CHAPTER 1

THE EVOLVING INDIAN

ECONOMY

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Introduction

Since the time we got independence till around the late 90s, Indias economy was not really

progressing at a fast pace and about this period, it can be said, that to be economically strong we

had miles to go and a lot more to achieve. Our imports were high, value of exports were low, we

were slow to catch up with the fast changing technology changes happening around the world

and deficits of the Government were on a rise, nationally as well as globally.

In 1991, the then Prime Minister of India, Dr. Manmohan Singh, approached the IMF for loan to

repay the huge deficit in balance of payments. The loan was approved on pre-conditions that

such policy measures be undertaken in the country, which will help transform the economy from

a slow growing one into an emerging economy. This set the genesis to the Liberalization

policies which were thenceforth undertaken. By way of these policies, the license raj was

abolished which meant boosting the growth of industry domestically through more freedom of

entry; FERA (Foreign Exchange Regulation Act) changed to FEMA (Foreign Exchange

Management Act), wherein foreign exchange was encouraged but monitored and managed and

not just restricted and hence a rise in FDI through MNCs. The entry of MNCs changed the

employment scenario in India. Job opportunities and income levels rose, thus giving rise to a

new class of Indians, namely the Upper Middle Class. Indias growth did not stop at that the

Liberalization policies further upshot into the process of Privatization and further into

Globalization, today making us a country in contention to be among the super powers by 2020.

The change that has effected so far has made India move into a scale where change is the rule.

Adaptability towards change has become the order of the day. Today, India is at an advantage

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because it has the largest population in the category of workable individuals. Which means that

the ability of the population to contribute towards GDP and productivity is higher compared to

other countries. Today we have a population of literate and tech savvy youngsters who have

great potential to change the face of the nation.

For the rate of development that we have achieved today in the field of ICT (Information &

Communication Technology), we must acknowledge the contribution of our Late Prime

Minister, Rajiv Gandhi, who introduced the computers to India during the 1985 Asian Games,

which we were the host country. The introduction of computers in India at the initial stages had

a lot of criticisms and revolting from union groups who felt that jobs would be lost. But

gradually as the benefits were demonstrated, the change was welcomed. Since then, changes

have been revolutionary. The software export industry developed, reaping dollars for India, the

BPO sector developed, networking through the internet became a necessity and gradually its

effects spread to the mobile technology. Internet became such a tool that it made its impact in

India with more and more users realizing its importance.

The result is that today, there are around 120 million internet users today. This represents a

penetration of 7% of the population thus having huge opportunity for further growth. This also

according to the McKinsey & Company Report, December 2012, makes it the second largest

national group, only behind China.

Corporate India taking advantage of this huge base of internet users, uses this media to

promote their products, by providing the customers ease and convenience of shopping.

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It has been observed that the young and dynamic user population in India is driving the growth

of online consumption and is using the internet in sophisticated ways that are in line with

developed countries. With almost 900 million mobile phone users in the country, broadband and

internet services are expected to grow through wireless modes.

Internet is getting into the daily life of most people and mobile internet will drive the growth of

E-Commerce, Banking, Education, Healthcare and Entertainment in the near future. Internet has

also brought significant changes the way businesses and e-commerce is being run today. Social

media is gaining dominance in our society and taking the centre stage in defining how businesses

are engaging with potential customers.

India has rising levels of urbanization, rapid growth in the consumer base, and one of the most

youthful demographic profiles worldwide. The populations median age is 25.1 years, which is

among the lowest in the world and 58 percent of the population is under the age of 30 years. The

urban population is already sizeable, at 377 million at the end of 2013, or 31 percent of Indias

total population.

In a nutshell the following factors are encouraging the growth of the use of e-transaction in

business:

Growth of income levels

Growth of literacy among the Indian youth

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 Liberalized policies encouraging entry of foreign companies which has increased our

exposure to the world

Technology literate

Internet revolution

Mobile technology

Change in mindset of Indians towards rapid adaptation and understanding towards

change

Increasing urbanization

Rural penetration by companies, exposing them to the larger world

Change in Consumer Behaviour from Unbranded to Branded Products

As is observed, Can't Touch, Won't Buy Mentality of Indian Consumers is being transformed

into more aware and bold consumers and The Retail Sector is transforming into the E-Tail

Sector - The World can sense the potentials of growth of the Sector

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 CHAPTER 2

REVIEW OF

LITERATURE

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(Ranganathan & Ganapathy, 2002) The rapid growth in the electronic commerce over the

Internet has fuelled predictions and speculations about what makes a business-to-consumer

(B2C) web site effective. Yet, there are very few empirical studies that examine this issue. We

examined the key characteristics of a B2C web site as perceived by online consumers. Based on

a questionnaire survey of 214 online shoppers, we empirically derived four key dimensions of

B2C web sites: information content, design, security, and privacy. Though all these dimensions

seem to have an impact on the online purchase intent of consumers, security and privacy were

found to have greater effect on the purchase intent of consumers. The implications of the

findings for online merchants are discussed.

(Shelly & Ann, 2003) The authors consider the role of gender as it relates to e-commerce and

offer a conceptual framework that attempts to explain why women are less satisfied than men

with the online shopping experience. Perceived emotional benefits are discussed as a primary

reason women lack support for e-commerce activity. Additional concepts in our model include

trust (i.e., skepticism) and practically (i.e., convenience). Our survey findings revealed that these

three concepts emotion, trust and convenience predicted womens dissatisfaction (and mens

satisfaction) with online shopping, as well as men and womens actual shopping behavior. The

authors offer ideas to help e-marketers from stronger emotional bonds with female shoppers.

(Kaur & Singh, 1999) The retail boom in India brings tremendous opportunities for foreign as

well as domestic players. The changing lifestyle of the Indian consumer makes it imperative for

the retailers to understand the patterns of consumption. The changing consumption patterns

trigger changes in shopping styles of consumers and also the factors that drive people into stores.
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Hence, the key objective of this paper is to uncover the motives that drive young people to shop

in departmental stores or malls. A sample of 115 students has been taken and their responses

have been gauged through a personally administered, structured questionnaire. The results

reveal that the Indian youth primarily shop from a hedonic perspective. They importantly serve

as new product information seekers, and the retailing firms can directly frame and communicate

the requisite product information to them. As not much work in India has been done in this

context, the paper seeks to provide fruitful insights into the motives of Indian youth that can

benefit academics as well as marketers.

