Toothpaste Industry Market in India and Analysis of Consumer Purchasing behavior

Submitted By

Rohan Kumar Pattnaik-11BM60108 Akash Krishnatry-11BM60106 Sourabh Chaturvedi-11BM60013 Yash Mehta-11BM60116 Abhishek Thampan-11BM60126

TOOTHPASTE INDUSTRY:
The toothpaste history in India can be tracked back from 1975 with 1200 tonnes of toothpaste produced by the toothpaste industry. Prior to the toothpastes Oral Hygiene was the domain of local homemade powders and ayurvedh practitioners. With the entry of Colgate in Indian marketplace the awareness about Oral care and the importance of oral care. In recent years the Industry has shown impressive growth rate of 18.6% (this growth is calculated in terms of value growth in Rs. ). The growth in the urban market has been largely by the Gel Segment. Presently, a large chunk of the Market is still held by Colgate. The major players in the toothpaste Industry being Colgate Palmolive and Hindustan Lever Limited and several minor players like Balsara hygiene, Dabur etc. Presently Colgate Dental Cream holds 52% of market share. HLLs Close up lies far behind with 23% of the existing market share. The third player in the marketplace in terms of market share is Colgate Gel with 10.5% of the market share. That leaves 14.5% market share for other Brands like Pepsodent, Pepsodent G, Promise, Babool, Sensofoam, Forhans, Cibaca, Neem, Vicco etc. The toothpaste market is presently valued at Rs. 750 crores out of which the Gel segment has already bagged 1/3rd portion of it. The Gel segment presently stands at Rs. 248 crores and is growing at a rate much faster than Cream. In India toothpaste usage as compared to other countries is very low which signifies about the potential of the market. In Urban India the usage of toothpaste per person per year is just 190gms. Where as it is 200gms of toothpaste per person per year in developing countries as Indonesia and Thailand. In developed countries as USA and other European countries the toothpaste usage is 375 Gms per person year.

Worldwide annual per capital consumption of toothpaste averaged 363 grams while consumer in India used only 107 grams of toothpaste annually. The average annual per capital consumption of toothpaste in India is lower than the worldwide average due to a lower average personal income and a lack of consumer education. Also, recent studies have indicated a high price elasticity of almost 300% for certain mass consumer products: i.e. a10% drops in prices could lead to a

30%increase in consumption. Realizing the importance of these products in consumers daily lives especially toothpastes, many companies like P & G, Hindustan Unilever etc. are planning to launch products to fight for the share of the existing market giants.

Introduction: Highlights of Indian Toothpaste Industry

1. The toothpaste market in India increased at a compound annual growth rate of 6.6% between 2004 and 2010. 2. The standard category led the toothpaste market in India in 2009, with a share of 91.5%. 3. Leading player in toothpaste market in India is Colgate-Palmolive Company.

The growth in the Toothpaste market demand can be attributed to a number of factors. Perhaps the two most important are rising penetration higher intensity of use. Penetration is driven by purchasing power, reach of media, availability and also price. Growth in rural areas is driven by conversion of non users. Various initiatives such as distribution of free samples, low unit price packs in small sizes and conducting oral care education in the rural areas are being undertaken by leading players. Paralleling these trends had been dramatic increase in Advertising expenditure and new value proposition introduced by the players in the market. The cumulative of above initiatives had been to increase the consumer awareness in rural areas and conversion of non-users to branded product.

Demand
With a population of 1.22 billion and population growth rate of around 2%, India has a huge potential market for toothpaste. Demand for urban area is growing at a rate of 2-3% where as that

of rural area is growing at a rate of 12-14 %.Among various segments protection and economy segment is growing at 5-6% per annum where as the social interaction segment is growing at faster pace of 12-14% per annum. (Source: Indianinfoline.com)

Market Research Motive

Identifying the key factors that companies should take into account before launching a new product in the market and realising the buyer behaviour in order to gain a better understanding of Indian market.

Primary Research Objective (PRO):

To determine the consumer preferences while buying toothpastes.

Secondary Research Objectives (SROs):

To determine the various factors affecting the purchase of toothpastes. To determine the brand preferences for toothpastes To determine the type of toothpastes preferred by consumers To determine the positioning of various brands in the minds of consumers To determine whether the various demographical factors affect the purchase of toothpaste. To determine the relative importance of various functionalities attached to toothpaste (whiteness, freshness, protection).

