SUMMER TRAINING REPORT

ON

CHERRY PICKING OF FMCG PRODUCTS AT BIG BAZAAR


Dissertation submitted In Partial fulfillment for the
Post Graduate Diploma in Business Management


By:-


Under the guidance of:




CONTENTS


Acknowledgement
Preface
Executive Summary
Literature Review
Introduction to the industry
Interpretition
Management Hierarchy
Comparison with other business
Govt. policies related to business
About the topic (Market Potential)
Findings And Analysis
Limitation
Summary/conclusion
Suggestions/Recommendations
Bibliography















ACKNOWLEDGEMENT


A work is never a work of an individual. We owe a sense of gratitude to the intelligence and co-
operation of those people who had been so easy to let us understand what we needed from time
to time for completion of this exclusive project.
We want to express our gratitude towards Mr. Girish Pandey Faculty, IEM, Lucknow for giving
us an opportunity to do this project.
Last but not the least, we would like to forward our gratitude to our friends & other faculty
members who always endured us and stood by us and without whom we could not have
envisaged the completion of our project.



Ramjeet
BBA-IInd year
Roll No. 39069












PREFACE


MARKETING is designed in such a way that student can grasp maximum knowledge
and can get practical exposure to the corporate world in minimum possible time. Business
schools of today realize the importance of practical knowledge over the theoretical base.
The research report is necessary as it provides an opportunity to the researcher in
understanding the industry with special emphasis on the development of skills in analyzing and
interpreting practical problems through the application of management theories and techniques.
It is a new platform of learning through practical experience.

























EXECUTIVE SUMMARY


The phenomenon of organized retailing, in spite of its tremendous growth in the last 2-3 years in
India has just seen the tip of the iceberg. As giants like Reliance, Bharti-Walmart and others
enter the fray, the scenario is going to become more competitive and attractive. Under this
backdrop, the fruits and vegetable sector (F&V) sector has a tremendous potential to take
advantage of this development. Right now, with less than 1% of the produce being marketed in
an organized way and an inefficient supply chain plaguing the system with losses and wastages,
there is a need to evolve a frame-work or a model of retailing that configures an efficient supply
chain to benefit the retailers, farmers and the customers alike.

Demographics continue to show a positive report to spur retailing growth. Consumers aged 20-45
years is emerging as the fastest growing consumer group and the mean age of Indians is now pegged
at 27, a mean age that reinforces spending across all the retailing channels of grocery, non-grocery
and non-store.

The government stance of protecting local retailers and prohibiting 100% foreign direct investment
in retailing continued in 2005, restraining international retailers' entry. However, there was gradual
economic reform, giving way to easier and faster franchising agreements as well as the loosening of
zonal regulations on retail expansion, thus stimulating retailing.

Non-store retailing is expected to continue its fast-paced growth from a miniscule base. Across all
channels, growth in retailing is expected to be boosted heightened competition during the period
2009-2011 due to the growing.







LITERATURE REVIEW
Marketing
Marketing is a societal process by which individuals and groups obtain what they need and want
through creating, offering and freely exchanging products and services of value with others or
other wise it is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods, services to create exchanges that satisfy individual and
organizational goals.
Marketing Strategy
Marketing strategy is a set of objectives, policies and rules that leads the company's marketing
efforts. It is the marketing approach to accomplish the bread objective of the marketing approach
to accomplish the bread objective of the marketing plan. The various process of marketing
strategy are given below.
1. Selecting largest markets segmentation
2. Positioning
3. Product
4. Price
5. Place
6. Promotion
7. Research and development
8. Marketing research


Market segmentation and selecting target market
It is an effort to increase a company's precision marketing. The starting point of any
segmentation discussion is mass marketing. In mass marketing, the seller engaged in the mass


production, mass distribution and mass promotion of one product for all buyers. Market segment
consists of a large identifiable group within a market with similar wants, purchasing power
geographical location, buying attitudes or buying habita. It is an approach midway between mass
marketing and individual marketing. Through this the choice of distribution channels, and
communicaton channels become much easier. The researchers try to form segments by looking at
consumer characteristics; geographic, demographic, and psychographic. After segmenting the
market then target market selected.
2. Positioning:- The positioning is a creative exercise donw with an existing product. the well
known products generally hold a distinctive position in consumer's minds. The positioning
requires that every tangible aspect of product, price, place and promotion must support the
chosen positioning strategy. Company should develop a unique selling proposition (USP) for
each brand and stick to it, PPL consistently promotes its DAP fertilizer by Higher yield at lower
cost. As companies increase the number of claims for their brand, they risk disbelief and a loss of
clear positioning. In general a company must avoid four major positioning errors. Those are
under positioning over positioning, confused positioning and doubtful positioning.
3. Product:- A product is any offering that can satisfy a need or want. The major types of basic
offerings are goods, services, experiences, events, places, properties, organizations, information
and ideas. The company gives more importance in quality, packaging, services etc. to satisfy the
customers. The products has it's life cycle. The product strategies are modified in different stages
of product life cycle.
4. Price:- It is the most important aspect in company's point of view. Price of the product will be
decided by the company according to the competitor's price.
5. Place:- This plays a major role in the entire marketing system. the company emphasis on it's
distribution network. Proper distribution network gives proper availability of the product.
6. Promotion:- Promotion is the one of the major aspects in marketing strategies. By adopting
various promotional activities the company create strong brand image. It also helps in increasing
the brand awareness. It includes advertising, sales promotioins and public relations etc.
7. Research and Development:- after testing, the new product manager must develop a
preliminary marketing strategy plan for introducing the new product in to the market. The plan


consists of three parts. The first part describes the target market's size, structure and behavior.
The second part out lines the planned price, distribution strategy and marketing budget for the
first year. The third part of the development describes the long run sales and profit goals and
marketing mix strategy over time.



MARKETING MIX
Target Market
Product Price Promotion Place
Product variety List price Sales promotion Channels
Quality Discounts Advertising Coverage
Design Allowances Sales forces Assortments
Features Payment period Public relation Locations
Brand name Credit terms Direct marketing Inventory
Packaging Transport
Sizes
Services
Warranties
Returns











INTRODUCTION TO THE INDUSTRY

Products which have a quick turnover, and relatively low cost are known as Fast Moving
Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples
of FMCG generally include a wide range of frequently purchased consumer products such as
toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as
other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG
may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks,
tissue paper, and chocolate bars.

Indias FMCG sector is the fourth largest sector in the economy and creates employment for
more than three million people in downstream activities. Its principal constituents are Household
Care, Personal Care and Food & Beverages.

The total FMCG market is in excess of Rs. 85,000 Crores. It iscurrently growing at double digit
growth rate and is expected to maintain a high growth rate. FMCG Industry is characterized by a
well established distribution network, low penetration levels, low operating cost, lower per capita
consumption and intense competition between the organized and unorganized segments.

The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in the third
quarter of 2008-09 despite the economic downturn. The industry is expected to register a 15%
growth in Q3 2008-09 as compared to the corresponding period last year. Unlike other sectors,
the FMCG industry did not slow down since Q2 2008. the industry is doing pretty well, bucking
the trend. As it is meeting the every-day demands of consumers, it will continue to grow.
Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with
domination in their key categories, have improved their market shares and outperformed peers in
the FMCG sector. This has been also aided by the lack of competition in the respective
categories. Single product leaders such as Colgate Palmolive India Ltd and Britannia Industries


Ltd have also witnessed strength in their respective categories, aided byinnovations and strong
distribution. Consumer Products Ltd in soaps and Dabur .
Industry Category and Products

Household Care
Personal Wash:-
The market size of personal wash is estimated to be around Rs. 8,300 Cr. The personal wash can
be segregated into three segments: Premium, Economy and Popular. The penetration level of
soaps is ~92 per cent. It is available in 5 million retail stores, out of which, 75 per cent are in the
rural areas. HUL is the leader with market share of ~53 per cent; Godrej occupies second
position with market share of ~10 per cent. With increase in disposable incomes, growth in rural
demand is expected to increase because consumers are moving up towards premium products.
However, in the recent past there has not been much change in the volume of premium soaps in
proportion to economy soaps, because increase in prices has led some consumers to look for
cheaper substitutes.

