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Research Methodology

Project Report
A study on the influence of price as the
most important attribute in the consumer
behavior related to the purchase of soap

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Table of contents:

Contents Page no.

Abstract 6

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A. Introduction 7

1. Problem statement

2. Research objectives/Hypotheses

3. Rationale for approach

4. Value in terms of possible outcomes

5. Limitations

B. Research Methodology 8

1. Research design and questions

2. Data collection

3. Questionnaire format

4. Research schedule

Literature Review 10

Analysis of Results 11

Summary 14

Conclusion 14

Scope for further studies 14

List of figures:

Fig 1 Ranking of soap attributes in purchase of soap

Fig 2 Ranking of price by customers while purchasing soap

Fig 3 Price sensitivity of consumers buying soap

Fig 4 Soap price sensitivity difference in males and females.

Fig 5 Knowledge of hidden pricing among consumers and change in


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purchase behavior

Abstract

Our research project studied the influence of price as the major factor in the purchase behavior of
Indian consumers by studying the purchase behavior of soap in a sample of students. As price is
traditionally considered as one of the most important of 4 P’s of marketing, and a review of past
literature showed an existing link between price and the purchase behavior, the topic was chosen
to study. A convenient sample of 40 students was asked to respond to questionnaire containing
multiple choice, scale and dichotomous questions with a focus on price of soaps. The results
were analyzed with the emphasis on finding the important attributes of soap considered by
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consumers and how they ranked of price among the most important attributes in soaps. Gender
analyses of the results were also done to find the change of the perception of price among men
and woman. Respondents were also tested on their knowledge of the phenomenon of hidden
pricing. The results were analyzed and were plotted in graphs to arrive at the proof for testing our
hypothesis.

A. Introduction

1. Problem Statement

Consumer behavior is a complex, dynamic, multidimensional process, and all marketing


decisions are based on assumptions about consumer behavior. The 4 P’s (Price, promotion,
product and place) are considered to be the marketing-mix variables that influence the consumers
of a product. From a seller’s view, these four are the marketing tools available to influence
buyers. From a buyer’s point of view, each of these marketing tools is designed to provide a
customer benefit.

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Out of the marketing-mix variables, traditionally, price has been the major determinant of
a buyer’s choice. This is still in case with large segments of buyers across the globe. Although
non-price factors have gained a lot of importance in the last few decades, price still remains an
important factor in determining sales and profitability.

Price exerts its influence in FMCG (Fast moving consumer goods) and marketers have
tried to introduce new factors such as superior packaging, better advertisements, and increased
number of choices to reduce the influence of price. The increased efforts are more visible in this
product category as there is more competition for all segments in this market. Despite the
extensive research, marketers still have poorly understood pricing and pricing strategies have
become very important in determining the success of a product and a company.

2. Research Objectives/Hypotheses

The objective of this research is to provide the insight into the degree of influence of
price as the most important factor in the purchase decision of soap by a consumer, in order to
provide a clear insight into the effect of price and the change of price in product sales which will
help marketers to develop better pricing strategies and to plan for the optimum mix of the
marketing-mix variables.

Null hypothesis: Price is the most important attribute that influences the purchasing decision of
soaps.

Alternate hypothesis: Price does not play a significant role in the purchase decision of soaps.

3. Rationale for Approach

The study started with collecting and reviewing existing literature in consumer behavior
to ascertain the various factors of influence. Pricing related studies are also taken into account to
find and conclude the presence of a research gap in studies relating FMCG sector (soaps in
particular) and price to the behavior of consumers in southern India.

4. Value: in terms of Possible Outcomes

The outcomes will provide the answer to the research questions of whether price plays a
role in consumer’s minds while evaluating soap as a product and how much of an influence does
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price play in the buying decision. It will also give us an insight into whether price has the effect
of overcoming customer loyalty and change habits and buying pattern.

5. Limitations of the study

1. The sample was fairly homogenous in terms of education level and income level.

2. The shopping behavior of the sample was not varied.

3. The study did not focus on the discount offers given on soaps.

B. Methodology/Approach

1. General Research Design

2. Specific Research Questions

1. What are the factors that play a role in consumer’s decision of purchase of soaps?

2. Is price the most important attribute on which the consumer bases his purchase
decision?

3. Will a change in price of the soap influence the buying decision?

4. Will a price change lead to shift in the customer loyalty to particular brand?

3. Data Collection

• Population – The shopping population of the campus and surrounding areas

• Sample Design - 40 (Convenience sample).

• Measurement methods - Survey using personal, structured questionnaire composed of


be multiple-choice, dichotomous, scale questions.

4. Questionnaire Format:

This Questionnaire was structured in such a way that it includes the profile of the
consumer and the following factors related to the consumer behavior.

