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Marketing problems of edible oil industry in the state of
Tamilnadu
Dhinesh babu.S 1 , Venkateshwaran.P.S 2
1 Professor, JJ College of Engineering and Technology, Tiruchirappalli
2 Lecturer, PSNA College of Engineering and Technology, Dindigul
venkateshpsna07@gmail.com
ABSTRACT
1. Introduction
The edible oil need in Tamil Nadu is practically met by the branded oil and the remaining part is
met by unbranded oil. Since the number of oil mills producing branded oils is growing, there is a
hectic competition in the market. The marketers rely much on their marketing strategies and also
their competitors’ strategies. The consumers’ awareness, exposure and knowledge of edible oils
are also growing because of the level of education, urbanization and also the vast development in
communication facilities. Since branded oil is supplied only by large units, they try to capture the
market. The business of small oil units is under a cloud. But these small firms focus on their own
consumers and they are very weak in analyzing the consumer behaviour in the edible oil market.
The small firms do not realize the importance of marketing and marketrelated activities in the
edible oil market. Even though, some small firms have a higher exposure to the marketing of
edible oil, their capital is not a supportive element to implement their own marketing strategies.
Both the small and large firms face many problems in marketing their products since the
consumer behaviour is highly unpredictable. Especially, after globalization, the marketers realize
the importance of market orientation, marketing strategies and practices in the edible oil market.
2.1 Research Design
Descriptive research method has been used in this present study. The survey research method, a
branch of descriptive research used for obtaining data from respondents (owners) by asking a
variety of questions, was selected. The present study consists of a prestructured methodology,
with limited objectives and data collection forms. Since the study focuses on various marketing
aspects of edible oil from the manufacturers’ point of view, it has become descriptive in nature.
2.2 Collection of Data
The data related to marketing of edible oils were collected through interview schedules. The
variables related to marketing of edible oils, market orientation among the owners, marketing
strategies and marketing problems were identified with the help of previous studies, the view of
experts and experienced owners in the marketing field.
2.3 Sampling Procedure
Since the study focuses on the edible oil manufacturers at various districts in Tamil Nadu, the oil
manufacturers from the Southern districts of Tamil Nadu were selected by the application of
stratified proportionate random sampling. Out of the total oil manufacturing units in the southern
districts (732 units), 50 per cent of the total units are treated as the sample size of the units. The
districts in South Tamilnadu are treated as strata. The determined sample size of 366 units is
distributed among various districts according to the proportion of total units in each district to the
total units.
Limitations of the Study
1) The primary data collected from the oil manufacturers is highly based on their records.
Many of the manufacturers replied to the questions only from their memory. Hence, it is
subjected to memory bias.
2) Only edible oil units in Southern districts of Tamil Nadu were taken into consideration.
Units in other areas of Tamil Nadu were excluded since the number is negligible.
3) The applied statistical tools in the present study may be subjected to their own limitations.
3. Marketing Problems
The strategic orientation to its environment is of paramount importance for the success of units
in industry (Miller and Friensen, 1983). The environments are heterogeneous and are
characterized by a range of factors the firm needs to address (Dess and Beard, 1984).
Environmental dynamism can be conceptualized as the rate of change and the degree of
instability of the environment (Tan and Li, 1996). The marketing strategy is essential to focus on
the changing needs of consumers within a firm’s ability to satisfy them. Marketing strategy is the
adoption of policy that meets a marketing problem.
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4. Analysis and Interpretation
Table 1: Marketing Problems Faced by the Units
4.1 Important Marketing Problems
The important marketing problems in the edible oil units are analyzed with the help of factor
analysis. The score on listed sixteen marketing problems has been included for the factor
analysis. Initially, the test of validity of data for factor analyzed has been examined with the help
of KMO measures and Bartlett’s test of sphericity.
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Both these two tests satisfy the conditions for validity of data for factor analysis. The factor
analysis results in four important problems namely finance customer, competitors and
intermediaries. The important problems, its eigen value and per cent of variation explain by these
important problems are given in Table 2.
Table 2: Important Marketing Problems in Edible Oil Market
Table 3: Problems in each Important Marketing Problem
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2. Customer Demand for Customer Higher Requireme Frequent 0.7304
products knowledge switching nt of change in
(0.8146) on behaviour variety of taste of
products among Products consumer
(0.7302) customers (0.6182) (0.5508)
(0.6911)
Figures in parentheses are factor loadings.
The included problems in ‘finance’ explain it to the extent of 83.42 per cent. The important
problems in ‘finance’ are unremunerative price and heavy marketing margin since its factor
loadings are 0.8969 and 0.8144 respectively. The six problems in ‘customer’ explain it to the
extent of 73.04 per cent. The important problems are demand for products and customer
knowledge on products. The problems in ‘competitors’ explain it to the extent of 69.61 per cent.