Detergents:-
The size of the detergent market is estimated to be Rs. 12,000 Cr. Household care segment is
characterized by high degree of competition and high level of penetration. With rapid
urbanization, emergence of small pack size and sachets, the demand for the household care
products is flourishing. The demand for detergents has been growing but the regional and small
unorganized players account for a major share of the total volume of the detergent market. In
washing powder HUL is the leader with ~38 per cent of market share. Other major players are
Nirma, Henkel and Proctor & Gamble.


Personal Care
Skin Care:-
The total skin care market is estimated to be around Rs. 3,400 Cr. The skin care market is at a
primary stage in India. The penetration level of this segment in India is around 20 per cent. With
changing life styles, increase in disposable incomes, greater product choice and availability,


people are becoming aware about personal grooming. The major players in this segment are
Hindustan Unilever with a market share of ~54 per cent, fol-lowed by CavinKare with a market
share of ~12 per cent and Godrej with a market share of ~3 per cent.
Hair Care:-
The hair care market in India is estimated at around Rs. 3,800 Cr. The hair care market can be
segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. Marico is the
leader in Hair Oil segment with market share of ~ 33 per cent; Dabur occu-pies second position
at ~17 per cent.

Shampoos:-
The Indian shampoo market is estimated to be around Rs. 2,700 Cr. It has the penetration level of
only 13 per cent in India. Sachet makes up to 40 per cent of the total shampoo sale. It has low
penetration level even in metros. Again the market is dominated by HUL with around ~47 per
cent market share; P&G occupies second position with market share of around ~23 per cent.
Antidandruff segment constitutes around 15 per cent of the total shampoo market.
The market is further expected to increase due to increased marketing by players and availability
of shampoos in affordable sachets.

Oral Care:-
The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per cent;
toothbrushes - 17 per cent. The total toothpaste market is estimated to be around Rs. 3,500 Cr.
The penetration level of toothpowder/toothpaste in urban areas is three times that of rural areas.
This segment is dominated by Colgate-Palmolive with market share of ~49 per cent, while HUL
occupies second position with market share of ~30 per cent. In toothpowders market, Colgate
and Dabur are the major players. The oral care market, es-pecially toothpastes, remains under
penetrated in India with penetration level ~50 per cent.


Food & Beverages
Food Segment :-


The foods category in FMCG is gaining popularity with a swing of launches by HUL, ITC,
Godrej, and others. This category has 18 major brands aggregating Rs. 4,600 Cr. Nestle and
Amul slug it out in the powders segment. The food category has also seen innovations like
softies in ice creams, ready to eat rice by HUL and pizzas by both GCMMF and Godrej
Pillsbury.


Tea :-
The major share of tea market is dominated by unorganized players. More than 50 per cent of the
market share is capture by unorganized players. Leading branded tea players are HUL and Tata
Tea.

Coffee :-
The Indian beverage industry faces over supply in segments like coffee and tea. However, more
than 50 per cent of the market share is in unpacked or loose form. The major players in this
segment are Nestl, HUL and Tata Tea.











Growth Prospect

Large Market
India has a population of more than 1.150 Billions which is just behind China. According to the
estimates, by 2030 India population will be around 1.450 Billion and will surpass China to
become the World largest in terms of population. FMCG Industry which is directly related to the
population is expected to maintain a robust growth rate.




Spending Pattern
An increase is spending pattern has been witnessed in Indian FMCG market. There is an upward
trend in urban as well as rural market and also an increase in spending in organ-ized retail sector.
An increase in disposable income, of household mainly because of in-crease in nuclear family
where both the husband and wife are earning, has leads to growth rate in FMCG goods.

Changing Profile and Mind Set of Consumer
People are becoming conscious about health and hygienic. There is a change in the mind set of
the Consumer and now looking at Money for Value rather than Value for Money. We have
seen willingness in consumers to move to evolved products/ brands, because of changing


lifestyles, rising disposable income etc. Consumers are switching from economy to premium
product even we have witnessed a sharp increase in the sales of packaged water and water
purifier. Findings according to a recent survey by A. C. Nielsen shows about 71 per
cent of Indian take notice of packaged goods labels containing nutritional information compared
to two years ago which was only 59 per cent.



Sources: Naukri Hub, IBEF, Chennai Online




Sources: Statistical Outline of India (2001-02), NCAER



Market Opportunities

Vast Rural Market
Rural India accounts for more than 700 Million consumers, or ~70 per cent of the Indian
population and accounts for ~50 per cent of the total FMCG market. The working rural
population is approximately 400 Millions. And an average citizen in rural India has less then half
of the purchasing power as compare to his urban counterpart. Still there is an untapped market
and most of the FMCG Companies are taking different steps to capture rural market share. The
market for FMCG products in rural India is esti-mated ~ 52 per cent and is projected to touch ~
60 per cent within a year. Hindustan Unilever Ltd is the largest player in the industry and has the
widest market coverage.


Export - Leveraging the Cost Advantage
Cheap labor and quality product & services have helped India to represent as a cost ad-vantage
over other Countries. Even the Government has offered zero import duty on capital goods and
raw material for 100% export oriented units. Multi National Companies out-source its product
requirements from its Indian company to have a cost advantage. India is the largest producer of
livestock, milk, sugarcane, coconut, spices and cashew apart from being the second largest
producer of rice, wheat, fruits & vegetables. It adds a cost advantage as well as easily available
raw materials.

Sectoral Opportunities
Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below:

Dairy Based Products
India is the largest milk producer in the world, yet only around 15 per cent of the milk is
processed. The organized liquid milk business is in its infancy and also has large long-term
growth potential. Even investment opportunities exist in value-added products like desserts,
puddings etc.




Packaged Food
Only about 10-12 per cent of output is processed and consumed in packaged form, thus
highlighting the huge potential for expansion of this industry.

Oral Care
The oral care industry, especially toothpastes, remains under penetrated in India with penetration
rates around 50 per cent. With rise in per capita incomes and awareness of oral hygiene, the
growth potential is huge. Lower price and smaller packs are also likely to drive potential up
trading.

Beverages
Indian tea market is dominated by unorganized players. More than 50% of the market share is
capture by unorganized players highlighting high potential for organized players.


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 characterised by a
wellestablished distribution network, intense competition between the organised and unorganised
segments and low operational cost. Availability of key raw materials, cheaper labour 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 rural segments,
presents an opportunity to 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.


Large domestic market
India is one of the largest emerging markets, with a population of over one billion. India is one of
the largest economies in the world in terms of purchasing power and has a strong middle class
base of 300 million.

Rural and urban potential
Rural-urban profile

Population 2001-02 (mn household) 53 135
Population 2009-10 (mn household) 69 153
% Distribution (2001-02) 28 72
Market (Towns/Villages) 3,768 6,27,000
Universe of Outlets (mn) 1 3.3

Source: Statistical Outline of India (2001-02), NCAER
Around 70 per cent of the total households in India (188 million) resides in the rural areas. The
total number of rural households are expected to rise from 135 million in 2001-02 to 153 million
in 2009-10. This presents the largest potential market in the world. The annual size of the rural
FMCG market was estimated at around US$ 10.5 billion in 2001-02. With growing incomes at
both the rural and the urban level, the market potential is expected to expand further.

India - a large consumer goods spender
An average Indian spends around 40 per cent of his income on grocery and 8 per cent on
personal care products. The large share of fast moving consumer goods (FMCG) in total
individual spending along with the large population base is another factor that makes


India one of the largest FMCG markets.





Consumption pie:



Source: KSA Technopak Consumer Outlook 2004.




Source: Euro monitor.


Change in the Indian consumer profile:


Source: Statistical Outline of India (2002-03).


Rapid urbanisation, increased literacy and rising per capita income, have all caused rapid growth
and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent
of the population in India is below 20 years of age and the young population is set to rise further.


Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a
latent demand with more money and a new mindset.

Demand-supply gap
Currently, only a small percentage of the raw materials in India are processed into value added
products even as the demand for processed and convenience food is on the rise. This demand
supply gap indicates an untapped opportunity in areas such as packaged form, convenience food
and drinks, milk products etc. In the personal care segment, the low penetration rate in both the
rural and urban areas indicates a market potential.








