CHAPTER TWO RESEARCH METHODOLOGY AND STATISTICAL TOOLS APPLIED

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1 CHAPTER TWO RESEARCH METHODOLOGY AND STATISTICAL TOOLS APPLIED 2.1 An Overview of FMGC sector 2.2 Research Methodology Research Design Universe of the Study Survey Population Sampling Design Data Collection Construction of Data Construction Instruments Validity and Reliability Analysis Pattern Variables of the Study Content Analysis Statistical Tools Used Analysis

2 2.1 OVERVIEW OF FMCG SECTOR FMCG is the acronym of Fast Moving Consumer Goods which is also known as Consumer Packaged Goods (CPG). Fast moving consumer goods are products that have a quick turnover, and relatively low cost. These are all consumable items (other than groceries/pulses) that one needs to buy at regular intervals. These are items which are used daily, and so have a quick rate of consumption, and a high return. FMCG generally include a wide range of often purchased consumer products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and detergents. The purchasers usually put less thought into the purchase of FMCG than they do for other durable products such as electronic items. In comparison with other industries such as automobiles, computers, and airlines, FMCG business has a steady rate of growth, for it does not suffer from huge recession and layoffs every time the economy starts to dip. In FMCG business absolute profit made on the products is relatively small. Since they generally sell in large numbers, the overall profit on such products can be huge. FMCG can broadly be categorized into three segments which are: Household items: like Household cleaners - Dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, mosquito repellents, soaps, detergents, household accessories, etc.; Fabric wash - laundry soaps and synthetic detergents. Personal care items: : like Oral Care toothpaste, mouth-wash; Skin Care - creams, lotions; Hair Care - hair oil, shampoos, conditioners, personal wash soaps; cosmetics, deodorants, perfumes; paper products - tissues, diapers etc. ; shoe care. Food and Beverages: Foods - as snacks, confectionary, chocolates, bakery products - biscuits, bread, cakes. Beverages tea, coffee, juices, bottled water, health beverages and soft drinks. Global leaders in the FMCG segment are Nestlé, ITC, Hindustan Unilever Limited, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi, Gillette etc.

3 The burgeoning middle class Indian population, as well as the rural sector, presents a huge potential for this sector. The FMCG sector in India is at present, the fourth largest sector with a total market size in excess of USD 13 billion as of This sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year This sector is characterized by strong MNC presence and a well-established distribution network. In India the easy availability of raw materials as well as cheap labour makes it an ideal destination for this sector. There is also intense competition between the organized and unorganized segments and the fight to keep operational costs low. A look at some factors that will drive growth in this sector: Increasing rate of urbanization, expected to see major growth in coming years. Rise in disposable incomes, resulting in premium brands having faster growth and deeper penetration. Innovative and stronger channels of distribution to the rural segment, leading to deeper penetration into this segment. Increase in rural non-agricultural income and benefits from government welfare programmes. Investment in stock markets of FMCG companies, which are expected to grow constantly. Some of the challenges this sector is likely to face are: Increasing rate of inflation, which is likely to lead to higher cost of raw materials. The standardization of packaging norms that is likely to be implemented by the Government by Jan 2013 is expected to increase cost of beverages, cereals, edible oil, detergent, flour, salt, aerated drinks and mineral water. Steadily rising fuel costs, leading to increased distribution costs. The present slow-down in the economy may lower demand of FMCG products, particularly in the premium sector, leading to reduced volumes.

4 The declining value of rupee against other currencies may reduce margins of many companies, as Marico, Godrej Consumer Products, Colgate, Dabur etc. who import raw materials. To conclude, this sector will continue to see growth as it depends on an ever-increasing internal market for consumption, and demand for these goods remains more or less constant, irrespective of recession or inflation. Hence this sector will grow, though it may not be a smooth growth path, due to the present world-wide economic slowdown, rising inflation and fall of the rupee. This sector will see good growth in the long run and hiring will continue to remain robust. 2.2 RESEARCH METHODOLOGY RESEARCH DESIGN The research design of the present study is exploratory-cum-descriptive-cum-diagnostic. Exploratory research helps in knowing more about the problem. The study is exploratory as few studies have been conducted in the area of packaging as promotional strategy in consumer goods. Moreover, the prevalent packaging strategies used by the marketers have been explored. The study is descriptive as it identifies the factors influencing packaging and is being conducted with the help of a structured schedule. It is also diagnostic in its nature as an attempt has been made to see the relationship between the prevalent packaging strategies implemented by the marketers and the promotion of consumer goods UNIVERSE OF THE STUDY The universe means the entire mass of observation which is the parent group from which a sample is to be taken. The universe of the proposed study has been confined only to the FMCG (Fast Moving Consumer Goods) where packaging strategies can play a significant role.

