A project report on consumer buying behaviour towards

Submitted to Prof M.D.Kakade

Submitted By Md Javed Khan(25) Neeshu Agarwal (27)

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BHARTI VIDYAPEETH DEEMED UNIVERSITY, PUNE

INSTITUTE OF MANAGEMENT AND ENTREPRENUERSHIP DEVELOPMENT, PAUD ROAD, ERANDWANE PUNE-38 CERTIFICATE OF COMPLETION

This is to certify that Md Javed Khan and Neeshu Agarwal are a bonafide student of MBA (BA) program of the university in this institute for the year 2010-2012. As a part of the , the student has completed the project report titled, “A STUDY CONSUMER BUYING BEHAVIOUR TOWARDS NOODLES” The project report is prepared by the student under the guidance of Prof. M.D.KAKADE (Teacher Guide) Date: Place: Pune

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DECLARATION

I, MD JAVED KHAN AND NEESHU AGARWAL undersigned hereby

declare

that

the

project

report

entitled:

CONSUMER BUYING BEHAVIOUR TOWARDS

“A

STUDY

NOODLES”.

Written and submitted by us is submitted to Prof.M.D.KAKADE is our original work. The empirical findings in this report are based on the data collected by myself. While preparing the report I have not copied from any report.

MD JAVED KHAN (25) NEESHU AGARWAL (27)

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PREFACE Marketing has to go beyond the various influences on buyers and develops an understanding of how consumers actually make their buying decisions. We are exposed to marketing in almost everything we do; we see marketing in the advertisement that fills our newspapers. But marketing is not that simple as it appears to be. The mission of present day marketing is not 'telling and selling', but, satisfying customer 'needs' and 'Customer delight'. Customer is the fulcrum around which all marketing activities revolve. To start any business the success entirely depends on the marketing research done about the particular and the consumer attitude towards the product. Marketing research plays a vital role in a business to make it success. In this era where time is very big factor for everyone. Every person wants to save his every second to utilize it to achieve more and more goals, and with less time, people want the better facilities and in short time. When the traveling is the factor, people choose that how best, they can travel, what facilities they can get and how much time and money they can save. In the marketing point of view, the behavior of the consumers effects deeply on the concerned organization. So that why, I am here to analyzing and study the consumer behavior towards the Maggi noodles and Horlicks foodles.

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INDEX SERIAL NO

NAME

PAGE NO

1

Executive summery

6

2 3

4 5

7 Introduction 33 Strategic analysis of Maggi and Horlicks foodles (Company Profile) 63 RESEARCH METHODOLOGY 65 Survey Results

6

SUGGESTIONS AND CONCLUSION

73

7

Bibliography

77

8

Annexure

78

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EXECUTIVE SUMMERY The report entitled ―A study of consumer buying behaviour towards Maggi and Foodles‖ deals with the study of Maggi brand and Horliks foodles that was launched in India in the year 1983, by Nestle India Limited, and foodles in the year of 2009 which became synonymous with noodles. This research paper tries to find consumer buying behaviour towards these products. This research paper also finds of reach of foodles and Maggi .Describes the level of involvement and types of consumer problem solving process. This research will also explain how situational influences may affect the consumer buying decision process. Understand the psychological influences that may affect the consumer buying decision process.

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INTRODUCTION CONSUMER BUYING BEHAVIOUR : All marketing starts with the consumer. So consumer is a very important person to a marketer. Consumer decides what to purchase, for whom to purchase, why to purchase, from where to purchase, and how much to purchase. In order to become a successful marketer, he must know the liking or disliking of the customers. He must also know the time and the quantity of goods and services, a consumer may purchase, so that he may store the goods or provide the services according to the likings of the consumers. Gone are the days when the concept of market was let the buyer‘s beware or when the market was mainly the seller‘s market. Now the whole concept of consumer‘s sovereignty prevails. The manufacturers produce and the sellers sell whatever the consumer likes. In this sense, ―consumer is the supreme in the market‖. As consumers, we play a very vital role in the health of the economy local, national or international. The decision we make concerning our consumption behaviour affect the demand for the basic raw materials, for the transportation, for the banking, for the production; they effect the employment of workers and deployment of resources and success of some industries and failures of others. Thus marketer must understand this. The consumer behaviour suggest how individual, groups and organization select, buy, use and dispose of goods, services, ideas or experience to satisfy their needs and wants. It also clues for improving or introducing products or services, setting price, devising channels etc. Since liberalization 100% FDI is allowed in India. This has attracted foreign companies to penetrate the Indian market. The marketers always look for emergent trends that suggest new. As a consumer we are all unique and this uniqueness is reflected in the consumption pattern and process purchase. The study of consumer behaviour provides us with reasons why consumers differ from one another in buying using products and services. We receive stimuli from the environment and the specifics of the marketing strategies of different products and services, and responds to these stimuli in terms 7|Page

of either buying or not buying product. In between the stage of receiving the stimuli and responding to it, the consumer goes through the process of making his decision. CONSUMER BEHAVIOUR Consumer behaviour is the study of how people buy, what they buy, when they buy and why they buy. It is a subcategory of marketing that blends elements from psychology, sociology, socio psychology, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies

characteristics

of

individual

consumers

such

as

demographics,

psychographics, and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Consumption is the ―process of production, acquisition, utilization and destruction of goods, services, experiences or places‖ Understanding Demographics 1) Youth – 60% of India‘s teens stay in rural area. 2) Women – Only 23 % house wives in urban areas have jobs outside their homes

