International Journal of Business Management & Research (IJBMR) ISSN 2249-6920 Vol.

3, Issue 1, Mar 2013, 11-20 TJPRC Pvt. Ltd.

ANALYSIS OF CONSUMER BEHAVIOR IN BRANDED FAST FOOD JOINTS

1

S. JACOB PRATABARAJ & 2SARPRASATHA JOE

1

Assistant Professor, SRM University, Chennai, India

2

Professor, SRM University, Chennai, India

ABSTRACT
There is an increasing tendency for lower segments to move over to higher segments. The rising levels of education, employment, urbanization and exposure to global influences are seen as leading to higher standards of living for the people. This study compares impact of changes in purchasing power on segment crossovers, across societies accelerated towards MNC branded fast food joints.

KEYWORDS: MNC Food Joints, Purchasing Power, Segment Crossover INTRODUCTION

The Modern fast food industry originated in the United States in the 1920s, and developed rapidly and became epidemic all over the world from 1950s (Li, 2005). As for India, the economic reform has introduced many changes in every aspect of peoples life during the Post liberalization era. At the backdrop of modernization, globalization and privatization has brought in innumerable MNC and deshi brands to the Indian market. This paper reports an empirical test of the claim that purchasing power has changed drastically in every aspect of FMCG segment particularly in the food products. There is an increasing tendency for lower / income segments to move over to higher segments. Other than simply as a response to price why consumers cross over from one segment to another, there may be many reasons such as lifestyle, accessibility and purchasing power. The available studies involve different kinds of comparisons - Individualization as measured by three aspects: moral appreciation of individualism, opportunity to choose, and capability to choose (Veenhoven.R, 1999). A few other studies are linked to several other modernization processes, such as: growing division of labor, extension of youth and expanding education. (Veenhoven,1999, Kamp.I.V., Leidelmeijer.K , Marsman.G and Hollander.A ,2003). As the result of economic reforms and the consequent economic progress there is greater employment opportunities and rising levels of education and urbanization, leading to higher standards of living for the people. This study compares impact of changes in purchasing power on segment crossovers, across societies accelerated by launching MNCs new outlets in free trade influencing regional markets and consumers behavior. The impact is on the segments whose borders are thinning out so much, the composition is volatile and influx. What was earlier thought to be junk food, alien to Indian culture, beyond ones reach and the youth lifestyle, is now perceived to be an expression of individualistic capability to afford and appropriate. If the study traces out the changes in the perceptions and behaviors of customers, the MNC joints could evolve marketing strategies to capture the rural segments. The Indian Brands too could evolve suitable products to offer a viable competition for the benefits of the masses. Despite the expected behavior of people to spend on food considering their levels of come, one often perceives that those who will not otherwise spend so much on food choose to visit and demand fast food at MNC joints. This research raised the following questions: Do customers move over from low end to high end eateries? If so, the question therefore arises what are those factors that drive people to such behavior?

12

S. Jacob Pratabaraj & Sarprasatha Joe

Is the purchasing power a significant factor? Is there a gender behavior difference? Is there any other factor influencing the change over? The research seeks to verify in the Indian context and particularly in the state of Tamil Nadu, if more people are influenced by these three forces (lifestyle, accessibility and purchasing power) to move over from one type of buying habits at branded fast food joints to another because of change in their standard of living/income. There may be many factors influencing the behaviors some of which have already been identified in earlier studies (see above: Veenhoven, 1999, Kamp.I.V., Leidelmeijer.K, Marsman.G and Hollander.A, 2003).Yet there may be other factors such as lifestyle, accessibility and purchasing power that need to be tested for their significance in altering the buying behavior in the context of branded fast food joints. (Livingstone.S and Helsper.E,2004).

