AMMR PROJECT REPORT

on

YOUNG CONSUMER PERCEPTION OF AYURVEDIC

PRODUCTS IN FMCG MARKET

Group 3
Adarsh R (PGP/20/ 367)

Shashank Shekhar (PGP/20/181)

Shashank Kaushik (PGP/20/180)

Sai Kiran Pathipaka (PGP/20/336)

Vidyasagar Diyavath (PGP/20/324)

INTRODUCTION

A decade ago it was modern trade which changed the way Indians shopped. Then came e-
commerce and online shopping. And this time around it is Patanjali Ayurveda – the latest
force to disrupt the branded consumer goods sector. Its raging popularity and strong brand
resonance have some incisive lessons for the Indian fast-moving consumer goods (FMCG)
sector.

FMCG is a USD 50 Billion industry once dominated by multinational behemoths – the likes
of Unilever, P&G, Nestle, Colgate - Palmolive, Johnson & Johnson. But Patanjali Ayurveda
Ltd. (PAL), today, is arguably the fastest growing company in the Indian FMCG sector. It has
grown more than ten times in revenue in last five years. In the recent times, we have noticed
that many FMCG companies are introducing many Ayurvedic products in the market.

Patanjali has reinforced that there is scope for disruption at any point in the industry. Despite
the high clutter & penetration and subdued consumer demand, Patanjali products could make
a mark. “This shows that there is always scope for creating new moats – which are not easy
to replicate or compete with”. Emergence of Patanjali helps keep the established players on
their toes and provides the consumer the benefit of more efficacious products at lower prices.

Religions around the world are believed to have sets of laws and rules that impact on
consumer’s behaviour ritualistically and symbolically. In fact, religion not only refers to
belief biding the spirituality of human to a supernatural being, but it is mainly a system of
faith and worships that impact on the consumer’s individual faith. On the other hand,
consumer’s purchase decision is dependent on many different factors for example, brand
equity brand loyalty. Furthermore, consumer’s religiosity, spirituality and animosity are also
influencing willingness of consumers to purchase foreign products from companies based in
or associated with an opposed country. Previous studies explored that the religiosity,
animosity, spirituality and country of origin concepts are still a new term in a developing
country like Bangladesh which have given limited attention by the previous researchers
(Allport and Ross, 1967; Delener, 1990; Esso and Dibb, 2004).

What are the underlying constructs that affect the buying behaviour of customers towards
FMCG products. In order to understand the purchase triggers of customers while buying
FMCG products, we designed a questionnaire and collected responses from approx. 80 young
consumers below 30 years of age.
LITERATURE REVIEW

Religion is an important foundation of a culture which influences consumers’ habits, attitudes

and values. Religion influences a person’s emotional experience, behaviour, thinking and
psychological well-being. These emotions create preferences which lead to our decisions
including purchase decisions. This has led to the emergence of a new market and attracted the
attention of marketers and researchers. Researchers have tried developing a conceptual
framework to understand the effect of religion on consumer behaviour by delineating religion
as a multi-dimensional construct with beliefs, rituals, values and community as its dimensions
(Mathras, et al, 2016).

Spirituality is different from religion as it includes a sense of association to something superior

than oneself, and it typically engages with a search for meaning in life. It is about mind-body
harmony rather than any institutionalised religious practice. Spirituality was found to have a
big impact on consumer perception creation especially with regard to ayurvedic products
(Arora, et. al, 2016). Within B2B markets, spirituality has been found to be a relevant construct
in relationship marketing. The results indicate that spirituality is significantly related to
perceptions about communication, commitment, and shared valuesfor both sets of participants
in a B2B environment (Standifer, 2010). Whether such a relationship exists between brands
and consumers in B2C environment needs to be explored. Research on consumers of products
marketed on the basis of spirituality classifies spirituality into four distinct types in the neo-
capitalistic era – namely anti-capitalistic, reformist, consumerist and capitalist. (Carrette and
King, 2004). Studies show that identifies the typical consumer to be middle aged females,
easily influenced by reference to health benefits, improvement of self and susceptible to social
media marketing (Basci, 2015). Whether such a conclusion is valid in the Indian context needs
to be explored.

Economic nationalism has been identified as a critical component of nationalistic sentiment,

influencing cognitions, attitudes, evaluation and purchase intentions. Scales to measure such
influence has been developed (Cheah and Phau, 2015). In case of multinational products
produced by workers of different nations in America, the basis of nationalistic tendencies was
found to be concern for supporting America and American economy rather than any perceived
quality differences (Levin and Jasper, 1996). Further research has concentrated on
disentangling the interplay of national identity, ethnocentrism and country of origin. Country-
of-origin (COO) of products has been shown to affect consumer choice when the origin has a
stereotypical association with particular products. Consumers with a low national identity are
positively affected by a high product ethnicity of foreign products, this effect vanishes with
increasing levels of national identity (Fischer and Roth, 2017). Effect of invoking national
identity in ethnic minorities through a prime concluded that effect of national identity activation
on evaluation of ads was greater among Asian Americans than among Caucasian Americans
(Yoo and Lee, 2016) suggesting variation in the role of national identity’s influence across
ethnic groups. This suggests that results cannot be generalised and a specialised study has to
be undertaken in the Indian context.