Research Approach
Data Collection Method:
An exploratory research was conducted for which the following techniques were used:

a. Open-ended questionnaire
These questions were used to know that what are the different attributes which a customer looks for while selecting toothpaste.

b. Focused group discussions

Here, a discussion among a group of students was arranged to bring out the attributes that are evaluated by the students while selecting toothpaste. For secondary research, the following sources were used: a. Websites of different toothpaste brands to know their unique selling propositions. b. CMIE c. Other journals and reports Based on the attributes found out in the exploratory research and the secondary research, the information gap was identified and hence it was decided to conduct primary research to fill the gap. The research was conducted by administering questionnaire for the target age-group. For primary

data collection, Questionnaire administration was done personally and through online questionnaires.

Measurement Technique:
To record the data the following measurement techniques would be used: Rank order scale In order to know the preference of this scale would be used to rank the various brands. Itemized non- comparative rating scale Respondents would rate certain attributes of toothpaste on a scale with positions from strongly agree to strongly disagree. Likert Scale The Likert scale would be used to find out how the respondents perceive the features of toothpaste. Semantic Differential Scale Respondents would rate the toothpaste they are aware of on various attributes. These individual rating scales would be combined to study the overall effect of all the attributes and different Attitude scales would be used to rank items. Dichotomous Questions These questions would be asked to get an objective answer. Willingness of Respondents Personal questions like Name, Age, and Gender etc have been asked at the end of the questionnaire.

Sampling Plan:
The sample for survey would be taken on the following basis. Sample Frame: Sample Unit: Sample Size: Time Frame: Sampling Method: Data Analysis Technique: People residing or working in Kharagpur Students and working professionals 79 respondents 10-15 Days. Simple random sampling (SRS) Chi-Square Analysis, Factor Analysis, Multidimensional Scaling

Exploratory Research:
Questionnaire:
1. Which brands of toothpaste are you aware of? 2. What brand of toothpaste do you use? 3. Why do you use the aforementioned toothpaste? 4. What additional features would you like to see in your toothpaste? 5. What factors influence the choice of toothpaste?

Findings:
The exploratory research phase aims to find out the parameters over which the research should proceed. The questionnaires explored the different factors that respondents look into before buying toothpaste. The sample size was 15 respondents. Findings:

Brands commonly used were:

Colgate, close-up and Pepsodent

Other Brands which people were able to recall were:

Babool, Cibaca, Meswak, Vicco Vajradanti, Dabur, Meswak, Neem, Amway

Some of the reasons given by the respondents for choosing their preferredbrand of toothpaste were:
Good Cleaning Power, Habit, Brand Loyalty, Good Lather, Colour, Shelf Positioning, Calcium content, Flavours, liking for gel based toothpastes , taste , Cavity Protection, Prevention of Bad Breath, Medicinal Value , and utility viewpoint.

Some additional features that the respondents said they might want in their toothpastes were:
Lower Price, Change of Colour, New Flavours, Mouth, Refreshing Breath, Prevention against tooth decay The factors that respondents thought were influential in buying toothpastes in general were: Advertisements, Family Influence, Packaging, Personal Experience, Protection, Cleanliness, whitening, freshness, taste, Dentist Recommendations, Pricing, Availability and peer suggestion.

Questionnaire:
1. Gender: 2. Age: Less than 20 Between 21-25 Between 26-30 Above 30

3. How often do you use toothpaste in day? Once a day Twice a day After every meal 4. Which brand of toothpaste do you use? Colgate Close up Pepsodent Meswak Babool Dabur Red Toothpaste Sensodyne Amway Others (____________)

5. Which type of toothpaste do you prefer? Paste Gel Others 6. Where do you buy your toothpaste from? General store Departmental store Medical shops/ Pharmacies 7. What various promotional activities for toothpaste have you come across? Newspaper Ads TV Commercial Radio Jingle Kiosks Free Sample Distribution

 Word of mouth/Recommendations 8. Whose advice do you generally take while buying toothpaste? Friends Family Individual decision Dentist Shopkeeper/Salesperson

9. I select the toothpaste because it is cheaper than other toothpastes. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

10. The cleansing power of the toothpaste matters a lot. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

11. The brand of the toothpaste is important. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

12. I look for what medicinal value the toothpaste has to offer. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

13. My toothpaste should provide me with optimum quantity of calcium content. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

14. My toothpaste should protect me against cavity. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

15. My toothpaste should provide prevention against tooth decay. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

16. The best toothpaste is which provides long lasting freshness. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

17. The best toothpaste is which provides Whiteness. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

18. I prefer toothpaste that provides Natural Herbs 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

19. I buy combo packs rather than single units in order to save money. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

