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Indian Streams Research Journal
ISSN 2230-7850
Volume-3 | Issue-12 | Jan-2014
Available online at www.isrj.net
Abstract:-The purpose of this study is to examine the customer satisfaction and to study its impact on
brand loyalty in branded products of Fast Moving Consumer Goods (FMCG). Now a days the brand
awareness of the customers or we can say an end user or a common man is showing an increasing
tendency everywhere.
The need to examine the validity of this general statement that is being discussed day in and day
out by the researcher, market managers,producers, consumers, advertisers, etc.
1.0 INTRODUCTION
Organized retail is definitely a sunrise sector in India but to say that it is a sunrise sector for entrepreneurship would be
wrong. Entrepreneurship is required in those fields in which an individual can go in with small capital and his/her expertise and
go on to create a company which usually yields returns of the order of 10x or even much more.The 'natural barriers' to enter into
organized retail are so large that it would not be wise for and an entrepreneur to jump into it and think that he will be able to
compete with the likes of Reliance, Bharti, Wal-Mart etc. Also, organized retail is something which tests your operational and
logistics skill rather than entrepreneurship abilities.
Though organized retail is in practice around the globe for many decades now, it is only now that it is making an entry
into India in a big way. The reasons for this are many. With a booming Indian economy and burgeoning middle class the
shopping habits of Indians have changed fast since last few years. Malls and multiplexes and making headway into tier II and
tier III cities also after mushrooming in the metros. Also the fact that organized retail accounts for only 3% of retail sales in
India there's a huge untapped potential. So much so that every company wants a piece of the pie. No wonder that every business
house from Birlas to Ambanis is busy chalking out their retail plans. Though it will be too early for them to start counting their
chickens as the government policy is still hazy and huge amount of expertise is required to run a pan-India retail network. There
is an acute scarce of the managerial talent in the retail business and salaries are already skyrocketing. The government is still in
the process of studying the effect of organized retail in 'mom-and- pop' stores and the economy as a whole. There is huge
pressure on government from foreign multinationals to allow FDI in retail. Of course local giants are keen to put their plans in
place before foreign players are allowed to move in. The bleak chances of FDI in retail have forced foreign retail giants to look
for local partners. Bharti has joined hands with Wal-Mart after failed talks with UK giant Tesco. The shopper's stop has inked a
deal with the UK's Home Retail group to develop Argos retail stores. Bombay Dyeing has tied up with France's Auchen. Local
retailers who already have a huge presence in India include Future Group (former Pantaloons), Subhiksha, Shopper's Stop,
RPG group. While Reliance retail, Tata, Bharti and Aditya Birla group are soon to start rolling out their retail plans. 1The most
bullish on them all is Reliance with plans to invest Rs. 25,000 crore in its retail venture. With MukeshAmbani in driving seat
there's little doubt that reliance will change how Indians shop. His plans include selling everything from vegetables to cars
under one roof and even deploying cargo planes to make sure that you get fruits and vegetables 'farm-fresh'. Reliance has
already opened 50 'Reliance Fresh' stores with the very first in Hyderabad. Reliance plans to launch 1000 stores by this year
end. Reliance Retail will launch its hypermarket, supermarket and specialty formats in April-June quarter this year. Reliance
and Bharti also have plans to set up Micro Finance Institutionsalong with their retail chains. While Bharti will also offer
telecom services in its retail stores.As a result of hyper growth plans and rushed hiring, most retail ventures are struggling to
keep pace. A massive churn is already taking place in retail space while real estate prices in prime locations are going over the
roof. Most retail ventures are going in for mixed strategy when acquiring retail space. Some are just buying the land and then
Pendse Priyanka Narendra and M. D. Lawrence , AN ASSESSMENT OF THE IMPORTANCE OF CUSTOMER SATISFACTION IN
FMCG PRODUCTS AND ITS IMPACT ON BRAND LOYALTY Indian Streams Research Journal | Volume 3 | Issue 12 | Jan 2014 | Online &
Print
1
.An Assessment Of The Importance Of Customer Satisfaction In Fmcg............
building their stores while others are buying finished commercial space or just renting it. When there is a huge competition in
the market it's always a win-win for consumers. They can expect better services from 'mom-and-pop' stores and great bargains
at their local mall.After all, it's all about the customers. To keep the prices low the retailers are doing everything from buying
cargo planes to sourcing fruits and vegetables directly from farmers. Also the retail stores promise to give the consumers more
choices and a better shopping experience.With the economy growing at 10%, nobody is complaining about the money being
put in behind these retail ventures. Though, initially there will be a few surprises and a few new lesson learnt the long term story
looks promising.
