MAJOR PROJECT REPORT

ON
Consumer’s changing behavior with respect to the
packaging of the products in the FMCG sector

Submitted in partial fulfillment of the requirements

for the award of the degree of
Bachelor of Business Administration (BBA)

To
Guru Gobind Singh Indraprastha University, Delhi
Guided By: Ms. Shikha Shokeen
Submitted by: Paras Gupta | Roll No. 40221201717

Maharaja Surajmal Institute

Recognized by UGC u/s 2F
AFFILIATED to GGSIPU
C-4 Janakpuri, New Delhi
Batch (2017-2020)
Certificate

I Mr. Paras Gupta, roll no. 40221201717, certify that the project report/dissertation (BBA
311) entitled Consumer’s changing behavior with respect to the packaging of the
products in FMCG sector, is done by me at Institute of Innovation in Technology &
Management The matter embodied in this project work has not been submitted earlier for the
award of any degree or diploma to the best of my knowledge and belief.

Signature of the Student

Date:

Acknowledgment
I certify that the project report/dissertation (BBA 311) entitled Consumer’s changing
behavior with respect to the packaging of the products in the FMCG sector, done by
Paras Gupta, roll no. 40221201717 is done under my guidance.

Guide:
Professor Shikha Shaukeen
23 March 2020

Countersigned
(Director / Project Coordinator)
 TABLE OF CONTENTS

CHAPTER CHAPTER NAME

NO.
1. INTRODUCTION
1.1 Introduction
1.2 Objectives
1.3 Research methodology
1.4 Limitations

2. PROFILE OF THE STUDY

3. REVIEW OF LITERATURE

4. ANALYSIS AND INTERPRETATION

3.1 Data and data interpretation

5. CONCLUSION AND RECOMMENDATIONS

4.1 Conclusion
4.2 Recommendation

6. ANNEXURE: QUESTIONNAIRES

7. BIBLIOGRAPHY

CHAPTER 1
 Introduction

THE FMCG SECTOR

The Fast-moving consumer goods (FMCG) sector is the 4th largest sector of the Indian
economy. It is characterized by high turnover consumer packaged goods, i.e. goods that are
produced, distributed, marketed and consumed within a short period. FMCG products that
dominate the market today are detergents, toiletries, tooth cleaning products, cosmetics, etc.
The FMCG sector in India also includes pharmaceuticals, consumer electronics, soft drinks
packaged food products and chocolates. Since the sector encompasses a diverse range of
products, different companies dominate the market in various sub-sectors. However, some of
the top FMCG companies in India are- Dabur (60%), Colgate (54.7%), Hindustan Unilever
(54%).
 MARKET SIZE

The retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion
in 2017, with modern trade expected to grow at 20 percent - 25 percent per annum, which is
likely to boost revenues of FMCG companies. Revenues of the FMCG sector reached Rs 3.4
lakh crore (US$ 52.75 billion) in FY18 and are estimated to reach US$ 103.7 billion in 2020.
The sector witnessed a growth of 16.5 percent in value terms between July-September 2018;
supported by moderate inflation, increase in private consumption and rural income.@
The FMCG sector is expected to grow at 9-10 percent in 2019. Rise in rural consumption to
drive the FMCG market. It contributes around 36 percent to the overall FMCG spending.
FMCG urban segment witnessed a growth rate of 8 percent whereas the rural segment grew
at 5 percent in the quarter ended in September 2019.
 DEVELOPMENTS

The government has allowed 100 percent Foreign Direct Investment (FDI) in food processing
and single-brand retail and 51 percent in multi-brand retail. This would bolster employment
and supply chains, and also provide high visibility for FMCG brands in organized retail
markets, bolstering consumer spending and encouraging more product launches. The sector
witnessed healthy FDI inflows of US$ 15.36 billion, from April 2000 to June 2019.
Some of the recent developments in the FMCG sector are as follows:

● In November 2019, ITC Ltd acquired a 33.42 percent stake in Delectable

Technologies, which is a vending machine start-up.
● India’s first kids cooking oil launched by Mother Sparsh in 2019.
● In June 2019, ITC launched dairy beverage range Sunfeast Wonderz Milk in four
variants
● In November 2019, Santoor launched Santoor Deo pocket perfumes exclusively for
West Bengal.
● Nestle plans to invest Rs 700 crore (US$ 100.16 million) to open a new plant in
Sanand for Maggi.
● ITC to invest Rs 700 crore (US$ 100 million) in food park in Madhya Pradesh
● Patanjali will spend US$743.72 million in various food parks in Maharashtra, Madhya
Pradesh, Assam, Andhra Pradesh, and Uttar Pradesh.
● Dabur is planning to invest Rs 250-300 crore (US$ 38.79-46.55 million) in FY19 for
capacity expansion and is also planning to make acquisitions in the domestic market.
● In May 2018, RP-Sanjiv Goenka Group created a Rs 1 billion (US$ 14.92 million)
venture capital fund to invest in FMCG start-ups.
● In August 2018, Fonterra announced a joint venture with Future Consumer Ltd which
will produce a range of consumer and foodservice dairy products.
 DEMOGRAPHIC SUPPORT

