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A Dissertation on Consumer behavior of Edible oil

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  1. 1. “A Study of consumer behavior towards various edible oil” CHAPTER NO 1 NATURE AND SCOPE OF THE STUDY 1.1) INTRODUCTION: India is a leading player in edible oils, being the world‘s largest importer (ahead of the EU and China) and the world‘s third-largest consumer (after China and the EU). Each year, India consumes over 10 million tons of edible oils. Edible oils have a high penetration of 90% in India. However, per capita consumption of edible oils is around 11 kg per year. This is considerably lower than in most developed countries. Palm oil (mainly imported) and soya bean oil account for almost half of total edible oil consumption in India, followed by mustard and groundnut oil. In India, most vegetable oil is purchased by household or industrial buyers (food processors, restaurants and hotels) for frying or baking needs and is sold as loose oil or vanaspati (partially hydrogenated vegetable oil). Only a small percentage of edible oils are sold in branded form at the retail level. In India consumer oil preferences vary from region to region because preference is based on local cultivations. India is fortunate in having a wide range of oilseed crops grown in its different agro-climatic zones. Groundnut, mustard/rapeseed, sesame, safflower, linseed, Niger seed/castor are the major traditionally cultivated oilseeds. Soya bean and sunflower oils have also assumed importance in recent years. Coconut is the most important amongst the plantation crops. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important. Vegetable oil consumption in the country is continuously rising and has sharply increased in the last couple of years to roughly 11.2 kg/head/year. This is still lower than the world average consumption level of 17.8 kg and that in neighboring countries like Pakistan (16.1 kg). The developed western world has a per capita consumption of 44 to 48 kg/year. According to projections from the National Council of Applied Economic Research (NCAER), per capita Page 1
  2. 2. “A Study of consumer behavior towards various edible oil” consumption of edible oils is likely to reach 13.95, 14.83 and 16.17 kg by 20092010 in per capita income grows by 4%, 5% and 6% respectively. India is the fourth-largest economy in the world and the fastestgrowing significant economy with an average GDP of 6%. It has a population of 1.06 billion, which is growing at a rate of 1.65% per annum. According to the NCAER, there are five classes of consumer households, ranging from the destitute to highly affluent, which differ considerably in their consumption behavior and ownership patterns across various categories of goods. These classes exist in urban as well as rural households and consumption trends may differ significantly between similar income households in urban and rural areas. Movement to cheaper oils/Pricing power. EDIBLE OILS AND INDIAN ECONOMY Oilseeds and edible oils are two of the most sensitive essential commodities. India is one of the largest producers of oilseeds in the world and this sector occupies an important position in the agricultural economy covering an area of 24.38 million hectares and accounting for the production of 20.87 million tons of oilseeds during the year 1999-2000. India contributes about nine percent of the world oilseeds production, about seven percent of the global production of protein meal is the fourth largest edible oil economy in the world1. India is a vast country and inhabitants of several regions have developed specific preference for certain oils largely depending upon the oils available in the region. For example, people in the South and West prefer groundnut oil while those in the East and North use mustard seed/rapeseed oil. Likewise several pockets in the South have a preference for coconut and sesame oil2. Through technological means such as refining, bleaching and deodorizations, all oils have been rendered practically colorless, odorless and tasteless and therefore, have become easily interchangeable in the kitchen. Newer oils, which were not known before have entered the kitchen, like those of cottonseed, sunflower, palm oil or its liquid fraction, polyolefin, soybean and rice bran3. All of them are again essentially bland, processed edible oils. About 60-70% predominantly groundnut and Page 2
  3. 3. “A Study of consumer behavior towards various edible oil” mustard seeds are used to make non-refined or filtered oils. These are often branded by large manufacturers. The lower quality and generally lower. Cost filtered oil produced is mainly by the small scale village based processors. The oil is mostly sold loose directly to the consumers from a variety of containers, often within two to three days of production4. These local crushers will produce between half and two MTs per month. This decentralized production and marketing pattern may account for around 20% of all edible oils in the country5. The share of raw oil & refined oil in the total edible oil market is respectively 42.0% and 42.7% as per the Department of Food & Public Distribution. In the above context, an attempt has been made to understand the buyer‘s behavior and brand preferences for edible oils in the state of Maharashtra. Marketing and purchasing practices, production, sales and marketing strategies of business firms in respect of edible oil products were thoroughly examined in the literature review. The main thrust of these studies is the evaluation of edible oil brand extension practices of some reputed brands preferences equity and the market share. In fact the findings of the studies are very valuable for new researchers and marketers though who want to chalk out edible oil branding Strategies in a professional way regarding to this study, some eminent professors and academician‘s quality research papers review has been taken by studying their research papers on edible oils. Near about 10 quality research papers review has been taken in this study. Prof. H. Sulochana (2008), eminent female professor of Omanis University, Hyderabad highlighted in her article that, the consumers must care about the use of edible oil to avoid the health problems. In India 60% of the health problems are raised by not using the quality edible oil in their regular diet6. Prof. Reddy Bhagwan (2009) University of Tamil Nadu has recommended in his research article that the consumers must use the refined edible oil to prevent the fat in the human body. Heavy fat is the main cause of weight and stomach problems in the health of human beings. Prof. Philip Opar Donney (2007) a Marketing vice president of Asian companies from Afghanistan, basically he is from Kenya, has recommended the packed edible oil for regular diet by the customers than loose edible oil. Prof. Purushootam Rao Page 3