5 2.2.3 SURVEY POPULATION The survey population of the study is confined to the consumers of FMCG in NCR and Haryana region SAMPLING DESIGN Sampling is the act, process or technique of selecting a suitable sample or a representative part of a universe for the purpose of determining parameters or characteristics of the whole universe or population. The sample has been selected from consumers, who consume FMCG (Fast Moving Consumer Goods). Non-probability sampling technique has been applied in the study. The sample has been selected by applying mainly judgmental sampling. The sample size is 200. A fixed number of respondents have been taken from the following categories: 100 males and 100 females; in each category of male and female 50 are from urban area while other 50 are from rural area; further in each category of rural and urban approximately 10 respondents each are from different age groups (11-20 years, years, years, years and 51 above) DATA COLLECTION For the present study both secondary and primary sources of data has been used. The secondary data has been used for the development of the present research problem has been collected through review of existing literature pertaining to the study and relevant information regarding the packaging of consumer goods. Various sources like books, journals, magazines and internet have been used. The primary data has been collected by personally visiting the respondents and conducting their interview with the help of a structured schedule. The discussion and personal observation has been used for gathering the relevant information from the respondents. The structured schedule has been designed to gather the primary information of the respondents regarding demographic information, significance of packaging, consumer perception about packaging strategies and impact of packaging strategies on purchase decision of consumers. Part A includes eighteen statements on 5 - point scale to assess significance of packaging; Part B includes twenty four statements on 5 - point scale to assess consumer perception about packaging

6 strategies; Part C includes 16 statements on 5 - point scale to assess the impact of packaging strategies on purchase decision of consumers; Part D includes four open ended questions to explore personal experiences of the respondents regarding packaging strategies and get their valuable suggestions, if any CONSTRUCTION OF DATA COLLECTION INSTRUMENTS For gathering the primary data to fulfill the objectives of the present study, three scales were developed and standardized by the investigator herself: Scale - A to Assess Significance of Packaging Scale - B to Assess Consumer Perception about Packaging Strategies Scale - C to Assess Impact of Packaging Strategies on Purchase Decision of Consumers. The process of development and standardization of scales is given as under: Identification of dimensions After review of literature, discussion with faculty members of management, experts and analysis various dimensions for all the three scales were identified. For significance of packaging four dimensions identified are protection & storage factors, convenience & availability factors, communication factors and promotional factors; the six dimensions about consumer perception about packaging strategies include sachet packaging factors, communication factors, environmental factors, choice/variety factors, innovative and different packaging factors and economy factors; four dimensions have been identified for impact packaging strategies on promotion of consumer goods - attraction / communication factors, economy factors, ecofriendly packaging factors and convenience factors. Item Writing After identification of the dimensions list of items was prepared on the basis of above sources. Three attempts were made to check and reframe the statements to ensure the relevancy and uniqueness of the statement. A panel of experienced faculty members and experts reviewed the items. The items were deleted or rejected on the basis of

7 recommendations of the experts. So a preliminary draft of items having positive characteristics was framed. The preliminary draft was used for further analysis. A likert format answer key was created with each statement rated on five point scale ranging from strongly agree (5) to strongly disagree (1). The second draft of remaining items was administered to 100 respondents. For Scale - A to assess significance of packaging a preliminary pool of 29 items was framed. Five items were deleted or rejected on the basis of recommendations of the experts. So a preliminary draft of 24 items was framed. The second draft of 24 items was administered to 100 respondents. For Scale - B to assess consumer perception about packaging strategies based on the above sources, a preliminary pool of 35 items was framed. Seven items were deleted or rejected on the basis of recommendations of the experts. So a preliminary draft of 28 items was framed. The second draft of 28 items was administered to 100 respondents. For Scale -C to assess impact of packaging strategies on purchase decision of consumers a list of 30 items was prepared on the basis of above sources. Nine items were deleted or rejected on the basis of recommendations of the experts. So a preliminary draft of 21 items having positive characteristics was framed. The preliminary draft was used for further analysis. Item Analysis Item analysis was carried out to determine the adequacy of the scale. It differentiates between better and poorer items. For the purpose the investigator employed the item total correlation and Kelleys (1939) criteria of top 27% and bottom 27% was used for items analysis to evaluate the proposed category of items. The data were analyzed by using t test which to depict significance of difference between upper group and lower group on each item. For items where significant differences were not obtained between two groups, the items were dropped out. Significant differences were not obtained between two groups for the following scales - six items for scale A, four items for scale B and five items for scale C. Data were analyzed using SPSS statistical package version 20.0.