(Prasad & Aryasri, 1973) Retailing in India is an unchartered territory. Food and grocery is the

most promising area for setting up retail business in India. An understanding of shopper retail

format choice behaviour will enable retailers to segment their market and target specific

consumer groups with strategies premeditated to meet their retail needs. The purpose of this

paper is to make a detailed study on the effect of shoppers' demographic, geographic and

psychographic dimensions in terms of format choice behaviour in the fast growing Indian food

and grocery retailing. Descriptive research design is adopted applying mall intercept survey

method using structured questionnaire for data collection. Both descriptive (mean and standard

deviation) and inferential statistical tools like ?2, factor analysis and multivariate analysis are

used to analyse the data collected from 1,040 food and grocery retail customers from upgraded

neighbourhood kirana stores, convenience stores, supermarkets and hypermarkets in conjoint

cities of Secunderabad and Hyderabad in Andhra Pradesh in India. The findings suggest that

shoppers' age, gender, occupation, education, monthly household income, family size and

distance travelled to store have significant association with retail format choice decisions. The

choice decisions are also varied among shoppers' demographic attributes. The findings from
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shoppers' psychographic dimensions like values, lifestyle factors and shopping orientations

resulted in segmentation of food and grocery retail consumers into hedonic, utilitarian,

autonomous, conventional and socialization type. The study has practical implications for food

and grocery retailers for better understanding the shopper behaviour in the context of changing

consumer demographic and psychographic characteristics in an emerging Indian retail market.

The findings may help the retailers to segment and target the food and grocery retail consumers

and, as a consequence, to undertake more effective retail marketing strategies for competitive

advantage. Given the absence of published academic literature and empirical findings relating

to store format choice behaviour in food and grocery retailing in India, this study may serve as a

departure point for future studies in this area of concern. The research is also relevant to retail

marketers in terms of format development and reorientation of marketing strategies in the fastest

growing Indian retail market

A Report by ASSOCHAM on E-Commerce Market in India

The report of ASSOCHAM E-Commerce Market in India - 2013-2023, is based on the survey

responses conducted among 3500 traders in the metros of India, namely. Delhi. Mumbai.

Chennai, Bangalore, Ahmedabad and Kolkatta.

The E-Commerce market in India has been growing by leaps and bounds for the last few years.

the trend is expected to continue as the e-commerce market in India is estimated to be worth $16

billion in 2013 and is expected to touch $56 billion by 2023, according to the latest

ASSOCHAM report. Consumer behaviour and shopping trends have helped the Indian e-

commerce industry to record a staggering 85% growth in 2013. The e-commerce market in India

will control 6.5 percent of total retail market by 2023.

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The results claim that Mumbai leads the other cities in number of online shoppers, followed by

Delhi and Kolkatta. It is surprisingly observed that Bangalore which is the Silicon Hub of India,

does not feature among the top 3 places despite very high technology infrastructure and a large

number if technology professionals who are quite used to the internet usage.

Young generation on the internet has emerged as the driving force behind the growth of the e-

commerce industry in India. Nearly 90 percent of the online shoppers in India belong to the 18-

35 years age group, while 8 percent fall in the 36-45 years age group. While classifying the

online shoppers based on gender, men contribute more to online shopping revenue. Nearly 65

percent of online shoppers in India are male against 35 percent who are females.

Source : ASSOCHAM Report, December 20, 2013

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According to the Report, the products bought and sold online are : Gift articles (58%), which

remain the favourite among online shoppers in India, followed by Books (42%) and then

Electronic Gadgets (41%).

The survey also attempted to understand the reluctance of people who refrain from online

shopping and the results were as follows :

30 percent people buy from retail stores but research about the product online

25 percent were skeptical about online security and did not want not share their

financial information online.

20 percent were of the view that shipping costs are often high and hence deters

them from online shopping

15 percent are unsure about the handling of the product during transit and hence

receiving it in good condition

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 CHAPTER 3

THE INDIAN FMCG

SECTOR

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Summary

The Fast-Moving Consumer Goods (FMCG) sector is an important contributor to Indias GDP

and it is the fourth largest sector of the Indian economy. Items in this category are meant for

frequent consumption and they usually yield a high return. The most common in the list are toilet

soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and

household accessories and extends to certain electronic goods. The Indian FMCG sector, which

is the fourth biggest sector in the Indian economy, has a market size of `2 trillion with rural India

contributing to one third of the sectors revenues.

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The Indian FMCG sector is highly fragmented, volume driven and characterized by low margins.

The sector has a strong MNC presence, well established distribution network and high

competition between organized and unorganized players. FMCG products are branded while

players incur heavy advertising, marketing, packaging and distribution costs. The pricing of the

final product also depends on the costs of raw material used. The growth of the sector has been

driven by both the rural and urban segments. India is becoming one of the most attractive

markets for foreign FMCG players due to easy availability of imported raw materials and

cheaper labour costs.

The FMCG sector is an upcoming and booming sector within the Indian economy. Its

contribution to the national GDP is increasing over the years. The Indian FMCG sector is the

fourth largest in the economy and has a market size of 13.1 billion USD. Well established

distribution networks, as well as intense competition between the organized and unorganized

segments are the characteristics of this sector. FMCG in India has a strong and competitive MNC

presence across the entire value chain. The middle class and the rural segments of the Indian

population are the most promising market for FMCG.