The objectives of the study are to understand the buyers / consumer's perception of the towards FMCG Products.
Consumer's who are the actual end user of the product. For this, the objectives of the Research Work are as under :
FMCG products are substantially used to enhance and protect the health and physical appearance and also the dignity
of the people among their counterparts. The spending on FMCG products is showing an increasing tendency in the last 5 years.
This is due to increase in income levels, fascination towards urban culture, good connectivity to near- by towns & cities,
improvement in sanitary conditions, beauty awareness among teenagers emulating their counterparts in the urban areas led to
the increased usage of FMCG products particularly beauty & health care products in this region. With this backdrop the brand
awareness with reference to FMCG products is thought of. The study is confined only to Pune city. It is believed that the
findings in this region are fairly representative of the other parts of the State and the lifestyle & other parameters are not much
different from what exist in the area of survey.
4.0 HYPOTHESIS
1.There is a relation between male and female attitudes towards the brand.
2.There is a relation between different age group's attitude towards the brand.
3.There is relational different among different income group attitudes towards the brand.
4.There is relational different among male and female attitudes towards brand awareness through Media.
The methodology of the study is based on the primary as well as secondary data. The study depends mainly on the
primary data collected through a well-framed and structured questionnaire to elicit the well-considered opinions of the
respondents. The study is confined to the Pune City Region are chosen for survey adapting a simple random sampling
technique. In all 100 respondents were chosen from different age groups classifying them on the basis of literacy with the help
of structured & unstructured interviews & discussions with these respondents the information from this survey is gathered.
The information gathered through the questionnaires will be analyzed with the help of SPSS software by using the
Tabular Presentation, t test and Analysis of Variance (ANOVA).
Customer satisfaction measures how well a firm is able to meet the expectations of customers. Customer satisfaction
is a key concept in marketing, as a firm can't retain its customers unless it has highly satisfied customers.
The following are some of the factors that are necessary of customer satisfaction:
The customer satisfaction is measured through feedbacks and surveys. Surveys are specially designed for past
customers measure their satisfaction level on various parameters. Customer satisfaction becomes more important in highly
competitive industries like FMCG products, where the customer can change its loyalty quickly.
Positive evaluations result in greater customer satisfaction, which leads to customer loyalty and product
repurchase.Here are some key customer satisfaction measurements that are critical to business success.
The single greatest predictors of customer satisfaction are the customer experiences that result in attributions of quality.
Overall quality
Perceived reliability
Extent of customer's needs fulfilled
It is commonly believed that dissatisfaction is synonymous with purchase regret while satisfaction is linked to
positive ideas such as it was a good choice or I am glad that I bought it.
Customer loyalty reflects the likelihood of repurchasing products or services. Customer satisfaction is a major
predictor of repurchase but is strongly influenced by explicit performance evaluations of product performance, quality, and
value.
Loyalty is often measured as a combination of measures including overall satisfaction, likelihood of repurchase, and
likelihood of recommending the brand to a friend.
A common measure of loyalty might be the sum of scores for the following three questions:
Affect (liking/disliking) is best measured in the context of product attributes or benefits. Customer satisfaction is
influenced by the perceived quality of product and service attributes, and is moderated by expectations of the product or
service. The researcher must define and develop measures for each attribute that is important for customer satisfaction.
Consumer attitudes toward a product development as a result of product information or any experience with the
product, whether perceived or real.
Again, it may be meaningful to measure attitudes towards a product or service that a consumer has never used, but it is
not meaningful to measure satisfaction when a product or service has not been used.
Cognition refers to judgment: the product was useful (or not useful); fit the situation (or did not fit); exceeded the
requirements of the problem/situation (or did not exceed); or was an important part of the product experience (or was
unimportant).
Judgments are often specific to the intended use application and use occasion for which the product is purchased,
regardless if that use is correct or incorrect.
Affect and satisfaction are closely related concepts. The distinction is that satisfaction is post experience and
represents the emotional affect produced by the product's quality or value.
When wording questions about future or hypothetical behavior, consumers often indicate that purchasing this
product would be a good choice or I would be glad to purchase this product. Behavioral measures also reflect the consumer's
past experience with customer service representatives.