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STAGES OF CONSUMER BUYNG PROCESS

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity...discussed next. The 6 stages are: 1. Problem Recognition: The buying process starts with need or problem recognition—the buyer recognizes a problem or need. The buyer senses a difference 9|Page

between his or her actual state and some desired state. The need can be triggered by internal stimuli when one of the person's normal needs—hunger, thirst, sex—rises to a level high enough to become a drive. A need can also be triggered by external stimuli. Hunger--Food. Hunger stimulates your need to eat. Can be stimulated by the marketer through product information--did not know you were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes At this stage, the marketer should research consumers to find out what kinds of needs or problems arise, what brought them about, and how they led the consumer to this particular product. 2. Information search— an aroused consumer may or may not search for more

information. If the consumer's drive is strong and a satisfying product is near at hand, the consumer is likely to buy it then. If not, the consumer may store the need in memory or undertake an information search related to the need. At one level, the consumer may simply enter heightened attention. The consumer can obtain information from any of several sources. These include personal sources (family, friends, neighbors, acquaintances), commercial sources (advertising, salespeople, dealers, packaging, displays, Web sites), public sources (mass media, consumer-rating organizations), and experiential sources (handling, examining, using the product). The relative influence of these information sources varies with the product and the buyer. Generally, the consumer receives the most information about a product from commercial sources—those controlled by the marketer. The most effective sources, however, tend to be personal. Commercial sources normally inform the buyer, but personal sources legitimize or evaluate products for the buyer. People often ask others—friends, relatives, acquaintances, professionals—for recommendations concerning a product or service. Thus, companies have a strong interest in building such word-of-mouth sources. These sources have two chief advantages. First, they are convincing: Word of mouth is the only promotion method 10 | P a g e

that is of consumers, by consumers, and for consumers. Having loyal, satisfied customers that brag about doing business with you is the dream of every business owner. Not only are satisfied customers repeating buyers, but they are also walking, talking billboards for your business. Second, the costs are low. Keeping in touch with satisfied customers and turning them into word-of-mouth advocates costs the business relatively little. A successful information search leaves a buyer with possible alternatives, the evoked set. Hungry, want to go out and eat, evoked set is Chinese food Indian food Burger king

3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, Indian gets highest rank etc. If not satisfied with your choices then return to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by "framing" alternatives. 4. Purchase decision—In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. The first factor is the attitudes of others The second factor is unexpected situational factors. The consumer may form a purchase intention based on factors such as expected income, expected price, and expected product benefits. However, unexpected events may change the purchase intention. 5. Purchase--May differ from decision, time lapse between 4 & product availability

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6. Post-Purchase Evaluation--outcome: The marketer's job does not end when the product is bought. After purchasing the product, the consumer will be satisfied or dissatisfied and will engage in post purchase behavior of interest to the marketer. What determines whether the buyer is satisfied or dissatisfied with a purchase? The answer lies in the relationship between the consumer's expectations and the product's perceived performance. If the product falls short of expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is delighted. The larger the gap between expectations and performance, the greater the consumer's dissatisfaction. This suggests that sellers should make product claims that faithfully represent the product's performance so that buyers are satisfied. Some sellers might even understate performance levels to boost consumer satisfaction with the product. Almost all major purchases result in cognitive dissonance, or discomfort caused by post purchase conflict. After the purchase, consumers are satisfied with the benefits of the chosen brand and are glad to avoid the drawbacks of the brands not bought. However, every purchase involves compromise. Consumers feel uneasy about acquiring the drawbacks of the chosen brand and about losing the benefits of the brands not purchased. Thus, consumers feel at least some postpurchase dissonance for every purchase. Why is it so important to satisfy the customer? Such satisfaction is important because a company's sales come from two basic groups—new customers and retained customers. It usually costs more to attract new customers than to retain current ones, and the best way to retain current customers is to keep them satisfied. Customer satisfaction is a key to making lasting connections with consumers—to keeping and growing consumers and reaping their customer lifetime value. Satisfied customers buy a product again, talk favorably to others about the product, pay less attention to competing brands and advertising, and buy other products from the company. Many marketers go beyond merely meeting the expectations of customers—they aim to delight the customer. A delighted customer is even more likely to purchase again and to talk favorably about the product and company. A dissatisfied consumer responds differently. Whereas, on average, a satisfied customer tells 3 people about a good product experience, a dissatisfied customer 12 | P a g e

gripes to 11 people. In fact, one study showed that 13 percent of the people who had a problem with an organization complained about the company to more than 20 people. Clearly, bad word of mouth travels farther and faster than good word of mouth and can quickly damage consumer attitudes about a company and its products. Therefore, a company would be wise to measure customer satisfaction regularly. It cannot simply rely on dissatisfied customers to volunteer their complaints when they are dissatisfied. Some 96 percent of unhappy customers never tell the company about their problem. Companies should set up systems that encourage customers to complain. In this way, the company can learn how well it is doing and how it can improve TYPES OF COMSUMER BUYING BEHAVIOUR : Types of consumer buying behaviour are determined by: Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular situation. Buyer‘s level of involvement determines why he/she is motivated to seek information about a certain products and brands but virtually ignores others. High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement. Types of risk: Personal risk Social risk Economic risk The four type of consumer buying behaviour are:

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Routine Response/Programmed Behaviour--Buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc. COMPLEX BUYING BEHAVIOUR: Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive significant differences among brands. Consumers may be highly involved when the product is expensive, risky, purchased infrequently, and highly self-expressive. Typically, the consumer has much to learn about the product category. For example, a personal computer buyer may not know what attributes to consider. Many product features carry no real meaning: a "Pentium Pro chip," "super VGA resolution," or "megs of RAM." This buyer will pass through a learning process, first developing beliefs about the product, then attitudes, and then making a thoughtful purchase choice. Marketers of high-involvement products must understand the information-gathering and evaluation behavior of high-involvement consumers. They need to help buyers learn about product-class attributes and their relative importance, and about what the company's brand offers on the important attributes. Marketers need to differentiate their brand's features, perhaps by describing the brand's benefits using print media with long copy. They must motivate store salespeople and the buyer's acquaintances to influence the final brand choice.

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DISSONANCE- REDUCING BUYING BEHAVIOUR: Dissonance-reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands. For example, consumers buying carpeting may face a high-involvement decision because carpeting is expensive and self-expressive. Yet buyers may consider most carpet brands in a given price range to be the same. In this case, because perceived brand differences are not large, buyers may shop around to learn what is available, but buy relatively quickly. They may respond primarily to a good price or to purchase convenience. After the purchase, consumers might experience post purchase dissonance (aftersale discomfort) when they notice certain disadvantages of the purchased carpet brand or hear favorable things about brands not purchased. To counter such dissonance, the marketer's after-sale communications should provide evidence and support to help consumers feel good about their brand choices.

HABITUAL BUYING BEHAVIOUR: Habitual buying behavior occurs under conditions of low consumer involvement and little significant brand difference. For example, take salt. Consumers have little involvement in this product category—they simply go to the store and reach for a brand. If they keep reaching for the same brand, it is out of habit rather than strong brand loyalty. Consumers appear to have low involvement with most low-cost, frequently purchased products. In such cases, consumer behavior does not pass through the usual belief-attitudebehavior sequence. Consumers do not search extensively for information about the brands, evaluate brand characteristics, and make weighty decisions about which brands to buy. Instead, they passively receive information as they watch television or read magazines. Ad repetition creates brand familiarity rather than brand conviction. Consumers do not form strong attitudes toward a brand; they select the brand because it is familiar. Because they are not highly involved with the product, consumers may not evaluate the choice even after purchase. Thus, the buying process

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involves brand beliefs formed by passive learning, followed by purchase behavior, which may or may not be followed by evaluation. Because buyers are not highly committed to any brands, marketers of lowinvolvement products with few brand differences often use price and sales promotions to stimulate product trial. In advertising for a low-involvement product, ad copy should stress only a few key points. Visual symbols and imagery are important because they can be remembered easily and associated with the brand. Ad campaigns should include high repetition of short-duration messages. Television is usually more effective than print media because it is a low-involvement medium suitable for passive learning. Advertising planning should be based on classical conditioning theory, in which buyers learn to identify a certain product by a symbol repeatedly attached to it. Marketers can try to convert low-involvement products into higher-involvement ones by linking them to some involving issue. Procter & Gamble does this when it links Crest toothpaste to avoiding cavities. Or the product can be linked to some involving personal situation. Nestlé did this in its series of ads for Taster's Choice coffee, each consisting of a new soap-opera-like episode featuring the evolving romantic relationship between two neighbors. At best, these strategies can raise consumer involvement from a low to a moderate level. However, they are not likely to propel the consumer into highly involved buying behavior. VARIETY SEEKING BUYING BEHAVIOUR: Consumers undertake variety-seeking buying behavior in situations characterized by low consumer involvement but significant perceived brand differences. In such cases, consumers often do a lot of brand switching. For example, when buying cookies, a consumer may hold some beliefs, choose a cookie brand without much evaluation, then evaluate that brand during consumption. But the next time, the consumer might pick another brand out of boredom or simply to try something different. Brand switching occurs for the sake of variety rather than because of dissatisfaction. In such product categories, the marketing strategy may differ for the market leader and minor brands. The market leader will try to encourage habitual buying behavior by dominating shelf space, keeping shelves fully stocked, and running frequent reminder advertising. Challenger firms will encourage variety seeking by offering 16 | P a g e

lower prices, special deals, coupons, free samples, and advertising that presents reasons for trying something new.

