the features (like spiciness) and characteristics of LAYS is compiled by the company on the need and want of the consumer. Market of LAYS: As far as the LAYS is concerned with the market in which it deals is near to pure competition but due to certain factors it lies in the monopolistic competition because every company is charging the different prices according to their quality and product features and as well as target market. Lays is charging comparatively high prices from other ones in potato chips. And if we talk about the Pringles they serve the elite class with quality and style thats why they are getting too high prices which is not near to any company which deals with snacks. Style & Design:

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Style and design matter a lot on the outcome and response of the product. LAYS as the product (inside the pack and outside wrapper) has much attractive and catchy colors style and design which attracts the customer. Consumer Satisfaction : There is a balance in consumers mind between the price they pay and the quality of the product they purchase

Promotion: 1. Advertising: Lays advertises through various channels Media (FM media, TV channels, Internet links etc.) News Papers & Magazines Billboards & Banners Sponsoring various Shows and Matches Free samples

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2. Sales Promotion: Lays made sale promotion in the following ways: By launching any new product like Aquafina they get sale promotion in their business. When Lays launched they offered a package of Buy 2 and get 1 free. When Mountain Dew was launched they offered free drinks to people to develop the taste. They have a deal with KFC and Pizza Hut where they offer drinks to their customers. They decrease their prices to increase the sales to capture the market. They also decrease their prices in winter too Availability: Lays are easily available in Pakistan. Lays are available on every store.

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People easily purchase lays from there every closest market. Thats an advantage for lays. For customers there is no problem for finding the lays. Pricing Strategies: The pricing strategy which is LAYS is following, cannot be easily evaluate because from company has not mentioned clearly about any system. However most of the companies including this are following the Cost-Based Pricing. But a company cannot follow a single strategy straightly because in the FMCGs product market their will be influence of competitors based pricing along with a bit effect of customer value. It is already decided between kolson and Lays about their price strategy. They made the agreement that their prices will remain the same. They also decide the price of their packaging; they also set their strategy on (Cost + Price). Their cost includes: Man Power Machinery Electricity Raw material Employees These are some of the major traits of Lays: The preference of the customer is Lays. 1) They are the pioneer customers of Lays and hardcore loyal. 2) Independent decision making power. 3) Major source of information is TV advertisement. 4) Taste conscious 5) Quality conscious

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6) More introvert 7) Taste is the key of retaining customer Visualizer and Verbalizer: Visualizer are the advertisements which gives visual information and products that stress the visual, which includes videotape club, TV, billboard and all electronic media. The ads on TV and billboard of lays are included in visualizers. Verbalizer are in written form like newspapers, pamphlets, magazines , banners and all print media .The ads of lays given in the newspapers and magazines. Languages and Symbols: To acquire a common culture the members of society must communicate with each other effectively. The audience makers use symbols to communicate more effectively. Symbols are of two kinds verbal and non-verbal .In verbal we can take example of ad of lays given on magazine. They attracts the customer attention to buy lays product .In non-verbal symbol the use of symbol such as different colors, textures and shape like lays uses different colors yellow , red , blue to attract customers attention towards them. They have also produced a different kind of packing like Pringles in which they have been successful, but it is very rare in Pakistan. The advertisement of lays is also playing a key role in promoting their product for example they hire different celebrities like Junaid Jamshed, Ali Zafar, Dhoni, Saif Ali Khan and many more to promote their product. The company is using heavy cost on their advertisement section. Behaviour towards Lays: Behavior towards any product is like a response towards that product. Through the questionnaire and interviews we came to know that most of the childrens and some adults are addicted towards lays. They are having a positive response

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towards Lays chips. The behavior of children is also positive towards the new flavours like they introduced the new flavors in the recent Cricket World Cup and because of those children as well as the teenagers liked the new flavors which were Australian, Pakistani chicken achari and African salsa.

Questionnaire Lays Questionnaire Q: Do you prefer chips? A: Yes B: NO

(This question was put in the questionnaire to check whether consumers have interest in the chips or not, as there are other eatables available like biscuits, wafers etc. SO to fulfill his physiological need whether consumer prefer chips over these or not)

Q: What compels you to consume it? A; Brand name B: Quality C: Price

D: Any other; specify _________________________________ (This question was put in to check what drives the customer to consume LAYS, what are the cues that compel him to make the purchase?)