  4. 4. “A Study of consumer behavior towards various edible oil” (2008), dean faculty of commerce and Head department of commerce, Osmania University Hyderabad from Andhra Pradesh highlighted in his research paper that, edible oil is the most important part of a food for human being. The Govt. must prevent the oil mixing practices done by the wholesalers and local retailers while they are selling loose oils to the consumers. Dr. B.K. Bhattacharya, West Bengal (2009) a eminent health physician advised and given important suggestions to his patients and consumers to use the less quantity of edible oil in the regular diet of the people, 30% of the Indian peoples were not conscious while using the edible oils in their diet, so the concentration must be given to the regular use of edible oils. Prof. Merry George (2009), great academician from Malaysia analyzed in her study that, the producers of edible oil mills are not taking care while producing the edible oils. The producers must avoid using the chemicals for getting bright color and better transparency in edible oils. There must be strict rules and regulations in the production and selling of edible oils1. Dr. Simon Chippy (2007) Afghanistan a health specialist recommended to the patients to use Saffola and Sunflower packed edible oil in their regular food to avoid unwanted diseases from the use of regular edible oils2. Prof. Abdul Gilani, Pakistan (2009) has analyzed in his research study that the customers or regular users of edible oils must avoid fatty edible oils in non-veg food as well as vegetation food. Prof. James Berry U.S.A. (2009), said in her article that Gov.t. and different NGO‘s must come forward in public and try to create proper awareness in use of regular edible oils and save the life by health diseases3. Prof. Ramana Joof U.A.E. (2009) has found in her study that from Afghanistan, Iraq, Iran, and Saudi Arabian peoples are using most fatty edible oils. She suggested to the regular users try to use less and refined edible oil in their regular food and easy diet. Page 4
  5. 5. “A Study of consumer behavior towards various edible oil” 1.2) INFLUENCES ON CONSUMER BEHAVIOR: Consumer behavior involves the psychological processes that consumers go through in recognizing needs, finding ways to solve these needs, making purchase decisions (e.g., whether or not to purchase a product and, if so, which brand and where), interpret information, make plans, and implement these plans (e.g., by engaging in comparison shopping or actually purchasing a product). Sources of influence on the consumer. The consumer faces numerous sources of influence. Often, we take cultural influences for granted, but they are significant. An American will usually not bargain with a store owner. This, however, is a common practice in much of the World. Physical factors also influence our behavior. We are more likely to buy a soft drink when we are thirsty, for example, and food manufacturers have found that it is more effective to advertise their products on the radio in the late afternoon when people are getting hungry. A person‘s self-image will also tend to influence what he or she will buy an upwardly mobile manager may buy a flashy car to project an image of success. Social factors also influence what the consumers buy—often, consumers seek to imitate others whom they admire, and may buy the same brands. The social environment can include both the mainstream culture (e.g., Americans are more likely to have corn flakes or ham and eggs for breakfast than to have rice, which is preferred in many Asian countries) and a subculture (e.g., rap music often appeals to a segment within the population that seeks to distinguish itself from the mainstream population). Thus, sneaker manufacturers are eager to have their products worn by admired athletes. Finally, consumer behavior is influenced by learning you try a hamburger and learn that it satisfies your hunger and tastes good, and the next time you are hungry, you may consider another hamburger. Page 5
  6. 6. “A Study of consumer behavior towards various edible oil” CONSUMER CHOICE AND DECISION MAKING: Problem Recognition. One model of consumer decision making involves several steps. The first one is problem recognition—you realize that something is not as it should be. Perhaps, for example, your car is getting more difficult to start and is not accelerating well. The second step is information search—what are some alternative ways of solving the problem? You might buy a new car, buy a used car, take your car in for repair, ride the bus, ride a taxi, or ride a skateboard to work. The third step involves evaluation of alternatives. A skateboard is inexpensive, but may be ill-suited for long distances and for rainy days. Finally, we have the purchase stage, and sometimes a post-purchase stage (e.g., you return a product to the store because you did not find it satisfactory). In reality, people may go back and forth between the stages. For example, a person may resume alternative identification during while evaluating already known alternatives. Consumer involvement will tend to vary dramatically depending on the type of product. In general, consumer involvement will be higher for products that are very expensive (e.g., a home, a car) or are highly significant in the consumer‘s life in some other way (e.g., a word processing program or acne medication). It is important to consider the consumer‘s motivation for buying products. To achieve this goal, we can use the Means-End chain, wherein we consider a logical progression of consequences of product use that eventually lead to desired end benefit. Thus, for example, a consumer may see that a car has a large engine, leading to fast acceleration, leading to a feeling of performance, leading to a feeling of power, which ultimately improves the consumer‘s selfesteem. A handgun may aim bullets with precision, which enables the user to kill an intruder, which means that the intruder will not be able to harm the consumer‘s family, which achieves the desired end-state of security. In advertising, it is Page 6
  7. 7. “A Study of consumer behavior towards various edible oil” important to portray the desired end-states. Focusing on the large motor will do less good than portraying a successful person driving the car. INFORMATION SEARCH AND DECISION MAKING: Consumer engages in both internal and external information search. Internal search involves the consumer identifying alternatives from his or her memory. For certain low involvement products, it is very important that marketing programs achieve ―top of mind‖ awareness. For example, few people will search the Yellow Pages for fast food restaurants; thus, the consumer must be able to retrieve one‘s restaurant from memory before it will be considered. For high involvement products, consumers are more likely to use an external search. Before buying a car, for example, the consumer may ask friends‘ opinions, read reviews in Consumer Reports, consult several web sites, and visit several dealerships. Thus, firms that make products that are selected predominantly through external search must invest in having information available to the consumer in need—e.g., through brochures, web sites, or news coverage. A compensatory decision involves the consumer ―trading off‖ good and bad attributes of a product. For example, a car may have a low price and good gas mileage but slow acceleration. If the price is sufficiently inexpensive and gas efficient, the consumer may then select it over a car with better acceleration that costs more and uses more gas. Occasionally, a decision will involve a noncompensatory strategy. For example, a parent may reject all soft drinks that contain artificial sweeteners. Here, other good features such as taste and low calories cannot overcome this one ―non-negotiable‖ attribute. The amount of effort a consumer puts into searching depends on a number of factors such as the market (how many competitors are there, and how great are differences between brands expected to be?), product characteristics (how Page 7