LITERATURE REVIEW
Though junk food mania was on its peak once, the trend of eating junk food has decreased with increasing awareness. Today people want to eat less but prefer to eat healthy. Researcher have proved that the risk factor of the untreatable diseases has increased with the use of junk food (Gulnazahmad, 2012). People who still are more into eating junk food say that they eat because of the convenience knowing well the risk involved like obesity, heart diseases, cancer and so on. A trend towards eating super-food at the MNC food joints that claim to be rich in antioxidants, minerals and vitamins (Shah.A, 2010). Hence the present study enquires into the reasons for the crossover of segments with increasing tendency to MNC fast food despite their awareness of the health hazards. Latest trends in fashion, food and in interior are leading back consumers to nature and values. So also the MNC claims to offer nutritious and ecofriendly food calling their stuffs as wholesome and complete meal and that in an ambience much in tune with the local sensitivities. Need to relax and nurture relationship, discarding differences in celebration, ensuring privacy in public space of life are gaining more importance (Carmona 2003).( There has been great emphasis on the role and importance of public spaces in different aspects of socio-cultural context and health issues in the literature of design and planning (Moudon 1992; Sorkin 1992; Tibbalds 1992; Worpole 1992; Madanipour 1992; Calthorpe 1993; Katz 1994).)The food joints apparently create such public space while retaining ones individuality. The economic progress has also recast the social fabric of traditional family into growing nuclear family where both spouses go for work necessitating a change in their life style and depending more on bought food and fast food. Hence they spend a greater percentage of their income on fast food by such existential necessity. Anticipating increase in the family purchasing power, increasing spending on food is easily overlooked. Nagaraja (2004) opined that, buying behavior is very much influenced by experience of the nuclear family and other neighbor nuclear families. It is also the quality of the product and its accessibility that are the primary and the vital determinants of his buying behavior. Mooij (2003) considered that the managers of transnational corporations should provide appropriate products according to the local consumer values and buying behaviors of a certain market. However the present study focuses on purchasing power as what sparks buying behavior. Purchasing Power as Perceived Jorin (1987) examined changes in spending power and buying habits of Swiss consumers since the beginning of the 20th century till recent past. Current trends include greater emphasis on health and safety of foodstuffs and less attention to price, increasing demand for low calorie light products and organically grown foods. Young people are more concerned with enjoyment than health. As more often meals are eaten from home, there is an increased demand for convenience foods. Hence the prospects for high quality branded products were seen to be good.

Analysis of Consumer Behavior in Branded Fast Food Joints

13

Shivkumar (2004) showed that the consumer, irrespective of income groups, was mainly influenced by the opinions of their family members to purchase and perhaps to some extent by the dealers recommendation and advertisement claims. Importantly, the participants studied had estimated increases in purchasing power that appears significantly greater than the cost of products (Hangen , 2007 ). As the standard of living enhances, a qualitative life is perceived differently and people strive to have quality in every possible manner, affordability is not an issue. Selfexpression seems to lie in choosing, bonding and branding for which price seems to be no bar. MNC food joints appear to rise up to their needs. Lifestyle With advancement in technology each day new development and changes occur in the lifestyle of people. Today changes in lifestyle occur much faster. Tracking changes has become more difficult. Minor changes (fads) come and go and without even getting aware of them. But there are certain major changes that have been brought about by the recession and technology-war in recent years (Ahmad, 2011). As small is getting in fashion, Technology is becoming enough small that one can carry it anywhere. Technology has become smart, sleek, portable and interactive (Lomanto, 2007). Machinemade food and tech savvy food is attractive. So too the MNC fast food joints extensively use systems for customer interactive transactions, offering services like take away, order booking, free home deliveries, billing and payments. Smart, sleek and stylish furniture, gadgets and fashion accessories have become quite a vogue to attract the tech savvy customers. The modern need for finding privacy in public space food joints with cool cozy ambience provides that. The use of public space expresses our deep-seated shared values, as in public festivals, parades, cultural events, and political demonstrations and permits the practice of our democratic rights such as freedom of assembly (Arefi and Meyers 2003). Public space provides a venue for chance encounters, which serves to strengthen community bonds. Most traditional formal relationships are built and nurtured around informally. Neighborhood gathering places give heart to the

community (Langdon 1994), and serve as a counter pressure to community fragmentation which results when communication is privatized (Talen 2000). Sense of place is created simply by paying attention to sense of space through proper design and placement of public space (Duany and Platter- Zyberck 1991). This is exactly what MNC food joints do in crowded towns, trying to make up for the lost local community space in a village. Accessibility The nuclear families not so familiar with neighborhood, seek to stay connected in some way to a larger community. Hence there is an importance and the need for accessibility to public space. The urban spaces where all citizens have access to them such as square, street, park and the abutting buildings are the public space of a city (Tibblalds 1992). Carmona (2003) outlined that in broad terms, the public realm includes all the spaces accessible to and used by the public including external public spaces (public squares, streets), internal public space(libraries, museums) and finally external and internal quasi-public space (university campuses, sports grounds, food joints). Besides the geographic gap often found in inner cities, the accessibility gap is intensified by the distribution of the food stores which are located in urban markets. Algert et al (2006) notes that food stores concentrated in certain part of urban cities implying longer

distances for shoppers. Moore and Diez Roux (2006) point out that in US food joints are predominantly found in minority and racially mixed neighborhoods. But in India there seems to be a focus on income rather than racial or regional minorities. The concern seems to be more with accessibility by locating near work places or residential areas.

