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CONCEPT
Consumer
The attitude of consumer or buyer decides how demand will emerge for a new product
and service and how existing goods and services will be sold. The attitude in turn
depends upon many economic, social, cultural, climatic factors. The decisions are also
influenced by education, stage of economic development, lifestyle, information, size of
family and hoast of other factors.
To understand consumers each brand has to start by asking several basic questions:
WHO?
Who is the consumer? What are consumers demographics? Where does she stay? Which
socio-economic class does she hail from? Who can influence her purchase behaviour?
WHY?
Why does she buy this product? This brand? What are her beliefs? What is her attitude
towards this brand and the key competitors? What needs does this brand fulfill?
WHEN?
When does she buy the brand? Daily? Monthly? When does she use the brand?
WHERE?
Where does she buy the brand? Where else may she want to buy the brand? Where does
she use the brand? At home? Outside?
Customer
Whos running the organization?
Customers!!!
By Tom Peters
Its an old saying that customer is the king because he is the person on whose decision
demand of any product or any service is dependent.
The purpose of a business organization is to achieve the objectives set out by its
stakeholders, its shareholders, its employees and others. But among the most important
players in this game are the customers of the business. No business can be successful if it
ignores the needs of its customers.
CONSUMER BEHAVIOUR
Meaning and definition
The study of consumer behaviour implies how and why a particular consumer or group
reacts to decisions of producers. Consumer behaviour could be defined as those actions
directly involved in obtaining, consuming, and disposing of products and services,
including the decisions process that proceeds and follow the action.
According to another author consumer behaviour is the behaviour that consumer display
in scanning for purchasing, using, evaluating and disposing of products and services that
they expect will satisfy their needs. The study of consumer behaviour is the study of how
individuals make decisions to spend their available resources (time, money, effort) on
consumption related items. It includes the study of what to buy, when to buy, why to buy,
from where to buy, how often to buy, and how often they will use it.
Normally in consumer behaviour one studies the behaviour of consumers for
consumption goods but in the study the behaviour of the buyer is also included. He may
be user i.e. ultimate consumer or he may be buying for someone else.
In a competitive environment, one cannot trust a product or a consumer. The producer has
to produce what is demanded or what can be demanded. Study of consumer behaviour
will help us to know what can be sold and what goods and services are likely to get
rejected.
In certain products like medicines one buys on the prescription of a physician which is
also a part of consumer behaviour. In case of capital goods that is plant, equipment,
machinery, buildings etc the decisions are often based on technical advise of others. In
case of industrial raw materials the decision is influenced by supplier of equipment. Then
there are purely consumer goods with short life and once they are used they extinguish.
They are called Fast Moving Consumer Goods (FMCG). There are other consumer goods
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Economics
Economic theory talks about the producers of goods and consumers of goods. A
manufacturer makes consumption goods at a price and offers them to consumers at a
price. The consumers perceive value in the goods and are willing to pay a particular price
for the goods. Economic theory states that lower the price, higher the demand. But since
the manufacturer is trying to maximize his profits, the demand-supply situation arrives at
an equilibrium position. The economic theory of consumption gets more interesting as the
number of manufacturers increases and there is competition amongst them for the
consumers wallet. Economic theory treats consumers as purely rational beings.
P
R
DEMAND
I
C
E
QUANTITY
Buying behaviour
Consumer will buy whatever needed by him. But whatever he buys depends on some
factors. The consumer buying is based on a particular behaviour, which if predicted helps
the marketer to market his products thereby increasing the profits. This buying behaviour
can be explained in the following manner:
Buying
Behaviour
Ability
Opportunity
*
Motivation
Buying decision
For some purchases, a consumer will spend very little time considering the purchase itself
before making the decision to buy e.g. buying a roll of selotape. However, in other cases,
consumers will ask the opinions of other people before making their purchase decision.
Hence, marketers are always interested in learning which people are likely to influence
the purchase decisions of a typical consumer in a target group. For example, if a member
of your family is considering attending college, then it is unlikely that they will decide
which college to attend without first discussing the matter with several people. The
opinions of parents, siblings, friends, teachers, professional acquaintances, etc. will all
have a certain degree of influence over the persons final decision. Identifying the key
influencers is important. Companies may be able to target some forms of promotional
activity at the influencers, so that they in turn will speak favourably about the companys
products/services to the actual purchaser or user.