  8. 8. “A Study of consumer behavior towards various edible oil” important is this product? How complex is the product? How obvious are indications of quality?), consumer characteristics (how interested is a consumer, generally, in analyzing product characteristics and making the best possible deal?), and situational characteristics (as previously discussed). Two interesting issues in decisions are: Variety seeking (where consumers seek to try new brands not because these brands are expected to be ―better‖ in any way, but rather because the consumer wants a ―change of pace,‖ and ―Impulse‖ purchases—unplanned buys. This represents a somewhat ―fuzzy‖ group. For example, a shopper may plan to buy vegetables but only decide in the store to actually buy broccoli and corn. Alternatively, a person may buy an item which is currently on sale, or one that he or she remembers that is needed only once inside the store. A number of factors involve consumer choices. In some cases, consumers will be more motivated. For example, one may be more careful choosing a gift for an in-law than when buying the same thing for one self. Some consumers are also more motivated to comparison shop for the best prices, while others are more convenience oriented. Personality impacts decisions. Some like variety more than others, and some are more receptive to stimulation and excitement in trying new stores. Perception influences decisions. Some people, for example, can taste the difference between generic and name brand foods while many cannot. Selective perception occurs when a person is paying attention only to information of interest. For example, when looking for a new car, the consumer may pay more attention to car ads than when this is not in the horizon. Some consumers are put off by perceived risk. Thus, many marketers offer a money back guarantee. Consumers will tend to change their behavior through learning—e.g., they will avoid restaurants they have found to be crowded and will settle on brands that best meet their tastes. Consumers differ in the values they hold (e.g., some people are more committed to recycling than Page 8
  9. 9. “A Study of consumer behavior towards various edible oil” others who will not want to go through the hassle). We will consider the issue of lifestyle under segmentation. THE MEANS-END CHAIN: Consumers often buy products not because of their attributes per se but rather because of the ultimate benefits that these attributes provide, in turn leading to the satisfaction of ultimate values. For example, a consumer may not be particularly interested in the chemistry of plastic roses, but might reason as follows: The important thing in a means-end chain is to start with an attribute, a concrete characteristic of the product, and then logically progress to a series of consequences (which tend to become progressively more abstract) that end with a value being satisfied. Thus, each chain must start with an attribute and end with a value. An important implication of means-end chains is that it is usually most effective in advertising to focus on higher level items. For example, in the flower example above, an individual giving the flowers to the significant other might better be portrayed than the flowers alone. ATTITUDE: Consumer attitudes are a composite of a consumer‘s (1) beliefs about, (2) feelings about, (3) and behavioral intentions toward some ―object‖— within the context of marketing, usually a brand, product category, or retail store. These components are viewed together since they are highly interdependent and together represent forces that influence how the consumer will react to the object. Beliefs. The first component is beliefs. A consumer may hold both positive beliefs toward an object (e.g., coffee tastes good) as well as negative beliefs (e.g., coffee is easily spilled and stains papers). In addition, some beliefs may be neutral (coffee is black), and some may be differ in valance depending on Page 9
  10. 10. “A Study of consumer behavior towards various edible oil” the person or the situation (e.g., coffee is hot and stimulates--good on a cold morning, but not well on a hot summer evening when one wants to sleep). Note also that the beliefs that consumers hold need not be accurate (e.g., that pork contains little fat), and some beliefs may, upon closer examination, be contradictory. Affect. Consumers also hold certain feelings toward brands or other objects. Sometimes these feelings are based on the beliefs (e.g., a person feels nauseated when thinking about a hamburger because of the tremendous amount of fat it contains), but there may also be feelings which are relatively independent of beliefs. For example, an extreme environmentalist may believe that cutting down trees is morally wrong, but may have positive affect toward Christmas trees because he or she unconsciously associates these trees with the experience that he or she had at Christmas as a child. Behavioral intention. The behavioral intention is what the consumer plans to do with respect to the object (e.g., buy or not buy the brand). As with affect, this is sometimes a logical consequence of beliefs (or affect), but may sometimes reflect other circumstances--e.g., although a consumer does not really like a restaurant, he or she will go there because it is a hangout for his or her friends. Changing attitudes is generally very difficult, particularly when consumers suspect that the marketer has a self-serving ―agenda‖ in bringing about this change (e.g., to get the consumer to buy more or to switch brands). Here are some possible methods: Changing affect. One approach is to try to change affect, which may or may not involve getting consumers to change their beliefs. One strategy uses the approach of classical conditioning try to ―pair‖ the product with a liked stimulus. For example, we ―pair‖ a car with a beautiful woman. Alternatively, we can try to get people to like the Page 10