Factors Affecting the Consumer Buying Decision Process

A consumer, making a purchase decision will be affected by the following four factors: 1. Cultural and sub culture Factor 2. Social Factor 3. Personal Factor 4. Psychological 17 | P a g e

1. Culture and Sub-culture Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous group of people and transmitted to the next generation. Culture also determines what is acceptable with product advertising. Culture determines what people wear, eat, reside and travel. Cultural values in the US are good health, education, individualism and freedom. In American culture time scarcity is a growing problem that is change in meals. Big impact on international marketing. Culture can be divided into subcultures: Geographic regions Human characteristics such as ethnic background. Culture affects what people buy, how they buy and when they buy. 2. Social Factors Consumer wants, learning, motives etc. are influenced by opinion leaders, person's family, reference groups, social class and culture. Roles and Family Influences-Role...things you should do based on the expectations of you from your position within a group. People have many roles. Husband, father, employer, employee. Individuals role are continuing to change therefore marketers must continue to update information. Family is the most basic group a person belongs to. Marketers must understand: that many family decisions are made by the family unit consumer behaviour starts in the family unit family roles and preferences are the model for children's future family (can reject/alter/etc) family buying decisions are a mixture of family interactions and individual decision making. Family acts an interpreter of social and cultural values for the individual. The Family life cycle: families go through stages; each stage creates different consumer demands Family members can strongly influence buyer behavior. The family is the most important consumer buying organization in society, and it has been researched extensively. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services. 18 | P a g e

Husband-wife involvement varies widely by product category and by stage in the buying process. Buying roles change with evolving consumer lifestyles. In the United States, the wife traditionally has been the main purchasing agent for the family, especially in the areas of food, household products, and clothing. But with 70 percent of women holding jobs outside the home and the willingness of husbands to do more of the family's purchasing, all this is changing. For example, women now buy about 45 percent of all cars and men account for about 40 percent of food-shopping dollars. Such changes suggest that marketers who've typically sold their products to only women or only men are now courting the opposite sex. For example, with research revealing that women now account for nearly half of all hardware store purchases, home improvement retailers such as Home Depot and Builders Square have turned what once were intimidating warehouses into female-friendly retail outlets. The new Builders Square II outlets feature decorator design centers at the front of the store. To attract more women, Builders Square runs ads targeting women in Home, House Beautiful, Woman's Day, and Better Homes and Gardens. Home Depot even offers bridal registries Children may also have a strong influence on family buying decisions. Chevrolet recognizes these influences in marketing its Chevy Venture minivan. For example, it ran ads to woo these "back-seat consumers" in Sports Illustrated for Kids, which attracts mostly 8- to 14-year-old boys. "We're kidding ourselves when we think kids aren't aware of brands," says Venture's brand manager, adding that even she was surprised at how often parents told her that kids played a tie-breaking role in deciding which car to buy. Groups A person's behavior is influenced by many small groups. Groups that have a direct influence and to which a person belongs are called membership groups. In contrast, reference groups serve as direct (face-to-face) or indirect points of comparison or reference in forming a person's attitudes or behavior. People often are influenced by reference groups to which they do not belong. For example, an aspirational group is one to which the individual wishes to belong, as when a teenage basketball player hopes to play someday for the Utah Jazz. Marketers try to identify the reference groups of their target markets. Reference groups expose a person to new behaviors 19 | P a g e

and lifestyles, influence the person's attitudes and self-concept, and create pressures to conform that may affect the person's product and brand choices. The importance of group influence varies across products and brands. It tends to be strongest when the product is visible to others whom the buyer respects. Manufacturers of products and brands subjected to strong group influence must figure out how to reach opinion leaders—people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert influence on others. Reference Groups-Individual identifies with the group to the extent that he takes on many of the values, attitudes or behaviours of the group members. Families, friends, sororities, civic and professional organizations. Any group that has a positive or negative influence on a person‘s attitude and behaviour. Membership groups (Belong to) Affinity marketing is focused on the desires of consumers that belong to reference groups. Marketers get the groups to approve the product and communicate that approval to its members. Credit Cards etc.!! Aspiration groups (Want to belong to) Disassociate groups (do not want to belong to) Honda tries to disassociate from the "biker" group. The degree to which a reference group will affect a purchase decision depends on an individual‘s susceptibility to reference group influence and the strength of his/her involvement with the group. Social Class An open group of individuals who have similar social rank. US is not a classless society. US criteria; occupation, education, income, wealth, race, ethnic groups and possessions. Social class influences many aspects of our lives. i.e.; upper middle class Americans prefer luxury cars Mercedes. 20 | P a g e