INDIA COMPETITIVENESS AND COMPARISON WITH THE WORLD MARKETS

Materials availability
India has a diverse agro-climatic condition due to which there exists a wide-ranging and large
raw material base suitable for food processing industries. India is the largest producer of
livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice,
wheat and fruits & vegetables. India also has an ample supply of caustic soda and soda ash, the
raw materials in the production of soaps and detergents India produced 1.6 million tonnes of
caustic soda in 2003-04. Tata Chemicals, one of the largest producers of synthetic soda ash in the
world is located in India. The availability of these raw materials gives
India the locational advantage.





Source: DIPP.


Apart from the advantage in terms of ample raw material availability, existence of low-cost
labour force also works in favour of India. Labour cost in India is amongst the lowest in Asian
countries. Easy raw material availability and low labour costs have resulted in a lower
cost of production. Many multi-nationals have set up large low cost production bases in India to
outsource for domestic as well as export markets.
Penetration and per capita consumption
Rural - urban penetration (2002)



Source: HLL, Indian Readership Survey.



Penetration level in most product categories like jams, tooth paste, skin care, hair wash etc in
India is low. The contrast is particularly striking between the rural and urban segments - the
average consumption by rural households is much lower than their urban counterparts. Low
penetration indicates the existence of unsaturated markets, which are likely to expand as the
income levels rise. This provides an excellent opportunity for the industry players
in the form of a vastly untapped market.

Moreover, per capita consumption in most of the FMCG categories (including the high
penetration categories) in India is low as compared to both the developed markets and other
emerging economies. A rise in per capita consumption, with improvement in incomes and
affordability and change in tastes and preferences, is further expected to boost FMCG demand.
Growth is also likely to come from consumer "upgrading", especially in the matured product
categories.


Household income distribution 2003






Household income distribution 2015


Demand for FMCG products is set to boom by almost 60 per cent by 2007 and more than 100
per cent by 2015. This will be driven by the rise in share of middle class (defined as the climbers
and consuming class) from 67 per cent in 2003 to 88 per cent in 2015. The boom in various
consumer categories, further, indicates a latent demand for various product segments. For
example, the upper end of very rich and a part of the consuming class indicate a small but rapidly
growing segment for branded products. The middle segment, on the other hand, indicates a large
market for the mass end products.

The BRICs report indicates that India's per capita disposable income, currently at US$ 556 per
annum, will rise to US$ 1150 by 2015 - another FMCG demand driver. Spurt in the industrial
and services sector growth is also likely to boost the urban consumption
demand.







Rise in Indian disposable income (US$/annum)



MARKET OPPORTUNITIES FOR INVESTMENT





Source: HH Panel data

According to estimates based on China's current per capitaconsumption, the Indian FMCG
market is set to treble fromUS$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The
dominanceof Indian markets by unbranded products, change in eating habits and the increased
affordability of the growing Indian population presents an opportunity to makers of branded
products, who can convert consumers to branded products.




CONSUMER SALES PROMOTINAL ACTIVITIES

The importance of consumer sales promotion in the marketing mix of the fast moving consumer
goods (FMCG) category throughout the world has increased. Companies spend considerable
time in planning such activities. However, in order to enhance the effectiveness of these
activities, manufacturers should understand consumer and retailer interpretations of their
promotional activities. The study here pertains to consumers perceptions regarding sales
promotion. Some past researches have suggested that promotion itself has an effect on the
perceived value of the brand. This is because promotions provide utilitarian benefits such as
monetary savings, added value, increased quality and convenience as well as hedonic benefits
such as entertainment, exploration and self-expression.

Broadly speaking most of the companies using Marketing Mix which includes

Price
Place (Channel of Distribution)
Product
Promotion

These are the four basic pillar of marketing mix. Most of the marketing strategies are built on the
basis of these criteria.

Promotion is one of the important elements of marketing mix. There are so many elements of
promotion such as

Advertising
Direct Marketing
Public Relations
Sales Promotion




Traditionally, sales Promotions have been used by marketer to increase sales in the short term.
However, in the last few decades this communication tool has evolved and now is considered
from a strategic point of view. For this reason, it is necessary to realize new studies in this area
and study how consumers evaluate sales promotions.

Sales promotions have grown in both importance and frequency over the past few decades.
Although an accurate estimate for total sales promotions expenditures does not exist, we can be
sure that the trend is up.

Sales promotion serves three essential roles: It informs, persuades and reminds prospective
customers about a company and its products. Even the most useful product or brand will be a
failure if no one knows that it is available. As we know, channels of distribution take more time
in creating awareness because a product has to pass through many hands between a producer and
consumers.

Therefore, a producer has to inform channel members as well as ultimate consumers about the
attributes and availability of his products. The second purpose of promotion is persuasion. The
cut throat competition among different products puts tremendous pressure on their manufacturers
and they are compelled to undertake sales promotion activities. The third purpose of promotion
is reminding consumers about products availability and its potential to satisfy their needs.

From these elements Sales Promotion is the element which is in the focus of this project. Further
Sales Promotion is quite broad term it includes

Trade Oriented Sales Promotion
Consumer Oriented Sales Promotion


Trade Oriented Sales Promotion:



Trade Oriented Sales Promotion aimed to motivate channel member of the company and
to encourage them to push companys product. Trade Oriented Sales Promotion includes dealer
contest and incentives, trade allowances. Point-of-purchase displays, sales training programs,
trade shows, cooperative advertising, and other programs designed to motivate distributors and
retailers to carry a product and make an extra effort to push it to their customers

Consumer Oriented Sales Promotion:

Consumer Oriented Sales Promotion is the main topic of this project. Here emphasize is
given to motivate consumer to increase sales. Consumer Oriented Sales Promotion includes
Sampling, Couponing, Premiums, Contest, Refunds, Rebates, Bonus Packs, Price-off, Event
marketing etc.

Definition:

For the purpose of this study, following definitions of sales promotion were kept in mind.
Kotler defines sales promotion as: Sales promotion consists of a diverse collection of incentive
tools, mostly short-term designed to stimulate quicker and/or greater purchase of particular
products/services by consumers or the trade.

Roger Strang has given a more simplistic definition i.e. sales promotions are short-term
incentives to encourage purchase or sales of a product or service.

Hence, any forms of incentives (price cut or value added nature) offered for short period either to
trade or consumers are considered as sales promotion activities.


Marketers uses consumer oriented sales promotion tools for the following reasons:

To increase short term sales
To induce trial


To reduce inventory
To establish a brand name
To make cross selling
To cope up with competition
To avoid advertising clutter
Tools of Consumer Oriented Sales Promotion:

There are so many tools or technique available to the marketers for achieving objective of sales
promotion. These tools should be used considering all other factors affecting such as cost, time,
competitors, availability of goods etc. These tools are as under

1. Sampling
2. Couponing
3. Price-Off
4. Premium
5. Contest
6. Bonus Pack

Lets have look at each tool

1. Sampling:

Sampling is an important and very frequently used sales promotion tool. In sampling consumers
are given some quantity of a product for no charge to induce trial. Sampling is the most effective
way to generate trial, at the same time it is most expensive tools. Sampling is also used for
established product. Marketers of packaged-goods products such as food, health care items,
cosmetics, and toiletries are heavy users of sampling.

Benefits of Sampling:

From the consumers point of view Sampling is risk free way to try new product.


With the help of sampling scheme consumer can experience directly which is not
possible in any kind of advertisement.
Sampling is best way to induce trial when product feature are very difficult to
describe through advertisement.



Limitation of Sampling:

The main drawback of sampling is of cost. While giving free sample it requires
financial soundness because otherwise company cant afford it.
While giving free sample it is necessary that brand have some unique quality.
There is some product which requires long time to show result due to that it is
possible that the sampling scheme may not give benefit as expected. E.g. Skin
cream requires time to show result in this case it is possible that customer might
not respond when there is no such scheme.