14

S. Jacob Pratabaraj & Sarprasatha Joe

RESEARCH METHODOLOGY
The methodology chosen in this study is a qualitative (Bryman and Bell, 2007) approach in order to get a deeper understanding of the different factors such as lifestyle, accessibility and purchasing power with regard to their relevance and influence in the crossover of segments. The level of satisfaction and the factors causing such satisfaction are analyzed by correlation regression and chi square test is applied to study significant relationship between cross overs with gender, age and purchasing power. Objectives: a). To identify the determinants of changing preference towards branded fast food joints. b).To identify the changes in the purchasing power towards MNC fast food. This study is focusing on Tamil Nadu as one of the fast developing state in the post reform era, with a cursory glance, the mushroom growth of food joints in the metro (Chennai) and other tier two cities (Coimbatore & Trichy) provide ample scope to study the changes in the customer behavior and crossing over of customers from one segment to another and under what circumstances or for what reasons they do. Chennai is accounting for 50% of outlets, Coimbatore and Trichy 20% and 10% respectively and the remaining 20% in the other towns. Hence it was considered practical to select at random outlets in Chennai, Coimbatore and Trichy in the same proportion like 25, 15 and 10 outlets and from each 8-10 questionnaires was sent out for conducting Survey. 180 samples were administered and 110 were collected from outlets located in these cities of which 90 were found complete for further analysis. Analysis and Interpretation To assess the dimensionality of the cross segments of consumers on MNC fast food restaurants factor analysis was performed using the principal factor/component (PF) method, followed by the varimax rotation. Table 1 KMO and Bartlett's Testa Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .580 Approx. Chi-Square 44.374 Bartlett's Test of Sphericity Df 15 Sig. .000 a. Only cases for which visit fast food joint once in two week are used in the analysis phase. The result of Factor analysis on factors affecting the visit frequency to the fast food joints was taken up. The KMO test confirmed that Factor analysis could be done for these factors. The Bartletts test score also indicated that factors are significantly associated. The total variance computed indicated that there are two factors which together explained more than 69% of the variance in satisfaction level. Assuming a cut off point of 0.7 we find that the first component included : occupation and age which together explained about 44% of the total variance. These factors are titled as more satisfier group. The second component included : sex and location which explained totally 25% of the variance and so they are titled as Less satisfier group. It could be noted that income level and education level never emerged as important factors affecting satisfaction at all. This implies that the consumers visiting the fast food joints belong to all categories of income group.

Analysis of Consumer Behavior in Branded Fast Food Joints

15

Table 2 Communalitiesa Initial Extraction 1.000 .774

Location

Age 1.000 .675 Sex 1.000 .781 Education 1.000 .217 Occupation 1.000 .841 Income 1.000 .854 Extraction Method: Principal Component Analysis. a. Only cases for which visit fast food joint = once in two week are used in the analysis phase. Table 3 Total Variance Explaineda Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings Component % of Cumulative % of Cumulative % of Cumulative Total Total Total Variance % Variance % Variance % 1 2.695 44.921 44.921 2.695 44.921 44.921 2.625 43.757 43.757 2 1.446 24.097 69.017 1.446 24.097 69.017 1.516 25.260 69.017 3 .952 15.868 84.886 dimension0 4 .515 8.586 93.472 5 .265 4.411 97.883 6 .127 2.117 100.000 Extraction Method: Principal Component Analysis. Initial Eigenvalues a. Only cases for which visit fast food joints = once in two week are used in the analysis phase. Table 4 Component Matrixa,b Component 1 2 Location Age Sex Education Occupation

Income Extraction Method: Principal Component Analysis. a. 2 components extracted. b. Only cases for which visit fast food joint = once in two week are used in the analysis phase.

.670 .812 -.216 .001 .898 .856

-.570 .127 .857 .466 .185 .347

16

S. Jacob Pratabaraj & Sarprasatha Joe

Table 5 Rotated Component Matrixa,b Component 1 2 Location Age Sex Education Occupation Income

.517 .819 -.007 .111 .917 ..091

-.712 -.069 .883 .452 -.032 .435

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 3 iterations. b. only cases for which visit fast food joints = once in two week are used in the analysis phase.

