The Study of Customer Switching Behaviour toward Carbonated Soft Drink Market

Mr. J.W. Abarajithan Temporary Assistant Lecturer, Department of Management, Faculty of Commerce and Management, Eastern University, Sri Lanka williams_jk@ymail.com Mrs. V.R. Ragel Coordinator- Discipline of Marketing / Senior Lecturer Gr. I, Department of Management, Faculty of Commerce and Management, Eastern University, Sri Lanka victoriaragel@yahoo.co.uk

ABSTRACT With the continuous growth of competition in the market place, understanding customers has become more and more important in marketing. Moreover, customers are more mobile and knowledgeable than ever before, searching for a best alterative in their purchasing process, and finally switch to best brand. This process can be known as customer switching behaviour. The switching behaviour in products and services are not the same for all categories. The main purpose of this study was to examine whether there is customer switching behaviour in the carbonated soft drink market; and if so, what are the factors that contributed for customers switching behaviour. This research was limited to Manmunai North Divisional secretariat area in Batticaloa district. Customer switching behaviour is operataionalized in terms of four variables; Marketers Product Mix, Pricing Strategies, Distributional Strategies, and Promotional Strategies. A quantitative method was applied where for data collection structure questionnaires were used. 200 questionnaires were issued and collected data were analyzed using SPSS v.11.0 and evaluated as low, moderate, and high level influence of research variables on switching behaviour in carbonated soft drink repurchase. Family unit was considered as a unit of analysis. Descriptive analysis was used for data analysis. This study found that most of the customers are switching their brands (85%). Research found that Marketers promotional, distributional and product mix are heavily motivating customers switching tendency while pricing strategies has moderate influence on customers switching tendency. However, most of the respondents agree that marketers promotional strategies are attracting them to switch toward their brand. According to the analyzed data, the Coca-Cola Company holds 43.7%, PepsiCo holds 25.1%, and Ceylon Cold Stores Limited holds 21% of Market share. It is advisable for carbonated soft-drink marketers to concentrate more on their pricing and product strategies while maintaining present placing and promotional strategies. Finally recommendations have been given as to how carbonated soft-drink marketers can enhance their markshare further by protecting their customers from competitors moves. Keywords: Switching Behaviour, Loyalty, Marketing Mix

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Electronic copy available at: http://ssrn.com/abstract=1951780

1. INTRODUCTION
Nowadays many business organizations are operating in a highly competitive marketplace. Drucker (1999) states that the basic function of marketing is to attract and retain customers at a profit. However, a critical issue for the continued success of a firm is depends on its capability to retain its current customers and make them loyal to its brands (Dekimpe et al, 1997). Customer switching behaviour can be seen as serious risk to the wealth and profitability of the firm. Therefore, it is important for the companies to develop an understanding of what the customers decisions are influenced by. At present marketers are motivated to address the customer switching behaviour in order to ensure long-term relationships with their customers. Meanwhile customers have become more mobile and better informed than ever before, are increasingly able to get precisely what they want, when they want it, and at the price. To meet these exacting desires, new and different products and services appear unceasingly in customers aspect. Due to these reasons, the marketing environment has become more competitive. Therefore, the manufactures implement many strategies to create and retain customers for their product in the competitive marketing environment. Therefore concept of customer switching behaviour has become popular among the general public, business people, professionals and academic; and has gain universal recognition. As a consequence contemporary marketing managers attempt to address the customer switching behaviour. Thus, knowledge on customer switching behaviour is widely known and practiced in most of the organizations in particular in carbonated soft drink market. But, in Sri Lanka, there is an empirical gap of whether customer switching behaviour has addressed in carbonated soft drink market. This problem is examined in this study. Based on above research background and generally observed empirical knowledge gap two research questions were formulated such as whether there is customer switching behaviour in the carbonated soft drink market; if so, what is the most basic factor that contributes for customers switching behaviour toward the selection of carbonated soft drink products with special reference to Manmunai -North Divisional secretariat area? To what extent marketers Product Mix, Pricing Strategies, Distributional Strategies, and Promotional Strategies influence on customer switching behaviour?