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7. Others
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Brand
Beliefs
Evaluations
Intentions
These are linked to the main three components of attitudes. Brand beliefs are the
cogniting (thinking) component of attitudes, brand evaluations, the affecting component
and intention to buy, the conative component. This linkage gives the high involvement
hierarchy of effects, brand beliefs influence evaluation, which influence intention to buy.
All these components are linked to behaviour.
There are important predicting and diagnostic differences among three components and
measures when prediction is of prime concern then behavioural intention measures are
most appropriate, since they offer the greatest predictive power, but are limited in their
diagnostic power. This is basically because of their inability to reveal why consumers
intend.
For example, consumer does not want to shop from a particular store for a number of
reasons. Intention measures do not reveal these reasons like convenient shopping hours.
Therefore, reasons for consumers attitudes and intention can be known by measuring
beliefs.
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Family influences
Family is an important influence on purchase decisions. Bonnet and Kassarjian say
Attitudes towards personal hygiene, preferences for food items etc. are acquired from
parents.
Peer group influences
Researchers say that peer groups are much more likely than advertising to influence
attitudes and purchasing behaviour.
Personality
Personality also affects consumers attitudes. Traits such as aggression, extroversion,
submissiveness or authoritarianism may influence attitudes toward brands and products.
Information and experience
According to learning theory, consumers past experiences influence their brand attitude
and condition their future behaviour. It is seen that brand loyalty will quickly end if brand
does not perform well. Therefore, information and experience also determines attitude.
Role of Direct or Indirect experience
Attitudes are formed as a result of direct contact with the object. Products that fail to
perform as expected can easily lead to negative attitudes. Sometimes, even in absence of
actual experience with an object one can form attitude. For example, many consumers
have never driven Mercedes Benz or spent a vacation in Switzerland, but then also form
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Effective communication
For changing the attitudes of consumers it is essential to treat the process of change as a
form of information processing that is being subjected to persuasive communications. So,
advertisers need to use persuasive communications in their advertisement.
Cognitive dissonance
According to this, all people strive to be consistent, if they hold two psychologically
inconsistent beliefs / ideas / values / attitudes at the same time or if their behaviour
contradicts these cognitions, they will find a way of reducing tension. At this moment,
marketer can come up with the benefits of the product, so the consumer can reduce
tension by buying that product and dissonance stage ends.
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Education
The level of education also affects the behaviour as a consumer. An illiterate man has no
interest in newspapers; books and magazines but people with high education need these
products regularly. In the matter of other products, consumption also differs widely,
therefore sometimes it is desirable to classify as per level of education.
Income
The income of an individual or family plays an important role in his behaviour as a
consumer. The demand of products for rich, high income, middle income, low income
and poor differs widely and therefore it is most important criteria for social classification.
But people even in same bracket behave differently based on many other factors such as
place of their residence (urban, rural) or even state. Even people with same education,
occupation and income behave differently in different regions due to cultural factors,
climate, traditions, social customs, etc.
Religion
Religion is another factor, which influences the behaviour, as a consumer too
consumption of certain products is tobacco in some religion but permitted in other
irrespective of other factors. Jains, Brahmins, Agrawals generally will not eat meat but it
is openly consumed by many other classes. Sikhs will not consume tobacco and
cigarettes. Not only in the matter of eating religion also affects consumption in other
ways. People of different religion have different festivals when they are gee and happy
and buy new things for self, family and for gifting. These factors affect their behaviour as
a consumer and are very important for marketer.
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BUYER BEHAVIOUR
Buyer behaviour model
How does a consumer make a purchase decision? What are the factors that influence this
process? How do these factors interact among themselves?
To explain in a very simple manner, say a boy feels thirsty. He wants a drink of water.
While grabbing a bottle of water, his eyes fall on the bottle of Pepsi. Will he pick the
Pepsi? What made his mother stock Pepsi at home? Was it meant for the kid or was it
meant for the guests arriving at 4 p.m.