As the factor analysis indicated that income is not an important factor frequency of visiting the fast food joints, a multiple regression analysis was undertaken to identify the determinants of level of satisfaction. The variables included : Religion, Differences disappear, Sex, visit to fast food joints, Income, economic status differences disappear, language differences disappear, Age, designation differences disappear, Gender Differences disappear. The r2 value of 0.176 indicated that these variables together explained about 18% of the variation in the level of satisfaction of the consumers, and this is found to be statistically significant at 5% level as revealed by F value [1.904]. Among the determinants it is found that only sex and religious differences disappear turned out to be statistically significant. This result also confirms that income is not at all a factor influencing the level of satisfaction. Based on the results of the Factor analysis and multiple regression analysis, it is clearly established that income is not a major factor either in determining the frequency of visit to fast food joints or the level of satisfaction that the consumers derive by visiting and consuming at these joints. Table 6 Model Summary Model dimension0 1 R .420a R Square .176 Adjusted R Square .084 Std. Error of the Estimate 1.085

a. Predictors: (Constant), Religion Differences disappear, Sex, visit fast food joints, Income, economic status Differences disappear, Language Differences disappear, Age, designation Differences disappear, Gender Differences disappear Table 7 ANOVAb Model Regression 1 Residual Sum of Squares 20.178 94.222 df 9 80 Mean Square 2.242 1.178 F 1.904 Sig. .063a

Total 114.4 89 a. Predictors: (Constant), Religion Differences disappear, Sex, visit fast food joints, Income, economic status Differences disappear, Language Differences disappear, Age, designation Differences disappear, Gender Differences disappear a. Dependent Variable: level of satisfaction

Analysis of Consumer Behavior in Branded Fast Food Joints

17

Table 8 Coefficientsa Model (Constant) Age Sex Income Visitfastfoodj 1 desgnation Differences disappear economic status Differences disappear Language Differences disappear Gender Differences disappear Religion Differences disappear Unstandardized Coefficients Std. B Error Standardized Coefficients Beta t Sig. 95.0% Confidence Interval for B Lower Upper Bound Bound

.174 .262 .569 -.127 .073 -.152 -.022 .070 -.050 .255

.829 .283 .251 .133 .112 .131 .132 .141 .159 .143 .135 .245 -.136 .070 -.187 -.025 .078 -.064 .381

.210 .925 2.269 -.961 .649 -1.153 -.170 .493 -.315 1.782

.834 .358 .026 .339 .518 .252 .866 .623 .753 .079

-1.475 -.301 .070 -.391 -.150 -.413 -.286 -.212 -.367 -.030

1.824 .824 1.068 .136 .296 .110 .241 .351 .267 .540

a. Dependent Variable: level of satisfaction As the above analyses did not show any significant relationship between income and level of satisfaction, two-way Anova was undertaken by incorporating income and sex as two variables along with the level of satisfaction as the dependent variable. It is clear from the Anova table below that only sex is the significant factor and not the income. This is true to some extent. In Indian context, the joint family system has given place to nucleus families wherein both the spouses are employed and practically do not find time to prepare breakfast or lunch. As a result they prefer to dine out in fast food restaurant within the time available for them during the lunch interval. Further during the week ends they also lead their children to such joints as that would enable them to save time and unwind before reporting on the ensuing working day. Table 9 Between - Subjects Factors Value Label 0 NR 1 less than 15000 Income 2 15001 to 30000 3 30001 to 60000 4 more than 60000 1 Male Sex 2 Female

N 20 15 38 8 9 56 34

18

S. Jacob Pratabaraj & Sarprasatha Joe

Table 10 Tests of Between - Subjects Effects Dependent Variable : Level of Satisfaction Type III Sum of Mean Source df F Squares Square Corrected Model 12.755a 5 2.551 2.108 Intercept 240.924 1 240.924 199.101 Income 5.329 4 1.332 1.101 Sex 7.107 1 7.107 5.874 Error 101.645 84 1.210 Total 428.000 90 Corrected Total 114.400 89 a. R Squared = .111 (Adjusted R Squared = .059)