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Electronic copy available at: http://ssrn.com/abstract=1951780

1.1 Objectives of the Study

Based on the above research questions following research objectives were formulated. 1. To examine whether there is customer switching behaviour in carbonated soft drink market; 2. To find out the level of influence which driven from marketers Product Mix, Pricing Strategies, Distributional Strategies, and Promotional Strategies influence on customer switching behaviour. 1.2 Literature Review Customer Switching Behaviour Susan M. Keaveney (Apr 1995) claimed that customer switching behaviour damages market share and profitability of service firms yet has remained virtually un-explored in the marketing literature. Aitzaz Saeed et al (2007) defined the concept of customer switching behaviour as a negative out come of the buyer decision-making process and the then implementation of the decision in regard with a specific product or service selection. Therefore the origin of such switching tendency can be explored using following figure I. Some purchases are followed by a phenomenon called postpurchase dissonances. This occurs when a consumer doubts the wisdom of a purchase he or she has made. Other purchases are followed by nonuse. This means the consumer keep or return the products without using it. However, most purchase is followed by product use, even if postpurchase dissonances are present. Product use often requires the disposition of the product package or the product itself. During and after use, the purchase process and the product are evaluated by the customers. Whereas, unsatisfactory evolutions may produce complains by those consumers, and the customer switching
Figure I - Postpurchase Consumer Behaviour
Purchase Postpurchase Dissonance Usage Product Disposal Evaluation Satisfaction Nonuse

behaviour can be played in this stage. Appropriate response by the firm may reverse the initial among

dissatisfactory

Complaint Behaviour

those who complained. The result of all these processes is a final level of satisfaction, which in
Committed Customers Repeat Purchase

Increased Use

Brand Switching

Discontinued Use

Source: Del I Hawkins, Roger J Best, Kenneth A Coney, Amit Mookerjee, Consumer Behaviour Building Marketing Strategy, 2007

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turn can result in loyal, committed customer, one who is willing to repurchase, or a customer who switches brands or discontinues using the product category. Marketing Mix Marketing consists of individual and organizational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion, and pricing of goods, services, and ideas. (Dibb, S. &Simkin, L. & Pride, W. M. & Ferrell, O. C., 1994). In this definition made by Kotler one recognizes that the marketing mix consist out of four Ps. These four Ps are product, price, place and promotion (Kotler, P. & Wong, V. & Saunders, J. & Armstrong, G., 2005). Product : Anything that is offered to a market for attention, acquisition, use or consumption and that might satisfy a want or need, products include more than just tangible goods (Kotler and Armstrong, 2007) Price : The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service. (Kotler, Wong, Saunders and Armstrong, 2005) Place : A channel of distribution comprises a set of institutions, which perform all of the activities used to move a product and its title from production to consumption. (Bucklin, 1966) Promotion : A companys total marketing communications mix (Kotler, Wong, Saunders and Armstrong, 2005)
Target Market Source: Kotler, Wong, Saunders and Armstrong, Principles of marketing, 2005

Figure II - The Four Ps Components of the Marketing Mix

Product Product Variety Quality Design Features Brand name Packaging Size Service Warranties Returns Marketing Mix Promotion Price Sales List price Promotion Discount Advertising Allowances Sales force Payment Public period Relation Credit terms Direct Marketing Place Channels Coverage Assortments Locations Inventory Transport

1.4 Measuring Customer Switching Behaviour A search of the literature revealed no existing measurement scales for customer switching behaviour. In order to achieve the study objectives the measurement was developed to measure the degree of customer switching behavior which influence by marketing mix variables.

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1.5 Measures In this study, Customer switching behaviour was measured by using 25 items which are representing 4 variable designed to tap the following Customer Switching Behaviour facets in a Carbonated soft-drink market such as Product Mix (11 items), Pricing Strategies (4 items), Distributional Strategies (6 items), and Promotional Strategies (4 items). In addition to the Customer Switching behavioural measure, respondent were asked to indicate their purchased brand from thirty-one soft drinks that manufactured by six

companies in four different occasion such as present, two weeks before, one month before, and six month before. Finally, it was asked to indicate their decision upon their switching tendency in order to measure switching tendency in their purchase in every time between brands. Also, they were asked complete short demographics questions in the questionnaire. The study questionnaire includes questions on gender, age, and educational qualification.

