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Marketing Intelligence & Planning

Emerald Article: Adopters of new food products in India

Marketing Intelligence & Planning, Vol. 22 Iss: 4 pp. 371 391

Shu-Shian Ling, Ho Jung Choo, Dawn Thorndike Pysarchik

Submitted By Riswan.K M6-19 PGDM (Marketing) SSIM

Introduction There are many factors that make India an attractive market for Western consumer goods. With one-sixth of the worlds population, India is the second most populous country in the world, following China. In addition, the population of India continues to grow. Forecasts indicate that by 2010, only 9 percent of the Indian population will be elderly, while the elderly, by comparison, will make up 19 percent of the US and 30 percent of the Japanese populations (Gingrich, 1999). Thus, consumers in India are comparatively young, having a potential to powerfully influence economic growth and consumption patterns. These factors signal the large and growing purchasing power of Indians with an estimated population of about 971 million (US Department of Economic and Social Affairs Statistics Division, 1999), and 150 to 200 million Indians in the middle class (US Department of State, 1998; Pal, 2000). Although imported products are generally welcomed by Indian consumers, it is important for marketers to note that various product categories are perceived and accepted differentially in India. While some imported products, for example, color TVs and motorcycles, are easily accepted and increasingly purchased in India, other products may find it difficult to gain great acceptability (Bullis, 1997). According to the US International Trade Administration, for example, processed foods such as Packaged meat and frozen vegetables are becoming accepted only very slowly the Indian market (International Trade Administration, 2000). Historically, Indian consumers have preferred fresh food, and they have not tended to put a high priority on convenience and speed when purchasing and preparing the evening meal (Pysarchik et al., 1999). According to a survey conducted in India by the Marketing and Research Group (MARG), cooking ranked seventh on the list of leisure and personal interest in India (Bullis, 1997). Nevertheless, as the number of working women continues to grow, there has been a change in lifestyles that has lead to increasing demand for processed food products that can be easily and quickly prepared after a day outside home (Bullis, 1997; International Trade Administration, 2000). Objectives . To compare the attitudes about new food purchases between innovators/early Adopters and non-innovators; and . To determine the food purchase characteristics of innovators/early adopters and Non-innovators. Literature review Due to the cultural and personal attitudes of Indian consumers about food and the perceived importance of fresh food, processed food is a new concept to this population, and thus should be viewed as a new product and an innovation. Product innovation therefore, is the underlying conceptual framework of this study. Countless new products are introduced on world markets only to fail and to be taken off the market within a few months. Usually, the failure of a new product is accompanied by substantial financial losses to manufacturers, middlemen, and retailers. Market researchers, therefore, need to examine carefully the relationship between product and marketing innovation, and other important variables that make the introduction of a product successful in new markets.

Method of study Consumer attitudes to be measured in the study. The study contained 39 questions and focused on: purchasing priority (price consciousness and nutrition consciousness), consumer personality, communication behavior, social influence, and shopping habits. The structure of the instrument and resulting items were originally conceptualized for US and Thai consumer comparison. We used it since both studies were focused on food product purchase behavior, and the Indian and Thai cultures share some similarities in economic development, values and religious foundations. Prior to conducting the quantitative study, focus group interviews of Indian consumers were conducted to assess the appropriateness of the consumer attributes and associated survey items under consideration. Focus group results indicated that some consumer phrases or situational contexts needed to be adjusted for Indian consumers. Also, through the focus group interviews, six relevant processed food product categories were identified for Indian consumers: meat, fruits and vegetables, dairy products, soft drinks, snacks and cereal, and baked products. Thus, the study was limited to investigation of these food categories. Indian consumers were asked the following question: How do you see yourself with regard to buying new food products? Four answers were provided. They were: as one of the first to buy, purchasing after a few others have tried the product, purchasing after many people have bought the product; and finally, will not purchase. Those respondents who answered either of the first two answers were classified as innovators/early adopters, those who selected either of the last two answers were classified as non-innovators, A total of 277 respondents completed the questionnaires. The average age of the sample is 37 years, and the average annual income is US$5,318. Published income data indicates that the Indian middle class has an average annual income of US$4,674 (Asian Demographics, 2001). Thus, the sample represents a slightly higher income group than middle income. The respondents tend to be female (51 percent) and have a college degree (84 percent). From census data, we also know that only 25 percent of the Indian population has a bachelors degree or higher (Census Data Online, 1991). The sample, therefore, represents a higher than average education segment of consumers. Findings Based on our innovativeness measure, the sample was divided into two groups of 167 innovators/early adopters and 110 non-innovators. The larger proportion of innovators/early adopters is a likely outcome of the higher socioeconomic status of the sample. As discussed in the literature review, consumer innovativeness has been positively related to socioeconomic status. There are no significant differences between innovators/early adopters and non-innovators regarding their attitudes on price and on health when purchasing food. The study found significant differences in the influence of both sales promotion and advertising on food purchasing between innovators/early adopters and non-innovators. Innovators/early adopters tend to respond to promotional activity and advertising more than non-innovators. Innovators and early adopters tend to buy different kinds of products, such as different brands or flavors, when they purchase food.

Conclusions and implications Food marketers are intensely interested in the market segment containing innovators and early adopters because acceptance by these consumers may legitimize and facilitate the spread of food products to other people, or later buyers. The findings presented here provide some important characteristics of Indian food innovators and early adopters, namely, they tend to be opinion leaders; less loyal to the same food product; and more responsive to product promotions and advertisement. Food prices are important to all Indian consumers. Moreover, the findings extend our knowledge of food innovators/early adopters to Indian consumers. Since the large population of India provides innumerable opportunities for food companies,understanding the characteristics of innovators/early adopters is of substantial importance. The results disclose the importance of advertisements in India. As expected, Indian innovators and early adopters rely heavily on advertisement as an information resource. In the early stage of the product life cycle, it is critical to get as many potential customers as possible to know the product, to try it, and eventually to buy it regularly. Knowledge of innovators and early adopters information sources can help marketers to approach their target customers more effectively and efficiently. The more knowledge innovators/early adopters gain about a new product, the more likely they are to try it or buy it. The findings showing less product loyalty displayed by the innovators and early adopters reveal yet another point to marketers. As expected, although innovators/early adopters are quicker to accept new products, they are quicker to switch to other products or brands. In addition to gaining the early acceptance of innovators/early adopters, marketers need to put more continuous efforts into attracting and keeping consumers, especially the majority the later followers. Another important result of this study is that innovators/early adopters are not really different in their price consciousness. Since pricing and other marketing policies usually play an important role in determining the kind of people who will make purchases, marketers should be more careful in choosing their pricing strategies. If a new products high initial price may prevent its early adoption by price-conscious consumers, then entering the market with a lower price product and introducing upscale products later may be a more effective strategy. In general, the results of this study can help marketers to better understand the Indian consumer by identifying and profiling relevant purchase behaviors. This information provides guidance to develop market entry strategies that best fit the Indian market. Foreign food marketers that wish to launch new food products in India should develop strategic marketing plans with long-term goals in mind. Moreover, foreign companies should attach importance to gathering marketing intelligence about local Indian food marketers. Local suppliers, local resellers, and customers should be considered as critical sources of market intelligence since the collectivitist nature of India suggests that local businesses are much closer to their consumers than what would be common in most western cultures.