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TABLE OF CONTENTS
S.No. Particulars Page No.
1 Title 3
2 FMCG industry in India 4
3 Introduction 4
4 Review of Literature 5
5 Key Findings from 7
Literature Review
6 Research Objectives 9
7 Research Methodology 9
Qualitative insights from
8 focused interviews 11
10 Conclusions 19
11 Acknowledgements 20
12 References 20
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TITLE
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FMCG industry in India
Fast moving consumer goods (FMCG) are the fourth biggest contributor to the
Indian economy. There are three primary portions in the division – food and
beverages which represents 19 percent of the part, human services which
represents 31 percent and family unit and individual consideration which
represents the staying 50 percent.
The FMCG division has developed from Rs 2,20,852.4 crore (US$ 31.6 billion)
in 2011 to Rs 3,68,669.75 crore (US$ 52.75 billion) in 2017-18. The division is
additionally expected to develop at a Compound Annual Growth Rate (CAGR)
of 27.86 percent to arrive at Rs 7,24,759.3 crore (US$ 103.7 billion) by 2020.
The part is anticipated to grow 11-12 percent in 2019. FMCG urban fragment
saw development pace of 8 percent though provincial section developed at 5
percent in quarter finished in September 2019; upheld by moderate expansion,
increment in private utilization and rustic salary.
Introduction
The purpose of this research is to understand the impulse buying behaviour of the
Indian consumers with respect to FMCG products. Impulse buying is widely seen
in the FMCG space as the ticket size is small in this case which makes room for
impulse buying amongst consumers (Karabasivar, Yarahmahdi, 2011). Impulse
buying is unreflective as the purchase made is without a great deal of evaluation.
The individual’s buying impulse is less likely to consider to think of the
consequences or to think carefully before making purchase (Rook, 1987). The
consumer while on an impulse buying spree is focused on attaining instant
gratification of responding to the urge to buy rather than on solving a pre-existing
problem or addressing a need gap. Impulse buying occurs when a consumer
experiences a sudden and a powerful and lingering urge to buy an article
immediately. This impulse is hedonistically complex and may give rise to
emotional conflict as well. The consumer also has very little regard for the
consequences of the purchase. The aim of this paper is to understand the factors
behind the purchase and with that understand this facet of the Indian FMCG
consumer.
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Review of Literature
This study utilises previous work done on the analysis of impulse buying behaviour
amongst consumers via freely available sources in the public domain and the
internet.
Researchers over the years have used0 the term “unplanned” and “impulse” buying
to refer to purchases that depart in 0various ways from normative models of
effective decision making, with the implication that the resulting purchase results
in less overall satisfaction and more buying mistakes and than would be the case if
the rational model were followed (Brinley, 1989; O'Dell, 1996). Common elements
of definitions of impulse buying in the consumer behavior research literature
include: (a) little or no planning, (b) making a decision too quickly or “on the
spot”, (c) the presence of a heightened emotional state, which may be accompanied
by the experience of compulsion, and (d) dissatisfaction and regret after the
purchase (Stern, 1962; Rook, 1987; Piron, 1991). We could define “impulse
buying” as “a sudden and immediate purchase with no pre-shopping intentions
either to buy the specific product category or to fulfill a specific buying task. The
behaviour occurs after experiencing an urge to buy and it tends to be spontaneous
and without a lot of reflection (i.e., it is "impulsive"). It does not include the
purchase of a simple reminder item, which is an item that is simply out-of-stock at
home.(Beatty, 1998).
Through the literature reviewed impulse buying can be divided into three types: (a)
Planned impulse buying, (b) Reminder impulse buying, (c) Pure impulse buying.
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In a landmark study by Stern(1962), impulse buying was categorised according to
the amount of affect versus cognition present in the decision making process. Pure
impulse buying involves the least amount of cognitive involvement. The remaining
three types involve a combination of cognitive and affective influence, with
cognition increasing respectively. A suggested impulse buy occurs when the
consumer is unaware about the product and sees the item for the first time when
the desire to buy is generated within the consumer. Planned0 impulse buying
occurs when shopper has some specific purchase in mind but0 the actual purchase
depends upon price specials0, coupon offers, etc. Reminder 0impulse buying
results from a pre-determined0 need that surfaces upon encountering0 the product
while shopping. In the FMCG space0 this is the most observed type of impulse
buying. Impulse buying in this space0 is widespread, in the entire gamut of FMCG
products there are items which are bought mostly because of impulse buying only,
for instance when we go to any general trade or modern trade store, the cash
counter always has some items kept near it, this acts as a bait for the consumers,
the consumers following an impulse pick up something from the items kept there
and add it to the bill. Chocolates, mint, candy are the most popular items out of all
those that are kept at the cash counter. Impulse buying is a naturally occurring
behaviour that stems from cognitive involvement and the need of the product to the
consumer in question.