  11. 11. “A Study of consumer behavior towards various edible oil” advertisement and hope that this liking will ―spill over‖ into the purchase of a product. For example, the Pillsbury Doughboy does not really emphasize the conveyance of much information to the consumer; instead, it attempts to create a warm, ―fuzzy‖ image. Although Energizer Bunny ads try to get people to believe that their batteries last longer, the main emphasis is on the likeable bunny. Finally, products which are better known, through the mere exposure effect, tend to be better liked—that is, the more a product is advertised and seen in stores, the more it will generally be liked, even if consumers to do not develop any specific beliefs about the product. Changing behavior. People like to believe that their behavior is rational; thus, once they use our products, chances are that they will continue unless someone is able to get them to switch. One way to get people to switch to our brand is to use temporary price discounts and coupons; however, when consumers buy a product on deal, they may justify the purchase based on that deal (i.e., the low price) and may then switch to other brands on deal later. A better way to get people to switch to our brand is to at least temporarily obtain better shelf space so that the product is more convenient. Consumers are less likely to use this availability as a rationale for their purchase and may continue to buy the product even when the product is less conveniently located. Changing beliefs. Although attempting to change beliefs is the obvious way to attempt attitude change, particularly when consumers hold unfavorable or inaccurate ones, this is often difficult to achieve because consumers tend to resist. Several approaches to belief change exist: Change currently held beliefs. It is generally very difficult to attempt to change beliefs that people hold, particularly those that are strongly held, even if they are inaccurate. For example, the petroleum industry advertised for a long time that its profits were lower than were commonly believed, and provided extensive factual evidence in its Page 11
  12. 12. “A Study of consumer behavior towards various edible oil” advertising to support this reality. Consumers were suspicious and rejected this information, however. Change the importance of beliefs. Although the sugar manufacturers would undoubtedly like to decrease the importance of healthy teeth, it is usually not feasible to make beliefs less important-consumers are likely to reason, why, then, would you bother bringing them up in the first place? However, it may be possible to strengthen beliefs that favor us--e.g., a vitamin supplement manufacturer may advertise that it is extremely important for women to replace iron lost through menstruation. Most consumers already agree with this, but the belief can be made stronger. Add beliefs. Consumers are less likely to resist the addition of beliefs so long as they do not conflict with existing beliefs. Thus, the beef industry has added beliefs that beef (1) is convenient and (2) can be used to make a number of creative dishes. Vitamin manufacturers attempt to add the belief that stress causes vitamin depletion, which sounds quite plausible to most people. Change ideal. It usually difficult, and very risky, to attempt to change ideals, and only few firms succeed. For example, Hard Candy may have attempted to change the ideal away from traditional beauty toward more unique self expression. One-sided vs. two-sided appeals. Attitude research has shown that consumers often tend to react more favorably to advertisements which either (1) admit something negative about the sponsoring brand (e.g., the Volvo is a clumsy car, but very safe) or (2) admits something positive about a competing brand (e.g., a competing supermarket has slightly lower prices, but offers less service and selection). Two-sided appeals must, contain overriding arguments why the sponsoring brand is ultimately superior—that is, in the above examples, the ―but‖ part must be emphasized. Page 12
  13. 13. “A Study of consumer behavior towards various edible oil” PERCEPTION: Our perception is an approximation of reality. Our brain attempts to make sense out of the stimuli to which we are exposed. This works well, for example, when we ―see‖ a friend three hundred feet away at his or her correct height; however, our perception is sometimes ―off‖—for example, certain shapes of ice cream containers look like they contain more than rectangular ones with the same volume. Subliminal stimuli. Back in the 1960s, it was reported that on selected evenings, movie goers in a theater had been exposed to isolated frames with the words ―Drink Coca Cola‖ and ―Eat Popcorn‖ imbedded into the movie. These frames went by so fast that people did not consciously notice them, but it was reported that on nights with frames present, Coke and popcorn sales were significantly higher than on days they were left off. This led Congress to ban the use of subliminal advertising. First of all, there is a question as to whether this experiment ever took place or whether this information was simply made up. Secondly, no one has been able to replicate these findings. There is research to show that people will start to giggle with embarrassment when they are briefly exposed to ―dirty‖ words in an experimental machine. Here, again, the exposure is so brief that the subjects are not aware of the actual words they saw, but it is evident that something has been recognized by the embarrassment displayed. Page 13
  14. 14. “A Study of consumer behavior towards various edible oil” ORGANIZATIONAL BUYERS: A large portion of the market for goods and services is attributable to organizational, as opposed to individual, buyers. In general, organizational buyers, who make buying decisions for their companies for a living, tend to be somewhat more sophisticated than ordinary consumers. However, these organizational buyers are also often more risk averse. There is a risk in going with a new, possibly better (lower price or higher quality) supplier whose product is unproven and may turn out to be problematic. Often the fear of running this risk is greater than the potential rewards for getting a better deal. In the old days, it used to be said that ―You can‘t get fired for buying IBM.‖ This attitude is beginning to soften a bit today as firms face increasing pressures to cut costs. Organizational buyers come in several forms. Resellers involve either wholesalers or retailers that buy from one organization and resell to some other entity. For example, large grocery chains sometimes buy products directly from the manufacturer and resell them to endconsumers. Wholesalers may sell to retailers who in turn sell to consumers. Producers also buy products from sub-manufacturers to create a finished product. For example, rather than manufacturing the parts themselves, computer manufacturers often buy hard drives, motherboards, cases, monitors, keyboards, and other components from manufacturers and put them together to create a finished product. Governments buy a great deal of things. For example, the military needs an incredible amount of supplies to feed and equip troops. Finally, large institutions buy products in huge quantities. For example, UCR probably buys thousands of reams of paper every month. Organizational buying usually involves more people than individual buying. Often, many people are involved in making decisions as to (a) whether to buy, (b) what to buy, (c) at what quantity, and (d) from whom. An engineer may make a specification as to what is needed, which Page 14