Distribution of Samples:

Door-to-door sampling: Here product is directly delivered to the prospects
residence. This distribution method is very expensive because of labour cost. But
it can be cost effective if marketer has exact information of target market.

Sampling through the mail: This method can be used when product is
comparable small, lightweight, and nonperishable. In this method marketer has
control over where and when the product will be distributed. The main drawback
is of postal restrictions and increasing postal rates.



In-store sampling: This method requires great support from retailers. This
method is more used in product like food, perfume, etc. Here table or booth set-
up in the store. In this method consumer can directly taste and than can purchase.

On-package sampling: In this method free sample is attached to another
product. This is cost effective method but it is also not free from drawback as it is
distributed only to consumers who purchase the item to which it is attached the
sample will not reach nonusers of the carrier brand.

Other Methods: To distribute free sample, methods like newspaper, magazine
are used. Send sample to those who call tall free number. Thorough internet free
sample can be distributed like film clip.


2. Couponing:

Couponing is the oldest and most widely used way of sales promotion. Coupons have been used
since 1895. It is mostly used by packaged goods. It is worthwhile to use coupon as a promotion
tool because data shows that market for packaged goods increased from 16 billion in 1968 to 310
billion in 1994. To boost up the sales not only manufacturer but retailers personally can also
used.

Benefits of Couponing:

Couponing leads to price reductions so as to encourage price sensitive customers.
Non users can try a product which may leads to regular sales.
Reduction in price reduces the consumers perceived risk associated with new
product such as financial risk, social risk, psychological risk etc.
Coupons can be used not only for newly launched product but it can also use for
already established brand.




Limitations of Couponing:

It is very difficult to estimate number of buyers.
Cost of coupon and reduction given as per scheme leads to reduction in over
all profit of the firm.
It may to target towards actual buyers, some other may got benefit of it who
are actually not interested.
It can be manipulated by retailers and company may not get the result
expected.
Distribution of coupons:

The use of newspaper and magazine as a vehicle for distributing coupon was used
quite freely. Newspaper and magazine gives advantage of market selectivity,
shorter lead time and cost efficiency. But now a day these media is not so much
effective.
Very widely used method for distributing coupon is placing coupons either inside
or on the outside of the package.
Distribution through newspaper freestanding inserts is by far the most popular
method for delivering coupons to consumers.

3. Price-off:

A price-off is simply a reduction in the price of the product to increase sales and is very often
used when introduction a new product. A reduction in price always increases sales but the use of
this technique should be carefully considered in the current market situation.

Price-off is the most preferred sales promotion technique because consumers response very
positively to this scheme. Not only that but it also cause large increase in sales volume. Price-off
reductions are typically offered tight on the package through specially marked price packs. E.g.
Krack Jack offers 30% Price-off.



Generally Price-offs given from 10 to 50 percent of the regular price. Here reduction is coming
out from manufacturers profit margin, and not the retailers.

Benefits of Price-off:

Since marketers bare the probable reduction in price at cost of his own profit so
he can control over the price-off scheme.
Price-off can be a strong influence at the point of purchase when price
comparisons are being made.
Price-off promotion can also encourage consumers to purchase larger quantities.
Limitation of Price-off:

Retailers may create pricing and inventory problems because retailers will not
accept packages with a specific price shown.
To the company it is very expensive tool of sales promotion


4. Premium:

Premium is an offer of an item either free or at a low price .With consumer spending more,
companies will look to incentive programs as a way to maintain customer loyalty and capture a
greater share of the market. Creative and will-constructed premium promotions are known
delivering brand enhancing and sales building results.

Currently marketers ask themselves how to select a premium. There are some guidelines for
choosing a premium: Offer a brand that enhances your brand, and capitalize on the equity of the
brands logo by incorporating it into the premium item.


Two basic type of premium:



1. Free Premium: Free premiums are small gifts included in the product package or
sent to consumers who mail in a request along with a proof or purchase. Free
Premium includes toys, balls, trading card or other items. Free premium have high
impulse value and can provide an extra incentive to buy the product. Even though
it is also facing some problems like cost factor, which results from the premium
itself as well as from extra packaging that may be needed. Again retailers can
manipulate with customer and with the free premium scheme.

2. Self-Liquidating Premiums: In Self-Liquidating Premiums consumers are
requires to pay some or all of the cost of the premium plus handling and mailing
costs. This tool is more useful to the retailers to gain extra profit as he can
purchase from manufacturer and than can sale it to final user at lower cost. Here
the aim is not to make profit on the premium item but rather just to cover costs
and offer a value to the consumer. Offering values to consumers through the
premium products can create interest in the brand and goodwill that enhances the
brands image.

Self-Liquidating Premiums also has some limitation. It has very low redemption
rate. Consumers are not always responds to this type of sales promotion scheme.


5. Contest:

A contest is a promotion where consumers compete for prizes or money on the basis of skills or
ability. To the customers contest is more attractive because they have mentality that they can win
big prizes being offered. Contest usually provide

a purchase incentive by requiring a proof of purchase to enter or an entry form that is available
from a dealer or advertisement; some contest require consumers to read an ad or package or visit
a store display to gather information needed to enter. Marketers must be careful not to make their


contests too difficult to enter, as doing so might discourage participation among key prospects in
the targets audience.

There is another term called Sweepstakes which is promotion where winners are determined
purely by chance; it does not require a proof of purchase as condition for entry. Entrants need
only submit their names for the prize drawing. It is easier to enter thats why sweepstakes more
customers than contest.

Benefits of Contest:

Contest and sweepstakes can get the customers involved with a brand by making
the promotion product relevant.
Marketers can use contests and sweepstakes to build brand equity by connecting
the prizes to the lifestyle, needs or interests of the target audience.
Consumers can know more about the product as well as about company as direct
involvement increases.

Limitation of Contest:

In contest and sweepstakes winners are given prizes randomly so customers
reluctant to pay more attention towards it.
Marketers have cut back the uses of these promotional tools due to its lower
effectiveness and fears that consumers might become dependent on them.
A major problem in contest and sweepstakes is that of participation by
professionals or hobbyists who submit many entries but have no intention of
purchasing the product.
Further, for marketers it increases so many other activities like managing all the
entries and selecting winner from them and delivering prize to them which also
requires so many time and it also increase cost.

6. Bonus Pack:



Bonus packs offer the consumer an extra amount of a product at the regular price by providing
larger containers or extra units. Bonus is also frequently used sales promotion tool because
consumer response towards bonus pack is very positive. The additional value of a bonus pack is
generally obvious to the consumer and can have a strong impact on the purchase decision at the
time of purchase.

Benefits from Bonus Pack:

It gives a direct way to provide extra value without having to get involved with
complicated coupons or refund offers.
Bonus can be a good answer to competitors promotion or introduction of a new
brand.
Bonus packs result in larger purchase orders and favorable display space in the
store if the relationships with retailers are good.

Limitation of Bonus Pack:

It requires additional space so retailers or distributors may create problem if the
relation with distributors are not good as it does not give any extra benefit to
them.
Another problem is that bonus packs may appeal primarily to current users who
probably would have purchase the brand anyway or to promotion sensitive
consumers who may not become loyal to the brand.
A common limitation is of cost. As marketers giving extra quantity it makes cost
to the company.


These are the main consumer oriented sales promotion tools Marketers use any of them or more
then one at a time depending on the sales promotion strategy. There are some other sales


promotion tools like Refunds and Rebates, Frequency Programs, Event Marketing etc to name a
few, but these tools are used very less compared to earlier noted main tools.

The evaluation of sales promotion tools is measured in terms of their ability to accomplish
specific objectives and consider whether the impact of the promotion will be immediate or
delayed.



























Factors Influencing Consumer Oriented sales promotion:

Mainly four factors should be taken into account while determining the sales promotion
programme.

> Target market
> Nature of product
> Stage of product life cycle
> Budget available for promotion

1. Target Market:

While doing sales promotion, marketer must know who their target market is, otherwise
there is no use of all effort because it leads to no where. A target market can be in any of the
stages of buying hierarchy i.e. awareness, knowledge, liking, preferences, conviction and
purchase. Each stage defines a possible goal of promotion.