Prasad (1975) used0 the basic approach of Kollat and Willett (1967), but queried
department store and0 discount store shoppers instead of supermarket consumers.
Shoppers were asked0 what they intended to buy before they entered the store, and
offered a reward for being0 interviewed upon exit. A questionnaire with
background information was0 to be returned by mail. Out of 780 shoppers
contacted initially, 457 were interviewed0 upon exit and also returned usable
questionnaires and constituted the final study sample. Prasad reported that 39.3%
of department store shoppers and 62.4% of discount0 store shoppers purchased at
least one item 0on an unplanned basis. Socio-economic0 status variables (including
family income, 0husband's occupation0, husband's education, and shoppers
education) were not0 found to be 0significantly related to level of unplanned
buying; 0however, family income0 and age approached statistical significance
among 0department store 0shoppers. Prasad concluded that unplanned buying was
more a function of situational variables than of shopper characteristics.
External factors of impulse buying refers to the marketing cues or stimuli that are
placed and controlled by the marketer in an attempt to lure customers into purchase
behaviour (Youn and Faber, 2000). Consumers can experience an urge to
impulsively buy when encountering visual cues that help them make the impulsive
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buying decision such as promotional activities, buying incentives, attractive
packaging, etc. External marketing cues not only attract consumers but they also
promote cross selling and upselling for products. External aspects such as store
attractiveness, placement of products, creatives talking about the product,
promotional incentives all are important external factors. For instance, the findings
of Darden et al.’s (1983) study showed that consumers’ beliefs about the physical
attractiveness of a store had a higher correlation with a choice of store than it did
with merchandise quality, general price level and selection. This supports the
notion that the visual attractiveness of the store and the way products are placed
hold high importance in the mind of the consumers. These factors become more
important in case of a modern trade outlet, the consumers are always looking for
immersive shopping experiences be it in retail, FMCG or consumer durables.
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Price
Price refers to psychological pricing of different products. For instance, attractive
price amounts like Rs 199, Rs 498, Rs 999 hits the psychological aspect of
consumers to end up in unintended purchases
Promotional Schemes
Promotional schemes includes advertisements (TVC), promotion schemes such as
discount, clearance sale/sale, offers (buy 1 get 1 free, limited stock, limited time)
and coupons/points received on purchase of certain quantity or amount. Here, the
promotion schemes may or may not be known to consumers prior to their visit to
supermarket.
Availability of time
Availability of time for shopping refers to the amount of time consumers feel
he/she has available that day during the shopping at supermarket/retail stores,
expressed in hours.
Referral groups
Reference Groups allude to peer-based gathering of a buyer with whom the
buyer shops or the customer considers its to be as good examples. The reference
gathering can be loved ones.
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Research Objectives
Based on the insights gained from the reviewed literature, the objectives of this
study can be broadly classified into the following –
❖
To study and analyse the various factors that determine the impulse buying
behaviour amongst consumers buying FMCG products
❖
To identify the most important factors that contribute to the impulse buying
nature of Indian consumers for FMCG products.
Research Methodology
Exploratory Survey
• Type of Research – Exploratory Research approach
• Data Sources
❖
Primary Sources – Questionnaires and Interviews
❖
Secondary Sources – Internet and Journals
• Sampling Plan
❖
Sampling Method – Simple Random Sampling
❖
Sample Size - 103
❖
Sampling Unit – Any Customer, Both Male/Female, Age ranging
from 18-60 years
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Quantitative Survey
• Type of Research – Exploratory Research approach
• Data Sources
❖
Primary Sources – Questionnaires
• Sampling Plan
❖
Sampling Method – Simple Random Sampling
❖
Sample Size - 103
❖
Sampling Unit – Any Customer, Both Male/Female, Age ranging
from 18-60 years
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Qualitative Insights from Focused Interviews
Personal interviews were conducted with 10 professionals working in the sales
division of various FMCG companies to illicit their insights on the I pulse buying
behaviour of consumers. The professionals were working at managerial level and
had significant experience and in-depth knowledge between them.
The analysis of the responses received from the 10 professionals revealed three
interesting insights. These are:
b) Product packaging: Our experts believe that a product must look “eye-
catching” to figure into the impulsive consideration set of the consumer. The
look of the product is essential to generate some sort of interest in the
consumer. Bold colour palette, refined designing, size and shape of the
packaging, all of these could make significant impact on the minds of the
consumer. Since the beginning of the century, FMCG has seen the most
innovation in packaging, with the introduction of shampoo satchets,
companies opened a whole new market for them or with new deodorant slide
packs. Over these years companies have introduced various kinds of SKUs
for different products. That’s where size plays a part. An ideal size for any
consumer translates to the ideal portion required by the consumer. This also
presents companies with the opportunity of getting into the consideration set
of the consumer.
c) Promotional schemes: “ A big reason of why we keep doing this is to lure our
consumers into buying our product and in a lot of cases, trying our
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products as well” said one of the experts working for a multinational FMCG
giant. The schemes are targeted at acquiring new customers for the product, it’s
a proven strategy for new customer acquisition. These schemes are designed to
attract customers at every step of the customer journey. But for the part of the
consumer populace who isn’t aware of the offerings, these schemes are a very
effective way of initiating impulse buying within the consumer.