Upper-upper class, .3%, inherited wealth, aristocratic names .Upper uppers are the social elite who live on inherited wealth and have well-known family backgrounds. They give large sums to charity, run debutante balls, own more than one home, and send their children to the finest schools. They are a market for jewelry, antiques, homes, and vacations. They often buy and dress conservatively rather than showing off their wealth. Although small in number, upper uppers serve as a reference group for others. Lower-upper class, 1.2%, newer social elite, from current professionals and corporate elite. Lower uppers have earned high income or wealth through exceptional ability in the professions or business. They usually begin in the middle class. They tend to be active in social and civic affairs and buy for themselves and their children the symbols of status, such as expensive homes, schools, swimming pools, and automobiles. They include the new rich who consume conspicuously to impress those below them. They want to be accepted in the upper-upper stratum, a status more likely to be achieved by their children than by themselves. Upper-middle class, 12.5%, college graduates, managers and professionals Upper middles possess neither family status nor unusual wealth. They are primarily concerned with "career," They have attained positions as professionals, independent businesspersons, and corporate managers. They believe in education and want their children to develop professional or administrative skills. They are joiners and highly civic-minded. They are the quality market for good homes, clothes, furniture, and appliances. Middle class, 32%, average pay white collar workers and blue collar friends. The middle class is made up of average-pay white- and blue-collar workers who live on "the better side of town" and try to "do the proper things." To keep up with the trends, they often buy products that are popular. Most are concerned with fashion, seeking the better brand names. Better living means owning a nice home in a nice neighborhood with good schools. They believe in spending more money on

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worthwhile experiences for their children and aiming them toward a college education. Working class, 38%, average pay blue collar workers. The working class consists of those who lead a "working-class lifestyle," whatever their income, school background, or job. They depend heavily on relatives for economic and emotional support, for advice on purchases, and for assistance in times of trouble. The working class maintains sharper sex role division and stereotyping. Lower class, 9%, working, not on welfare Upper lowers are working (are not on welfare), although their living standard is just above poverty. They perform unskilled work for very poor pay although they strive toward a higher class. Often, upper lowers lack education. Although they fall near the poverty line financially, they manage to "present a picture of self-discipline" and "maintain some effort at cleanliness." Lower-lower class, 7%, on welfare Lower lowers are on welfare, visibly poverty stricken, and usually out of work or have "the dirtiest jobs." Often they are not interested in finding a job and are permanently dependent on public aid or charity for income. Their homes, clothes, and possessions are "dirty," "raggedy," and "broken-down." Social class determines to some extent, the types, quality, and quantity of products that a person buys or uses. Lower class people tend to stay close to home when shopping; do not engage in much pre-purchase information gathering. Stores project definite class images. Family, reference groups and social classes are all social influences on consumer behaviour. All operate within a larger culture.

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Celebrity Influence This is an important tool which is able to influence Indian consumer buying behaviour. In India, celebrities are being increasingly used in marketing communication by marketers to lend personality to their products. With the visual media becoming more popular the use of celebrities in the TV media has increased. Celebrities create headlines. Their activities and movements are being closely watched and imitated. What they endorse sell like hot cakes. It is not surprising therefore that using celebrities in advertisements has become common practice. In India especially, it is not difficult to look for the reasons as to why companies are increasingly using celebrities. Indians always love their heroes and heroines. Consumers like advertisements more if they are admirers of the celebrities in the advertisements. When a consumer likes the celebrity in the advertisement, he or she is more likely to accept what the celebrity says about the advertised product and therefore will develop more positive feelings toward the advertisement and the brand itself. Famous celebrities are able to attract attention and retain attention by their mere presence in the advertisement In the midst of the advertisement clutter, the advertisements that celebrities endorse also achieve high recall rates. When people see their favoured reference group members or celebrities in the advertisements, they pay more attention to them. Celebrities may also help reposition products. Products with sagging sales needs some boosting and in these Indian celebrities can help by way of the endorsing the product concerned.

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Personal factors

Ability and Knowledge— Need to understand individual‘s capacity to learn. Learning, changes in a person's behaviour caused by information and experience. Therefore to change consumers' behaviour about your product, need to give them new information re: product...free sample etc. When making buying decisions, buyers must process information. Knowledge is the familiarity with the product and expertise. Inexperience buyers often use prices as an indicator of quality more than those who have knowledge of a product. Non-alcoholic Beer example: consumers chose the most expensive six-pack, because they assume that the greater price indicates greater quality. Learning is the process through which a relatively permanent change in behaviour results from the consequences of past behaviour. •

Attitudes--

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Knowledge and positive and negative feelings about an object or activity-maybe tangible or intangible, living or non living.....Drive perceptions Individual learns attitudes through experience and interaction with other people. Consumer attitudes toward a firm and its products greatly influence the success or failure of the firm's marketing strategy. Honda "You meet the nicest people on a Honda‖ dispels the unsavoury image of a motorbike rider, late 1950s. Changing market of the 1990s, baby boomers aging, Hondas market returning to hard core. To change this they have a new slogan "Come ride with us". Attitudes and attitude change are influenced by consumer‘s personality and lifestyle. Consumers screen information that conflicts with their attitudes. Distort information to make it consistent and selectively retain information that reinforces our attitudes. IE brand loyalty. There is a difference between attitude and intention to buy (ability to buy) Personality-- all the internal traits and behaviours that make a person unique, uniqueness arrives from a person's heredity and personal experience. Examples include: Work holism Compulsiveness Self confidence Friendliness Adaptability Ambitiousness Introversion Extroversion Aggressiveness Competitiveness 25 | P a g e