An FMCG industry overview indicated that India’s demographic profile plays a major role in
the growth of this sector. Not only is India’s demographic young, but this segment is also
characterized by increased urbanization and higher expenditure. Urban development
initiatives by the government, as well as the increasing middle class of India, has led to an
increase in the number of attractive markets in the country. Ernst & Young’s research on the
cities of India highlights the emergence of 30 ‘new wave’ cities such as Jaipur and Surat.
Consumption in these cities is growing at a faster rate than that of many of India’s metros.
India’s young population is also characterized by a high degree of technological awareness.
Growing penetration of smartphones and better internet connectivity in India has led to a
burgeoning E-Commerce sector, which has, in turn, helped formalize large sections of the
unorganized retail sector. The E-Commerce segment is projected to contribute 11% of overall
Indian FMCG companies’ sales in 2030. The online FMCG market is projected to reach $ 45
billion in 2020. This has been a major catalyst in the development of the FMCG sector in
rural India.
 TOP 5 COMPANIES in FMCG SECTOR

1. Nestle AG

Undertaking several corporate acquisitions, Swiss food, and beverage company, Nestle has
become the largest in the world, with more than 2000 brands available in 189 countries.
Home to the world’s largest private food and nutrition research organization, the company
invested US$1.7bn in its research capabilities in 2017 alone, supporting its 30 R&D facilities
worldwide. Its recent partnership with Starbucks will see the business bolster its complex
distribution network. Additionally, in alignment with UN Sustainable Development Goals,
Nestle is striving for zero environmental impact across its operations. Providing clear labels
across its manufacturing lines, the company provides nutritional knowledge as well as
supporting local farmers who provide high-quality ingredients within its sustainable sourcing
efforts.

2. Johnson & Johnson

A firm family favorite, Johnson & Johnson remains one of the most influential FMCG
companies. With products in three categories, Consumer Healthcare, Medical Devices, and
Pharmaceuticals, the business has grown at a considerate pace, with up to 250 subsidiaries
under its umbrella. The company’s complex, global distribution network and diverse supplier
base have seen the business embrace new technologies across its network, as it continues to
thrive in its role in delivering quality products and services at affordable prices for
consumers.

3. Procter & Gamble

Following its acquisition of personal care company Gillette in 2005, Procter & Gamble has
become one of the largest FMCG companies, with operations in up to 70 countries. Providing
a range of personal and consumer health products to five billion customers, the company’s
recent plans to acquire the consumer health division of Merck Group, as well as
implementing a new simplified management structure will form part of its 2020 vision.
4. PepsiCo

The main rival to Coca-Cola, PepsiCo’s beverages, as well as its food products, continue to
grow in popularity and demand. Harnessing significant brand awareness, the Fortune 500
company is one of the most admired companies in the world. Its six global divisions form
part of its aim to transform its products which are delivered through its extensive distribution
network to meet the ever-evolving needs of customers.

5. Unilever

Housing some of the most recognizable everyday brands, Unilever’s aggressive acquisition
strategy, and strong brand presence has seen it become a household name across 190
countries worldwide. Its R&D centers have sought to fully bolster its manufacturing
operations and vast distribution network, where the business has maintained its zero non-
hazardous waste-to- landfill agenda since 2017. Additionally, several initiatives have
provided employment opportunities to those in rural areas. Unilever’s Sustainable Living
Plan (USLP) has enabled half of the company’s agricultural raw materials, such as palm oil to
become sustainably sourced. Not only that, but 26 sustainable living brands are also now
situated under the company’s umbrella.
 OBJECTIVE OF STUDY

Through this project the aim is to study:

● The changing consumer behavior with the change in the packaging of the product in
the FMCG sector.
● Does the change in packaging make the consumer choose some other brand?
● To establish the relationship between independent and dependent variables, where the
independent variables are the packaging designs and the dependent variable is the
consumer behavior.

● To understand the importance of packaging in FMCG sector

● Whether the quality of the project matters to the customer

 CHAPTER 2

Theoretical Framework and Research Methodology

CONCEPTUAL FRAMEWORK

Consumer behavior is the study of how individual customers, groups or organizations select,
buy, use, and dispose of ideas, goods, and services to satisfy their needs and wants. It refers
to the actions of the consumers in the marketplace and the underlying motives for those
actions.

