STUDY OF IMPACT OF CSR PROGRAM ON CONSUMER S BUYING BEHAVIOR FOR FMCG PRODUCTS IN MUMBAI

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1 Volume 3, Issue 4 (April, 2014) Online ISSN Paper Presented in National Refereed Conference on Corporate Social Responsibility: Towards New Agenda Published by: Abhinav Publication Abhinav International Monthly Refereed Journal of Research in STUDY OF IMPACT OF CSR PROGRAM ON CONSUMER S BUYING BEHAVIOR FOR FMCG PRODUCTS IN MUMBAI Shilpa Shinde Research Scholar, JJT University, Jhunjhunu, Rajasthan, India shindeshilpa81@gmail.com ABSTRACT Today the word Corporate Social Responsibility program has become a part of people living in India. Initiating or executing CSR program, this culture is mushrooming across the country s landscape at a faster pace among all industries. This paper explores the customers buying behaviour towards FMCG companies product with reference to CSR programs. The data for this study are collected from Mumbai and Suburb Mumbai region. The analysis is done taking into consideration factors like preference of product as per program, attitude of consumer towards program and awareness of CSR program among consumer. The paper concludes that CSR program puts significant impact on consumer buying behaviour. It also serves as an encouragement to the organisations that cater CSR program for the needs of the Corporate Social responsibility as sustainability factor. Keywords: Corporate Social Responsibility; Sustainability; Consumer Buying Behavior; FMCG INTRODUCTION Earlier organisation is likely to make wealth and employment, although society is likely to provide a conductive environment for the business to flourish. But in today s world there are number of tasks that organisation has to achieve to the society. These contain the financial, political, environmental and social tasks. To achieve these tasks organisation implements various policies and procedures through various methods. Corporate Social Responsibility (CSR) is the road for business to achieve these tasks. Corporate Social Responsibility (CSR) is stated as a wide-ranging set of policies, practices and programs that are combined into business operations, supply chains, and decision-making processes all over the organization process and practices, all places where ever they do the business and it also include responsibility for present and past actions as well as future impacts on business Ghosh J. (2003). The elements which have headed to the development of the concept of corporate social responsibility (CSR) would be perfect beginning with the theoretical improvement of suitable corporate business practices for emerging markets and developing countries. Today companies are expanding their boundaries from the country of their origin to the evolving markets in the developing countries which have been sometimes referred to as emerging markets due to this reason the business environment has undergone vast changes in the recent years, in relations of both the environment of competition and the trend of globalization that has been sweeping across markets. The current trend of globalization has brought a realisation among the firms that in direction to participate effectively in a competitive environment; they need clearly defined business practices with a sound focus on the public interest in the markets (Gray, 2001). Available online on 67

2 The word CSR is regularly used interchangeably for other words such as Corporate Citizenship and is also linked to the concept of Triple Bottom Line Reporting (TBL), which is used as a framework for measuring an organisation s performance against economic, social and environmental parameters, Subhabrata Ghosh and Pabitra Kumar Ghosh (2011). However I think the word CSR can also be used to sustainability for companies who want survive in today s global competition and at the same time companies who want to collaborate with Employees, Business Partners, Investors, Community, Consumers and Government to implement CSR initiative programs for ethical purpose with good cause. Not only this, today s business organisation considered to be social institutions, apart from being economic entities, for two reasons. Firstly, business organisations exist and operate within a social structure. They need to win social acceptance, for their survival. Secondly, business organisation needs to be socially responsible as they exercise a wide influence on the society s lifestyle. Business, can succeed only if they maintain good relationships with all their stakeholders. These relations can be strengthened, if organisation fulfills their commitments towards stakeholder and consumer is one among those stakeholders, hence consumers views, behavior and response towards organization CSR programs is also plays important role. LITERATURE REVIEW Corporate Social Responsibility represents only the social dimension of corporate responsibility, Schüz M (2012). One can connect the main three traditional ethical theories with this dimension, Virtue ethics strengthens the company s ability for taking responsibility, while the utilitarian ethics assesses the consequences as beneficial or damaging, and deontological ethics defines the authority asking for the fulfillment of ethical duties. Those concepts are not fighting each other, but eventually complementing one another, when linked to the term of ethical responsibility as mentioned in below diagram. We can refer to the term sustainability as it was defined 1987 by the Brundtland Commission: Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs (Brundtland, 1987). Grayson and Hodges (2001) point to the interaction of four forces or signposts that make corporate social responsibility a mainstream business issue, namely: VOL. 3, ISSUE 4 (April 2014) 68