Traits affect the way people behave. Marketers try to match the store image to the perceived image of their customers. There is a weak association between personality and Buying Behaviour; this may be due to unreliable measures. Nike ads. Consumers buy products that are consistent with their self concept. Lifestyles-People coming from the same subculture, social class, and occupation may have quite different lifestyles. Lifestyle is a person's pattern of living as expressed in his or her psychographics. It involves measuring consumers' major AIO dimensions—activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products). Lifestyle captures something more than the person's social class or personality. It profiles a person's whole pattern of acting and interacting in the world. Several research firms have developed lifestyle classifications. The most widely used is the SRI Consulting's Values and Lifestyles (VALS) y typology (see Figure 5.3). VALS classifies people according to how they spend their time and money. It divides consumers into eight groups based on two major dimensions: self-orientation and resources. Self-orientation groups include principle-oriented consumers who buy based on their views of the world; status-oriented buyers who base their purchases on the actions and opinions of others; and action-oriented buyers who are driven by their desire for activity, variety, and risk taking. Consumers within each orientation are further classified into those with abundant resources and those with minimal resources, depending on whether they have high or low levels of income, education, health, self-confidence, energy, and other factors. Consumers with either very high or very low levels of resources are classified without regard to their self-orientations (actualizers, strugglers). Actualizers are people with so many resources that they can indulge in any or all self-orientations. In contrast, strugglers are people with too few resources to be included in any consumer orientation

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Economic Situation A person's economic situation will affect product choice. Anna Flores can consider buying an expensive Nikon if she has enough spendable income, savings, or borrowing power. Marketers of income-sensitive goods watch trends in personal income, savings, and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and reprice their products closely. 4. Psychological factors A person's buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes. Motivation A person has many needs at any given time. Some are biological, arising from states of tension such as hunger, thirst, or discomfort. Others are psychological, arising from the need for recognition, esteem, or belonging. Most of these needs will not be strong enough to motivate the person to act at a given point in time. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Psychologists have developed theories of human motivation. Two of the most popular—the theories of Sigmund Freud and Abraham Maslow—have quite different meanings for consumer analysis and marketing. Perception A motivated person is ready to act. How the person acts is influenced by his or her own perception of the situation. All of us learn by the flow of information through our five senses: sight, hearing, smell, touch, and taste. However, each of us receives, organizes, and interprets this sensory information in an individual way. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. People can form different perceptions of the same stimulus because of three perceptual processes: selective attention, selective distortion, and selective retention.

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People are exposed to a great amount of stimuli every day. For example, the average person may be exposed to more than 1,500 ads in a single day. It is impossible for a person to pay attention to all these stimuli. Selective attention—the tendency for people to screen out most of the information to which they are exposed—means that marketers have to work especially hard to attract the consumer's attention. Even noted stimuli do not always come across in the intended way. Each person fits incoming information into an existing mind-set. Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective distortion means that marketers must try to understand the mind-sets of consumers and how these will affect interpretations of advertising and sales information. People also will forget much that they learn. They tend to retain information that supports their attitudes and beliefs. Because of selective retention, Anna is likely to remember good points made about the Nikon and to forget good points made about competing cameras. Because of selective exposure, distortion, and retention, marketers have to work hard to get their messages through. This fact explains why marketers use so much drama and repetition in sending messages to their market. Learning When people act, they learn. Learning describes changes in an individual's behavior arising from experience. Learning theorists say that most human behavior is learned. Learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement. We saw that Anna Flores has a drive for self-actualization. A drive is a strong internal stimulus that calls for action. Her drive becomes a motive when it is directed toward a particular stimulus object, in this case a camera. Anna's response to the idea of buying a camera is conditioned by the surrounding cues. Cues are minor stimuli that determine when, where, and how the person responds. Beliefs and Attitudes

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Through doing and learning, people acquire beliefs and attitudes. These, in turn, influence their buying behavior. A belief is a descriptive thought that a person has about something. Anna Flores may believe that a Nikon camera takes great pictures, stands up well under hard use, and costs $450. These beliefs may be based on real knowledge, opinion, or faith, and may or may not carry an emotional charge. For example, Anna Flores's belief that a Nikon camera is heavy may or may not matter to her decision. Marketers are interested in the beliefs that people formulate about specific products and services, because these beliefs make up product and brand images that affect buying behavior. If some of the beliefs are wrong and prevent purchase, the marketer will want to launch a campaign to correct them. People have attitudes regarding religion, politics, clothes, music, food, and almost everything else. Attitude describes a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea. Attitudes put people into a frame of mind of liking or disliking things, of moving toward or away from them. Thus, Anna Flores may hold attitudes such as "Buy the best," "The Japanese make the best products in the world," and "Creativity and self-expression are among the most important things in life." If so, the Nikon camera would fit well into Anna's existing attitudes. Attitudes are difficult to change. A person's attitudes fit into a pattern, and to change one attitude may require difficult adjustments in many others. Thus, a company should usually try to fit its products into existing attitudes rather than attempt to change attitudes