A large amount of work has been done in the area of buyer behaviour. Models have been
developed to explain the various factors that influence purchase behaviour.
At the heart of any buyer behaviour model is the buying process:
Need recognition
Information research
Evaluation of alternatives
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Utilitarian influence the consumers confirms with the wishes of others in order
to obtain a reward or avoid punishment.
Visualizers v/s verbalizers Visualizers are those who prefer visual information
and products that stress the visual and verbalizers are those who prefer written or
verbal information and products.
Need for Cognition (NC) Need for Cognition measures a persons craving for
or enjoyment of thinking. It is seen through research that consumers who are high
in NC are more likely to see that part of an ad first that is rich in product related
information are unresponsive to the contractual or peripheral aspects of the ad,
such as the model or the situation in which the product is used.
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Decision-making
When one decides to buy a particular product it is an economic decision and expectations
play an important role. One expects best of performance, durability, and dependability
from a product or a service. Expectancy can be defined as a monetary belief concerning
the likelihood that a particular act will be followed by a particular outcome. Act is the
decision to buy a particular service or product and outcome is satisfaction or
dissatisfaction from use/consumption of purchased products or service. Finally there are a
number of alternatives for each product or service. The consumer has to decide which one
should be bought. In case of consumer non-durables choice is immense. Be it shampoo,
soap, wheat flour, cosmetics, garments or consumer durables like car, refrigerator,
washing machine, T.V., computer or something else or services like restaurant, finance,
doctor or others having long life, degree of involvement is high. In case of short life
FMCG the involvement is low and the degree of involvement is medium in case of items
which have medium life and have to be replaced after some time.
The degree of involvement depends upon the level of knowledge, information,
psychology, culture and social system for the same product in different settings. The
involvements are ego involvement, commitment, communication, involvement, purchase
importance and extent of information research.
The decision making process is a process where by a buyer decides to purchase a
particular product out of various available alternatives. The buyer expects best of
performance, durability and dependability, which he evaluates from a product. The
process of selection and final selection is known as buying decision making.
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Interest in product/service
Evaluation
Rejection/purchase
Product evaluation
No future purchase
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The decision-making process starts by awareness. This is whether you are aware about
the product or not. Take the case of a shampoo. For instance there are hundreds of
shampoos available in the Indian market but unless the consumer is aware about its
performance, the brand is not considered. Unless he knows about the availability of the
product (in this case take a shampoo) of a particular brand, it will not enter into consumer
decision-making. Therefore, it is the function of the marketer to make the prospective
customers to know about a product i.e. consumer must be informed about its availability.
The next stage is your interest in the product. This can be there or can be developed only
if you very well know the utility of the product i.e. for what all purposes the product can
be used. Say if someone has to decide to buy a car, he must not restrict his choice to a
few well-known brands, he must show interest in the new brands also. This is equally
applicable to any other product also. If there are 10/15 shampoo brands in the market all
of them should interest the customer, so that he may evaluate them.
Evaluation in certain items can be done by the trial of the product. For instance, these
days most car producers allow trial run and one can evaluate the automobile by trial run.
In case of certain consumer items like shampoos, washing powders, etc. small packets are
available. The consumer before making the purchase decision can buy small packs for
trial.
After trial or evaluation of its attributes the consumer may either purchase or reject the
product or the service. If the consumer decides to purchase the product, he gets first hand
experience and the product can be evaluated once again. For example, if a consumer
purchases a shampoo and likes it, he will have repeat purchase. In case of durables like
refrigerator, T.V., etc. if one finds the product as per his expectations; he will not only
adopt it but will recommend it to others as well. If after the use the product is not found
satisfactory it will not only be rejected but the experience will be narrated to others also.
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Alternative 2
is well known.
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Alternative 2
Buy cheap brand
market share
Buy new innovative product
reputation
Buy international brands
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PURCHASES
Methods of purchases
The method of purchase depends upon the product to be purchased and purchase
intentions. The purchases can be fully planned, partially planned or unplanned.
Fully planned purchases
Most of the purchases of consumer durables like T.V., cars, refrigerators, cooking range
are fully planned. Similarly purchases of durables like house property, insurance policy
are fully planned. They are normally purchased after proper evaluation of the product. In
these cases consumer decides in advance what product model and what brand he will buy.