2. METHODOLOGY
2.1 Study Setting, Design and Method of Survey For this study of customers switching behaviour in Manmunai North divisional secretariat area Batticaloa district, data were collected based on primary and secondary sources. Primary data collected by issuing questionnaire and secondary data collected from past research papers, literature, reports, and internet. Two hundred questionnaires were issued to the families in Manmunai -North Divisional secretariat area on a stratified random sampling method. For this research study, cross sectional analysis is used to analyze the collected data during specific time. The unit of analysis is the family unites in the Manmunai North divisional secretariat area Batticaloa district. Research Approach: This research is followed the pattern of quantitative research as this study is customer base and using a questionnaire to know about customer switching behaviour towards carbonated soft drink purchase. This approach is best suited to research purpose and research question. 2.2 Population and Sampling of Research As this is a quantitative study, therefore this requires a population, and the targeted population for this research is 22,774families (household units) in the Manmunai-North divisional secretariat area in Batticaloa district.

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Researcher divided the whole population in Manmunai North divisional secretariat area Batticaloa according to the villages in that DS division, and the sample of 200 families selected from all villages according to their contribution for total population in ManmunaiNorth divisional secretariat area. 2.3 Method of Data Analysis and Evaluation This study is following the pattern of induction, as this study analyzes the empirical data with the help of literature review. It is specially considered univariate analysis consist of mean, standard deviation and percentage etc, at the same time, those data presented by tables. The statistical package for social science statistics (SPSS 11.0) was used for analyzing the data and finding the results. Each variable is given a scale from 1-5 to show the extent of agreement, based on responses, univariate measures were calculated for each of variables. The mean value is lying in the range of 1-5 and the value of each respondent for a variable is compared with the medium values of 3. In evaluating the samples as a whole the mean value of the respondent is compared with the medium. If a respondents average score of an aspect is less than the mean value (2.5) it is assumed that the respondent feel low level in customer switching behaviour in relation to the particular marketing mix variables. Thus, the decision rule to measure the level of customer switching behaviour can be formulated as follows given in Table 1.

Table 1: Decision Rule

Range
1 X 2.5 2.5<X 3.5 3.5<X 5.0

Decision Attributes
Low Level Influence on Customer Switching Tendency Moderate Level Influence on Customer Switching Tendency High Level Influence on Customer Switching Tendency

The criteria in the table describes the attributes of the population in relation to particular variable by considering aggregation of scales provided for each and every item of the respective variable in the questionnaire.

3. RESULTS AND DISCUSSION

3.1 Results and Discussion: Objective One The first objective of this study is to find whether there is customer switching behaviour in carbonated soft drink market. In order to achieve this objective, data were collected from -6-

200 household in Manmunai North divisional secretariat area Batticaloa District. Out of 200 samples, 167 customers exposed their brand switching behaviour and 29 customers also expressed their loyal behaviour toward their soft drink purchase over time. Whereas, 4 respondents exposed non-purchasing tendency toward carbonated soft drinks. Finding The Coca-Cola company hold 37.1% of market six month before, it was reduced to 28.7% one month before, two weeks before it hold 30.5% of market share, and presently they are having 43.7% of share among 167 respondents. Moreover, newly entered domestic player Shaa Cola Beverages (Pvt.) does not have any market share.
Table 2: Brand Purchased by Switching Customers
Manufacturing Companies The Coca-Cola Company The PepsiCo The MyCola Ceylon Cold Stores Limited Elephant House Ol Springs Bottlers (Pvt) Limited Maharaja Group Shaa Cola Beverages (Pvt.) Limited Total Present Purchase Fq % 73 42 5 35 12 167 43.7 25.1 3.0 21.0 7.2 100.0 Two Weeks Before One Month Before Fq 51 53 10 40 13 167 % 30.5 31.7 6.0 24.0 7.8 100.0 Fq 48 51 16 41 11 167 % 28.7 30.5 9.6 24.6 6.6 100.0 Six Month Before Fq 62 43 9 42 11 167 % 37.1 25.7 5.4 25.1 6.6 100.0

Source: survey data

3.2 Results and Discussion: Objective Two The second objective of this study is to find out the level of influence which driven from marketers Product Mix, Pricing Strategies, Distributional Strategies, and Promotional Strategies influence on customer switching behaviour. In order to achieve this objective, data were collected from 167 switching customers in Manmunai North divisional secretariat area Batticaloa District. The means and standard deviations of each variable were presented in Table 2.
Table 3: Mean and Standard deviation of each variable