3 The development of technology and communications which result in companies having no place to hide, The increased prominence of multinationals globally and the growth in the value and visibility of their brands which make them more susceptible to scrutiny; Demographic change and development which encompasses issues such as an ageing population in the developed world, skewed income distribution, limited access to health, education and jobs; and The revolution of values and the decline in deference for institutions. Social responsibility is increasingly being seen as a necessity for doing business in developing economies that lack the infrastructure and capacity to build social capital. Investment in local communities is seen to be a prerequisite in contributing to a sustainable, healthy and stable business environment in which investments will be protected and produce returns (World Business Council for Sustainable Development, 2003). Hamann (2003, p.239) notes that (t)o embrace economic, social and environmental aspects of sustainability in a holistic manner, and to provide maximum development benefits, corporate social responsibility must be integrated into the core activities and decision making of a company. Hence, sustainability needs to be seen as a key concern by top management. FMCG Companies and Their Initiatives in India Today in India many FMCG companies are spending lot of money on their Corporate Social Responsibility Programs through their various CSR initiatives directions mode. The below mentioned are selected companies, who run many CSR activities though out year. The information on activities mentioned below is sourced from the annual sustainability reports or the CSR section on companies websites. Source: Futures cape presentation for CSR on slideshare.com From above table it look like organisations are taking lots of efforts for CSR program, but we need to think from consumer perspective also, i.e. why, how, & what type of consumer buy our product, also which CSR program more influencing from consumer point of view in today s scenario. An understanding of the buyer behaviour is essential in business planning & programmes. In the final analysis buyer behaviour is one of the most important keys to successful business. OBJECTIVES 1. To examine the relationship between corporate social responsibility and the consumer buying behaviour. 2. To study awareness of corporate social responsibility among consumer. VOL. 3, ISSUE 4 (April 2014) 69

4 RESEARCH METHODOLOGY The objective is to have an understanding of the relation between corporate Social Responsibility and Sustainability and to know the consumer buying behavior with reference to the same. Sample Design Sample Size is 100, across different demographic category from Mumbai city in Maharashtra State. For the purpose of present study a related sample of population was selected on the basis of convenience. Data Collection Primary data was collected through Questionnaire and Secondary data through Annual Reports Magazines, Newspaper, Books, journals and Websites. Analysis Techniques The source of analysis is the data provided by the questionnaires. Then a Chi Square Analysis is done in order to determine significant impact on consumer buying behaviour. LIMITATIONS Similar like many other researches, this research has some limitations but that also present openings for future research. The research result findings were exclusively based on the respondents perception on the role of corporate social responsibility, which influence their buying behavior. Therefore, the results could be prejudiced. To answer this weakness is only one, i.e. future research is undoubtedly needed to study the relationships of the variables utilising more diverse samples. DATA ANALYSIS Table 1. Demographic Characteristics of Respondents Demographic % of Respondent Gender Male 86% Female 14% Age (Yrs) % % % 46 & above 10% Qualification HSC 15% Graduate 45% Post Graduate 10% Professional 30% Profession Student 1% Salaried (Office workers) 54% Entrepreneurs (Businessman) 23% Senior Citizen 18% Others 4% Income % % VOL. 3, ISSUE 4 (April 2014) 70