The author survey in Delhi suggests that 90 percent of purchases of durables and
consumer durables are fully planned.
The next category of purchases is daily consumption items for which a list of products to
be purchased is decided before visiting a shop or a store i.e. shopping list is decided
before stepping out of the house. But very often the brand is decided at the shop after
looking around; only in few items the brand is also predetermined but the decision
sometimes is changed after visiting the shop/store on the recommendation of the
retailer/shop keeper or by seeing the product.
Partially planned purchases
In this category those items fall which consumer intents to buy but does not make a
shopping list before visiting the store/shop. In this group often the decision on the
quantity to be purchased is decided by seeing the prices, the display of packaging and the
mood of the consumer at the time of purchase. For instance, a consumer may decide
before visit to the shop that what items he wants to purchase like soap, tea, wheat flour,
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When one visits a fair, exhibition or mela almost 100 percent of purchases are unplanned.
People in India visit many fairs and melas where they go with the intention to buy certain
goods but neither have they decided in advance their purchase basket nor they have
shopping list. If they find something attractive to purchase either price wise, quality wise
or product wise or they see some new product purchases are made spontaneously without
any prior plan.
The unplanned purchases can be under following circumstances:
Spontaneous.
Power compulsion and intensity to acquire a product.
Excitement and stimulation.
Situational influence.
Purchase in fairs, exhibitions.
The survey of buyers in Delhi suggests that only 60-70 percent of purchases are planned,
23-30 percent of purchases are partially planned and 10-20 percent of purchases are
unplanned.
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Process of purchases
Purchases can be made in the following ways:
Home shopping salesman, hawkers.
Direct mail.
E-commerce/telemarketing.
Visiting a shop or store or showroom.
Home shopping
There was a time when very high percentages of purchases were made through home
shopping. Now in USA and other developed countries the role of home shopping has very
much reduced and now does not account for more than 10 percent of total purchases.
However, in India such purchases are much higher of the total, especially in rural areas
where shops are few and on them all the products are not available. Therefore when a
hawker or a salesperson visits a house, he induces the consumer to purchase from him.
Many persons specially ladies purchase from them to save time and inconvenience to
visit the market. In order to help consumers to buy sitting at home now many suppliers of
food, drinks, ice-creams, pizza are delivered at home. Such purchases are increasing day
by day and the share of home purchases in the recent years has gone up from 10 percent
in 1999 to 15 percent in 2001 in Delhi as per the survey. But home purchases are of two
types of goods. One those which are branded and well known and other in which brand
does not matter or where it is felt that it is a bargain purchase when sales person of well
known companies make door to door selling for sales promotion. In rural areas home
purchases are also made of products, which are not available on the shop in villages.
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Direct mailing
In Europe, USA and Japan a significant purchases are made through direct mail. In these
system manufacturers, distributors or marketer mails the catalogue to the consumers
giving certain basic details about the product, its price and mode of payment preferred by
the seller. Some customers in USA get lots of such mails everyday. Some of the
consumers study them and place orders but some others discard such mail literature. In
India also some companies are mailing literature to the consumers directly or through
agencies. But most of the consumers do not have faith in such sales and just ignore them.
They are afraid that they may not be cheated with regard to the product or it may be
inferior or may not be dispatched at all. The theory of such marketing is that it eliminates
intermediaries and so consumers get products at cheaper price. But consumers buy them
through mail only if they are well known brands; in other cases one prefers to see the
product. Therefore this system of purchase is not popular in India in spite of renewed
efforts by some companies but it is quite popular in USA.
E-Commerce, Telemarketing
E-commerce is becoming increasingly popular round the globe. Telemarketing is
gradually becoming popular. In this type of sales the marketer gets telephone numbers of
likely consumers and tries to persuade them to buy the particular property, service or
product. Its basic limitation is that most of the people in India do not have telephones and
those who have telephones do not want to talk during office hours; still insurance
companies and banks are trying in a big way.