2. Nature of the product:

There are various product attributes which influence sales promotional strategy. When
the unit price is low the manufacturer as well as the customer has low risk but he can get the
benefit of mass marketing. Therefore, mass marketing requires mass sales promotion schemes.
Sales promotion scheme differ for products like its durability, perishable goods etc.

3. Stage of product Life Cycle:

Sales promotion strategies are influenced by the life cycle of a product. When a new
product introduced, prospective buyers must be informed about its existence and its benefits and
middlemen must be convinced to stock it. Later, if a product becomes successful, competition
intensifies and more emphasis is placed on sales promotion to increase its sales.



4. Budget Available for Promotion:

The funds available for promotion are the ultimate determinant of the promotional
programme. A business with ample funds can make more effective use of sales promotion
programme than a firm with limited financial resources. The budget for sales promotion can be
prepared by the following methods

Percentage of Sales
Fixed funds available for sales promotion
Following the competition, and
Budgeting by objective.


Why do Sales promotion schemes affect sales?

There are three mechanisms behind these facts. It is Purchase quantity, Brand switching and
Category expansion.

First, consumer can increase the quantity they buy just because the product is on sale.

Second, consumers are inducing to purchase another brand different from the one they would
have purchased when there is no promotional incentive.

Finally, consumers total consumption of the product category is increased by the promotion.
However, in the long term this positive effect may be diluted because a promotional campaign
has no permanent effect in the sales of the firm




Sales Promotion Strategy:

Sales are the lifeblood of a business, without sales there would be no business in the first place;
therefore it is very important that if a business wants to succeed, it should have a sales promotion
strategy in mind. The primary objective of a sales promotion is to improve a companys sales by
predicting and modifying your target customers purchasing behavior and patterns.
Sales promotion is very important as it not only helps to boost sales but it also helps a business to
draw new customers while at the same time retaining older ones. There are a variety of sales
promotional strategies that a business can use to increase their sales, however it is important that
we first understand what a sales promotion strategy actually is and why it is so important.

A sales promotion strategy is an activity that is designed to help boost the sales of a product or
service. This can be done through an advertising campaign, public relation activities, a free
sampling campaign, a free gift campaign, a trading stamps campaign, through demonstrations
and exhibitions, through prize giving competitions, through temporary price cuts, and through
door-to-door sales, telemarketing, personal sales letters, and emails.
The importance of a sales promotion strategy cannot be underestimated. This is because a sales
promotion strategy is important to a business boosting its sales.

When developing a sales promotion strategy for your business, it is important that you keep the
following points in mind.
Consumer attitudes and buying patterns
Your brand strategy
Your competitive strategy
Your advertising strategy
Other external factors that can influence products availability and pricing.



There are three types of sales promotion strategies:
A push strategy
A pull strategy or
A combination of the two
A Push Strategy:
A push sales promotion strategy involves pushing distributors and retailers to sell your
products and services to the consumer by offering various kinds of promotions and personal
selling efforts. What happens here is that a company promotes their product/services to a reseller
who in turn promotes it to another reseller or to the consumer. The basic objective of this
strategy is to persuade retailers, wholesalers and distributors to carry your brand, give it shelf
space, promote it by advertising, and ultimately push it forward to the consumer. Typical push
sales promotion strategies include; buy-back guarantees, free trials, contests, discounts, and
specialty advertising items.

A Pull Strategy:

A pull sales promotion strategy focuses more on the consumer instead of the reseller or
distributor. This strategy involves getting the consumer to pull or purchase the product/services
directly from the company itself. This strategy targets its marketing efforts directly on the
consumers with the hope that it will stimulate interest and demand for the product. This pull
strategy is often used when distributors are reluctant to carry or distribute a product. Typical pull
sales promotion strategies include; samples, coupons, cash refunds or rebates, loyalty programs
and rewards, contests, sweepstakes, games, and point-of-purchase displays.

A Combination of Two Strategies:


A combination sales promotion strategy is just that; it is a combination of a push and a pull
strategy. It focuses both on the distributor as well as the consumers, targeting both parties
directly. It offers consumer incentives side by side with dealer discounts.
Sales Promotion and different theories:

There are certain theories which can be considered by the marketers while deciding sales
promotion strategies. It should be noted that these theories are not final conclusion but it helps in
making better decisions. Here I will try to elaborate on two theory i.e. theory of attitude and
theory of prospects.


Sales Promotion and theory of Attitude:

Multi attribute models of attitude (Fishbein and Ajzen, 1975) depict the consumers decision to
perform a specific behavior as the logical consequence of beliefs, attitudes and intentions with
regard to the behavior. As per this model, a consumers intention to buy a brand may be based on
positive/negative attitudes towards a promotion.

Attitude Model:

Behavior Reward or Purchase
Punishment Not Purchase

It is found that the impact of three attitudinal dimensions price consciousness, time value and
satisfaction/pride on consumers decision to use coupons. Results of their study showed that
there was a positive relationship between coupon usage and consumer price consciousness.
There was a significant

negative relationship between coupon usage and perceived value of time indicating that the more
a consumer valued his or her time, the lesser was the tendency to use coupons. The authors found


that coupon usage increased when the consumer perceived higher satisfaction and pride with the
use of coupons.

Some marketers applied the theory of reasoned action to understand consumers decision to use
coupons. As per the model, behavior towards coupons would be influenced by consumer
intentions to use coupons. Consumers intention to use coupons would be determined by their
attitudes and subjective norms. Consumers attitudes would be formed through their beliefs in
the rewards and costs of using coupons while subjective norms would be formed through
consumers perception of whether important others think they should expend the effort to clip,
save and use coupons. It is found that beliefs in the rewards of using coupons had high positive
correlation with attitude while inconveniences and encumbrances had weak negative correlation
with attitude

Although attitude models provide important insights into the consumer decision-making process,
researchers have found discrepancies between stated attitudes and actual behavior. in several
studies (Perry and Gillespie, 1976; Keesling and Kaynama, 2003). Studies in different contexts
have shown that attitudes are actually poor predictors of behavior. This possibly accounts for the
limited application of attitude models to examine consumer response to sales promotions.


Sales Promotion and Prospect Theory:

This theory proposes that people perceive outcomes of a choice as perceived losses and Gains
relative to a subjective reference point/price.

As per this theory of sales promotions it is stated that consumers perception of promotion as a
loss or gain is a function of the type of the promotion. They proposed that non price
promotions such as premium offers which segregate the



promotional gain from the purchase price will be viewed as gains. On the other hand, price
promotions such as price off, which integrate the promotional gain with the purchase price will
be viewed as reduced losses.

The impact of price versus non price promotions on a consumers reference price reasoned that
price promotions would be integrated with the purchase price of the product and lead to a
reduction of internal reference price. While non price promotions would be segregated from the
purchase price of a product and not lead to a reduction of internal reference price. Results
showed that price promotions led to a lower internal reference price while non price promotions
did not affect internal reference price.

As per prospect theory to predict that price promotions would be viewed as reduced losses and
chosen less often than non price promotion which would be viewed as gains. However it is
shown that an almost equal number of subjects chose the non price promotion (a premium offer)
as compared to the price promotion (a price discount). The reasoning that price promotions
would be viewed as reduced losses and preferred less as compared to non price promotions
which would be viewed as gains was not supported by the results of the study.

Prospect theory based prediction that consumers will perceive non-price promotions as gains
and price promotions as reduced losses is not based on a precise application of the theory.
Contrary predictions can be derived from the theory. It can be argued that consumers will
perceive a price promotion as a gain as the price reduction offered reduces the loss experienced
by the purchase price.





Sales promotion from the retailers point of view:


Perceptions on Scheme Preference

It was found that retailer perceived price offs as a better form of sales promotion activity.
Price offs in their opinion had relatively a greater impact compared to any other form of sales
promotion activity like Bonus packs, Premium, Contests etc. Retailers preferred price offs the
most, then bonus pack, premium, contests, in order of importance.

Perceptions about Buying Roles

Retailers viewed that the person who came to the shop (who may be a maid, son,
daughter, daughter-in-law and child) was the decider of a toilet soap brand and not the Income
provider (e.g. head of the family). It could be inferred that visibility of information about the
sales promotion activity at the point of purchase could result into the purchase of a promoted
brand.