With a population of over one billion, India is one of the largest economies in the world in terms

of purchasing power and increasing consumer spending, next to China. In the last decade, the

FMCG sector has grown at an average of 11% a year; in the last five years, annual growth

accelerated at compounded rate of 17.3%. The sector is characterized by strong presence of

global businesses, intense competition between organized and unorganized players, well

established distribution network and low operational cost. Availability of key raw materials,

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cheaper labor costs and presence across the entire value chain gives India a competitive

advantage. During 2012, the country witnessed high inflation, muted salary hikes and slowing

economic growth, which affected the FMCG sector with companies posting deceleration in

volume growth in their quarterly results. However, this trend was partially reversed in 2013 as

growth of this sector was attempted through rural dwellers that were then expected to see a rise

in their disposable incomes.

Overview of the Performance of Some Components of the Indian FMCG

Sector

Household Care

The fabric wash market size is estimated to be USD 1 billion, household cleaners to be USD

239 million, with the production of synthetic detergents at 2.6 million tonnes. The demand for

detergents has been growing at an annual growth rate of 10 to 11% during the past five years.

On account of convenience of usage, increased purchasing power, aggressive advertising and

increased penetration of washing machines, the urban market prefers washing powder and

detergents to bars. The regional and small unorganized players account for a major share of the

total detergent market in volumes. Household Care category recorded robust volume and value

growth during the year through focused innovation in the portfolio to provide greater consumer

value. Vim bar continues to delight consumers by delivering superior performance and new

offerings like the Anti-Germ Bar and the Monthly Tub Pack. Vim liquid continues to develop

the liquid dish wash category driven by superior product quality and strong advertising. It has

effectively accomplished the dual job of growing the liquids market by reaching out to more

households, while increasing consumption in existing households. Domex continued to provide

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clean and germ free toilets to the consumers.

Personal Care

The personal care products (PCP) market in India is estimated to be worth USD 4 billion per

annum. Personal hygiene products (including bath and shower products, deodorants etc.), hair

care, skin care, colour cosmetics and fragrances are the key segments of the personal care

market. Each of these segments exhibits its unique trends and growth patterns. For example,

the largest segment of personal hygiene products, largely dominated by bar soaps, has grown

at 5% p.a. over the last five years. In comparison, the second largest segment, hair care

products has seen a much higher growth of 9-10% p.a. during the same period.

The hair care market can be segmented into hair oils, shampoos, hair colorants &

conditioners, and hair gels. The coconut oil market accounts for 72% share in the hair

oil market.

The skin care market is at a primary stage in India. With the change in life styles,

increase in disposable incomes, greater product choice and availability, people are

becoming more alert about personal grooming.

The oral care market can be segmented into toothpaste 60%; toothpowder 23%;

toothbrushes 17%.

Food & Beverages

Food processing industry is one of the largest industries in India, ranking fifth in terms of

production, growth, consumption, and export. The total value of Indian food processing

industry is expected to touch USD 194 billion by 2015 from a value of USD 121 billion in

2012, according to Indian Council of Agricultural Research (ICAR). The packaged food

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segment is expected to grow 9% annually to become a 6 lakh crore industry by 2030,

dominated by milk, sweet and savoury snacks and processed poultry, among other products,

according to the report by CII-McKinsey.

The ready-to-drink tea and coffee market in India is expected to touch 2,200 crore in next

four years, according to estimates arrived at the World Tea and Coffee Expo 2013. Branding

could drive the next growth wave in the countrys food processing sector. The total soft drink

(carbonated beverages and juices) market is estimated at USD 1 billion. The market is highly

seasonal in nature with consumption varying from 25 million crates per month during peak

season to 15 million during offseason. The market is predominantly urban with more than

25% contribution from rural areas. Coca cola and Pepsi dominate the Indian soft drinks

market.

Market Share of Companies in a Few FMCG Categories (as on March 2013)

Perfumes & Traditional Corporate Global MNC

Deodorants Sector (Attar Indian Fragrance
Artisans) & In- Fragrance Houses :
house Blenders Houses: Givaudan, IFF,
(Mass Oriental, Firmenich,
Fragrance Gupta, Seth, Symrise,
SMEs) (35%) Khatri, Saachi, etc.
FFC, Kelkar (40%)
(25%)
Hair Oil Marico (42%) Dabur (15%) Bajaj (8%) Emami (5%)
Shampoo HUL (46%) P&G (24%) Cavin Care (10%) Dabur (6%)
Oral care Colgate (50%) HUL (23%) Dabur (13%) -
Skin Care HUL (59%) Dabur (7%) Emami (7%) Loreal (6%)
Fruit Juice Dabur (52%) Pepsico (35%) - -
Source : PwC Report on FMCG 2013

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Reasons for Growth of the Indian FMCG Sector

Urban Segment the Biggest Contributor to the Sectors Revenue

The urban segment is the biggest contributor to the sector, accounting for two-thirds of total

FMCG sector revenue. The semi-urban and rural segments which are growing at a brisk

pace, currently account for 33.5% of revenues of the FMCG sector. FMCG products account

for 53% of total rural spending. During Financial year 2011, over 80% of FMCG products

grew at a faster pace in rural markets as compared to urban ones with premium skin care

brands growing twice as fast in rural areas than urban brands. Lower priced packs have

increased the penetration of the FMCG sector in rural India. The sectors that are witnessing

high growth include salty snacks, refined edible oil, healthcare products, iodised salt, etc.

Hair oils, toothpastes and shampoos have quite high penetration in both urban and rural

markets while the sales of instant noodles, floor cleaners and hair dyes is increasing in rural

markets due to higher awareness.

There are a total of 12-13 million retail outlets in India, with kirana stores being the majority

of them. Some of the major FMCG players in India include ITC, HUL, Nestle, Dabur,

Godrej Consumer, etc.