Satisfaction can influence other post-purchase/post-experience actions like communicating to others through word of
6.3 Customer satisfaction in FMCG products in India and categorization according to demographic profiles.
The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1
billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition
between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor
costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from
US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product
categories like jams,toothpaste, skin care, hair wash etc.in India is low indicating the untapped market potential. Burgeoning
Indian population, particularly the middle class and the segments, present an opportunity for makers of branded products to
convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product
categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28
billion of investment in the food-processing industry. Automatic investment approval (including foreign technology
agreements within specified norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies
(OCBs) investment, is allowed for most of the food processing sector. FMCG industry, alternatively called as CPG (Consumer
packaged goods) industry primarily deals with the production, distribution and marketing of consumer packaged goods. These
are products that have a quick turnover, and relatively low cost. Consumers generally put less thought into the purchase of
FMCG than they do for other products. Though the absolute profit made on FMCG products is relatively small, they generally
sell in large numbers and so the cumulative profit on such products can be large. Some of the prime activities of FMCG industry
are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain, production and
general management.
FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against
FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this,
investment in FMCG industry is also increasing, specifically in India, where FMCG industry is regarded as the fourth largest
sector with a total market size of US$13. 1 billion. An FMCG Sector in India is estimated to grow 60% by 2010.
FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against
FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this,
investment in FMCG industry is also increasing, specifically in India, where FMCG industry is regarded as the fourth largest
sector with a total market size of US$13. 1 billion. An FMCG Sector in India is estimated to grow 60% by 2010. FMCG
industry is regarded as the largest sector in New Zealand which accounts for 5% of Gross Domestic Product (GDP).
Brand loyalty is where a person buys products from the same manufacturer repeatedly rather than from other
suppliers.
A second dimension, however, is whether the customer is committed to the brand. Philip Kotler, again, defines four
patterns of behavior:
It has been suggested that loyalty includes some degree of pre-dispositional commitment toward a brand. Brand
loyalty is viewed as multidimensional construct. It is determined by several distinct psychological processes and it entails
multivariate measurements. Customers' perceived value, brand trust, customers' satisfaction, repeat purchase behavior, and
commitment are found to be the key influencing factors of brand loyalty. Commitment and repeated purchase behavior are
considered as necessary conditions for brand loyalty followed by perceived value, satisfaction, and brand trust. Fred
Reichheld, One of the most influential writers on brand loyalty, claimed that enhancing customer loyalty could have dramatic
effects on profitability. Among the benefits from brand loyalty specifically, long tenure or staying as a customer for long
was said to be lower sensitivity to price. This claim had not been empirically tested until recently. Recent research found
evidence that long-term customers were indeed less sensitive to price increases.
Brand loyalty is the act of consumers consistently purchasing a product or patronizing a company. Companies
typically build this loyalty through strong advertising and marketing campaigns that influence consumers as well as high-
quality products or services. Marketing is necessary to entice consumers to purchase one company's goods over competing
goods. The importance of brand loyalty leads to increased market share, higher profits and better goodwill among consumers.
Companies will often go through a series of activities that improve their loyalty among customers.
Market share represents the amount of a market's total sales that one company earns when consumers make purchases.
Brand loyalty allows a company to market and advertise its goods or services in the market. Companies are often unable to
capture a significant portion of market share without informing consumers. Additionally, new companies might have no
customers who are informed or loyal to the business and its products. Therefore, building loyalty by offering quality products
or undercutting another company's brand loyalty can improve market share.
Profit is the main reason why a company operates in a given business environment. A company makes a profit by
selling goods and/or services to consumers, with profits coming from either a high volume of sales or high profit margins.
Brand loyalty allows a company to generate higher sales through word-of-mouth advertisement. Word-of-mouth advertising
occurs when current customers have enough loyalty that they recommend a company's products or services to other
consumers. This allows the company to build a loyal consumer base through its current customers.
The goodwill is the positive relationship that a company has with its customers. Companies can establish goodwill by
offering high-quality products at a fair price. Brand loyalty built through goodwill often means that a company is able to sell
products to consumers regardless of price changes or alterations in the company's operations. In some cases, however, changes
that leave a negative outlook with consumers can decrease brand loyalty. To avoid a reduction in goodwill, companies must be
sure to listen and react properly when consumers provide feedback.
Brand loyalty is often expensive for companies to achieve. Though it sounds simple enough, it is not always easy.
Competitors that have a strong, loyal consumer base can make it difficult for a new company to enter a market. Other times, the
necessary expenditures for advertising products might be prohibitive for some companies. Well-managed plans and operations
can be more successful than blanketing an entire market with advertising.