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Q: What size you prefer most? A: 10.rs B: 20.rs

(This question was put in to check the purchasing power of the consumers, from the LAYS perspective; they will know which pack size is preferable by the consumers)

Q: How often you consume it? A: Very often B: Often C: Sometimes D: Rarely

(This question refers to the basic need theory and brand loyalty, that how much they are willing to consume to fulfill their need)

Q: How would you rate as a product? A: Excellent B: Good C: Average D: Poor

(This question will show the consumers current attitude towards the product)

Q: Which flavors do you like the most? A: Salted E: Salt& vinegar B: French cheese C: Masala D: Barbeque

F: Tango ketchup
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(This question was asked to check which flavor of LAYS is preferable by the consumer, and which flavor can give LAYS a competitive advantage)

Q: Would you suggest other person to buy lays chips? A: Yes B: No

(This question was put in to check the rand loyalty of the consumers that how much they are brand loyal and is willing to continue with the brand and how much awareness of the brand they can create for others .e.g. word of mouth) Q: Are you satisfied with the number of flavors? A: Yes B: No

(This question was asked to check that is LAYS satisfying his consumers with the range of flavors that are currently available)

Q: Do you think lays should come up with more flavors? A: Yes; specify ___________ B: No

(This was asked to know about consumers preference of flavors about what more can be added to the range of flavors for LAYS)

Q: Lays comes in a junk food? A: Yes B: No

(This question was asked to check that how consumers think about the product)

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Q: Do you think it is healthy to consume? A: Yes B: No

(This question was asked to check that how consumers think about the product)

Q: What is your source of information regarding the purchase of it? A: Advertising B: Live demonstration C: Retail outlets

(This was included to check through which of the above mentioned sources customers are attracted towards LAYS. This question was more focused towards the companys promotional strategies)

Q: Do you think there is a difference between local and imported quality? A: Yes B: No C: Cant say

(This was to check the quality difference between the local and imported LAYS, plus with this we will also get to know whether the consumers are satisfied or not)

Q: Do you find lays packaging attractive? A: Yes B: No C: Cant say

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(It was to observe the buying behaviors of the consumers whether they get attracted to buy or not. If consumers would fins there packaging attractive then it will result in the increase share for LAYS)

Q: In recent months it has been noted that lays have decreased its quantity? A: Agree B: Disagree C: Dont know

(As it was a rumor that the quantity of LAYS was decreasing due to inflation so it was to check whether the consumers have information about this issue or no)

Q: Are you thinking of switching you brand? A: Yes; specify______________ b: No (This was to know that out of the sample how many are brand loyal) Questionnaire evaluation In this project we have analyzed the different issues that are being faced by the consumers. For this reason a questionnaire was established consisted of open ended and close ended question. The survey was conducted . The age group in this survey was 6 to 50. 50 questionnaires were distributed as a whole. The survey produced fascinating results. Survey shows that most of the population prefers chips over biscuits and wafers as their snack. Obviously advertisement, billboards and posters outside the retail outlets compels the consumer to buy these kinds of items and through a careful research we come to find out that LAYS is being widely consumed in the market. Although LAYS makes very few advertisement for their flavors because there sales are carried out even without the advertisement, single advertisement yearly is good enough.

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Widely consumed flavor is French Cheese followed by Salted and Masala but consumers are not satisfied with just these flavors, they want more innovative and fresh flavors .Although LAYS introduced its Salt & Vinegar flavor but due to lack of advertisement and communication this flavor couldnt capture the market. Another reason for the failure of such a remarkable flavor was that it could not develop the taste that local people expected. Local consumers desire the flavors that are standard and are all across the world like Flaming Hot and Classic Potatoes. A global search is carried out in developing a new flavor for the country or region and for that a research is in progress. Pakistan is a developing country and a lot of investment is required to bring forward the additional flavors that will meet up the demand of the people. In the recent years there has been a noticeable change in the LAYS packet regarding quantity and quality. The difference can easily be seen from a naked eye in a local and imported LAYS pack. The freshness in a local pack is lost, so consumers feel dissatisfaction. The quality issue is noted in the packs of Rs 10 due to the rising trend of small private companies selling the fake packs of LAYS thus decreasing the standard of LAYS for their short term profits.

Decrease in the quantity is one of the reasons which might decrease LAYS market share in the future as other local brands are giving more quantity in the same price. But decreasing the quantity is more towards a market strategy as inflation in Pakistan is about 26% and so the prices for the commodities has been increased up to 15% so keeping in view this situation LAYS decided to decrease 15% quantity by keeping the price constant. People eat LAYS knowing its considered as a junk food and its not good for the health, still this product is considered good among the consumers and they would like to recommend it to others.

As from the evaluation of our questionnaire it is clear that Lays have issues like quality, quantity, fake products and availability of flavors. Majority of the persons rated LAYS as a good product.

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Recommendation:
After all the survey we have made we would like to conclude some recommendations to LAYS in the light of consumer behavior, with which in future they can be helped to overcome these issues. LAYS has to take rational steps to stop the increasing fake products which are creating hurdles in the market growth of the original LAYS.LAYS also need to increase the quantity for a stable market in the long term. As LAYS is backed by good customer relation and a strong parent company, so they have to maintain better taste and quality even if they increase prices. Besides all this quality department should be more focused towards their job in order to maintain quality and produce chips that are best in taste and quality

Bibliography: Saad.A.Khan Lays Brand Manager 03028488348 www.google.com www.ask.com www.yahoo.com

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