Growth in Rural Market Bodes Well for the FMCG Sector

The rural market is currently worth approximately USD 9 billion in consumer spending in the

FMCG space annually. Rural India accounts for 700 million consumers or 70% of the countrys

population, accounting for one-third of the total FMCG market. According to a report by

Nielsen, the Indian rural market is tipped to grow more than ten-fold to USD 100 billion by

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2025, presenting a huge opportunity for leading FMCG brands. One of the key drivers of the

rural FMCG market has been the unprecedented growth of smaller packaging options. Lower

priced packs have improved accessibility and increased the pace of penetration of FMCG

products in rural areas. According to Nielsen, FMCG growth in the rural sector for the quarter

ended March 2012, stood at 17.2%, surpassing the urban segment at 16.5%. The purchasing

power in rural areas has outpaced that of urban areas as non-farm incomes improve, bolstering

consumer spending on FMCG products. Rural consumption growth has outpaced urban

consumption with the percentage increase in monthly per capita expenditure in rural markets

surpassing its urban counterparts during the period 2009-2012. Significant progress in literacy

levels, higher government spending on welfare programs, growing support to agricultural sector,

which is the major occupation of rural India and better infrastructure and DTH and mobile

connections have also acted as a catalyst in bolstering rural demand for FMCG products. Several

measures taken by the government to support the rural population including higher minimum

support prices (MSPs), loan waivers, and disbursements through the National Rural Employment

Guarantee Act (NREGA) programme have bolstered the purchasing power of this segment.

Growing Popularity of Modern Retail Bodes Well for the Indian FMCG Industry

This Indian FMCG market is highly fragmented and a major part of the market constitutes of

unorganized players selling unbranded and unpackaged products. FMCG goods are marketed

by two primary sales channels - General Trade and Modern Trade.

General Trade includes kirana stores, which are the largest sales channel forming 95% of

overall retail sales. While, the Modern trade facilitates comfortable and modern store

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experience, availability of a wide variety of categories and brands under a single roof and

compelling value-for-money deals, which attracts consumers to organized retail in a big way.

However, modern trade is still an urban phenomenon with 17 key metros contributing to

73% of overall modern trade in India. FMCG product segments such as packaged rice, liquid

toilet soaps, floor cleaners, breakfast cereals, air fresheners & mosquito repellent equipment

have a higher penetration in modern trade channel.

The growing popularity of modern retail is expected further to bolster the growth of the

FMCG sector by aiding distribution channels. Rural distribution network has improved

through projects like Shakti Choupal Sagar, Aadhar and Hariyali Bazaar, increasing

penetration of FMCG products into the segment. While the share of modern retail in India

currently stands at only 6% of total retail industry; it is estimated to reach 10.2% or 4.87 lakh

crore by 2015, as private label products gain popularity while shoppers become aware of

increased choices and various deals being offered. In urbanized distribution, organized retail

boosts shelf space visibility.

Increasing its direct coverage, HUL doubled its products coverage to the remotest

areas of the country through a combination of increasing HULs direct coverage

through distributors and its flagship rural distribution programme, Project Shakti. A

rural distribution initiative that targets small villages, Project Shakti benefits by

enhancing direct rural reach and also creates employment opportunities for people in

rural India. Through Project Shakti, it has 48,000 Shakti entrepreneurs (Shakti

ammas) in 15 states. The Shakti ammas cover over 135,000 villages and serves 3.3

million households.

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 Daburs ambitious Project Double, which was aimed at enhancing direct coverage in

rural India, has been successfully implemented across 10 key states that contribute to

72% of the rural FMCG potential. Within these states, 287 prosperous districts were

targeted for this drive. Field resources were more than doubled as a part of the

project. Rural salesmen were provided mobile devices through which they report

sales and coverage data. Post the implementation of this project it has witnessed an

increase in its product width in rural markets which has translated into higher and

more profitable sales.

Rising Per Capita Income and Changing Lifestyle Augers Well for the FMCG Sector

Indias per capita income, a measure of living standards, is projected to have increased 11.7

per cent to 5,729 per month in 2012-13 at current prices, up from 5,130 in the previous

fiscal. The per capital income at current prices during 2012-13 is estimated to have stood at

68,747, up from 61,564 in FY 2011-12. Rising per capital incomes are likely to bolster

discretionary spending, driving growth in the Indian FMCG sector. The per capita income in

real terms (at 2004-05 constant prices) during 2012-13 is likely to attain a level of 39,143 as

compared to the First Revised Estimate for the year 2011-12 of 38,037. According to the

IMF, Indias per capita income is tipped to grow at a CAGR of 8.8 per cent to USD 2,228.5

over a period of 2012-17. In 2012-13, Indias per capita income stood at USD 1,535.6. Also,

rising number of working women and the reducing popularity of the joint family system has

increased the demand for processed and packaged food products. Further, rising awareness

has also boosted demand for personal care and healthcare products. People in the rural areas

have become more open to consuming modern packages food products and personal

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grooming products as satellite TV and internet powers awareness.

Also, the fast growing economy provides scope for growth in FMCG space. Despite the current

slowdown, India remains one of the fastest growing global economies, giving huge opportunities

for leading FMCG players to expand their brand presence, introduce new products and foray into

untapped markets. Being a consumer-driven economy, India is one of the leading FMCG

markets in the world.

New Launches and Product Extension by FMCG Companies to Boost Growth and Market

Share

New launches, innovation and product augmentation are many of the few motivational factors

for a FMCG company that has the potential to increase their profitability to a greater extent.

As Indian customers are becoming more global in their aspirations and desires, their appetite

to consume products is also increasing. Robust demand for existing FMCG products are

encouraging more FMCG players to extend their existing brand and expand their product

portfolio as well, bolstering the Indian FMCG space. Moreover, in a bid to garner higher

market share and sustain long-term growth, most of the FMCG companies are going for brand

extension strategy. Various big industrial players launched new and innovative products and

ideas during FY13. For instance,

HULs one of the largest brands, Lifebuoy aims to change hand washing behavior of

people by educating them about health and hygiene. At the Mahakumbh Mela,

Lifebuoy partnered with over 100 restaurants to raise awareness about hand hygiene.

Over 2.5 million Rotis (carried the stamp Lifebuoy se haath dhoye kya? and reminded

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 people to wash their hands before eating.

HULs Kissan strengthened its natural advantage by re-positioning itself on

Goodness of 100% real. The idea was to give consumers a real experience in the

products they buy and through participation in activities that help them connect to

nature. This inspired the launch of Kissanpur.