Sig. .072 .000 .362 .018

To examine how far location and age influence the level of satisfaction among consumers visiting fast food joints, two way Anova was carried out. The result indicated that on Age is a statistically significant factor and not location. This means wherever the fast food joints are located, it is the age of the consumers which influences more the level of satisfaction. This is a vital finding as it implies that location is not a constraint in starting a fast food restaurant. However, so long they are in the accessible distance, consumers patronize them. Age is certainly a factor as persons of younger age depend on the parents for money to visit such joints. But adults and employed persons have no constraint in this regard. Table 11 Between - Subjects Factors Value Label 1.0 North Location 2.0 South 3.0 West 1 Below 18 years 2 18- 30 years Age 3 31- 50 years 4 above 50 year Table 12 Tests of Between - Subjects Effects Dependent Variable : Level of Satisfaction Type III Sum Source df Mean Square F of Squares a Corrected Model 15.840 5 3.168 2.700 Intercept 93.555 1 93.555 79.734 Location 2.322 2 1.161 .989 Age 11.179 3 3.726 3.176 Error 98.560 84 1.173 Total 428.000 90 Corrected Total 114.400 89 a. R Squared = .138 (Adjusted R Squared = .087)

N 55 23 12 6 62 20 2

Sig. .026 .000 .376 .028

CONCLUSIONS
This study compares impact of changes in purchasing power on segment crossovers, across societies accelerated towards MNC branded fast food joints. From the analysis the researcher implies that the consumers visiting the fast food joints belong to all categories of income group. Thus it confirms from the analysis that the income is not a factor

Analysis of Consumer Behavior in Branded Fast Food Joints

19

influencing the level of satisfaction. The study reveals that more satisfied group are based on the occupation and age which is predefined by gender roles and accessibility to branded fast food joints. Thus the study finds reveals that consumer are moving towards the branded fast food joints.

REFERENCES
1. Ahmad., G., N. 2011, http://gulnazahmad.hubpages.com/hub/Lifestyle-Trends-arounf-the-Globe. Viewed August 10, 2011. 2. Algert, S.J., A. Agrawal, and D.S. Lewis "Disparities in access to fresh produce in low-income neighborhoods in Los Angeles." American Journal of Preventive Medicine 30 (2006):365-70. 3. Arefi, M. & Meyers, W.R., 2003. What is public about public space: The case of Visakhapatnam, India. Cities, 20(5), p.331-339 4. 5. 6. Bryman, A and Bell, E. (2007). Business research methods (2nd edition). New York: Oxford University Press. Carmona, M., Heath, T., Oc, T., & Tiesdell, S. (2003). Public places: Urban spaces. Oxford: Architectural Press. Cui. Yu and Ting Zhang, American Fast Food in Chinese Market: A Cross-Cultural Perspective -The Case of KFC and McDonalds, 2009. 7. Gulnazahmad,2012 Lifestyle, Trends around the Globe, http://gulnazahmad.hubpages.com/hub/Lifestyle-Trendsarounf-the-Globe. 8. Hangen., E. 2007, Case Study: Impacts of Homeownership Education and Counseling on Purchasing Power of Clients of INHP, Indianapolis, IN,. 9. Hofstede, G., The confucius connection: Form cultural roots to economic growth. Organizational Dynamics, 1998, 4, 12-13. 10. Jorin, R., 1987, Consumer behavior is changing and offering new opportunities. BeraterInformation. 26 (9) : 814. 11. Kamp.I.V., Leidelmeijer.K , Marsman.G , Hollander.A , Urban environmental quality and human well-being: Towards a conceptual framework and demarcation of concepts,65(1-2), 15 September 2003,518. 12. Li, S. Y. (2005). The content of fast food should be developed along with time. Modern Shanghai, 10, 16-18. 13. Lomanto., D., Innovative Use of IT: A Surgeons Perspective, Centre for Development of Teaching and Learning, April,2007,10(2). 14. Moore, L.V., and Roux,A,V,D., Associations of neighborhood characteristics with the location and type of food stores." American J. of Public Health 96, (2006),325-31. 15. Mooij, M. (2003), Consumer Behavior and Culture Consequences for Global Marketing and Advertising. Thousand Oaks, CA:Sage 16. Mooij,M. (2004), Consumer behavior and culture. Thousand Oaks: Sage, 26. MCD 10-K 2007, Item 6, 9. 17. Shivkumar,J.,Buying behaviour of consumers towards the products produced by SSI units. Ind.J. Mktg, 2004, 34(3),19-25. 18. Usunier, J-C. (2000), Marketing across cultures (3rd edition), Prentice Hall, Essex. 19. Veenhoven.R, Quality-Of-Life in Individualistic Society, Social Indicators Research, Kluwer Academic Publishers. Printed in the Netherlands, 1999, vol. 48, pp 157-186.