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Primary Research and Outcomes
In order to validate the idea of the factors affecting impulse buying behaviour as
the subject of this paper, a primary research was conducted utilising qualitative
factors which referenced the analysis of the impulse purchase process as well as
a few factors meant for exploring validation for the determined factors.
Sample Size
A total of 103 respondents were surveyed for the purpose of the study. The survey
was administered via Google forms and circulated using social media. The survey
tool contained questions about consumer behaviour on impulse buying and had to
be responded to through a Likert-scale based response guide.
Demographics
Both male and female respondents were chosen for the purpose of the study. Of
the total of 103 respondents, 59 (57.3%) were males and 44 (42.7%) were males.
The respondents were chosen from all age groups between 18 years to 45+ years.
The maximum number of respondents were from the 18-25 years age group
bracket.
The detailed age-wise breakup is provided below
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analysis and were derived from extensive review of available literature and
other secondary sources. The factors thus considered are listed below
• Discounted price
• Promotional Schemes
• Promotions and Advertising
• Availability of money
• Packaging and placement of the product.
• Mood of the consumer
• Availability of time
• Referral groups
Discounted price
63.8% of the sample set agreed or strongly agreed with the fact that a discounted
price definitely encouraged impulse buying amongst the consumers. 65 of the 103
respondents gave a positive response. This is indicative of the fact that a rebate is
something that initiates the process of impulse buying within them.
Promotional schemes
56.3% of the respondents agreed or strongly agreed that promotional schemes are
usually a precursor to their impulse buying process. 58 out of the 103 respondents
gave a positive response. Promotional schemes definitely are on the factors which
may affect the impulse buying behaviour amongst consumers.
Availability of money
44.7% of the respondents believed that availability of money was one of the factors
for impulse buying. 46 of the 103 believed that a higher disposable income and a
propensity to consume more influence impulse buying behaviour.
60.5% of the respondents believed that packaging and placement of the product in
the store influence impulse buying amongst consumers. 63 of the 103 respondents
gave a positive response. Packaging was one of the factors that came out
extensively during focused interviews as well.
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Mood of the consumer
65.1% of the respondents felt that mood was something that definitely influenced
impulse buying among them. 67 out of the 103 respondents gave a positive response.
Availability of time
53.4 % of the respondents thought that availability of time was a critical factor in
impulse buying for them. 55 out of 103 responded positively.
Referral groups
61.3% of the respondents agreed that people who shopped along with them were
influencers in impulse buying for them. 63 responded positively.
To understand the influence of each factor on the impulse buying behaviour of the
consumer, a structured questionnaire was designed keeping in mind the factors that
emerged post the literature review. The data from the responses were factored in and
multiple regression analysis was done with the help of SPSS and PH stat module in
Excel. The dependent variable in this case was “impulse buying” which was gauged by
the question “On a scale of 1 to 5 (1 being Strongly disagree and 5 being Strongly agree)
I tend to buy random unplanned things when I go to a convenience store”. All the rest 8
factors were taken as independent variables in this process.
In the multiple regression analysis we found out that the data is statistically significant
owing to the significance value being less than 0.5. A significant regression equation
was found (F(8,94)=48.1187, p<0.000), with an R2 of 0.8037. The other findings from
the ANOVA testing are given below:
ANOVA
Significance
df SS MS F F
Regression 8 20.4290 2.5536 48.1187 0.0000
Residual 94 4.9885 0.0531
Total 102 25.4175
The results from the analysis are encouraging, the R-square value computed came to
0.8037 which shows 80.3% of the variance explained by the independent variables, the
multiple R-value at 0.89 showed significant influence of factors on the dependent
variable(impulse buying).
Regression Statistics
Multiple R 0.8965
R Square 0.8037
Adjusted R Square 0.7870
Standard Error 0.2304
Observations 103
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Looking at the co-efficients table we understand that there are two independent
variables that have shown a p-value less than 0.05, they also have high co-efficients.