Marketers expect that by understanding what causes the consumers to buy particular goods
and services, they will be able to determine—which products are needed in the marketplace,
which is obsolete, and how best to present the goods to the consumers.
 Nature of Consumer Behavior

1. Influenced by various factors:

The various factors that influence consumer behavior are as follows:

a. Marketing factors such as product design, price, promotion, packaging, positioning, and
distribution.

b. Personal factors such as age, gender, education, and income level.

c. Psychological factors such as buying motives, perception of the product and attitudes
towards the product.

d. Situational factors such as physical surroundings at the time of purchase, social

surroundings and time factor.

e. Social factors such as social status, reference groups, and family. :

f. Cultural factors, such as religion, social class—caste and sub-castes.

2. Undergoes a constant change:

Consumer behavior is not static. It changes over some time depending on the nature of
products. For example, kids prefer colorful and fancy footwear, but as they grow up as
teenagers and young adults, they prefer trendy footwear, and as middle-aged and senior
citizens they prefer soberer footwear. The change in buying behavior may take place due to
several other factors such as an increase in income level, education level, and marketing
factors.

3. Varies from consumer to consumer:

All consumers do not behave in the same manner. Different consumers behave differently.
The differences in consumer behavior are due to individual factors such as the nature of the
consumers, lifestyle, and culture. For example, some consumers are technologies. They go on
shopping and spend beyond their means.

They borrow money from friends, relatives, banks, and at times even adopt unethical means
to spend on shopping for advanced technologies. But there are other consumers who, despite
having surplus money, do not go even for regular purchases and avoid use and purchase of
advanced technologies.

4. Varies from region to region and country to county:

Consumer behavior varies across states, regions, and countries. For example, the behavior of
urban consumers is different from that of rural consumers. A good number of rural
consumers are conservative in their buying behaviors.

The rich rural consumers may think twice to spend on luxuries despite having sufficient
funds, whereas urban consumers may even take bank loans to buy luxury items such as cars
and household appliances. Consumer behavior may also vary across states, regions, and
countries. It may differ depending on the upbringing, lifestyles, and level of development.

5. Information on consumer behavior is important to marketers:

Marketers need to have a good knowledge of consumer behavior. They need to study the
various factors that influence the consumer behavior of their target customers.

6. Leads to purchase decision:

A positive consumer behavior leads to a purchase decision. A consumer may decide between
buying a product based on different buying motives. The purchase decision leads to higher
demand and the sales of the marketers’ increase. Therefore, marketers need to influence
consumer behavior to increase their purchases.

7. Varies from product to product:

Consumer behavior is different for different products. Some consumers may buy more
quantity of certain items and very low or no quantity of other items. For example, teenagers
may spend heavily on products such as cell phones and branded wears for snob appeal, but
may not spend on general and academic reading. A middle-aged person may spend less on
clothing but may invest money in savings, insurance schemes, pension schemes, and so on.
 PACKAGING OF PRODUCTS

Some of the influencing factors can be an interesting advertising message, the brand’s
reputation, and the client/customer testimonials. But interestingly, a study published that the
color of the product’s package accounts for around 85% of purchases for a particular product.
Would you buy an organic food item packaged in black or red? Perhaps not. Colors play a
very important role in the purchase decisions made by consumers, but other equally essential
factors contribute to successful packaging.

Following are the factors that influence a product’s packaging:

● Protection: Packaging of the product is done to protect it from damage during

shipping and handling, and to lessen the decaying in case the product is exposed to
foul air or other harmful factors by accident.

● Design & Structure: Good packaging design and proper structure can add value
to a product. For instance, the benefits can be obtained from the structure of a
package that enhances the function of the product while the design gives the
product an appealing look.

● Appearance: Package design should be attractive enough to capture customers’

attention as they are shopping or just glancing through a catalog or your website.
This is particularly important for customers who are not very familiar with the
product. Designs that are unique and stand out are more likely to stay in the mind
of a shopper.

● Acceptance: Package designs are not just to attract the end-user, they also have to
be accepted and liked by distributors who are going to sell the product. For
instance, a retailer may not be interested in your package if it does not conform to
the requirements they have, for storing the products and displaying them on the
shelves.
● Cost: Packaging of a particular product can be a significant portion of its selling
price. In the cosmetics industry, it is estimated that the packaging cost of some
products may be as high as 40% of its product’s selling price. Make smart
packaging decisions to reduce the product’s selling price and possibly lead to
higher profits due to the increase in sales.

● Re-designing: Developing an entirely new package for your product can be

expensive. But it is also important to be part of the trend since your product should
appeal to your consumers. If you feel that your product packaging requires an
update, then consider re-designing the package.