Marico entered the breakfast category by launching Saffola oats in various flavors. It

also launched new products in the hair care and skin care segments. The acquisition of

Paras Healthcare in 2012, helped it extend into the male personal care business where it

gained some traction.

For Godrej, the growth came in from new channels, product innovation, and pollination

across regions and expansion of the distribution network. New launches such as creme-

based hair colour and extension of Cinthol into categories such as face wash and

moisturizers gave an added impetus to the overall business. HUL also went in for

extensions in brands such as Lux, Pepsodent and Pureit.

For Dabur, the year 2012 undertook a mega initiative to substantially expand its

distribution footprint and drive profitable growth. This initiative was aimed at doubling

the direct distribution reach in rural markets, customizing trade promotions and

providing focused servicing through a dedicated sales team in these markets.

Porters' Five Force Analysis of Indian FMCG Industry

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 Barriers
to Entry-
Modest

Bargaining Industry Bargaining

Power of Competiti Power of
Suppliers- veness- Customers
Modest High -Low

Threat of
Substitutes-
High

In order to determine industry attractiveness and long-run industry profitability of the Indian

FMCG Industry, the Porters five forces analysis proves fruitful.

Porters five forces are: (1) Barriers to Entry and exit, (2) Threat of substitutes, (3) Buyer

bargaining power, (4) supplier bargaining power, and (5) Industry Competition.

1. Barriers To Entry And Exit: The Indian FMCG Industry is characterized with

modest entry and exit barriers. Integrated business model and increasing capital

requirement in the industry restrict new entrants. Huge investments in setting up

distribution networks and promoting brands and competition from established

companies pose restriction to entry.

2. Threat Of Substitutes: Being an essential commodity the demand for consumer

products is elastic. Multiple brands positioned with narrow product differentiation.

Companies entering a category /trying to gain market share compete on pricing

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 which increases products substitution. Hence, threat of substitute is high in the

industry.

3. Buyer Bargaining Power: High brand loyalty for some products, thereby

discouraging customers product shift. But low switching cost and aggressive

marketing strategies under intense competition within the FMCG companies, induce

Customers to switch between products, thereby driving value for money deals for

consumers.

4. Supplier Bargaining Power: Prices are generally governed by international

commodity markets, making most FMCG companies price takers. Due to the long

term relationships with suppliers etc., FMCG companies negotiate better rates

during times of high input cost inflation

5. Industry Competition: Competitiveness among the Indian FMCG players is high.

With more MNCs entering the country, the industry is highly fragmented.

Advertising spends continue to grow and marketing budgets as well as strategies are

becoming more aggressive. Private labels offered by retailers at a discount to

mainframe brands act as competition to undifferentiated and weak brands.

Outlook on Domestic FMCG Sector

The outlook for Indian FMCG industry looks bright amid higher income levels and

the expansion of the model retail format. Moreover, expectation of rise in disposable

incomes of rural dwellers due to the direct cash transfer scheme may bolster the

sectors performance in the near future. Overall, FMCG sector has a great

opportunity for growth in the country, with the rising disposable incomes, increasing

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 rural consumption, the growing population, education, urbanization, rising modern

retail, and a consumption-driven society. Low cost labor and low per capita

consumption of almost all products in India, gives the country a competitive

advantage as many MNC's have established their plants in India to outsource for

domestic and export markets. Meanwhile, there exists huge untapped opportunities

for the sector. Indian companies have their presence across the value chain of FMCG

sector, right from the supply of raw materials to packaged goods in the food-

processing sector. This brings India a more cost competitive advantage.

However, the sharp depreciation in the value of rupee, new norms of standard-size

packaging, increase in raw material costs due to upward spiraling interest rates and

inflation together might dent the performance of the FMCG sector which ruled the

bourses in the year 2013. Increasing urbanization and higher disposable incomes are

encouraging many consumers to move from unbranded to branded products,

bolstering growth in the FMCG market. Despite the current slowdown, demand for

premium products in the health and wellness space is rising, encouraging companies

to launch more premium products. Moreover, demand for sophisticated personal care

products is also on the rise as people become beauty and health conscious. Hence,

observed is a positive outlook to FMCG companies for the near future following

strong consumption demand of the country.

The FMCG Sector in a Nutshell :

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 The overall fast moving consumer goods (FMCG) market is expected to increase at a

compound annual growth rate (CAGR) of 14.7 per cent to US$ 110.4 billion during

20122020, with the rural FMCG market expected to increase at a CAGR of 17.7 per

cent to US$ 100 billion during 20112025.

Rising incomes and growing youth population have been key growth drivers for the

sector. Brand consciousness has also aided demand. It is estimated that First Time

Modern Trade Shoppers (FTMTS) spend will reach US$ 1 billion by 2015.

Organised retail share is expected to double to 1418 per cent of the overall retail
market by 2015.

The Indian FMCG industry represents nearly 2.5% of the countrys GDP.

The industry has tripled in size in past 10 years and has grown at 17% CAGR in the
last 5 years driven by rising income levels, increasing urbanization, strong rural

demand and favourable demographic trends.

The industry has witnessed healthy foreign direct investment (FDI) inflow, as the
sector accounted for 3 per cent of the countrys total FDI inflow in the period April

2000 to October 2013. Cumulative FDI inflows into India from April 2000 to April

2013 in the food processing sector stood at 9,000.3 crore, accounting for 0.96% of

overall FDI inflows while the soaps, cosmetics and toiletries, accounted for 0.32% of

overall FDI at 3,115.5 crore.

Food products and personal care together make up two-third of the sectors revenues

Rural India accounts for more than 700 million consumers or 70% of the Indian
population and accounts for 50% of the total FMCG market.

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 With changing lifestyle and increasing consumer demand, the Indian FMCG market
is expected to cross $80 billion by 2026 in towns with population of up to 10 lakh.

India's labor cost is amongst the lowest in the world, after China & Indonesia, giving
it a competitive advantage over other countries.