19. I prefer toothpaste that provides discount often 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

20. I prefer toothpastes which have offers like free toothbrush, extra quantity, freebies etc. 1. 2. 3. 4. 5. Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Rank these brands according to the features Features/Brands Price Cleansing Power Medicinal value Lather Calcium Content Cavity Protection Prevention against bad breadth Anti bacterial protection Flavours Brand Colgate Close Up Pepsodent Babool Dabur Sensodyne

Factor Analysis
Factor Analysis is a general name denoting a class of procedures primarily used for data reduction and summarization. In marketing Research, there may be a large number of variables most of which are correlated and which must be reduced to a manageable level. Relationships among sets of many interrelated variables are examined and represented in terms of a few underlying factors. Factor Analysis is an independent technique in that an entire set of independent relationships is examined.

Factor analysis is used in the following circumstances: 1. To identify underlying dimensions or factors that explains the correlation among a set of variables. For ex, a set of lifestyle statements may be used to measure the psycho graphic profiles of

consumers. These statements may be factor analyzed to identify the underlying psychographic factors. 2. To identify a new, smaller set of uncorrelated variables to replace the original set of correlated variables in subsequent multivariate analyses. 3. To identify a smaller set of salient variables from a larger set for use in subsequent multivariate analysis. For example, a few of the original lifestyle statements that correlate highly with the identified factors may be used as independent variables to explain the differences between the loyal and normal users. In the exploratory research, we obtained 13 attributes which respondents find important while buying toothpaste. Factor analysis was used to club similar attributes into factors so as to know what exactly the consumers look for while choosing toothpaste. The total variance explained is shown in the table below along with the Eigen value at each stage. When the Eigen value drops below 1, we stop the factor analysis process. Since at the 5th stage, the Eigen value became < 1, we stopped the process and concluded that there are 4 factors as per the respondents. By the main questionnaire, we tried to measure peoples attitude towards various attributes that directly or indirectly affect the buying behaviours of people towards buying of toothpastes. Respondents were asked to rate their attitude towards on a Likert scale of 1 to 5, where 1stands for strongly agree and 5 stands for strongly disagree. The data collected was analyzed using SPSS for identifying the significant factors. Factors with Eigen values more than 1 were considered and it explained 84.64% of the total variation.

KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Approx. Chi-Square Bartlett's Test of Sphericity df Sig. .631 598.400 78 .000

Communalities Initial Price Matters Cleansing power matters Brand Matters Medicinal Value matters Calcium Content matters cavity protection healthy tooth &amp; gums Lasting Freshness Whiteness Natural Herbs matters Prefer Combo pack Discount matters Extra 10% for same Price matters 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .876 .816 .909 .747 .777 .876 .848 .728 .747 .932 .946 .866 .935

Extraction Method: Principal Component Analysis.

Total Variance Explained

Component

Initial Eigen values Total % of Variance Cumulative %

Extraction Sums of Squared Loadings Total % of Variance Cumulative %

Rotation Sums of Squared Loadings Total % of Variance Cumulativ e%

1 2 3 4 5 6 7 8 9 10 11 12 13

4.889 2.996 1.561 1.559 .646 .490 .305 .203 .142 .072 .062 .047 .030

37.605 23.043 12.007 11.988 4.973 3.769 2.345 1.559 1.094 .552 .474 .361 .229

37.605 60.649 72.656 84.644 89.617 93.386 95.731 97.290 98.384 98.935 99.410 99.771 100.000

4.889 2.996 1.561 1.559

37.605 23.043 12.007 11.988

37.605 60.649 72.656 84.644

4.042 2.654 2.316 1.993

31.090 20.412 17.813 15.329

31.090 51.502 69.315 84.644

Extraction Method: Principal Component Analysis. Component Matrix

a

Component 1 Price Matters Cleasing power matters Brand Matters Medicinal Value matters Calcium Content matters cavity protection healthy tooth &amp; gums Lasting Freshness Whiteness Natural Herbs matters Prefer Combo pack Discount matters Extra 10% for same Price matters .816 -.318 -.657 -.647 -.517 .025 -.320 .491 .446 -.192 .924 .851 .919 2 -.128 .732 .642 -.491 -.612 .863 .631 .029 .141 -.470 -.059 .144 .076 3 -.086 .277 -.222 .290 .363 .304 .532 -.163 -.047 .737 .276 .339 .269 4 -.431 .320 .132 -.053 .058 -.193 -.253 .678 .726 .361 -.106 .079 -.105

Extraction Method: Principal Component Analysis. a. 4 components extracted.