5 % % & above 5% Do you know about various CSR program runs by FMCG companies? Yes 55% No 45% Do you know about CSR Initiatives taken by FMCG companies for? Health 38% Stakeholders 15% Environment 20% Society 17% Others 10% Which sector you prefer for CSR Initiative? Education Sector 25% Health Sector 30% Environment Sector 20% Society 15% Others 10% What is Preference % of your CSR responsibility? Economic Responsibility 15% Legal Responsibility 30% Ethical Responsibility 45% Philanthropic Responsibility 10% Do you purchase product on the bases of Companies CSR program? Yes 52% No 48% Which CSR activity sector product do you prefer to purchase? Education Sector 26% Health Sector 32% Environment Sector 4% Society 36% Others 2% Why do purchase product those who are running CSR Program Want be a part of program 30% Want to contribute in good cause 40% Want to acknowledge the efforts taken by company 20% others 10% Sources of CSR program information Newspapers & Magazines 13% News channels 35% Friends & Family 27% Others 10% Internet 15% Which CSR Activity Sector Product Do You Prefer To Purchase? CSR Program Sector Product Preferred By Consumer Sector % of respondent Education Sector 26% Health Sector 32% Environment Sector 4% VOL. 3, ISSUE 4 (April 2014) 71

6 CSR Program Sector Product Preferred By Consumer (Contd.) Hypothesis Sector % of respondent Society 36% Others 2% Null Hypothesis (Ho):- There has been no significant impact on consumer buying behavior through CSR program sector. Alternate Hypothesis (H1):- There has been significant impact on consumer buying behavior through CSR program sector. Probability of CSR Program in any sector =1/5. On the basis of this hypothesis the expected number of respondent s preference (E) =100/5=20 Expected and Observed Respondent o(observed) e (Expected) Chi-Square test or X 2 test= Calculated value Degree of freedom(n-1) Tabulated value Chi-square The table value of X 2 for 4 degree of freedom at 5 per cent level of significance is The calculated value of X 2 is much higher than this table value and hence we reject the hypothesis and accept H1, which provides sufficient evidence that CSR program has significant impact on consumer buying behavior. CONCLUSION The industry of current century will have no choice but to implement CSR. Investments in CSR programs are under analysis. Stakeholders are demanding now increasingly that results from these programs be measured to know if and how they positively influence the profitability of the organisation. Not surprisingly, a significant amount of research has been undertaken to understand the relationship between CSR and profitability, which leads them to sustainability in the Global Market. Due to the increase in importance of consumers among business as a stakeholder, marketing research that examines the effects of CSR on profitability is particularly informative to organization for profitability and sustainability. This study shows that CSR leads to results such as improved customer loyalty, readiness to pay premium prices, and lower reputational risks in times of crisis. RECOMMENDATIONS Periodic evaluation of the CSR prgrams should be conducted by every industry so as to identify the difficulties and the areas which are missing out as per consumer expectations. REFERENCES 1. Brundtland Commission (1987). Our Common Future Towards Sustainable Development, chap. 2, World Commission on Economic Development (WCED), [accessed September 24, 2012), [available at ocf-02. html]. VOL. 3, ISSUE 4 (April 2014) 72

7 2. Ghosh J. (2003) Strategy for Development, Frontline Vol. 20, No, 18, India. 3. Gray, R. (2001). Social and Environmental Responsibility, Sustainability and Accountability, Can the Corporate Sector Deliver?, Glasgow, Centre for Social and Environmental Accounting Research, University of Glasgow, Retrieved on August 14, 2004 from Can%20business%20deliver%20Gray.pdf 4. Hamann, R. (2003). Mining companies role in sustainable development: The why and the how of corporate social responsibility from a business perspective. Development Southern Africa, 20 (2), Schüz, M ( 2012) sustainable corporate responsibility The foundation of successful business In the new millennium, CENTRAL EUROPEAN BUSINESS REVIEW, VOLUME 1, NUMBER 2, OCTOBER 2012, pp Subhabrata Ghosh and Pabitra Kumar Ghosh (2011), Role of Corporate Social Responsibility in Inclusive Growth Considering the Government Expenditure in Developing Social Infrastructure, Conference on Inclusive & Sustainable Growth, Role of Industry, Government and Society, Conference Proceedings: 2011 conducted at Institute of Management Technology. 7. World Business Council for Sustainable Development (2000). CSR: making good business sense. (accessed 13 May 2003). VOL. 3, ISSUE 4 (April 2014) 73