CHAPTER 4

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 EVOLUTION OF

INTERNET IN INDIA

Brief Timeline of the Development of Internet Infrastructure in India

1995 to 1998 : Introduction ad early growth

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The internet was first introduced by the Government owned agency. VSNL (Videsh Sanchar

Nigam Limited) in August 1995. Coincidentally the first mobile phone call in India was made in

the same month. Internet services was initially largely a monopoly of the VSNL, and restricted

to the four bog metropolitan areas New Delhi, Mumbai, Chennai and Kolkata. By the end of

1998, there were more than 1 million internet users and cybercafs became popular in the

metros.

1998 to 2009 : Entrance of Private players and Widespread Adoption by Users

Following the introduction of a new ISP policy, the barriers for private players to provide

internet services were reduced drastically and many of them started offering internet services in

1999-2000. By this time, the number of internet users had grown tenfold since VSNLs days,

reaching 10 million. The Government introduced its first broadband policy, laying out its aim to

connect every part of the country. By the end of 2009, there were more than 60 million internet

users in India, predominantly accessed through PCs.

2009 to Present : The Mobile Revolution

Although data services on mobiles were introduced in 2000, the huge growth in the user base

did not occur until the introduction of 3G services that provided a huge boost to mobile internet

access. By the end of 2010, almost 40 percent of the 100 million users were accessing the

internet through a tablet or a mobile device. The introduction of 4G services in the cities such as

Bangalore and Kolkata is likely to provide further impetus to mobile based internet. Today

Indias nearly 120 million- strong internet user base is the second largest in the world.

Indias Internet Landscape

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Indias internet evolution reflects the transition of its telecom and internet infrastructure industry

from state controlled to private sector led. On average, Indias internet users spend 20 to 25

hours online per month, broadly in line with usage in Latin America, where the average internet

users in Brazil and Argentina spends 28 hours online.

Out of the 1.25 billion people in India, only one-fifth of the people use internet and only 50

percent of these use the social media. The growth of social media sites, especially Facebook, is

accelerating the adoption rate.

India, which accounts for the third largest online user-base globally after China and the US, has

had the lowest internet penetration growth in Asia Pacific (APAC) at 17.4% IN 2014, research

firm eMarketer stated in a report. However, it left behind major emerging markets in APAC like

China and Indonesia in terms of growth in online users as of May 2014. Asia-Pacific will boast

of over 1.33 billion internet users by March 2015, the largest online population of any region in

the world, eMarketer stated in the report.

India led Asia Pacific nations in user growth at 28.9% followed by Indonesia (14.9%), China

(6%), Australia (1.7%), Japan (0.8%) and South Korea (0.7%). "Double-digit growth rates in

India's internet population are expected throughout eMarketer's forecast period (2012 - 2018).

Industry body the Internet And Mobile Association of India (IAMAI) expects India's internet

user base to touch 243 million by this year end, projecting a year-on-year growth of 28%. As

per TRAI data, the country's internet subscriber base stood at 238.71 million as on December 31,

2013.

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Regarding the use of internet on mobile phones, which TRAI claims to be 933 million users,

only 10 percent access social media sites from their mobiles. However, the advent of low priced

smartphones and cut-throat price competition in internet tariffs is expected to change the trend

and is expected to make more and more users in the country tech and net savvy.

Source: www.trai.gov.in

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 CHAPTER 5

E-COMMERCE IN INDIA

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Overview

As more and more people accessing the Web through mobile phones, the Internet user base in

the country was projected to touch 243 million by June 2014, a year-on-year growth of 28 per

cent.

According to the Internet And Mobile Association of India (IAMAI), the Internet user base in the

country stood at 190 million at the end of June, 2013.

For the whole year 2013, the Internet user base grew 42 per cent to 213 million, from 150 million

in 2012. Of the total user base, mobile Internet users accounted for 130 million in 2013, a growth

of about 92 per cent from 68 million in 2012.

IAMAI expects the number of mobile Internet users to touch 185 million by June 2014,

accounting for about 76 per cent of the Internet user base in the country.

Year 2013 was the year of Internet. The numbers affirms the fact that Internet in India is now

becoming inclusive, which augurs well for the industry and society at large, IAMAI said.

The growth of Internet users has also led to a substantial growth of other digital industries such

as e-commerce and digital advertising, it added.

Digital commerce market stood at Rs. 8,146 crore in December 2007 and it grew to Rs. 47,349

crore by the end of 2012. At the end of December 2013, digital commerce in India grew

to Rs. 62,967 crore.

Indias E-Commerce market is at an early stage but is expected to see huge growth over the next

four to five years. Over the past 12 months, venture capitalists have invested heavily in Indias

E-Commerce market, new players have emerged, and the E-Commerce ecosystem has
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developed, presenting a huge opportunity for companies willing to work through some of the

logistics and payments challenges in India. E-Business professionals with an interest in the

online retail market in India must understand how India differs from other leading E-Commerce

markets and where hurdles do and dont exist. This chapter outlines some of the local nuances

and explains the key trends shaping E-Commerce in India

Indias E-Commerce Market is Small but will Grow Strongly

An increasing number of global companies are eyeing the rapidly growing E-Commerce

market in India as improvements in infrastructure are made and Indias economy grows. As

the worlds 11th largest economy (and fourth-largest emerging economy after BRIC peers

China, Brazil, and Russia), India is starting to appear on E-Business organizations lists of

key international markets.

While Internet penetration is low at just 10% of the overall population, the Government is

building infrastructure to improve and enable connectivity in metropolitan and rural areas.

And with the 2001 census showing an estimated English-speaking population of 125 million,

India currently appeals to global companies looking to sell online using their English-language

websites.

Currently, shoppers in metropolitan India are driving E-Commerce: These consumers are

primarily buying travel, consumer electronics, and books online. And although spending per

online buyer remains low, some 59% of online consumers in metropolitan India already make

purchases online at least monthly. Consumers in non-metropolitan areas will also help fuel

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growth; unlike online consumers in cities, they are more likely to shop online for goods that are

unavailable at local stores.