Perceptions about their role in decision-making

Retailer had relatively very low influence in affecting choice. It could be inferred that
visibility and awareness about the scheme were the critical success factors so that pull could be
created.


Perceptions about Response to Sales Promotion Offers

They believed that younger age-groups were more experimental in nature, amenable to
trying new brands, and sought/looked for or asked whether there were any) sales promotion
schemes running on any toilet soap at the time of purchase.






Perceptions about Communications of Sales Promotion Schemes

Retailers perceived that role of word of mouth and television advertising played an
important part in providing information inputs to consumers regarding sales promotion activities.

Variations in Information Flow

Smaller (non-supermarket, small format store) retailers received relatively less support
compared to supermarkets in terms of servicing, margins, information about sales promotion
activities from the dealers. Many a times small retailers were only informed verbally about sales
promotion schemes by the dealer salesmen during the scheduled weekly visits.

Dealer-Retailer Dynamics

At the time of sales promotion activities, dealers had tendency to push unwanted stocks
onto the smaller retailers. In fact these retailers preferred to stock variety of brands and wanted
payment for shelf and window display to increase traffic into their store. However, supermarkets
and big retailers were pampered and given special services and given better margins and better
allowances.

Margins

It was found that in sales promotion schemes margins varied from 6 to15% depending of
the size of the retail outlet, bargaining power of a retailer, quantity ordered by him etc. Mostly
margins were linked to size of the volumes that were ordered.
Perceptions about terms and conditions



Retailers were not found to be happy with sales promotion schemes where their margins
were cut on the pretext of just fast movement of inventory of the brand being promoted. Also if
additional incentive was offered it was subject to minimum performance requirement.

Nature of POP

Retailers indicated that most of the POP (Point of Purchase) materials were meant for
brand advertisement and not for giving information regarding the schemes. Thus it could be
inferred that companys follow up was not adequate.

Servicing during duration of Scheme

In stock-out situation during the running of the sales promotion schemes, smaller retailers
had to wait for replenishment of stocks till the next scheduled weekly visit by the dealer
salesman but big retailers were serviced on telephonic request for replenishment of stocks. This
clearly indicated the disparity in treatment.

Problem of left-over

A leftover stock at the end of any scheme was required to be sold by the retailers before
they ordered fresh stocks. In case of bonus packs scheme, leftover stock was often dismantled
(cut open buy one get one free) and sold them individually as a regular soap. This approach of
the company leads to misappropriation which in turn could result in adverse brand image.

Gifts for Retailer motivation

Companies at times were rewarding retailers by giving free gifts like thermos flasks or
clocks if they sold more than certain quantity in a given period. Companies were making a half-
hearted effort to motivate retailers.

Perceptions about mass media announcements



Retailers viewed that whenever sales promotion scheme was announced on TV, it created
pull and they were more than willing to stock such brands. For example Medimix and Dettol
contest was not advertised on TV, hence there was very little awareness leading to unsold stock
till 6 months. While Lux Gold Star which was heavily promoted on T.V. is recalled even today.

Post Promotion Behaviour

Retailers observed that in most cases sales promotion scheme on a brand might
encourage a buyer to switch a brand temporarily but he would revert back to original brand after
promotion.

Handling Problems

Many a times retailers had to handle various sales promotion offers simultaneously in a
category and also across categories and there was no formal communication planning either from
the dealer or the company. Remembering each offer and handling was a problem especially for a
small retailer which was often an as one-man show.















Sales Promotion from the Consumers point of view:

Willingness to buy on sales promotion offer

Sixty per cent of the sample did not show willingness to buy a brand due to promotion
while 30% showed willingness and 10% were not sure. This indicates that when 30% showed
willingness and 10% consumers who were not sure, these groups might be lured through
innovative and lucrative sales promotion offer.

Ability to induce trial

Forty per cent of the respondents had said that sales promotion had the ability to induce
trial which reinforces the above inference.

Long-term impact

In order to understand ability of the promotions to increase long-term sales, respondents
were asked about continuity of purchase of a brand after the withdrawal of promotion. Eighty per
cent of the respondents indicated that they would not continue. But 20% said they would. Thus,
it could be inferred that promotions in this category (low involvement products) might encourage
trial and brand switching but not long term loyalty.

Preference of Schemes:

Price off was the most preferred type of scheme. Maximum customers ranked price-offs
as number one or two.

Perceived Quality:

Majority of respondents had a perception that the quality of the promoted brands
remained the same during promotion, while some of them felt that it was inferior than before. It


can be inferred that promotions were not leading to negative brand quality perceptions. It is
found that some customer strongly preferred to buy their regular brand and said that sales
promotion would not weaken their loyalty towards the brand.

Perceptions regarding underlying company motivations

On tapping perceptions regarding underlying company motivations for sales promotion,
to increase sales was ranked highest followed by to attract switchers and to sell excess
stocks. While providing value to customers and

to reinforce company image were ranked lowest. This indicates that consumers believed that
companies were undertaking such activities only for their own benefit and not for the benefit of
consumers.


Findings from retailer and consumer perception studies, it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most preferred type of scheme mentioned
by consumers and retailers perceptions about consumer preferences). Since retailers observe
consumers in store behaviour were frequently and directly, their perceptions regarding providing
consumer behaviour are likely to be accurate. Such inputs from the retailers would be useful to
companies.

The retailers had the perception that those schemes which were announced through mass media
had better response. This was reinforced by the consumer survey which showed that recall in
case of heavily promoted schemes on TV was found to be very high.

Retailers prediction of companies motivation for offering sales promotion were matching with
the consumer perception regarding the same. Thus both viewed that companies were using sales
promotion activities mainly to increase short term sales or encourage switching or selling excess
stock and not really to give value benefit or enhance/reinforce brand/company image.



Cherry Picking

Merriam-Webster Dictionary defines cherry picking as selecting the best or most desirable or
to describe one idiom with another taking the pick of the litter. The term cherry picking is used
to describe the behavior of both sellers and buyers in a variety of settings. Sometimes the phrase
is used to describe a seller who is selective about which customers they wish to serve.

For example, Southwest Airlines cherry picks price sensitive travelers who place little premium
on standard airline perks and Dell Computer cherry picks customers who are capable of buying
over the Internet and are savvy enough to make the necessary customization choices without
much hand holding. Both of these firms choose not to serve other customers with a higher
willingness to pay because it would require significant changes to efficient operating models.

The Cambridge International Dictionary of Idioms defines cherry picking as choosing only the
best people or things in a way that is not fair, as when financial institutions and insurance
companies are vilified because they refuse to serve high-risk populations. The term also
describes behavior of buyers who are selective about which products or services they purchase at
what locations and prices. In both the seller and buyer contexts, the essential meaning of cherry
picking is the same take the best and leave the rest.

Instead of going to the same outlet each week, every week, to complete their grocery shopping,
price-conscious consumers often visit more than one store in search of special prices a
bargain-hunting practice known in the industry as cherry-picking. (Mogelonsky 1994)

Consumer Reports recommends that smart shoppers scrutinize the food-day ads and cherry
pick the specials, noting that 20% of its readers show little loyalty among supermarkets
(Consumer Reports 1988)





BUYER SIDE CHERRY PICKING

WITHIN STORE

Levy and Witz (2004) define cherry pickers who visit the store and only buy merchandise
sold at big discounts.

BETWEEN STORES

The typical shopper visits the supermarkets 2.2 times per week but shops 3-4 different
chains on a regular basis, creating plenty of opportunities to cherry pick.

CHERRY PICKING STRATEGIES


SWITCH STORES ACROSS WEEKS

Dominicks one week jewel the next


SWITCH STORES WITHIN A DAY OR WEEK

Dominicks and jewel the same day or week

OUR OPERATIONALIZATION

Visit two or more stores on the same shopping day
Reduces the likelihood of confusing true cherry picking with fill in trips


Classification of Shopper Types






REF: Research paper on cherry picking by Edward Cox and Stephen Hoch


KEY FINDINGS


Q.1 Do you purchase the same brand every time?