  15. 15. “A Study of consumer behavior towards various edible oil” may be approved by a manager, with the final purchase being made by a purchase specialist who spends all his or her time finding the best deal on the goods that the organization needs. Often, such long purchase processes can cause long delays. In the government, rules are often especially stringent—e.g., vendors of fruit cake have to meet fourteen pages of specifications put out by the General Services Administration. In many cases, government buyers are also heavily bound to go with the lowest price. Even if it is obvious that a higher priced vendor will offer a superior product, it may be difficult to accept that bid. 1.3) DEFINITION OF THE PROBLEM: As we know that today‘s market is very competitive and full of challenges, to expansion, company should search the market potential of product. The size of a market in terms of revenue, number of buyers, or other factors Estimated maximum total sales revenue of all suppliers of a product in market during certain period. More competitors are attracted to the market as they see the market potential to provide high profits. Competitors selling products customers previously purchased to satisfy needs now addressed by the new product form may be extremely aggressive ( may be entering the maturity stage of their industries PLC) resulting in major price reduction. This may delay the adoption of the new product form by some early majority to know the best consumer buying behavior and demand into the minds of consumers because always consumer says something and does something. There are many companies manufacturing the edible oil into the market, at the same time as there are many companies manufacturing idea about thinking of consumer on whether, what, how and for whom to purchase edible oil. Therefore, research is required to measure present consumer buying behavior at the purchase of edible oil. So the researcher problem is to identify what are the criteria that prospective customer takes into consideration before buying the edible oil. Page 15
  16. 16. “A Study of consumer behavior towards various edible oil” 1.4) OBJECTIVES OF THE STUDY: The study has following objectives: To study the brand preference position in the market. To know the levels of brand awareness among the Consumers of edible oils. To study consumers buying behavior. To know the factors influencing the purchase Decision for edible oil. To know the purchase and consumption pattern of consumers. To study and analyze spatial and temporal aspects of area and price. To understand farm economics, constraints/issues in production at farm To understand the marketing aspects and identify different channels of marketing and their efficiency. 1.5) SCOPE OF THE STUDY: 1. It will help to study the consumer behavior to make changes in the edible oil. 2. It will help to find out role of advertisement in customer buying decision. 3. It will help to study the consumer behavior to make advertising strategies for new product Page 16
  17. 17. “A Study of consumer behavior towards various edible oil” CHAPTER NO 2 ORGANIZATIONAL PROFILES Consumer behavior is the study of when, why, how and where people do or do not buy product. It blends from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies the characteristics of individual consumer such as demographics and behavioral variables in an attempt to understand people‘s wants. It also tries to assess influences on the consumer from groups such as family, friends, reference group and society in general. Customer behavior study is based on consumer buying behavior, with the customer plying the three distinct roles of user, player and buyer. Relationship marketing is an influential asset for customer behavior analysis as it has a keen interest in the re- discovery of the true meaning of marketing through the reaffirmation of the importance of the consumer or buyer. A greater importance is also place on consumer retention, customer relationship management, personalization, customization and one-to-one marketing. Social functions can be categorized into social choice and welfare functions. EDIBLE OIL IN INDIA The Indian edible oil market is the world‘s fourth-largest after the USA, China and Brazil. A growing population, increasing rate of consumption and increasing per capita income are accelerating the demand for edible oil in India. This paper analyses the trend in edible oil consumption and the prospects for the Indian edible oil market in the coming years. The demand for edible oils in India has shown a steady grow that a CAGR of 4.43% over the period from 2001 to 2011. The growth has been driven by improvement in per capita consumption, which in turn is attributable to rising income levels and living standards. Page 17
  18. 18. “A Study of consumer behavior towards various edible oil” However, the current per capita consumption levels of India (at 13.3 Kg/year for 2009-10) are lower than global averages (24 kg/year).1 The Indian edible oils market continues to be underpenetrated and given the positive macro and demographic fundamentals it has a favorable demand growth outlook over the medium-to-long term. In terms of volumes, palm oil, soyabean oil and mustard oil are the three largest consumed edible oils in India, with respective shares of 46%, 16% and 14% in total oil consumption in 2010. Given the high price consciousness and varied taste preferences of Indian consumers, ICRA expects these three oils to continue to account for the bulk of edible oil consumption in the country. BACKGROUND Edible oils constitute an important component of food expenditure in Indian households. Historically, India has been a major importer of edible oils with almost 30-40% of its requirements being imported till 1980s. In 1986, the Government of India established the Technology Mission on Oilseeds and Pulses (TMOP) in order to enhance the production of oilseeds in the country. The TMOP launched special initiatives on several critical fronts such as improvement of oilseed production and processing technology; additional support to oilseed farmers and processors besides enhanced customs duty on the import of edible oils. Consequently, there was a significant increase in oilseeds area, production, and yields until the late-1990s. However, in order to fulfill its obligations towards various international trade agreements and also meet the increasing demandsupply deficits, India began to reduce import restrictions on edible oils in the late 1990s; and it was gradually brought under Open General License. This led to a significant slump in the domestic oil seeds market, as edible oil prices fell sharply in line with the low international prices prevailing at that time. Subsequently, the duty structure was modified so as to maintain a duty differential between crude and refined varieties in order to protect the domestic industry. Nevertheless, due to high import dependence, domestic edible oil prices remain highly correlated to Page 18