Retail shop purchases
Though exact figures are not available about purchases at retail shops or departmental
stores, it is estimated that in USA 90 percent of purchases are in stores. In India also the
purchases from shops may be almost same percentage or little lower because in India
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Results of purchases
Whatever process and method of purchase is adopted the ultimate objective of a
consumer is to get a satisfaction from the use or consumption of a product, which may be
one or the other as shown below:
Outcome of purchase
Results match
Expectation
Results are
better than
Expectation
Results below
Expectation
Based on experience and results the consumer reconfirms his decision for the failure (if
result matches expectations or are better than expectations) but modifies his decision if he
is not satisfied. The post purchase evaluation by the consumers is important not only for
the consumers for future decisions but they are also equally important and valuable for
the marketer to maintain and expand its sales. There are four purchase results for the
consumer. They are:
First, he learns whether his perception about a product or service was right decision.
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CASE STUDY
Research Methodology
1. Problem identification
Maricos Objectives:
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Organization Profile
History of Marico
The history of Marico can be traced all the way back to 1857, when a young man Kanji
Moorarji, set up a modest trade in spices which, in time, grew to include other export
worthy commodities. This firm's success gave birth to The Bombay Oil Industries in
1948, set up to convert the traditional buying strengths of the firm in the commodities
areas, to value added manufactured products.
At first Bombay Oil was involved in copra trading besides crushing and refining of
vegetable oils. Gradually, the company established itself firmly as a marketer of branded
vegetable oils and later expanded into fatty acids, specialty chemicals and spice extracts.
In 1983, Bombay Oil divisionalised its operations to create three Businesses: a Consumer
Products Division; a Fatty acids and Chemicals Division and an Oleoresins Division, also
called the Spice Extracts Division.
In 1990, Bombay Oil again restructured itself to form several companies, each focusing
on a specialized area of business. In April 1990, the Consumer Products Division became
Marico.
The history of Marico can be traced all the way back to 1857, when a young man Kanji
Moorarji, set up a modest trade in spices which, in time, grew to include other export
worthy commodities. This firm's success gave birth to The Bombay Oil Industries in
1948, set up to convert the traditional buying strengths of the firm in the commodities
areas, to value added manufactured products
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About Marico
A leading Indian group operating in:
Consumer Products.
Aesthetic Services.
Global Ayurvedics business.
Financial Year 2002-03 Turnover ~ Rs.7.75 billion (USD 163 Million) 12 brands and
extensions with leadership in respective categories are as follows:
Parachute, Saffola, Sweekar, Hair & Care, Shanti, Mediker, Mealmaker, Sil, Revive,
Kaya and Sundari.
The Overseas Sales franchise of Marico's branded FMCG products is one of the largest
among the Indian companies.
Marico's own manufacturing facilities are located at Goa, Kanjikode, Jalgaon, Saswad,
Pondicherry and Daman Supported by subcontracting units.
In Bangladesh, Marico operates through Marico Bangladesh Limited, a wholly owned
subsidiary manufacturing facility at Mouchak, near Gazipur.
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Maricos International Business is one of the top three among the Indian Consumer
Goods companies. Marico reaches, more than fifteen countries in the Middle East and the
Asian sub-continent. Maricos product offerings in the international markets include
Parachute Coconut Oil, Perfumed Oils, Hair Creams and edible oils.
IBGs product offering
The portfolio comprises:
Parachute Coconut Oil
Parachute Gold - a hair oil
Parachute Hair Cream
Parachute Beliphool a perfumed hair oil
Parachute Rose a perfumed hair oil
Parachute Shanti Him Kesh Tel a cooling hair oil
Saffola and Sweekar Refined edible oils
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Geographical Reach
Our products reach several countries in the Middle East and the Asian sub-continent:
UAE, Saudi, Oman, Qatar, Bahrain, Kuwait, Yemen, Bangladesh, Pakistan, Nepal,
Bhutan, and Sri Lanka, US, Canada, Singapore, Malaysia, Australia and Afghanistan.