Statistics

SOAP TOOTHPASTE
PACKED
MASALA PICKLE
MOSQUITO
REPELLENT
HOUSE
CLEANING
PRODUCTS
N Valid 80 60 45 35 30 65
Missing 22 42 57 67 72 37


Frequency Table

SOAP

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 20 19.6 25.0 25.0
no 60 58.8 75.0 100.0
Total 80 78.4 100.0

Missing .00 20 19.6

System 2 2.0

Total 22 21.6

Total 102 100.0













TOOTHPASTE

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 35 34.3 58.3 58.3
no 25 24.5 41.7 100.0
Total 60 58.8 100.0

Missing .00 40 39.2

System 2 2.0

Total 42 41.2

Total 102 100.0



PACKED MASALA

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 20 19.6 44.4 44.4
no 25 24.5 55.6 100.0
Total 45 44.1 100.0

Missing .00 55 53.9

System 2 2.0

Total 57 55.9

Total 102 100.0











PICKLE

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 20 20.0 57.1 57.1
no 15 15.0 42.9 100.0
Total 35 35.0 100.0

Missing .00 65 65.0
Total 100 100.0



MOSQUITO REPELLENT

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 25 24.5 83.3 83.3
no 5 4.9 16.7 100.0
Total 30 29.4 100.0

Missing .00 70 68.6

System 2 2.0

Total 72 70.6

Total 102 100.0






HOUSE CLEANING PRODUCTS

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 30 29.4 46.2 46.2
no 35 34.3 53.8 100.0
Total 65 63.7 100.0

Missing .00 35 34.3

System 2 2.0

Total 37 36.3

Total 102 100.0

















48%
52%
YES
NO





INTERPRETATION:

Soap: 75% of the respondents said that they do not purchase the same brand every time while 25
% said that they do purchase the same brand every time.

Toothpaste: 41.7% of the respondents said that they do not purchase the same brand every time
while 58.3 % said that they do purchase the same brand every time.

Packed Masala: 55.1% of the respondents said that they do not purchase the same brand every
time while 44.9 % said that they do purchase the same brand every time.

Pickle: 42.9% of the respondents said that they do not purchase the same brand every time while
57.1 % said that they do purchase the same brand every time.

Mosquito Repellent: 16.7% of the respondents said that they do not purchase the same brand
every time while 83.3 % said that they do purchase the same brand every time.

House Cleaning Products: 53.8% of the respondents said that they do not purchase the same
brand every time while 46.2 % said that they do purchase the same brand every time.

Overall: 52% of the respondents said that they do not purchase the same brand every time while
48 % said that they do purchase the same brand every time.





The consumer behaviour related to brand switching varies a lot across different products with 75
% of consumers in the soap category agreeing that they switch brands regularly while only
16.7% of consumers in the mosquito repellent category agreed that they switch brands regularly.
Overall, to get a fair idea an average of these responses show that 52% of the consumers switch
brands for one or the other reasons while 48% of the consumers stick to the same brand.


Q.2 Why do you change your brand?



Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent
Why change soap * income 75 73.5% 25 26.5% 100 100.0%
Why change toothpaste *
income
60 58.8% 40 41.2% 100 100.0%
Why change packed masala *
income
46 45.1% 54 54.9% 100 100.0%
Why change pickle * income 35 34.3% 65 65.7% 100 100.0%
Why change mosquito repellent
* income
30 29.4% 70 70.6% 100 100.0%
Why change cleaning products *
income
65 63.7% 35 36.3% 100 100.0%






















Why change soap * income Cross tabulation
Count

income
Total

less than 25000 26000-50000 51000-75000 more than 75000
Why change soap schemes 10 10 4 5 29
trial 0 0 0 0 5
better quality 10 15 11 10 41
Total 20 25 15 15 75








hy change toothpaste * income Cross tabulation


income
Total

less than 25000 26000-50000 51000-75000
more than
75000
whychangetoothpaste schemes 6 18 1 0 25
trial 0 3 3 0 6
better
quality
4 4 11 10 29
Total 10 25 15 10 60















PACKED MASALA * income Cross tabulation
Count

income
Total

less than 25000 26000-50000 51000-75000 more than 75000
PACKED MASALA schemes 11 3 4 0 18
trial 7 0 0 5 12
better quality 2 3 6 5 16
Total 20 6 10 10 46




PICKLE * income Crosstabulation
Count

income
Total

less than 25000 26000-50000 51000-75000 more than 75000
PICKLE schemes 10 5 1 0 16
trial 3 0 0 0 3
better quality 2 5 4 5 16
Total 15 10 5 5 35










Why change mosquito repellent * income Cross tabulation
Count

income
Total

less than 25000 26000-50000 51000-75000
whychangemosquito trial 5 0 0 5
better quality 10 10 5 25
Total 15 10 5 30











Why change cleaning * income Cross tabulation
Count

income
Total

less than 25000 26000-50000 51000-75000 more than 75000
whychangecleaning schemes 10 5 15 0 30
trial 10 0 0 5 15
better quality 5 5 0 10 20
Total 25 10 15 15 65











INTERPRETATION:

Soap: The cross tabulation of the reason of changing a brand with the income of the
respondent in the soap category shows that there is a change in the reason with increasing
income of the respondent. 6 out of 10 respondents of income less than 25,000 say the they
change brand due to the promotional schemes while only 5 out of 15 respondents of more than
75,000 category claim so.

Toothpaste: The cross tabulation of the reason of changing a brand with the income of the
respondent in the toothpaste category shows that there is a change in the reason with
increasing income of the respondent. 6 out of 10 respondents of income less than 25,000 say
the they change brand due to the promotional schemes while only 0 out of 10 respondents of
more than 75,000 category claim so.

Packed Masala: The cross tabulation of the reason of changing a brand with the income of the
respondent in the packed masala category shows that there is a change in the reason with
increasing income of the respondent. 11 out of 20 respondents of income less than 25,000 say
the they change brand due to the promotional schemes while only 0 out of 10 respondents of
more than 75,000 category claim so.

Pickle: The cross tabulation of the reason of changing a brand with the income of the
respondent in the pickle category shows that there is a change in the reason with increasing
income of the respondent. 10 out of 15 respondents of income less than 25,000 say the they


change brand due to the promotional schemes while only 0 out of 5 respondents of more than
75,000 category claim so.

Mosquito Repellent: The cross tabulation of the reason of changing a brand with the income of
the respondent in the mosquito repellent category shows that there is a change in the reason
with increasing income of the respondent. 10 out of 15 respondents of income less than 25,000
say the they change brand due to the better quality while all 5 respondents of more than
75,000 category claim so.

House Cleaning Products: The cross tabulation of the reason of changing a brand with the
income of the respondent in the house cleaning products category shows that there is a change
in the reason with increasing income of the respondent. 10 out of 25 respondents of income
less than 25,000 say the they change brand due to the promotional schemes while only 0 out of
15 respondents of more than 75,000 category claim so.


Hence, a gradual shift towards better quality rather than promotional schemes as a reason
for changing a brand is seen as the income slab increases. Though the shift varies from product
to product but a general trend towards better quality is seen as income increases.


Q.3 Was there any promotional scheme with this brand?


Frequencies


Statistics

SOAP TOOTHPASTE
PACKED
MASALA PICKLE
MOSQUITO
REPELLENT
HOUSE
CLEANING
PRODUCTS
N Valid 80 60 45 35 30 65
Missing 22 42 57 67 72 37


Frequency Table


SOAP

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 60 58.8 75.0 75.0
no 20 19.6 25.0 100.0
Total 80 78.4 100.0

Missing .00 20 19.6

System 2 2.0

Total 22 21.6

Total 102 100.0













TOOTHPASTE

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 60 58.8 100.0 100.0
Missing .00 40 39.2

System 2 2.0

Total 42 41.2

Total 102 100.0


PACKED MASALA

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 30 29.4 66.7 66.7
no 15 14.7 33.3 100.0
Total 45 44.1 100.0

Missing .00 55 53.9

System 2 2.0

Total 57 55.9

Total 102 100.0





\








PICKLE



Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 20 19.6 57.1 57.1
no 15 14.7 42.9 100.0
Total 35 34.3 100.0

Missing .00 65 63.7

System 2 2.0

Total 67 65.7

Total 102 100.0



MOSQUITO REPELLENT

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 15 14.7 50.0 50.0
no 15 14.7 50.0 100.0
Total 30 29.4 100.0

Missing .00 70 68.6

System 2 2.0

Total 72 70.6

Total 102 100.0



HOUSE CLEANING PRODUCTS

Frequency Percent Valid Percent
Cumulative
Percent
Valid yes 60 58.8 92.3 92.3
no 5 4.9 7.7 100.0
Total 65 63.7 100.0

Missing .00 35 34.3

System 2 2.0

Total 37 36.3

Total 102 100.0











Research Methodology

OBJECTIVES OF THE STUDY

1. To profile the cherry pickers.
2. To study the cherry picking sales pattern.
3. To find out whether Cherry pickers increases the basket size.
4. To find out whether cherry pickers increase the retail turnover.