8 Preparation of Final Draft of the Scale After carrying out item analysis of preliminary draft of all the three scales the final drafts were prepared. Scale - A to Assess Significance of Packaging The item distribution of various dimensions of factors influencing significance of packaging is shown in table 2.1. Table: 2.1: Item Distribution of Scale A to Assess Factors Influencing Significance of Packaging S.No. Factors Item No. 1. Protection & Storage Factors 1, 2, 3 2. Convenience & Availability Factors 4, 5, 6 3. Communication Factors 7, 8a, 8b, 8c, 8d, 8e 4. Promotional Factors 9, 10, 11, 12, 13, 14 Scale - B to Assess Consumer Perception about Packaging Strategies The item distribution of various dimensions of factors influencing consumer perception about packaging strategies is depicted in table 2.2. Table: 2.2: Item Distribution of Scale - B to Assess Factors Influencing Consumer Perception about Packaging Strategies S.No. Factors Item No. 1. Sachet Packaging Factors 10, 11, 12, 13, Communication Factors 1, 4, 5, 15, Environmental Factors 18, 19, 20, 21, Choice/ Variety Factors 2, 7, 9, Innovative & Different Packaging Factors 3, 6, 8 6. Economy Factors 16, 23

9 Scale - C to Assess Impact of Packaging Strategies on Purchase Decision of Consumers. The item distribution of various dimensions of a scale to assess factors having influence on the impact of packaging strategies on purchase decision of consumers is shown below in table 2.3. Table 2.3: Item Distribution of Scale- C to assess Factors Influencing Impact of Packaging Strategies on the Purchase Decision S.No. Factors Item No. 1. Attraction Factors 1, 4, 10, 11, 12, 13, Economy Factors 3, 5, 6, 7, 8, 9, Ecofriendly Packaging Factors 15, Convenience Factors 2 Scoring Pattern For scoring pattern for each item included in the scale, Likert -Type five point scale was adopted. Accordingly each item was scored on the basis of Strongly Agree, Agree, Indifferent, Disagree and Strongly Disagree and then quantified as 5,4,3,2 and 1 respectively VALIDITY AND RELIABILITY Reliability is concerned with the question of whether the results of a study are repeatable while validity is concerned with the integrity of conclusions that are generated from the piece of research. The content validity of the scales was established on the basis of experts opinions and comments. The content validity of the scales was assessed by ratings of judges. All the items initially selected for the three scales - to assess significance of packaging, to assess consumer perception about packaging strategies and to assess impact of packaging strategies on purchase decision of consumers were presented to the judges to decide. Only those items were selected which received 80% unanimity. Rest of the items were selected which received 80% unanimity. Rest of the items were either modified or dropped. Some of the items were ambiguous were either modified or dropped. Item

10 analysis was carried out to determine the internal consistency of the scale which is an evidence of construct validity. The reliability of all the three scales was estimated by using test- retest method. These reliability co-efficients were appropriate for the purpose as Guilford (1954) says that the Tool should be chosen even though their reliability may be of the order of only On the basis of high values, it can be concluded that all the three scales - to assess the significance of packaging, to assess consumer perception about packaging strategies and to assess impact of packaging strategies on purchase decision of consumers are reliable ANALYSIS PATTERN VARIABLES OF THE STUDY Two types of variables have been included in the present study. Independent Variables: Gender, Age, Place of residence, Qualification, Marital Status, Family Type and Family Income of the respondents have been taken as independent variables. Dependent Variables: Packaging, Packaging Strategies and Promotion have been taken as dependent variables CONTENT ANALYSIS Significance of Packaging: The four dimensions to assess significance of packaging (table 2.4) include protection & storage factors, convenience & availability factors, communication factors and promotional factors. The protection & storage factors include statements 1, 2 and 3; convenience & availability factors include statements 4, 5 & 6; communication factors include statements 7, 8a, 8b, 8c, 8d &8e and promotional factors include statements 9, 10,11,12,13 &14.