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About Parachute
Parachute is premium edible grade oil, a market leader in its category. Synonymous with
pure coconut oil in the market, Parachute is positioned on the platform of Vital
Nourishment today. From a loosely available commodity to a path-breaking brand,
Parachute pioneered the switch from coconut oil sold in tins to plastic. Parachute is also
available in pouch packs, to service the rural sectors, increasing penetration. The
positioning of Parachute has evolved over time. From the initial stand of purity to that of
clarity to the `Coconut Dream' theme, with a new look and logo, to today's positioning of
vital nourishment. The Coconut Dream logo is seen as an opportunity to transform
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Our consumers
Parachute's primary target has been women of all ages. The brand has a huge loyalty, not
only in the urban sections of India but also the rural. Parachute has several brand
extensions, each filling existing need gaps, acquired from consumer insight.
Quality
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Quality is all about satisfying consumers. It is not about profits or efficiencies but
keeping the consumer happy, so that he/she stays loyal. One of the basic requirements to
do this is to give the consumer a consistent product.
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Frequency
60
40
20
0
Conclusion
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Hair oil is an every day habit with most of the people. Therefore a large chunk of market
consists of bulk purchase like tin or bottle. This signifies that market for blister pack is
small and niche.
Purchase of blister pack
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Once in 2 weeks
Once a month
20
Count
10
Others ____________
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5.0%
hoarding
3.7%
television
9.3%
at the shop/outlet
61.0%
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70
tin
13.7%
sachet
11.7%
bottle
55.0%
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100
80
60
40
Count
20
In this graph X-axis shows the frequency of hair oil application, and the Y-axis shows
purchase of blister pack.
The graph clearly shows that in the category of people applying hair oil regularly, the
purchase of blister pack is not regular and mainly on occasions of traveling purpose or as
and when needed. This strengthens our conclusion from the earlier chart that regular oil
users are not opting for blister pack for their general usage.
Other than this we can se from the graph that people those who are purchasing blister
pack regularly are in the habit of using oil rarely or once in a month time.
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how many times you can apply blister pack * sex Crosstabulation
Count
sex
male
how many
times you
can apply
blister pack
once
twice
thrice
There is not quantity
even for one time
Others ____________
Total
40
145
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female
34
29
4
Total
10
5
229
1
71
6
300
74
174
36
160
140
120
100
80
60
sex
Count
40
20
male
female
once
thrice
twice
Others ____________
There is not quantit
The table and accompanied graph shows that most mail says that quantity of hair oil
blister pack is sufficient to use twice, while the most number of female says they can
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As depicted by the table and chart given below, maximum numbers of respondents are
using blister pack either for traveling for some other purpose but not for regular use.
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Valid
When travelling
When my regular pack
is over
As and when 1 need it
Others ____________
Total
Frequency
103
Percent
34.3
Valid Percent
34.3
Cumulative
Percent
34.3
65
21.7
21.7
56.0
127
5
300
42.3
1.7
100.0
42.3
1.7
100.0
98.3
100.0
120
100
80
60
Frequency
40
20
0
When travelling
Others ____________
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100
80
60
40
Count
20
yes
0
no
cut
fold
pierce
bite
bend
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Opportunities
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Findings
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Conclusion
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Recommendations
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Recommendations as based on the case are as per the four Ps of marketing, i.e:
Product
Price
Place
Promotion
Product:
As far as product is concerned there is not any necessity of changing the basic features of
product. Parachute hair oil enjoys a great customer satisfaction and brand loyalty. Our
suggestion is in relation to the packaging. Most of the customer feels that there should be
a cap at the top so that after using the oil from blister pack they can recap it, as it will
prevent oil wastage.
Price:
As far as price is concerned we cant suggest anything better as it is already competitive.
Place:
Although distribution channel of Marico is among the best in corporate India, during our
retail analysis we found that many of the retailers are not storing the blister pack.
Company needs to place blister pack on most of the stores and especially on pan-beedi
shops were the lower segment people comes more, who are the major customers of blister
pack.
Many of the retailers are not storing blister pack and storing the local brands of
competitors in the same category. The major reason posted by retailers is low margin in
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BIBLIOGRAPHY
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Web sites:
www.marketingteacher.com
www.bized.ac.uk
www.ihec.net
www.busmgt.ulst.ac.uk
www.austrainer.com
www.maricoindia.com
Books:
Understanding Consumers By M.G.Parameswaram.
Consumer Behaviour By P.C. Jain and Monica Bhatt.
Newspapers:
The Times of India
The Economic Times
Mid Day
`
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