Rotated Component Matrix

Component 1 Price Matters Cleansing power matters Brand Matters Medicinal Value matters Calcium Content matters cavity protection Prevention against tooth decay Lasting Freshness Whiteness Natural Herbs matters Prefer Combo pack Discount matters Extra 10% for same Price matters .794 -.304 -.747 -.381 -.258 .131 -.035 .170 .157 .087 .947 .843 .928 2 -.299 .811 .532 -.136 -.221 .872 .863 -.150 .011 .037 -.070 .146 .039 3 -.376 .000 -.260 .667 .775 -.304 .080 -.101 -.049 .952 -.092 -.080 -.168 4 -.121 .258 .003 -.372 -.248 -.079 -.310 .816 .849 .128 .190 .357 .208

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations.

Component Transformation Matrix Component 1 2 3 4 1 .862 -.082 .422 -.269 2 -.181 .828 .531 .001 3 -.320 -.537 .728 .280 4 .349 .138 -.099 .921

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Inferences:
Number of Major Factors = 4 84.644 % of total variance is explained cumulatively by the extracted factors. Factor1= FN (Price, Promotional Pack, Offers & Gifts) Cheapness and Sales Promotion Factor2= FN (Brand, Protection against cavity, Protection against tooth decay, cleansing power Prevention against Germs

Factor3= FN (Medicinal Value, Calcium Content, Natural Herbs)Medicinal Content Factor4= FN (Whiteness, Long Lasting Freshness) Cosmetic Functions

Multidimensional scaling
Multidimensional scaling is a set of statistical technique which allows one to: 1. Translate consumers preferences or perceptions towards products or brands into a reduced number of dimensions (usually two or three) 2. Represent them graphically into a perceptual map. Here, the multidimensional scaling is used for the six brands of toothpastes to determinehow the Indian consumers perceive them. It also helped to find out how many dimensionsthe consumers seem to be considering when they think of these brands. Following is the DRAS response obtained from the 30 respondents: Methodology Used- For each of the Attributes, the following matrix taking the median score was drawn up. Features/Brands Price Cleansing Power Medicinal value Brand Calcium Content Cavity Protection Colgate 2 1 4 1 1 2 Close Up 3 2 5 3 3 3 Pepsodent 3 3 4 3 3 3 Babool 4 4 3 4 4 4 Dabur 5 6 3 5 5 5 Sensodyne 6 6 2 6 6 6

Prevention against bad breadth Prevention against tooth decay Promotional aspect Natural herbs

2 3 2 2

2 4 2 2

3 3 3 3

4 4 4 4

5 4 5 5

6 4 6 5

The distance matrix was obtained from each respondent. Features/Brands Pepsodent Sensodyne Colgate Close Up Dabur Babool Pepsodent 0 6.8 3.6 4.7 6.5 6.9 Sensodyne 0 6.3 6.8 5.5 5.3 Colgate CloseUp Dabur Babool

0 4 5.8 5.8

0 6 6.2

0 3.2

Distances Pepsodent Pepsodent Sysnsodyne Colgate CloseUp Dabur Babul .000 1.184 .384 .749 1.308 1.368 .000 .917 1.408 1.072 .778 .000 .595 .937 .986 .000 .877 1.134 .000 .379 .000 Sysnsodyne Colgate CloseUp Dabur Babul

On our prediction Dimension 1- Prevention against Germs (Cleansing power, Prevention against tooth decay etc) Dimension 2- Medicinal Value

Analysis
Through our analysis in this report, we have figured out various important factors through which marketers can target various consumer segments for their brands of toothpastes. With the help of factor analysis, we found out the various factors that a consumer considerwhile buying toothpaste. These factors are: Sales Promotion: The various offers given by companies like extra toothpaste, discounts, freebies, promotional packs have a significant impact on the buying behaviour Prevention against Germs: The protection provided by toothpaste against cavityand bad breath is considered very important by consumers Medicinal Content: The medicinal value provided by the toothpaste along with thecalcium content is considered an important feature for buying toothpastes. Cosmetic Functions: The basic functions provided by toothpastes like cleansing, whitening,freshness etc also influence consumers while buying their toothpastes Then, multi-dimensional scaling was used based on the responses given by two similar setof respondents. One set of respondents were measured on the basis of non-attribute basedquestions while the other set of respondents were measured on the basis of attribute basedquestions. With the analysis, we identified two major dimensions i.e. Prevention Against Germs and Medicinal Content on which consumers perceive each brand.