Studies about the effect of spirituality, religiosity and national identity in young consumer
perception of FMCG goods results indicate that a strong significant relationship exists between
animosities and young consumers purchase intention of foreign made fast moving consumer’s
goods. The study restricted to Bangladesh this study also observed that Bangladeshi young
consumers were sensitive to the product’s country-of-origin and seek out this information when
evaluating the product for their potential purchase (Rahman, 2012). The effect of increased
concentration on specific religious communities as target group has been studied drawing upon
social identity theory. One such study concentrates on the use of religious labels on food
product (like Halal and Kosher) and its effect on product and brand evaluation by in-group and
out-group consumers. The findings indicate that the perception of religious labels on food
packaging is influenced by the attitudes towards the religion and the brand. Results have shown
that in-group identification reflected positive psychological attachment and felt closeness
towards one’s in-group, however this did not result in discrimination against out group.
Consumers who have either a positive or negative attitude towards a religion tend to apply their
attitude to the religiously labelled product. Further, consumers who are strongly attached to
their country and culture (reflected by high nationalism) showed lower recognition and
understanding of the religious labels. (Rauschnabel et. al., 2015). This shows that once, the
importance of spirituality and national identity has been established in the Indian context
further research on the strength of these relationships and moderating nature of these constructs
need to be explored.
ANALYSIS AND RESULT

Exploratory Factor Analysis:

The sample size used for research is 78. The variables used in exploratory factor analysis are
all continuous variables. We proceeded to check the quality of data for EFA. This is usually
determined by Kaiser-Meyer-Olkin measure of sampling adequacy and Bartlett’s test of
sphericity. The following are the results

Bartlett’s test of sphericity is significant. Therefore, the null hypothesis that the population
correlation matrix is an identity matrix is rejected. The approximate chi-square statistic is
744.685 with 78 degrees of freedom which is significant at the 0.05 level. Therefore
appropriateness of factor analysis can’t be questioned as of now. Also, the KMO measure of
sampling adequacy is 0.791 which is greater than 0.5. Hence the correlations between pairs
of variables can be explained using other variables which are considered as latent variables.

Method of factor analysis used is principal component analysis. Number of factors selected is
based on Eigen value method. The details are
The total number of factors selected are four which explain 82% of the total variance. Factor
matrix contains factor loadings or coefficients which represent the correlations between factors
and variables. As few variables were loading on multiple factors, factor matrix is transformed
into a simpler one by rotating the factor matrix using varimax rotation procedure. Rotation
doesn’t affect the communalities. The rotated factor matrix is presented below

Based on the above pattern matrix we can up with variables and their corresponding factors.
Factors were named based on the variables. Both the factors are variables are as follows

1. Religiosity
a. Religious beliefs lie behind the whole approach to life
b. Performing Regular Prayers
c. Watching religious programs
d. Religious affiliations

2. Spirituality
a. Believe in the spirit of life
b. Believe in life after death
c. Confidence on religious priest
 3. Animosity
a. Dislike people from certain countries
b. Avoid products made in certain countries
c. Never buy products from countries I hate

4. Country of Origin
a. Prefer to know the COO of the products you buy.
b. It is always best to buy western country products
c. COO important to evaluate FMCG products

Our main intention is to check the purchase behavior of young consumers towards ayurvedic
FMCG products. Based on the factors observed we begin to test the four following null
hypothesis:

H1: There exists a relationship between religiosity and purchase behaviour towards Ayurvedic
FMCG products

H2: There exists a relationship between spirituality and purchase behaviour towards Ayurvedic
FMCG products

H3: There exists a relationship between country of origin and purchase behaviour towards
Ayurvedic FMCG products

H4: There exists a relationship between animosity and purchase behaviour towards Ayurvedic
FMCG products

To test these hypotheses and also any mediation effect if present, we proceeded ahead with
confirmatory factor analysis.
Confirmatory Factor Analysis/Structural Equation Modelling:

Based on the hypothesis generated, we were able to come up with a Structural equation model,
the path diagram for the same can be seen below:

Here,

R Religious Independent
R1 Religious beliefs lie behind the whole
approach to life
R2 Performing Regular Prayers
R3 Watching religious programs
R4 Religious affiliations
S Spiritual Independent
S1 Believe in the spirit of life
S2 Believe in life after death
S3 Confidence on religious priest
A Animosity Independent
A1 Dislike people from certain countries
A2 Avoid products made in certain countries
A3 Never buy products from countries I hate
 COO Country of Origin Independent
COO1 Prefer to know the COO of the products
you buy
COO2 It is always best to buy western country
products
COO3 COO important to evaluate FMCG
products
CB Consumer Purchasing Behaviour Dependent
CB1 Buy products aligned to my religious
beliefs
CB2 Buy products from a country I do not like

Note: e22, e23, e24 are the error variables attached to S, CB, COO respectively, as these are
endogenous variables.