11 Table: 2.4: Content Analysis to Measure Significance of Packaging S.No. Item Description of Items No. Protection & Storage Factors 1 1 It protects the product 2 2 It stores the product properly 3 3 It keeps the products hygienic and fresh Convenience & Availability Factors 4 4 It makes the product convenient to use 5 5 It makes product available in different sizes according to requirement 6 6 It helps to lower the distribution cost Communication Factors 7 7 It communicates the necessary information 8 8 a) It communicates about ingredients/ composition 9 8 b) It communicates about statutory information (MRP/Date of manufacturing/expiry date etc.) 10 8 c) It communicates about the quality of the product 11 8 d) It communicates about marketer and brand 12 8 e) It communicates about utility for a particular purpose Promotional Factors 13 9 It acts as an attention seeker by attracting consumers It acts as a silent salesman It acts as a persuasive salesperson It adds value to the product Well- designed package creates promotional value It motivates consumers to buy the product Response Categories and Weight Assigned SA A I D SD Consumer Perception about Packaging Strategies: The six dimensions to assess consumer perception about packaging strategies include (table 2.5) Sachet packaging factors, communication factors, environmental factors, choice/variety factors, innovative & different packaging factors and economy factors.

12 Table: 2.5: Content Analysis to Measure Consumer Perception about Packaging Strategies S. No Item No. Description of Items Response Categories and Weight Assigned Sachet Packaging factors SA 5 A 4 I 3 D 2 SD Use of sachet(very small packets) is increasing Usage of sachet is increasing because of its affordable/low price Sachet motivates a consumer to try various products Sachets are easy to handle/use Using sachets leads to less wastage of product Communication Factors 6. 1 Packaging is just an outer covering 7. 4 These days more information is written on the package 8. 5 It tells story about the brand More attractive packaging is displayed in the main areas of the shops Good packaging is taken as symbol of better quality product Environmental Factors It is wasting the scarce raw materials Packaging is creating more waste material It is creating more pollution in the environment Unnecessary packaging of the product should be avoided Majority of Indian organizations do not consider the negative impact of packaging on environment. Choice/ Variety Factors Today, consumer has more choices in terms of packaging options Packaging is making the product more easy to use Now products are available in many sizes More eco-friendly packaging is available in the market Innovative & different packaging factors More attractive packaging is coming in the market More colourful packaging is coming The use of very innovative and different kind of packaging is increasing Economy Factors After consumption of the product the packaging is used for decoration/storage purpose Packaging is an undesirable burden on the pocket of consumers.

13 The sachet packaging factors include statements 10, 11, 12, 13, 14; communication factors include statements 1, 4, 5, 15 & 17; environmental factors include statements 18, 19, 20, 21 & 24; choice/variety factors include statements 2, 7, 9 & 22; innovative & different packaging factors include statements 3, 6 & 8 and economy factors include statements 16 & 23. Impact of Packaging Strategies on the Promotion of Consumer Goods: Table: 2.6: Content Analysis to Measure Impact of Packaging Strategies on the Promotion of Consumer Goods S. No Item No. Description of Items Response Categories and Weight Assigned Attraction/ Communication Factors SA 5 A 4 I 3 D 2 SD Good packaging of a product attracts you 2 4 You read the instructions on packaging before buying a product 3 10 The colour of packaging influences your purchase decision 4 11 You buy a product because of its attractive packaging 5 12 You buy a product (which you do not require) only because of its very attractive or different packaging It enhances impulse purchase (purchasing without thinking) 7 14 You will pay higher for good/attractive packaging Economy Factors 8 3 You buy a product because of the reusability of its package 9 5 You will purchase a product because of its value pack (big pack for less price) 10 6 You will buy a product because of its small sachet packaging 11 7 You will buy sachet (which you do not require) just to try 12 8 You prefer refill pack as it costs less 13 9 You prefer refill pack as its original packaging can be reused Ecofriendly Packaging Factors You prefer eco-friendly packaging You prefer eco-friendly packaging even if you have to pay little extra Convenience Factors 16 2 You will buy a product because its packing makes the product usage more convenient

14 Four dimensions to assess the impact of packaging strategies on promotion of consumer goods include (Table 2.6) attraction/communication factors, economy factors, ecofriendly packaging factors and convenience factors. Attraction/communication factors include statements 1, 4, 10, 11, 12, 13 & 14; economy factors include statements 3, 5, 6, 7, 8, 9 & 16; ecofriendly packaging factors include statements 15 & 16 and Convenience factors include statement STATISTICAL TECHNIQUES APPLIED FOR THE ANALYSIS OF DATA The data has been analyzed using SPSS version 20.0 statistical package. Factor analysis has been applied and further ANOVA and t-test have been applied on the various factors obtained from factor analysis. Descriptive statistics such as means and standard deviation have also been used to describe the nature of data. To represent the data pictorially bar diagrams have been used.

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