The E-Commerce Market in India is Poised for Rapid Growth

E-Commerce revenues in India will increase by more than five times by 2016, jumping from

US$1.6 billion in 2012 to US$8.8 billion in 2016. While US$8.8 billion is still less than other

countries in Asia Pacific, such as China and Japan, Indias CAGR is much higher than any

other country.

According to the ASSOCHAM report of 2012, titled, 'Trends in India's E-Commerce Market',

the following factors are influencing growth in this area:

Venture capitalists are bullish on E-Commerce growth : In 2011, venture capitalists

invested US$177 million in E-Commerce in India more than recent estimates of E-

Commerce investment in Russia in 2011. A partner at one of Indias top early and mid-

stage venture funds noted that Indias online population which is largely upper and

middle class has moved well beyond the initial stage of online shopping. Another

venture capital firm in India that is investing heavily in E-Commerce stated that it is

confident that consumers in both urban and nonurban areas are ready to shop online.

Investment firms are also diversifying to include retail sectors that have faced

challenges offline: Womens lingerie, for example, is expected to grow quickly online,

where women can purchase anonymously.

Online grocery shopping is starting to appeal to the upper- and middle-class

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 consumer : Grocery, traditionally a category that shifts online in the later stages of E-

Commerce development, has started to move online and is doing well with the middle

and upper class online shopper in metropolitan India. Revenues are small today but

poised to grow: MyGrahak.com, for example, expects to have a turnover of US$179.1

million by 2015. The site currently has only 22,000 registered users, but sign-up rates

are increasing by 25% per month. In 2012, the firm was focusing its efforts on raising

more capital to double warehouse capacity and improve logistics.

E-Commerce is expanding into non-metropolitan India: E-Commerce retailers in

India are expanding their offerings to the online population outside metropolitan India

and are investing heavily in the infrastructure to support these cities. Online apparel

retailer Myntra.com is already seeing demand for its products outside metropolitan India:

50% of its sales are outside Indias 10 biggest cities. To widen their reach, for example,

multiple retailers are building warehouses outside central locations; testing shipping

options that work in rural areas; offering payment options like cash on delivery (COD)

that provide options for the unbanked; and subsequently marketing these to semi-urban

and rural consumers. Additionally, retailers often view urban and rural users as having

two distinct goals: Many of the former shop online because they have more money but

cant access the products they want (such as unique or imported items), while many of

the latter shop online for things they need (such as shoes) but have no access cheaply to it

from where they live.

Large retailers are looking to build an online presence :Some brick-and-mortar retail

operations are also recognizing the opportunity online in India. For example, Croma, one

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 of Indias largest consumer electronics stores, moved online to sell its full range of

products. And global multi-brand, multi-channel retailers like Walmart that are currently

restricted by Indias foreign direct investment (FDI) laws are anxiously following

developments to take advantage of opportunities as they arise.

Social media and mobile are helping accelerate E-Commerce adoption : The social

and mobile trends that are prominent worldwide are also underway in India. With 51

million Facebook users, India is ranked as Facebooks third-largest audience in the world

after the US and Brazil. Social networks have not been major drivers of E-Commerce

transactions in other markets, yet these sites play an important role in driving consumers

online and getting them to engage with brands. And in mobile, India has close to 1

billion wireless subscribers: As of May 2012, the Telecom Regulatory Authority of India

reported more than 929 million wireless subscribers in the country. While 3G penetration

today is estimated to be in the low single digits and users complain of low network

speeds, mobile will be a key tool in helping users connect in a market where overall

Internet penetration remains low.

A Flexible Strategy is the Key to Success in Indias E-Commerce

Market

E-Commerce norms are still being established in India, where the E-Commerce market is just

developing and experienced E-Business professionals are still hard to find. The following

strategies have emerged out of observation in order to succeed in the E-Commerce business :

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 E-Businesses must be willing to work with many different partners : In India, no

single player today can handle all aspects of the E-Commerce business on behalf of

major retailers or brands. Instead, E-Businesses will need to manage every step of the E-

Business operation from site design to fulfillment solutions to employee training.

Leading E-Commerce sites in India today tend to build their capabilities rather than buy,

although that scenario is likely to change as more global players with existing vendor

partners enter the market. E-Businesses entering the Indian market must be aware of the

need to work with a variety of partners and be willing to work through the challenges of

integrating multiple solutions.

Savvy businesses will make mobile a part of the E-Commerce mix from the start :

While the mobile opportunity in India is nascent, it is undeniably going to be a critical

part of how consumers interact online. E-Businesses should take advantage of this

growing trend by including a mobile website as part of their offering ensuring that it

is accessible on both feature phones and smartphones, given the relatively low

penetration of smartphones in India today.

Multi-brand retailers should be ready to launch as soon as FDI constraints are

lifted : FDI regulations currently keep multi-brand retailers from establishing a business

in India: Amazon. com, for example, altered the business model it used when entering

other markets and launched in India with an online shopping service, Junglee.com. While

it is impossible to know exactly when and if the FDI restrictions will be relaxed, foreign

E-Businesses with an interest in India should map out their potential offerings in India

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 now so that they can move quickly when this type of investment is allowed. It will be

hard for slow movers to get a piece of the action, given that so many global companies

already have their sights set on the market.

Be prepared to move beyond English to differentiate longer term : In the research by

ASSOCHAM, it did not come across a single major site in a language other than English.

While it is a safe bet that online buyers in India will predominantly be English speakers

in the short term, global businesses often overestimate the number of consumers in India

who speak and understand English fluently. Global media sites have already taken notice

of Indias diverse online population: Yahoo, for example, provides news in Bengali,

Hindi, Malayalam, Marathi, and Tamil; MSN also offers a multilingual site. E-Business

leaders should consider multilingual websites as a potential long-term option for

differentiating their offerings and appealing to consumers who may understand English

but prefer a local language

These rapidly changing economic and social trends in India is changing the perception of the

Indian consumer. Companies are evolving in order to meet the growing demands of the Indian

consumer. The economic status has changed for the better, there is a creation of a new middle

class, and the population has growing income amongst them, which is together contributing to

the rise in internet usage among the population and that of the growth of the FMCG sector.