Standard P- Lower Upper Lower Upper
Coefficients Error t Stat value 95% 95% 95% 95%
Intercept 0.0839 0.2680 0.3132 0.7548 -0.4481 0.6160 -0.4481 0.6160
-
X Variable 1 -0.0587 0.0996 0.5888 0.5574 -0.2565 0.1392 -0.2565 0.1392
X Variable 2 0.0098 0.0242 0.4035 0.6875 -0.0383 0.0578 -0.0383 0.0578
X Variable 3 0.0133 0.0225 0.5925 0.5549 -0.0313 0.0579 -0.0313 0.0579
-
X Variable 4 -0.0095 0.0228 0.4179 0.6770 -0.0548 0.0358 -0.0548 0.0358
X Variable 5 0.4369 0.0558 7.8254 0.0000 0.3260 0.5477 0.3260 0.5477
X Variable 6 0.6112 0.1056 5.7863 0.0000 0.4015 0.8210 0.4015 0.8210
-
X Variable 7 -0.0131 0.0211 0.6226 0.5351 -0.0550 0.0287 -0.0550 0.0287
-
X Variable 8 -0.0051 0.0215 0.2370 0.8131 -0.0478 0.0376 -0.0478 0.0376
Hypotheses 1
H01: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by discounted price.
Ha1: In the presence of other factors, there will be significant influence on impulse
behaviour by discounted price.
The p-value in XVariable1 is 0.55, hence p value does not satisfy the conditions to
accept alternate hypotheses.
We accept the null hypotheses.
Hypotheses 2
H02: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by promotional schemes.
Ha2: In the presence of other factors, there will be significant influence on impulse
behaviour by promotional schemes.
The p-value in XVariable2 is 0.68, hence p value does not satisfy the conditions to
accept alternate hypotheses.
We accept the null hypotheses
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Hypotheses 3
H03: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by promotions and advertising.
Ha3: In the presence of other factors, there will be significant influence on impulse
behaviour by promotions and advertising.
The p-value in XVariable3 is 0.55, hence p value does not satisfy the conditions to
accept alternate hypotheses.
We accept the null hypotheses
Hypotheses 4
H04: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by availability of money.
Ha4: In the presence of other factors, there will be significant influence on impulse
behaviour by availability of money.
The p-value in XVariable4 is 0.67, hence p value does not satisfy the conditions to
accept alternate hypotheses.
We accept the null hypotheses
Hypotheses 5
H05: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by packaging and placement of the product.
Ha5: In the presence of other factors, there will be significant influence on impulse
behaviour by packaging and placement of the products.
The p-value in XVariable5 is 0.00, hence p value satisfies the conditions to accept
alternate hypotheses.
We reject the null hypotheses and accept the alternate hypotheses.
Hypotheses 6
H06: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by mood of the consumer.
Ha6: In the presence of other factors, there will be significant influence on impulse
behaviour by mood of the consumer.
The p-value in XVariable6 is 0.00, hence p value satisfies the conditions to accept
alternate hypotheses.
We reject the null hypotheses and accept the alternate hypotheses.
Hypotheses 7
H07: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by availability of time.
Ha7: In the presence of other factors, there will be significant influence on impulse
behaviour by availability of time.
The p-value in XVariable7 is 0.53, hence p value does not satisfy the conditions to
accept alternate hypotheses.
We accept the null hypotheses
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Hypotheses 8
H08: In the presence of other factors, there will be no significant influence on impulse
buying behaviour by referral groups.
Ha8: In the presence of other factors, there will be significant influence on impulse
behaviour by referral groups.
The p-value in XVariable8 is 0.81, hence p value does not satisfy the conditions to
accept alternate hypotheses.
We accept the null hypotheses
So we saw that out of the eight factors two of them show a strong significance over
the consumer. Mood of the consumer and Packaging and placement of the product.
They are critical in initiating impulse buying process for any consumer.
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Conclusion
The results of the quantitative survey suggest that there is significant statistical
backing towards the validation of mood of the consumer and packaging and
placement of the product as critical factors that influence impulse buying behaviour
amongst Indian consumers in the FMCG space, this was based on the ratings which
survey respondents have given to the various factors associated with the concept.
Apart from that, the various factors studied for this particular survey are statistically
significant for the study, as indicated by their p-value.
The primary research survey indicates the importance which respondents share their
opinions about which factors have a significant bearing on the impulse buying
sentiment of the consumer. The various factors we discussed were discounted price,
promotional schemes, availability of money, packaging and placement of the
product, mood of the consumer, availability of time, promotions and advertising
and referral groups. The two factors which statistically shone out of all these were
Mood of the consumer and packaging and placement of the products at the point of
sale.
The focus group discussions carried out with industry professionals further
highlight this fact, with a lot of time being devoted to the discussion of
psychological factors that govern the impulse buying trait of the average consumer.
As expected from the primary survey we received data that indicated that the mood
of the consumer played a critical role in the onset of impulse buying for them. Apart
from these factors packaging and promotional schemes are also quite important
while considering the factors that influence impulse buying.
Therefore, while the study indicates that sufficient evidence that mood of the
consumer and packaging and placement of the product are instrumental in
influencing the impulse buying sentiment of a consumer.
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Acknowledgement
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