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1. Product/brand attributes

2. Buying pattern/behavior

3. Purchase frequency/ quantity

4. Price of the product

5. Influence of price on the purchase

6. Shift in customer loyalty due to price change

5. Research Schedule:

Task Proposed date of completion


Collecting responses to questionnaire 30/11/2009 & 1/12/2009
Interpreting the responses from the questionnaire 03/12/2009
Discussion regarding analysis of data using statistical tool 05/12/2009
Application of the statistical analysis to the data collected. 09/12/2009
Forming the results and conclusion 11/12/2009

C. Literature review:

• An Exploratory Study of Sales Promotion Activities in Toilet Soap Category: An


Insight into Consumer and Retailer Perceptions - Kureshi Sonal and Vyas Preeta.

In this research paper, an attempt has been made to examine the nature of sales
promotion activities in toilet soap category in India, study retailer perceptions with respect to
these activities and also get an insight into consumer perceptions of these activities. Findings
indicate that with respect to the nature of the schemes, premiums (free gifts) were found to be the
most frequently used in both premium and popular toilet soap category, followed by price offs.
Retailers’ perceived price offs had relatively greater impact compared to any other forms of sales
promotion. In line with the retailers’ perceptions, the findings of consumer perceptions indicated
that price offs were the most preferred type of sales promotion.

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• Supplier Attributes That Impact Institutional Buying Behavior - A study on FMCG
supplies to Hotel Industry - Githa S Heggde and D. Sudharani Ravindran.

The study on the functional gap implied how and why a particular buyer or a group
reacted to the decisions of the producer in selecting a particular product and its utilization. The
study of this functional gap proved that effective positioning of the product made the market
place work better so that the buyers make better decisions to buy the product. The study involved
the consumer involvement in the decision making process through the involvement theory. This
theory is about consumer learning, which presumes that the degree of interest in purchase of an
item depends upon the risks involved. The involvement is also dependent on nature of the
product or service and the psychology of the customer.

• Consumer buying behavior in Asian markets - Mark Speece.

The findings of this study indicated that Asian middle-class was primarily value-
orientated. The specific criteria for choice that Asian consumers used was different for various
product characteristics. There was strong value orientation for product quality issues and price.
Asian consumers looked more closely at product characteristics to ensure a purchase was worth
the price they were being asked to pay. Consumers 'balance off' quality and price, which means
that they wanted good products, but not necessarily the best which they consider too expensive,
or the cheapest which they do not trust in quality terms. Within that, how consumers across
Asian markets reach their decisions is not so different from how western consumers reach theirs.

• Consumer Buying Behavior of, and Perceptions towards, Retail brand baby
products - Adelina Broadbridge and Henry Morgan.

For some consumers, retail brand products were regarded as superior to well known
manufacturers brands (Gallup, 1997). A successful brand was perceived as possessins
sustainable unique added values (de Chernatony and McDonald, 1998) or representing a variety
of ideas and additional attributes (Gardner, 1955)and this was extended to many retail brand
products. A higher risk tolerance usually occurred when the consumer required greater assurance
about quality rather than price although for high priced items, social and performance risk
slowed the growth of retail brands.

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D. Analysis of results:

Fig 1. Ranking of soap attributes in purchase of soap

Finding 1: Contrary to the assumption, Quality was ranked first by the majority of the people.

Fig 2 Ranking of price by customers while purchasing soap

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Finding 2: 41.46% of the respondents ranked price as the second most important attribute they
consider while purchasing soap.

The price sensitivity of the sample was checked. There were asked to identify for which price
range increase they would change their brand. As shown in the bar chart below, most people said
that they would change the brand only for a price increase of greater than 15%.

Fig 3 Price sensitivity of consumers buying soap

Segmenting the sample on the basis of the gender, the price sensitivity was checked again. It
was seen that females showed greater price sensitivity towards higher levels of price increase,
while the males showed greater price sensitivity at lower levels of price increase.

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Fig 4. Soap price sensitivity difference in males and females.

Another aspect that was evaluated was if the respondents were aware of the phenomenon
of hidden pricing in soaps. While a majority, i.e., 85% knew about hidden pricing, a
surprising percentage of only 68% said that they would change their brand due to hidden
pricing.

Fig 5. Knowledge of hidden pricing among consumers and change in purchase


behavior

E. Summary:
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1. After the analysis of results, we come to conclusion to reject the null hypothesis and
accept the alternate hypothesis.

2. Hence, “Price is not the most significant factor in the purchase decision of soaps. “

We can also see a number of other interesting conclusions – We can see that in the purview
of soaps based on the considered sample, they are

• Majority of the respondents felt that quality is a stronger deciding factor than price.

• Most of the respondents were price sensitive only to the higher levels of price increase.

• Females are more brand loyal than males in the lower price ranges. They change brands
only for a higher price increase.

• Though a majority of the respondents knew about the phenomenon of hidden pricing,
some of them still don’t view it as a reason strong enough to change brands.

F. Conclusion:

 Null Hypothesis has been rejected and Alternate Hypothesis has been accepted.

 Thus, Price is not the most significant factor in the purchase decision of soaps.

G. Scope for further studies:

 The sample considered could be of a larger size for more reliability and accuracy.

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 The study can be conducted on samples that are segmented demographically to ascertain
the consumer behavior better.

 The study can be successfully extended to the various FMCG products.

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