  19. 19. “A Study of consumer behavior towards various edible oil” international edible oil price movement, and this has resulted in volatility in the key credit metrics of rated edible oil companies. At the same time, ICRA notes that edible oil companies with benefits of large-scale integrated operations, multiproduct offerings and recognizable branded presence in retail markets have fared better as compared to small/medium-scale domestic oilseed crushers. KEY TRENDS & CREDIT IMPLICATIONS The demand for edible oils in India has shown a compounded growth of 4.5% over the last 10 years and is estimated at 16.2 million tons for Oil Year (OY) 2010-11. India plays an important role in the global edible oil market, accounting for approx. 10.2% share of consumption; 7% share of oilseed production; 5% share of edible oil production and 13.6% share of world edible oil imports for OY 2009-10. As per USDA estimates, India is the third largest consumer of edible oils (after China and the EU-27 countries); and will account for 11% of global edible oil demand and 16% of global imports in OY 2010/11F. India‘s annual per capita consumption has shown a steadily increasing trend from 4 kg in the 1970s to 10.2 kg in the late 1990s to current levels of ~13.5 - 14 kg. However, it still ranks well below the world average of around 24 kg (per capita figures including consumption of bio-energy), thereby signifying the high growth potential of the industry. Refer Charts 1 and 2 for trend in domestic demand and per capita consumption of edible oils in India. Page 19
  20. 20. “A Study of consumer behavior towards various edible oil” VARIOUS OIL BRANDS IN INDIA 2.1 GEMINI Gemini Edibles & Fats India Private Limited (GEF India), a Hyderabad based company, is into the business of manufacturing and marketing of edible oils and fats. The company is promoted and headed by Mr. Pradeep Chowdhry who has over three decades of experience and has worked with ICI, Britannia & ITC Agro Tech in leadership positions. Before promoting this company, he headed Acalmar Oils & Fats Limited (JV of Wilmar International, Singapore) with an annual turnover of Rs.1,100 crores. GEF India?s top management also has over two decades of experience in the edible oils business. The company has built a plant at Krishnapatnam (near Nellore) of refining capacity of 800 MTS per day with an investment of Rs.135 crores and acquired an existing refinery of capacity 200 MTS per day at another strategic location, Kakinada. Company Profile: Company name: Gemini Edibles & Fats India Private Limited Contact person: Mr. Govind Sewliker Telephone: +(91)-(40)-67357857 / 67357849 Mobile/ cell phone: +(91)-9618416297 Fax no. : + (91)-(40)-23550522 Address: No. 8-2-334/70 & 71, Road No. 5, Banjara Hills, Hyderabad, Andhra Pradesh - 500 034 (India) Page 20
  21. 21. “A Study of consumer behavior towards various edible oil” Edible oil Products of company: 1) Refined Sunflower Oil Freedom is your right to do whatever you want to do. With this thought in mind we have introduced a new brand of Sunflower oil. Freedom Refined Sunflower Oil is your right to eat what you want to eat, how much you want to eat and when you want to eat. This oil gives you the freedom to cook for everyone in the family. Freedom is a healthy oil for your complete family all year round. Freedom Refined Sunflower Oil is cholesterol free and contains essential fatty acids that our body needs and ample amounts of naturally occurring vitamin E. To make the oil even healthier for you and your family we have added Vitamins A & D in Freedom Sunflower Oil. 2.2) DHARA The Dhara brand of edible oils was launched in 1989. Dhara's creation added value to the return of the producers and provided a stable supply of quality oil to the consumers at a fair price. For the first time in India, edible oil was made available in tamper-proof tetra pak. Today, Dhara has a wide spectrum of edible vegetable oils. Dhara edible vegetable oils are packed at packaging stations all over India. To ensure that the oil which reaches the consumer is of high purity, it passes through stringent quality control tests using sophisticated analytical instruments like High Pressure Liquid Chromatography and Thin Layer Chromatography. These tests can even detect very low level of contamination caused by adulterants. Page 21
  22. 22. “A Study of consumer behavior towards various edible oil” Company Profile: Company name: Dhara Vegetable Oil & Foods Company Ltd Contact person: Mr. HC Virmani ,Managing Director Telephone: +91-2692 - 264896, 97 , 98 Email-id: Fax no. : +91-2692 – 264899 Address: Dhara Vegetable Oil & Foods Company Ltd, NDDB Campus, NDDB, Anand – 388 001 Edible oil Products of company: 1) Dhara refined vegetable oil: 2) Dhara double refined groundnut oil: 3) Dhara Rvo 1 ltr. Page 22
  23. 23. “A Study of consumer behavior towards various edible oil” 2.3 SAFFOLA: Over the years, the brand Saffola has become renowned for its expertise in Heart Care, thanks to the consistent introduction of innovative product like heart healthy cooking oil and foods. Saffola's products are the first in your line of defense against heart diseases, making your transition to a healthier lifestyle a lot easier. As a responsible brand whose philosophy is to help people get the most out of life, Saffola always promotes the adoption of a healthier lifestyle for your heart. Towards this end, Saffola life conducts several events every year on the eve of World Heart Day to spread awareness of the risk factors leading to heart disease and the preventive steps against the same. In addition, events like Walkathons and Health Check-up Camps are held frequently through the year. BRAND BUILDING: In April 2003, Marico reorganized its business and brought Nature Care, Health Care and the International Business Group under a single division Consumer Products. This profit center comprised the operations of Marico Industries and Marico Bangladesh Ltd. (MBL), a 100% subsidiary of Marico. Company Profile: Company name: Ventura foods pvt. Ltd. Contact person: ---------------- Telephone: (714) 257-3700 Email-id: ------------------- Fax no. : (800) 421-6257 Address: 40 Pointe Drive Brea, CA 92821 Page 23
  24. 24. “A Study of consumer behavior towards various edible oil” Edible oil Products of Brand: 1) Saffola gold cooking oil 1 ltr. 2) Saffola gold cooking oil 5 ltr. 3) Saffola kardi oil 5 ltr. 4) Saffola Tasty Blend Oil 1 Ltr. 5) Saffola Tasty 5 Ltr. Page 24
  25. 25. “A Study of consumer behavior towards various edible oil” 2.4) FORTUNE: The Fortune brand, flagship brand of Adani Wilmar Ltd, is a decade-long national leader aspiring to be a global leader in cooking oil category. Quality, health and customer satisfaction are the foundations of our business, and form the core ingredients for all our innovations at Fortune. Adani Wilmar Limited (AWL), a Rs. 6500 crore company; is a joint venture between two global corporations, The Adani Group of India - the leaders in international trading & private infrastructure, and The Wilmar International Limited of Singapore - agri-business group and leading merchandiser and processor of edible oils. The company has production infrastructure across the country with a crushing capacity of over 6000 TPD (Tonnes per Day) and Refining capacity of over 5000 TPD. Company Profile: Company name: Adani Wilmar Limited Contact person: Mr. Arun Harne Telephone: +91 79 2555 5650 Email-id: fortune [at] adaniwilmar dot in Fax no. : +91 79 255 55621 Address: "Fortune House" Near Navrangpura Railway Crossing, Ahmedabad 380 009, GUJARAT (India). Page 25