● Environmental & Legal Issues: While deciding on the package structure and
design, you should also include an assessment of its environmental impact
especially for product packages that are frequently discarded. Ensure that you
create packages that do not infringe on intellectual property, such as trademarks,
copyrights or patents, held by other companies. These are some of the key factors
that influence a product’s package design and branding. With constant innovation
in design and printing, packaging has become a key influencer in the market and
helps attract the right attention amongst a hoard of other products.
 CHAPTER 3
RESEARCH METHODOLOGY

1. RESEARCH METHOD: Conceptual research is defined as a methodology wherein

research is conducted by observing and analyzing already present information on a
given topic. Conceptual research doesn’t involve conducting any practical
experiments. It is related to abstract concepts or ideas. Philosophers have long used
conceptual research to develop new theories or interpret existing theories in a
different light.

2. DATA COLLECTION: Primary data has been collected through sharing a

questionnaire. (Attached at the end of the project)
3. POPULATION: The contributors are from Delhi.
4. SAMPLING UNIT: Combination of Students, employees, and homemakers
5. SAMPLE SIZE: 31
6. SAMPLING TECHNIQUE: Convenient Sampling
Responses on the Questionnaire —

● Interpretation: The survey respondents were mainly the young ones, i.e. between 15-
20 years.

● Interpretation: Out of all the respondents, more than 50% visit supermarkets often
wherein they come in contact with various FMCG products with different packages &
designs.
● Interpretation: People are thoughtful enough. They think about the packages &
designs displayed at the market. This means that somewhere there is some relation
that is built up between the packaging and consumer behavior.
● Interpretation: Eco-friendliness of the packet, attractive design, and protection, all of
them matter to almost 60% of the respondents. This means that an FMCG company
should think about how to manage these 3 aspects carefully. And today where
everyone is trying to reach out for eco-friendly yet attractive and strong products, a
company needs to find the best combination of these aspects which not only satisfies
the customer but the company also.

● Interpretation: Once the base is decided the next step is to decide what to display.
According to the results, what all has been added to the product is considered very
much. This means the company should rightly mention the ingredients and in the
primary label, the key ingredients should be mentioned.
● Interpretation: Today, the quality of the product still matters. Changes in the label or
packaging make much of a difference. Only 10% of respondents say that they will
change the product due to change in packaging and the other 42% might do that
depending upon the new packaging.

● Interpretation: As per the result of this question, the details provided on the package
matters. So, a designer should focus on the details that are being mentioned on the
primary label.
● Interpretation: 90% of the respondents say that they read the ingredients mentioned
on the label.

● Interpretation: 77% consider the visibility of the brand name as it increases the
reliability of the product.
● Interpretation: Almost 75% of the respondent's packaging of the product matters.
 CHAPTER 4
Summary & Conclusions
a) Findings of the Study:
● From the responses collected it can be stated that the details mentioned on the
label make a difference. Also the type of packaging and the quality of matters.
The consumer is sensitive when it comes to the details provided on the label.
So, the content on the label should be rightly presented.
● The quality of the product provided holds more importance. When it comes to
choosing whether to change the product due to the change in packaging most
of the respondents disagreed. They would prefer to continue with that product.
So, no change in packaging won’t change consumer behavior in most of the
cases.
● The relation between the packaging & consumer is delicate in the case of
youth. As the data collected was of the age group 15-30 years, so this
relationship can be established amongst that age group only.
● Packaging is very important as the durability of the packet is in direct
proportion with the durability of the product.

●
b) Limitation:
● Data is insufficient. Out of the 31 respondents, only 2 of them are above the
age of 30 which makes it difficult to establish the relations for the entire
community and so the conclusions made here are strictly restricted for the 15-
30 age group.
● These days consumers are still biased. They would choose a product with a
good packaging over a product with good quality.

c) Scope of Study and Suggestions:

This data is collected mainly from Delhi. In the future, if we again conduct one such
survey, we can increase our reach by surveying the country or at least the respondents
are from 4-5 different states. This would provide a wide range of details which means
the changing consumer behavior in different cultures can be studied.
For the suggestions are:
● Companies should stick the to right quality standards
● The details on the primary labels should be catchy yet precise
● The material should be eco-friendly and durable
● The quality of the product and package should be very good
● The no compromise should be made with the quality of the packet
● No false information should be added on the label
Appendix-1
Questionnaire
Bibliography

● Market Size: https://www.ibef.org/industry/fmcg.aspx

● Development of the FMCG sector: https://www.ibef.org/industry/fmcg.aspx
● Top 5 companies in the FMCG sector:
https://www.manufacturingglobal.com/top-10/top-10-fast-moving-consumer-goods-
companies