Noodles History: Noodles can be regarded as the second staple after rice in Asian countries. The great thing about noodles is that they can be prepared in various combinations; with sauces, in soup, fried, with all kinds of meat, seafood and vegetables. When compared to rice, noodle meals are cheaper and more convenient. A great deal of time can be saved in the preparing, consuming and dish washing processes. 29 | P a g e

Therefore, despite its ancient origins, it is highly suited to the fast beat of modern society. The traditional Chinese noodle stalls in Hong Kong has changed little over half a century. Like many traditional Chinese businesses, these were usually run by a family, (typically the father acts as the cook and master, the mother the cashier, and their children as waiters/ waitresses). Although the management of these stalls can be very flexible, they lack of control on the quality of food and customer service. Moreover, they do little to promote their shop image. The staffs seldom wear uniform, and little attention is paid to food hygiene and the shop interior. Some stalls have pets strolling around and some don't even have air conditioning. Usually the menu is only in Chinese language, which is placed either under the greasy table glass top

or

pasted

along

the

walls.

The target customers are usually people in their neighbourhood and the business relied mainly on the low price strategies, or by word of mouth. The way in which the noodle is cooked is the crucial factor on getting return business. However, since the current generations of young people nowadays are able to receive higher education, they will not be eager to inherit their father's business. Given that running a noodle stall is not considered as a particular prestigious and well-paid job. Therefore when the master retires, he must pass on his technique to someone outside the family. It is a customary practice though for Chinese chefs not to pass on everything. Therefore, there is bound to be changes to the quality of the food once the business has changed hands. The Japanese noodle shops on the other hand are better organized. In the shop front, there is usually a display window showing wax models of different set meals. The wax models can imitate the food so successfully that it provides a mouth-watering image to the passerby. When one walks into the shop, he will be greeted politely by trained waitresses either wearing apron or some sort of uniform. The shop interior is carefully design to reflect Japanese culture and is always clean and hygienic. The menu is supplemented by some very attractive photographs. So that customer can be assured what they order will match their expectations, even if they cannot read the menu

correctly.

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As the living standard of people in Hong Kong improves, their requirement on food is no longer just to fill the stomach. The target customers of Japanese noodles are usually the young generation and office workers. They are less price conscious and are willing to pay more for better food quality, service and eating environment. Although a bowl of noodle sold in a Japanese noodle shop could be at least three times higher than those sold in a Chinese noodle stall, many people still think that it is worth the money.

MAGGI INTRODUCTION Ever since its launch in India in 1983, this brand has become synonymous with noodles. The bright red and yellow colours of the packet with the brilliant blue ―2minute Noodles‖ printed on it has found a place on every kitchen. Over the years, Maggi has grown as a brand and positioned itself as a ―Fast to cook! Good to Eat! ―Food product. The history of this brand traces back to the 19th century when industrial revolution in Switzerland created factory jobs for women, who were therefore left with very little time to prepare meals. Due to this growing problem Swiss Public Welfare Society asked a miller named Julius Maggi to create a vegetable food product that would be quick to prepare and easy to digest. Julius, the son of an Italian immigrant came up with a formula to bring added taste to meals in 1863. Soon after he was commissioned by the Swiss Public Welfare Society, he came up with two instant pea soups & a bean soup- the first launch of Maggi brand of instant foods in 1882-83.Towards the end of the century, Maggi company was producing not just powdered soups, but bouillon cubes, sauces and other flavourings. However in India (the largest consumer of Maggi noodles in the world!) it was launched in 1980 by Nestle group of companies. Maggie had merged with Nestle family in 1947. When launched it had to face a stiff competition from the ready to eat snack segments like biscuits, wafers etc. Also it had other competitor the so called home made snacks which are till today considered healthy and hygienic. Hence to capture the market it was positioned as a hygienic homemade snack, a smart move.

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But still this didn‘t work, as it was targeted towards the wrong target group, the working women. After conducting an extensive research, the firm found that the children were the biggest consumers of Maggi noodles. Quickly a strategy was developed to capture the kids segment with various tools of sales promotion like pencils, fun books, Maggi clubs which worked wonders for it. No doubt the ads of Maggi have shown a hungry kid saying ―Mummy bhookh lagi hai‖ to which his mom replies ―Bas do minute!‖ and soon he is happily eating Maggie noodles. Further the MAGGI 2-MINUTE Noodles has been renovated to provide 20% of the RDA1 of Calcium and Protein for the core target group building on the nutrition proposition ―Taste bhi health bhi‖. The company could have easily positioned the product as a meal, but did not, as a study had shown that Indian mentality did not accept anything other than rice or roti as meal. They made it an easy to cook snack that could be prepared in just two minutes. The formula clicked well and Maggi became a brand name Nestlé‘s Maggie noodles are the leading brand in the instant noodles segment in India, enjoying a market share of 79.3%. The brand has grown to an estimated Rs 200 crores & contributes to around 10% of Nestle India‘s top line. Being the pioneer in the noodles market has given it a first mover‘s advantage over other brands. Maggi has regularly come up with new flavours and has recently launched two variantsVegetable Atta and Dal Atta noodles, catering to the increasing demand for healthy snacks.