  26. 26. “A Study of consumer behavior towards various edible oil” Edible oil Products of Brand: 1) Fortune Refind Oil 15 Ltr. 3) Fortune Soya 15 Ltr. 2) Fortune Mustard Oil Pet 5 Ltr. 4) Fortune Sunflower 5Ltr . 5) Fortune Kachi Ghani Mustard Oil 1 Ltr. 6) Fortune Refined Soyabean Oil 1 Ltr . Page 26
  27. 27. “A Study of consumer behavior towards various edible oil” CHAPTER NO 3 RESEARCH METHODOLOGY 3.1) RESEARCH DESIGN: To collect data needed to address the above mentioned objectives the exploratory research design was used. Exploratory research was design to describe something. It includes surveys and facts finding enquiries of different kind. The research study is based on collection of data and analysis to draw the conclusion. 3.2) METHODOLOGY: The completion of research involved three phases: First phase: Collection of Secondary and Primary data. Secondary data were collected from books, magazines and websites, etc. And Primary data was collected from the structured questionnaire and interview schedule. Second phase: Pilot study, Actual primary data collection, Editing and tabulation of data. Third phase: Data analysis using statistical tools. Inferences, conclusions, suggestions based on data collected. 3.3) DATA COLLECTION: Data means information required in the research. There are two types of data sources, which have been helpful to carry out the research these are as follows: Primary data Primary data are those, which are collected a fresh and for the first time. Primary data was collected through questionnaires & Interview schedule. Page 27
  28. 28. “A Study of consumer behavior towards various edible oil” Secondary data Secondary data are those, which have already been collected by publication of Governments, Periodicals of organization, newspaper, books, & internet etc. Questionnaire The questionnaire is one of the many ways through which data can be collected. Questionnaire is widely used by researcher to collect information on related study. Questionnaire is a method of getting data about respondent by asking them than by observing and sampling their behavior. Questionnaire should be standardized, its anonymity can be assured and questionnaire should be design to meet the simple and native language to allow the use of large sample. Sampling Universe The first step in devolving any sample design is to clearly define the set of objects, technically called the universe. Sample universe includes users of edible oil. Sample Technique Sampling technique used for selection of sample non-probability, ‗Convenience sampling technique‘. A convenience sample is that where the sample is selected, in part or only a limited attempt, to ensure that this sample is an accurate representation of some larger group of population. The classic example of convenience sample is standing at shopping mall and selecting shoppers as they walk by to fill out a survey. A convenience sample chooses the individuals that are easiest to reach or sampling that is done easy. Hence, convenience sampling was used for the research. Page 28
  29. 29. “A Study of consumer behavior towards various edible oil” Sample Size This refers to the number of item to be selected from the universe to constitute a sample. The sample size is 100 users of edible oil. These users are the families. 2.4) Limitation: The limitation of this study is that sometimes the male or female respondents may not give the proper and correct information regarding the price and used brands of edible oils in their daily diets. 1) The study was limited to Amravati city 2) Due to limited time & money, it was not peruse to come whole entire, hence the sample size was 100 respondents. 3) The study was limited to four brands. Page 29
  30. 30. “A Study of consumer behavior towards various edible oil” CHAPTER NO 4 DATA INTERPRETATION The data so collected is scrutinized, tabulated and analyzed by the help of some statistical tools and techniques and finally used for the study purpose. Following are the major conclusions are drawn by the researchers. Table No. 4.1 MONTHLY CONSUMPTION PATTERN OF EDIBLE OIL Sr. No Quantity(in liters) Number of Percentage respondents 1 01 09 09 2 02 43 43 3 05 27 27 4 10 15 15 5 15 06 06 TOTAL 100 100 Fig. no. 4.1 MONTHLY CONSUMPTION PATTERN OF EDIBLE OIL Number of respondents 15% 6% 9% 1 2 27% 43% 5 10 15 Interpretation From above data it can be concluded that, 43% of the respondent consumes the 2 liter oil per month. 27% respondent consumes 5 liter oil per month. 15% respondent consume 10 liter per month. 9% respondent consume 1liter per month. 6% respondent consumes 15 liter per month Page 30
  31. 31. “A Study of consumer behavior towards various edible oil” Table No. 4.2 BRAND DECISION MAKER FOR EDIBLE OIL Sr. No Decision Maker Number of Percentage respondents 1 Wife 87 87 2 Husband 07 07 3 Both 06 06 TOTAL 100 100 Fig. no. 4.2 BRAND DECISION MAKER FOR EDIBLE OIL Number of respondents Wife 7% Husband Both 6% 87% Interpretation From above data it can interpret that, 87% from respondent take decision wife at home. 07% decisions are taken by husband & 06% decision are taken by both of them. Page 31
  32. 32. “A Study of consumer behavior towards various edible oil” Table No. 4.3 RESPONDENT’S PREFERENCE TOWARDS PACKAGE SIZE OF EDIBLE OIL Sr. No Package Size Number of Percentage respondents 3 Package Oil 73 73 4 Loose Oil 27 27 TOTAL 100 100 Fig. no. 4.3 RESPONDENT’S PREFERENCE TOWARDS PACKAGE SIZE OF EDIBLE OIL Number of respondents 80 70 60 50 40 Number of respondents 30 20 10 0 Package Oil Loose Oil Interpretation From the above data conclusion was drawn that, when consumers were asked about their preference towards package size 60% of the respondents preferred package size edible oil and 27% respondent preferred loose oil. Page 32
  33. 33. “A Study of consumer behavior towards various edible oil” Table No. 4.4 FACTORS AFFECTING ON BRAND DECISION MAKING Sr. No Particulars Percentage 1 Price 29 2 Quality 33 3 Size of Pack 02 4 Advertisement 01 5 Package Design 02 6 Health Consciousness 33 Fig. no. 4.4 FACTORS AFFECTING ON BRAND DECISION MAKING Price Quality Size of Pack Advertisement Package Design Health Consciousness 29% 33% 2% 1% 2% 33% Interpretation From the above data it can be conclude that, health conscious is the main reason where 33% peoples choose on the basis of health, 33% choose because of its quality and 29% because of price, size of pack chooses 02% respondent, advertisement chooses 01% people & package design chooses by 2& respondent. Page 33
  34. 34. “A Study of consumer behavior towards various edible oil” Table No. 4.5 RESPONDENT’S PREFERENCE TOWARDS TYPE OF OILS Sr. No Type Of Oil Number of Percentage respondents 1 Kardi 32 32 2 Groundnut 15 15 3 Sunflower 42 42 4 Soya Bean 10 10 5 Palm 1 1 Total 100 100 Fig. no. 4.5 RESPONDENT’S PREFERENCE TOWARDS TYPE OF OILS Kardi Groundnut Sunflower Soya Bean Palm 1% 10% 32% 42% 15% Interpretation From the above data it can interpreted that, 42% respondent prefer sunflower oil, 32% respondent prefer kardi oil, 15% respondent prefer groundnut oil, 10% respondent prefer soya bean oil & 1% respondent prefer palm oil. Page 34