The most important problem in ‘competitor’ is competitors’ strategy since its factor loading is
0.7943. The problems in intermediary explain it to the extent of 71.19 per cent. The most
important problem in the ‘intermediary’ is ‘consistent searching of agents’ since its factor
loading is 0.8146.
4.3 Perception on Important Marketing Problems
The respondents’ perception on important marketing problems in edible oil industry is analyzed
with the help of the score on the four important problems (factors) in marketing of edible oil. The
score of the four factors is drawn from the mean score of the various marketing problems in each
factor. In order to analyze the significant difference among the two groups of owners regarding
their perception on important marketing problems, the ‘t’ test has been administrated. The
resulted mean of score of the four important problems and its respective ‘t’ statistics are
exhibited in Table 4.
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Table 4: Perceptions on Important Marketing Problems among the Units
The highly perceived problems (factors) among the owners in small units intermediaries and
finance since the mean scores are 3.8675 and 3.8386. Among the owners in large units, these are
competitors and finance since their respective mean scores are 3.9509 and 3.1194. Regarding the
perception on important problems, the significant difference among the two group of owners
have been noticed in the perception all four important marketing problems since their respective
‘t’ statistics are significant at five per cent level.
4.4 Association between profile of owners and their perception on important Marketing
Problems
The profile of the owners and their perception on important marketing problems has been
examined with the help of one way analysis of variance. The included profile variables are age,
level of education and occupational background of the owners. The resulted ‘F’ statistics is
presented in Table 5.
Table 5 Association between Profile of Owners and then Perception on Important
Marketing Problems
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4.5 Association between organizational variables and the Owners Perception on Problems
The association between organizational profile and the owners’ perception on important
marketing problems have been analyzed with the help of one way analysis of variance. The
included organizational variables are years of experience, nature of ownership, number of
products dealt in, number of employees worked, total investment, sources of capital and monthly
turnover. The resulted ‘F’ statistics are shown in Table 6.
Table 6: Association between Organization variables and Perception on Important Marketing
Problems
Regarding the perception in ‘finance’ the significantly associating organizational profile
variables are years of experience, number of exmplyees worked, total investment, sources of
capital and monthly turnover whereas regarding the perception on ‘customer’ related problem,
these organizational profile variables are nature of ownership, number of employees worked,
sources of capital and monthly turnover. The significantly associating profile variables regarding
the perception on ‘competitors’ oriented problems are years of experience, number of products
dealt, number of employees worked, total investment, sources of capital and monthly turnover
whereas regarding the perception on ‘intermediaries’ problem, these are number of employees
worked, sources of capital and monthly turnover.
5. Suggestions and Recommendations
The owners of the edible oil units should be trained to get more marketing knowledge to market
their products. They should think globally and act locally. It implies that their product should be
highly qualitative and also suitable to the local consumers.
The small units are unable to compete with large units because of their week financial strength.
Hence, they are advised to form clusters of small units and produce branded oil with higher
quality. Only then they can easily compete with the giants in the edible oil market.
Nowadays, the attractive packaging plays an important role in the marketing of edible oils. All
types of manufacturers should realize this fact and try to sell their products in attractive packets.
It is not only attractive but also is reachable to all customers’ segments.
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Since the profit of the edible oil units highly rests on the number of outlets covered by
established marketing system and also logistics management, the owners of small and large units
should be properly trained to learn the abovesaid aspects. Only then, they can market their
products in a under market. They should realize that they can earn profit through sales
maximization. Hence, they are advised to boost their sales through many promotional and
advertising techniques.
The important marketing problems in the edible oil market are finance, customers, competitors
and intermediaries. The owners of the small and large units have to remember that these will
occur in their businesses. Since the marketing problems are permanent in the market, they cannot
avoid them but they can manage them with the help of application of scientific principles of
management.
6. References
1. Achaya K.T., 1990. “Oilseeds and Oil milling in India: A Cultural and Historical
Survey”, Oxford and IBH Publishing Co. Pvt. Ltd., New Delhi.
2. Barker C.W. and Anshen M., 1987 “Modern Marketing”, Mac Millan Press Ltd.,
London.
3. Centre for Monitoring Indian Economy, Agriculture, August 1977, New Delhi.
4. David A. Revzan, 1961. “Marketing Organization through the Channel – Wholesale
and a Marketing Organization”, John Wiley and Sons, New York.
5. Kundu Dr. M.K., 2000a. “Edible Oil Scenario”, Oil and Fats Review, January –
February 2000, Vol. XII, No. 10 & 11.
9. Government of Tamil Nadu, 1991. “Status Paper on Edible Oil in Tamil Nadu”, The
Committee to Overview the Edible Oil Scenario in Tamil Nadu, Department of Civil
Supplies and Consumer Protection.
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