Variable Product Price Place Promotion

Mean 3.96 3.21 4.13 4.08

SD 0.874 0.632 0.871 0.789

Source: survey data

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The switching customers stated that marketers product mix (Brand Name, Taste, Different Size,
Quality, Favourable Smell, Safety to Health, Nutrition, Packaging, Product Variety, Product Modification, and Design)

has high influence on switching decision (mean value is 3.95) and they have

merely same opinion regarding product (standard deviation is 0.874). Hence, they isolated that marketers pricing mix (Price, Discount Facility, Credit Terms, and Payment Period ) has moderate influence on switching decision (mean value is 3.21) and they have merely somewhat same opinion regarding price (standard deviation is 0.632). Marketers distributional strategies (Availability, Location, Assortments / Quantities, Channel,
Coverage Area, Sellers Recommendations)

play high influence on switching decision of

customers (mean value is 4.13). Where, promotional mix (Advertisements, Sales Promotion,
Public Relation, and Sales Forces )

as a dimension has high-level influence on customers

switching tendency (mean value is 4.08). While considering overall marketing mix influence on customer switching tendency, it is highly influencing customer switching toward carbonated soft drink purchase. (Mean values 3.85 with SD of 0.79)

4. CONCLUSIONS
Conducted research shows that Coca-Cola Company attracted more switching customers by their offerings and the most of the loyal customers are loyal to Ol Springs Bottlers (Pvt) Limited in Manmunai -North Divisional secretariat area in Batticaloa district. Altogether, multinational players are dominating the Sri Lankan carbonated market compare to domestic players. This research concluded that, most of switching tendency for switching customers are triggered by high level influence of marketers marketing mix offerings such as product, place, promotion, and distributional strategies of marketers. They highly concentrated on brand name, taste, and quality of the soft drink that they purchase. As switching customers explore variety seeking behaviour toward their soft drink purchase, they were unable to loyal to specific brand; however they were also recognized that these factors also influenced on their switching decision. Moreover, switching customers are heavily attracted by marketers soft drink availability in different quantities of bottles, packaging (Plastic or Glass bottle) of the soft drink, and varieties of soft drink availability in specific brand compare to loyal customers. This may be a cause of seasonal sales promotion given by Coca-Cola Company for its whole products in its private brand.

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Place is the one importantly considered among 4Ps in the marketing mix by switching customers. Product availability at convenience time, friendly atmosphere for encouraging the purchase, geographical domination of soft drink, and sellers recommendation regarding soft drink purchase induce customers switching behaviour. Receiving of significant information through advertisements, sales promotion, public relation, and sales forces are more important in the promotional mix. However, switching customers perceive that the information received by these tools should be enhanced. The overall marketing mix exposed that majority of switching considered marketing mix as highly important in their decisions.

5. REFERENCES
AitzazSaeed and RehanArshad (2007). Corporate branding and customers purchase preferences in mobile phone telecommunication, School of Business and Engineering, International Marketing, 60p Bucklin Louis P (1966). A Theory of distribution channel structure, Berkeley University of California, Institutes of Business and Economic Research. Dekimpe, M.G., Steenkamp, J.-B.E.M., Mellens, M. and Abeele, P.V. (1997).Decline and variability in brand loyalty, International Journal of Research in Marketing, Vol. 14, pp. 405-20. Del I Hawkins, Roger J Best, Kenneth A Coney, Amit Mookerjee (2007).Consumer Behaviour Building Marketing Strategy, 9th Edition, Tata McGraw Hill Publishing Company Limited- New Delhi. Dibb, S. & Simkin, L. & Pride, W. M. & Ferrell, O. C. (1994). Marketing: Concepts and Strategies (2nd European ed.). Houghton Mifflin Company, London, p. 5. Drucker, P. F. (1999). The Practice of Management, London: Heinemann. Keaveney, Susan.M. (1995). Customer switching behavior in service industries: an exploratory study, Journal of Marketing, Vol. 59, April, pp. 71-82. Armstrong, G. & Kotler, P. (2007) Marketing: An Introduction. (8th ed.) New Jersey: Pearson Prentice Hall Kotler, P., Wong, V., Saunders, J. & Armstrong, G. (2005) Principles of Marketing, (4th ed.) FT/Prentice Hall

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