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COMPANY PROFILE NESTLE’ Nestle India

Nestle‘ India is a subsidiary of Nestle‘ S.A. of Switzerland. The company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships. Nestle India- Presence across India Beginning with its first investment in Moga in 1961, Nestlé‘s regular and substantial investments established that it was here to stay. In 1967, Nestlé set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. The Nanjangud factory (Karnataka), became operational in 1989, the Samalkha factory (Haryana), in 1993 and in 1995 and 1997, Nestlé commissioned two factories in Goa at Ponda and Bicholim respectively. Nestlé India is now putting up the 7th factory at Pant Nagar in Uttaranchal. Nestle’ Story Nestlé was founded in 1867 on the shores of Lake Geneva in Vevey, Switzerland and its first product was ―Farine Lactée Nestlé‖, an infant cereal specially formulated by Henri Nestlé to provide and improve infant nutrition. From its first historic merger 33 | P a g e

with the Anglo-Swiss Condensed Milk Company in 1905, Nestlé has grown to become the world‘s largest and most diversified food Company, and is about twice the size of its nearest competitor in the food and beverage sector. Nestlé‘s trademark of birds in a nest, derived from Henri Nestlé‘s personal coat of arms, evokes the values upon which he founded his Company. Namely, the values of security, maternity and affection, nature and nourishment, family and tradition. Today, it is not only the central element of Nestlé‘s corporate identity but serves to define the Company‘s products, responsibilities, business practices, ethics and goals. In 2004, Nestlé had around 247,000 employees worldwide, operated 500 factories in approx. 100 countries and offered over 8,000 products to millions of consumers universally. The Company‘s transparent business practices, pioneering environment policy and respect for the fundamental values of different cultures have earned it an enviable place in the countries it operates in. Nestlé‘s activities contribute to and nurture the sustainable economic development of people, communities and nations. Above all, Nestlé is dedicated to bringing the joy of ‗Good Food, Good Life‘ to people throughout their lives, throughout the world.

Nestle’ Brands Milk Products & Nutrition Beverages Prepared Dishes and Cooking Aids Chocolates & Confectionary A Maggi noodle is a brand of instant noodles manufactured by Nestlé. The brand is popular in Australia, India, South Africa, Brazil, Nepal, New Zealand, Malaysia, Singapore, Sri Lanka, Bangladesh, Pakistan, and the Philippines. In several countries, it is also known as "Maggi mee" (mee is Indonesian/Malay for noodles). Maggi noodles are part of the Maggi family, a Nestlé brand of instant soups, stocks, and noodles. In Malaysia, there are fried noodles made from Maggi noodles known as Maggi goreng. Maggi noodles recently introduced a new variety of its noodles, to cater for the health conscious like 'No MSG', 'Less Salt', and 'No Trans fat'. Wholewheat flour based noodle variation marketed by the name "Vegetable Atta Noodles" has been introduced in India (Atta flour is used in preparing most forms of wheat based breads in India) and caters to health conscious buyers wary of the refined flour 34 | P a g e

used in the regular Maggi noodles. This move helps the brand in India as suburban mothers, who feed the noodles to children as an afterschool snack, are the primary customers of the brand. Recently, a line of rice noodles and whole wheat with pulses, carrots, beans, and onions has also been introduced in India. In fact, "Maggi" has become a well-known brand for instant noodles in India and Malaysia. Nestlé India Ltd (NIL) offered a variety of culinary products such as instant noodles, soups, sauces and ketchups, cooking aids (seasonings), etc., under the Maggi brand (Refer to Exhibit II for Maggi's product portfolio as of mid-2006). Of these, instant noodles had been NIL's main product category in the culinary segment since the launch of Maggi 2 Minute Noodles (Maggi noodles) in 1982. Over the years, Maggi noodles became a popular snack food product in India. In mid 2008, New Zealand supermarkets introduced replacement formulations for its Beef, Oriental, and Curry flavours. A new feature is an extra sachet containing dehydrated vegetables. Maggi claims the new range contains 88% less total fat and 86% less saturated fat than the average of top-three (unnamed) 2-minute-noodle competitors. The new Maggi range also has considerably lower fat than its own previous formulation. However, the salt content has been increased by 31 percent. Consumers have not reacted well to the new formulations, complaining that they want the original chicken flavour back Claimed to be "2 minute noodles", The Maggi noodle cake and seasoning is added into boiling water for two minutes and it is ready for consumption. Egg, seaweed, boiled vegetables or lemon can also be added to the noodles for a better flavour. Market Summary TARGET MARKETS Primary target: Children (