  35. 35. “A Study of consumer behavior towards various edible oil” Table No. 4.6 BRAND AWARENESS FOR EDIBLE OIL Sr. No Names Respondent Percentage 1 Dhara 24 24 2 Saffola 10 10 3 Fortune 06 06 4 Gemini 20 20 5 Rassoya 20 20 Fig. no. 4.6 BRAND AWARENESS FOR EDIBLE OIL Respondent Dhara Saffola Fortune 25% Gemini Rassoya 30% 12% 25% 8% Interpretation From the above data it can be conclude that, The awareness of edible oil is maximum for Dhara i.e. 30% whereas Saffola, Fortune, Rassoya and Gemini are close with 10, 06, 20 and 20 % respectively. Page 35
  36. 36. “A Study of consumer behavior towards various edible oil” Table No. 4.7 BRAND PREFERENCE FOR EDIBLE OILS Sr. No Names Respondent Percentage 1 Dhara 24 24 2 Saffola 10 10 3 Fortune 06 06 4 Gemini 20 20 5 Rassoya 20 20 Fig. no. 4.7 BRAND PREFERENCE FOR EDIBLE OILS Respondent Rassoya Gemini Fortune Respondent Saffola Dhara 0 5 10 15 20 25 Interpretation From the above data conclusion was drawn that, The preference of edible oil is maximum for Dhara i.e. 30% whereas Saffola, Fortune, Rassoya and Gemini are close with 10, 06, 20 and 20 % respectively. Page 36
  37. 37. “A Study of consumer behavior towards various edible oil” Table No. 4.8 SOURCE OF INFORMATION FOR EDIBLE OIL Sr. No Source Number of Percentage respondents 1 Advertisement 44 44 2 TV 36 36 3 Paper 10 10 4 Banner 10 10 Total 100 100 Fig. no. 4.8 SOURCE OF INFORMATION FOR EDIBLE OIL Number of respondents 45 40 35 30 25 20 15 10 5 0 Number of respondents Interpretation From the above data it can be conclude that, 44% of the respondents get information from Advertisements, 36% from TV, 10% from Papers, 10% percent from Banners. Page 37
  38. 38. “A Study of consumer behavior towards various edible oil” Table No. 4.9 SATISFACTION OF THE RESPONDENTS Sr. No. Feedback No. of Percentage respondent 1 Highly Satisfied 10 10 2 Satisfied 46 46 3 Average Satisfied 28 28 4 Unsatisfied 16 16 Fig. no. 4.9 SATISFACTIONS OF THE RESPONDENTS No. of respondent Unsatisfied Average Satisfied No. of respondent Satisfied Highly Satisfied 0 10 20 30 40 50 Interpretation From the above data it can be interpreted that, 46% respondents are satisfied with their edible oil brands. 28% respondents are average satisfied, 16% are unsatisfied, and 10% are highly satisfied. Page 38
  39. 39. “A Study of consumer behavior towards various edible oil” Table No. 4.10 PLACES FOR PURCHASING EDIBLE OIL Sr. No. Place No. of Percentage respondent 1 Retailer 50 50 2 Departmental 10 10 Store 3 Shopping Mall 10 10 4 Wholesaler 30 30 Fig. no. 4.10 PLACES FOR PURCHASING EDIBLE OIL No. of respondent 50 45 40 35 30 25 20 15 10 5 0 No. of respondent Interpretation From the above data it can be conclude that, 50% respondents are purchase oil from retailer, 30% from wholesaler and 10% from Departmental store and shopping malls. Page 39
  40. 40. “A Study of consumer behavior towards various edible oil” Table No. 4.11 OPINION OF CONSUMERS FOR EDIBLE OIL Sr. No. Opinion No. of Percentage respondent 1 Excellent 10 10 2 Very good 10 10 3 Good 50 50 4 Poor 30 30 Fig. no. 4.11 PLACES FOR PURCHASING EDIBLE OIL No. of respondent Poor 30% Excellent 10% Very good 10% Good 50% Interpretation From the above data it can be conclude that, 50% respondents are gives opinion as good, 30% are poor and 10% are excellent and very good. Page 40
  41. 41. “A Study of consumer behavior towards various edible oil” Table No. 4.12 RESPONDENTS NATURE OF PURCHASING FOR EDIBLE OIL Sr. No. Nature No. of Percentage respondent 1 Impulsive 40 40 2 Planned 60 60 Fig. no. 4.12 PLACES FOR PURCHASING EDIBLE OIL No. of respondent 60 50 40 30 No. of respondent 20 10 0 Impulsive Planned Interpretation From the above data it can be conclude that, 60% respondents are impulsive nature for purchasing edible oil, 40% are planned nature. Page 41
  42. 42. “A Study of consumer behavior towards various edible oil” CHAPTER NO 5 FINDINGS, SUGGETIONS & RECOMMONDATIONS 5.1) FINDINGS: 1) After conducting the research the researcher found that, In case of buying of edible oil by the consumer, the consumer involvement in the purchasing of edible oil primarily depends upon basic need and ability to pay. 2) Female are mainly involve in purchasing of edible oil. 3) Advertising is major source to get the information for buying. Advertising affect on consumer buying behavior than other promotional tools. 4) 64% of the respondents use branded oil and 36% use loose oil. 5) Researcher found that, Dhara has maximum brand awareness followed by Saffola, Fortune, & Gemini respectively IN India and Maharashtra state. 6) Researcher found that, 35% of the respondents prefer 1litre and 30% 5 liters package size. 7) Researcher found that, Majority of the respondents consume 2 – 4 liters of oil per month. 8) From this research process, it can conclude that respondent take very much care of the health consciousness at the time of purchasing edible oil. 9) Dhara is mostly popular brand for preference factor of the respondent. 10) Mostly respondent are attract from the advertisement. That concludes 44% and TV getting 36% attraction for the sources of information of edible oil. 11) In these research process, mostly respondent are satisfied with their brands. 12) In another process, mostly respondent purchase the edible oil from retailer. 13) Here the respondent opinion is good with their existing edible oil brand. 14) And last one but not the list, 60% respondent planned purchase and 40% respondent is impulsive purchase nature. Page 42
  43. 43. “A Study of consumer behavior towards various edible oil” 15) In majority of the families interviewed during this course house wife is the decision maker for the brand and type of edible oil to be used. 16) Health consciousness and quality of a particular brand are the important factors in decision making. 17) Majority of the respondents use sunflower oil followed by kardi, groundnut, soya bean, corn & kardi blend. Branded oil is preferred than the loose oil in higher income class of the consumers. 18) Dhara has maximum brand awareness followed by Saffola, Fortune, & Gemini respectively. 19) Majority of the respondents prefer 1 litre and 5 liters package size. 20) Majority of the respondents consume 2 – 4 liters of edible oil per month. Page 43
  44. 44. “A Study of consumer behavior towards various edible oil” 5.2) SUGGESTIONS & RECOMMONDATIONS: 1. Edible oil manufacturer companies should try to decrease the cost of oil because more consumers are belongs to the middle class so mo cost will be Economical for them. 2. Companies should give more emphasize on quality and quantity. 3. Edible oil manufacturer are making the package sizes 1 liter, 5 liters, 15 liters this are not suitable for which purchase small size, and for that they purchase loose oil. 4. Advertisement affected to the consumer‘s behavior so companies should try to make effective advertisement. Page 44