The two important measures of brand awareness are brand recognition and recall. (Hoyer and Brown, in
1990,)Kapferer, in 1988 says top of mind awareness is critical as it captures the 'consideration set' in a given purchase
situation. (Laurent, Kapferer and Roussel, 1995) Study on recall of pictorial advertisements as compared to non-pictorial
advertisements indicate how much more effective they are consumers as compared to urban consumers. (Velayudhan, 2002)
In some studies, brand preference has been equated with brand loyalty (e.g., Rundle-Thiele and Mackay 2001). In other
studies, it has been evaluated as a precursor to brand loyalty (e.g., Odin et al. 2001). Ben-Akiva et al. (1999) define preferences
as comparative judgments between entities. Additional reasons (other than promotions) why consumers may purchase other
brands despite a stated brand preference include a desire to try and learn more about different brands in the category;changing
needs or situations; variety seeking; and changes in the available alternatives due to new products or improvements to existing
products (Coulter et al. 2003). Alba and Hutchison (1987) propose that experts are more likely to search for new information
because of the following :
(a) Expertise increases awareness of the existence of potentially acquirable information and
(b) Familiarity reduces the cost of information acquisition.
Schmidt andSpreng (1996) further postulate that knowledge increases the perceived ability to search and therefore
should decrease the perceived costs ofthe searchh. Greater knowledge has been shown to be positively related to increased
involvement with a category (e.g., Raju et al. 1995). Dunn et al. (1978) viewed advertising from its functional perspectives;
Morden (1991) is of the opinion that advertising is used to establish a basic awareness of the product. Those views of Etzel et al.
(1997) coincide with the simple but all-embracing definitions of Davies(1998) and Arens (1996). Aaker (2000) regarded brand
awareness as a remarkably durable and sustainable asset. Yee and Young (2001), aimed to create awareness of high fat content
of pies, studied consumer and producer awareness about nutrition labeling on packaging.
1.Demographic
Frequency Percentage
Details (N) (%)
Gender
Male 50 50%
Female 50 50%
Age
Below 20 13 13%
Between 20-30 25 25%
Between 30-40 40 40%
Above 40 22 22%
Monthly Income
5,000-10,000 17 17%
10,000-15000 13 13%
Above 15000 37 37%
Dependent Respondent (No Income
Group) 33 33%
Types of Products Prefers
Prefer Brand 20 20%
Prefer Non Brand 33 33%
Prefer Quality of Product over Brand 47 47%
2.Brand Awareness
Average 20 20 20
Interpretation : It has been concluded from the above table that the average awareness of the respondents in the market is
20%, in case of shampoo, in case of washing powder the average awareness of the respondents is 20% , in case of soap the
average awareness of the respondent is 20%.
3.Brand Preference
Factors Rank
Quality 1
Price 2
Easy availability 3
Family is liking 4
Advertisement 5
Variety 6
Interpretation : From the above table it is inferred that the respondents give 1st rank to Quality, 2nd to Price, 3rd to Easy
Availability, 4th to Family Liking, 5th to the Advertisement, and 6th to Variety for brand preference.
H1 - There is a relation between male and female attitudes towards the brand.
It's significant value is 0.040. Significant value is 0.040 which is less than (P<0.05), hence the null hypothesis is
rejected and may conclude that there is a significant relation between male and female attitude towards the brand.
Through ANNOVA test, it shows that, within the group and between the group, its significant value is 0.046 and
which is less than p value, hence the null hypothesis is rejected and may conclude that there is relational different age group
attitude towards the brand.
There is relational different among different income group attitudes towards the brand.
When researcher taken ANNOVA test for finding out different income group attitude towards the brand. The test
shows that, the significant value is 0..399, which is less than p value , hence he null hypothesis is rejected and may conclude that
there is relational different among different income group attitudes towards the brand.
2. There is relational difference among male and female attitudes towards brand awareness through Media.
With the help of correlation analysis between brand preferences and media, may conclude that due to its significant
value 0.046, which is less than p value, hence there is a relational difference between the attitude towards brand and media.
10.0 CONCLUSIONS
The brand awareness in respect of FMCG products is showing an increasing tendency. People are not worried about
the price of the product. They are showing willingness to spend higher price when they realize that they can afford to spend.
Since the usage of branded products of reputed companies will elevate their status.
This change in the attitude to spend more on the higher priced branded products (Example: Dove Soap) among high
income groups clearly suggests that there is an ample scope for such products to capture the markets in this areas by increasing
the supply of these products.
The marketing agencies are advised to conduct health awareness programs by educating the people about the need to
use the FMCG products. These products can be made more popular and acceptable among the people.
REFERENCES
1. Rao, S. L. (2001). The Rise and Fall of Fast Moving Consumer Goods (FMCG) -A Marketing Story.
2. The journal of consumer research 17 (2), 141-148.
3. Philip Kotlar - Marketing management
4. William G .Zikmund: Business Research Methods
WEB SITES :
en.wikipedia.org/wiki/Customer_satisfaction?
www.investopedia.com/terms/b/brand-loyalty.asp?
www.businessdictionary.com/definition/brand-loyalty.html?
en.wikipedia.org/wiki/FMCG?
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