From regression weights its evident that, Spirituality is not a significant variable which explains
the consumer purchasing behaviour, so is the case with Country of origin.
But religiosity is explains Spirituality and Animosity explains country of origin, hence, we can
conclude that, both spirituality and Country of Origin are mediating variables.

From Standardized regression weights as well, it’s evident that all the estimate values are more
than threshold 0.7, except for S to CB and COO to CB, which establishes our previous
explanation.

Model Fit:

Absolute fit Measure TLI = 0.873

Incremental fit Measure CFI = 0.898
Parsimonious fit Measure PCFI = 0.719
𝑪𝒎𝒊𝒏
= 2.057
𝑫𝒇

Badness of fit RMSEA = 0.117

From Model Fit measures it’s evident that the model is not a right fit for model created, but if
there is a covariance identified between the error terms which contributes for the maximum
parity, these values can be significantly improved.

𝐶𝑚𝑖𝑛
Value is well within the desirable limits of 2-5
𝐷𝑓

Parsimonious fit measure is more than the threshold limit of 0.6.

The Badness fit measured by RMSEA is exceeding the threshold of 0.08, reason being the
sample size taken for this analysis is only 78 which is not adequate, but improving the sample
size would improve the RMSEA output.

DISCUSSION

After analysis the given set of data, we found that although religiosity has an effect on the
spiritual beliefs of the person, the spiritual beliefs are not a driving factor for making a purchase
decision. Also, it was observed that the religious beliefs itself has an impact on the buying
behaviour of the young consumers. The young consumers do value their religious beliefs and
morality. One possible explanation of this behaviour could be because India has a mix of
various religions and people associate their various traditional beliefs and values of their
respective religion in line with the modern health conscious living style. The other possible
explanation could be the effect of sociological influences on young consumers where they are
encouraged to buy ayurvedic products. Ayurveda has been in our tradition since ages and that
has a positive impact on the mind set of young consumers.

However, the research does not confirm the effect of spirituality on buying behaviour of
young consumers while purchasing fast moving consumer goods. Hence, although the young
consumers have religious beliefs, they don’t give much importance to spirituality. There could
be other underlying reasons such as affordability or health benefits which might be driving
these young consumers for buying the ayurvedic products.

Secondly, it was observed that the young consumer is not concerned about the country of origin
of the product as long as it is fulfilling their need and the quality meets their expectations. It
was also observed that the consumers are highly ethnocentric because of the historical
backgrounds with other countries. Hence, if the consumer considers a country to be hostile, it
has a direct impact on the purchase behaviour of the consumer. They do not prefer to buy a
product manufactured in a country which has hostile or not so good relation to the native
country of the consumer. As a result, it has been observed that young consumers are very
sensitive and seek out information while evaluating the product when they are making decision
for purchasing a FMCG ayurvedic product. In this research, the key determinants which
impacts the purchasing behaviours were identified. It was found that FMCG products is not
only consisted with evaluation of the product but also the attitude towards the product which
ultimately has an influence on their future buying decision.
Hence, looking at the above results, the managers must take these variables into account while
developing the marketing strategies for the growing young consumers of FMCG products.
Since, the research has been only focussed on Indian consumers, it could be recommended that
the international marketers should also pay attention to the religious aspects apart from other
purchase triggers like price and product quality. It is suggested that firms should use religious
elements to attract more number of young consumers. The managers should use marketing
tactics to connect the brand image of the product with honesty, integrity, social responsibility
and religious elements.

LIMITATIONS

The sample size taken into consideration for this research was small as the number of responses
were limited to approximately 80, so the RMSEA value was observed to be above 0.08. Hence,
the model fit was not in the acceptable limit.

Secondly, majority of the respondents in this survey belonged to only one segment i.e. young
population below 30 years of age. Hence, this research does not take into consideration the
elder population who are more inclined to religious and spiritual beliefs. They have more
impact of culture and history and hence are one of the crucial target segment for the Ayurvedic
FMCG market. But this research is not focussed on their preference and insights. Also, this
survey was limited to a single country for analysis i.e. India. Hence, the findings of this research
cannot be generalized to all the geographies.

FUTURE RESEARCH

This research can be extended to older consumers (>30 years) to study the effect of spirituality
and country of origin of the products on their buying behaviour of Ayurvedic FMCG products.
Also, this research could be extended to different geographies in order to study the effect of
religious beliefs and culture on their buying behaviour of Ayurvedic FMCG products.

Once, research findings are obtained for all the age groups and geographies, those could be
used in designing the marketing campaigns, brand advertisements and promotion strategy for
these Ayurvedic products which could be altered in order to target the specific segment and
geography.
BIBLIOGRAPHY

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APPENDIX

QUESTIONNAIRE