RESEARCH QUESTIONS

78%
22%
YES
NO


Who are the cherry pickers?
How do these customers cherry pick products?
What are the implications on the total spending of these customers?
Do such consumers increase the retail turnover by buying more quantity for availing the
promotional schemes?

HYPOTHESIS

Ho: The amount spent more to avail the scheme is not dependent on the income of the buyer.

H1: The amount spent more to avail the scheme is dependent on the income of the buyer.


TYPE OF RESEARCH DESIGN
Descriptive research was used for the project.



QUANTITATIVE RESEARCH
A survey of customers leaving Big Bazaar was done so that all details of the shopping trip were
fresh in their minds and hence accurate price data could be collected. The survey was done by
questionnaire which comprised of closed ended questions.

SOURCES OF DATA
Primary data was collected through survey of customers at Big Bazaar.
Secondary data was collected from previous research by various authors on this topic, retail biz
magazine and articles and reports on the internet.

METHODOLOGY
The method used for survey was structured questionnaire.



RESEARCH TOOL
Questionnaire

QUESTIONNAIRE DESIGN
The questionnaire comprised of closed ended questions.

SAMPLE DESIGN
SAMPLE SIZE: 100 samples
SAMPLING TECHNIQUE: Convenience sampling.

PILOT STUDY
A pilot survey of 5 customers at Big Bazaar had been done to ensure that the questionnaire is
correct and relevant of research objectives.

SURVEY
Once pilot study is over, actual survey will be conducted.



DATA ANALYSIS
The researcher has used inferential statistics (through SPSS) in order to draw a conclusion.
Result of the study has been put in tables and graphs for easy understanding of the findings of the
research.

EXPECTED CONTRIBUTION OF THE STUDY
This project will help in giving a fresh insight on this topic on which research has been done very
rarely in India. It will help to understand the overall pattern of this activity and its impact on the
marketing strategies of various FMCG products. Also the profiling of this set of consumers can
help in framing the strategies accordingly.



REASON FOR TAKING UP THE PROJECT
The researcher has done his BCA and currently pursuing his MBA. This topic has not been
researched upon extensively in India and hence promises unique exposure and experience to the
researcher and hence this project has been undertaken.




CONCLUSIONS

More than half of the population of consumers switch brands of FMCG products due to some
reason or the other. (52% of the consumers agreed that they switch brands regularly.)

The percentage of consumers switching brands varies across different FMCG products.
(75% of respondents under soap category agreed that they switch brands regularly while
only 16.7% of respondents under mosquito repellent category agreed to it.)

The reason of switching brands varies with the income of the buyer. The reason of
switching brand tends towards better quality as the income of the individual increases.
The reason with lower income groups being schemes and with higher income groups
being better quality of the product. Though the shift varies from product to product but a
general trend towards better quality is seen as income increases.

Schemes giving instant cash benefit are preferred by the consumers. Most of the buyers
purchase products with price promotion schemes with 94 % of the buyers bought
products with price promotion.

The buyers save big amounts by availing the scheme. 56% of the buyers save more than
Rs. 20 on a single product during a single shopping trip, 28% saved Rs.10-15 on a single
product while 12% save Rs.15-20 on a single product.


The buyers in return have to buy more quantity of the product to avail the scheme and
save the above mentioned amounts. 34 % of the respondents said that they had to buy
more than intended to avail the scheme.

Again the quantity need to bought more to avail the scheme varies across products and
the scheme offered by the brand.100% of respondents under soap category agreed that


they had to buy more than intended to avail the scheme but only 7% of the respondents
under house cleaning products agreed to it.

So it can be concluded that the buyer increase the basket size in the process to avail the
promotional schemes and get value for money.

As the buyer needs to buy more to avail the scheme it directly affects the total amount
they spent to buy the product. 88% of the buyers agreed that they had to spend more than
Rs.20 to avail the scheme.

The most preferred promotional activity by the consumers is price promotion followed by
loyalty incentive, free gifts, coupons and refunds being the least preferred promotional
activity.

The amount spent more to avail the scheme has association with the income of the buyer.
We can conclude from this that the buyer spends more in accordance to his income rather
than attractiveness of the scheme.
Hence the amount spent more to avail the scheme is dependent on the income of the
buyer.
















RECOMMENDATIONS


The brands should come up with promotional activities which give instant cash benefit to
the consumers as such promotions are preferred by them.

The consumers do not mind buying more quantity to avail the offers hence the brands can
come up with schemes wherein the consumers need to buy more quantity to avail the
schemes offered.

The amount spent more to avail schemes with FMCG has association with the income of
the buyer and hence the target set of consumers should be studied before coming up with
the promotions.

The reason of switching brands does tend towards better quality but even higher income
groups indulge into cherry picking and hence the scope should not be limited to lower
income groups.

The retailers can come up with their own promotion schemes if not offered by brands.
Such schemes will increase foot falls at the store and hence the retailers sales.












ANNEXURE

PERSONALCA
RE PACKED FOOD
HOUSEHOLD
PRODUCTS
QUESTIONS
PARTICUL
ARS SOAP
TOOT
H
PASTE
PACKE
D
MASAL
A
PICKL
E
MOSQU
ITO
REPELL
ENT
HOUSE
CLEANING
PRODUCTS

Which of these products
did you buy today? -

Which brand did you buy
today?






Do you purchase the
same brand every time? YES



NO






Why do you change your
brand? SCHEMES
TRIAL

BETTER
QUALITY
LOWER


PRICE

Was there any
promotional scheme with
this brand? YES
NO

If , yes which one ?
Price
Promotion
Coupons
Free Gifts
Refunds
Loyalty




How much did you save
by availing this scheme ? 0-5 Rs.
( IN RS.) 5-10 Rs.
10-15 Rs.
15-20 Rs.

MORE THAN
20
Did you have to buy more
qty than intended to avail
the scheme? YES
NO
Did you spend more than
intended to avail the
scheme? YES
NO

If yes how much ? 0-5 Rs.
(IN RS.) 5-10 Rs.
10-15 Rs.
15-20 Rs.

MORE THAN
20

Which promotional
activities
Price
Promotion do you prefer ?
(Rank the top 4 preferred
activities - Coupons
Rank 1 for the most
preferred and 4 for least
preferred) Free Gifts
Refunds
Loyalty
Incentive
Incentive


PERSONAL INFORMATION:

OCCUPATION : House Wife Employed Self Employed Retired

No. of members in the family:

MONTHLY INCOME: < 25,000 26,000-50,000 51,000-75,000 > 75,000

Shopping Days : MON TUE WED THU FRI SAT SUN


BIBLIOGRAPHY

http://www.inbics.co.kr/english/reference/Final_Reports/INBICS_FMCG_Report.pdf
http://www.assocham.org/arb/afp/2009/AFP_Oct2009_Prospects_in_the_FMCG_sector.
pdf
http://www.indiainbusiness.nic.in/business-news/news-bulletin/oct13-19%20_09.pdf
http://www.moneycontrol.com/news_html_files/news_attachment/2008/FMCG%20Secto
r%20Report1.pdf
http://www.fddiindia.com/publications/newsletter/2009/007/July/FDDINL_215_17.07.20
09.pdf