In the light of this background, the research project aims to understand how well has online

shopping caught up in India. Is it in the nascent or the developing stage? It also aims to

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understand what are the available potential options for companies to use internet as a major

tool to promote their products.

A research study with 200 as the sample size was conducted in the city of Mumbai among

online shoppers to understand the consumer behaviour towards purchasing Perfumes and

Deodorants online.

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 CHAPTER 6

THE INDIAN PERFUME

INDUSTRY

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The Indian economy may not be performing at what may ideally be regarded as a healthy rate.

However, the perfume industry in India is doing commendably. The Associated Chambers of

Commerce and Industry of India (ASSOCHAM) have in a latest report made some positive

projections about the industry.

According to the ASSOCHAM study the roll on and deodorant market in India is worth INR

1800 crore and its present yearly growth rate is 55 percent. The market for perfumes has a

growth rate of 30 percent per year and its present value has been estimated at INR 1500 crore.

The roll on market itself is worth only INR 400 crore as not many brands are there in domain. It

is expected that by 2015 the industry will be worth INR 10 thousand crore.

Perfume makers in certain regions like West Delhi are expected to perform really well. Sanative

Industrial Corporation is headquartered at Naraina Industrial Area and is in the method oil, mint

oil, and related raw materials business. The Director of Sanative Industrial Corporation, Achyut

Bhardwaj, states that the fragrance market in that region alone contributes INR 2 to 3 crore on a

monthly basis. Bhardwaj says that the oil is imported. For example clove comes from countries

such as Indonesia and Madagascar. They also have a distillation plant at Bahadurgarh where the

cleansing process takes place. The company has some of the leading Indian brands such as

Dabur and Baidyanath on its clients list. Bhardwaj also states that there are some pan masala

makers as well who use their essences.

India Perfume Industry - Unorganized Sector

The Secretary General of ASSOCHAM, D. S. Rawat, opines that the worth of the Delhi

fragrance industry is INR 40 crore and INR 5 crore comes from the unorganized sector. The

overall Indian market is valued at approximately 3700 crore, the unorganized sector is worth
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INR 1 thousand crore. Mr. Rawat feels that the Indian fragrance industry is still in its earlier

stages but the demand is still going up thanks to increasing levels of awareness and affinities

among the Indian middle class. This category of consumers is steadily accumulating higher

amounts of disposable income and is also not hesitant to spend on lifestyle products and have an

overall good feeling about themselves.

Present Trends in the Indian Perfume Industry

Mr. Rawat, further feels that people are nowadays more inclined towards personal hygiene and

grooming and perfumes are also slowly becoming integral parts of peoples wardrobes. All these

factors present a splendid opportunity of growth for the industry. Mr. Rawat feels that majority

of the growth of the perfume industry is coming from the increasing demand in tier II and III

cities. Companies are also looking to stop making metros their only area of focus and are trying

to come up with deodorants, colognes, and perfumes that can be used during the summer and are

also fairly affordable.

Indian Perfume Brands Performance

Karol Chemicals has designed a deodorant named Roadies that is performing fairly well. The

Marketing Manager of the organization, Rajeev Kumar, says that a 100 ml bottle of this product

is worth approximately INR 200, which leads to a profit ranging between 25 and 30 percent. On

the other end of the spectrum, Rajeev Kumar says that his company is experiencing no

competition from the international brands as they are mostly aiming at middle income people and

not the higher income ones. Their products are available across 15 states in the country. Majority

of their customers, according to Kumar, are from their target group. One of the major problem

areas for the perfume companies is false products. Kumar feels that the government should

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establish recycling units for the cans made from aluminum and used for packaging. This way the

empty bottles can be used again for making deodorant bottles.

The market is seeing a lot of competition with demand getting higher on a regular basis. Saurabh

Gupta who owns the Vanessa Incorporation, which makes the synonymous deodorant for ladies,

says that there is space for newer companies as some older companies have exited the market.

However, with the increasing competition, the makers are bringing their retail prices down.

According to him, the retailers are earning a profit ranging from 15 to 35 percent. There are

certain companies that are still making traditional perfumes called attar.

Rajesh Sharma who owns the Chander Kaala Perfumer Company, which is based in Naraina and

was set up during the 1960s, says it is manufacturing jasmine, rose, and other attar fragrances in

spite of high competition. Their products are worth between INR 20 to INR 150. Its raw

materials come from Kannauj and the finished products are sent to Russia, South Africa, and

some countries in the Middle East. The organization also possesses an automated factory and so

it needs lesser manpower. Sharma further states that the focus is on quality and this is why the

company gets the fragrance oils analyzed at certified state run labs.

Present make up of India perfume industry

Mens category comprises almost 60 percent of the entire Indian market. This segment is highly

divided and experiences constant changes with simultaneous alterations in lifestyle and attitude

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of people. Besides, the need of the young Indian men to stay properly groomed has increased its

chances of prosperity as well.

Women at the moment do not have too many choices but that segment is expected to see a sea

change with both the new and the established players looking to create greater awareness with

their media campaigns. This area also has some significant potential to grow.

Teenagers, both male and female, comprise a significant part of the overall perfume customer

group in the urban areas. It has been seen that they can spend any amount ranging from INR 500

to INR 2000 on fragrance products like deodorants, perfumes, and roll-ons. By definition, the

fragrances can be used throughout the year and thus cannot be termed as seasonal. However, the

ASSOCHAM study reveals that the maximum sale, especially of perfumes and deodorants,

happens between March and September in order to deal with sweat and stay fresh. The study

also reveals that deodorants sell the most in the coastal cities. In addition, perfumes are widely

used as gifts and more than 50 percent of the sales happen for such purposes. So, the perfume

companies are always looking at ways to improve the packaging and reinvigorate their products

to draw more consumers and increase their sales.

Top Perfume Brands in India

Armani

Giorgio Armani offers 86 different perfumes. Its first product came out in 1982. Following are

its latest offerings: Acqua di Gio Essenza, Armani Prive Figuier Eden, Acqua di Gioia Eau de

Parfum Satinee, La Femme Nacre, Armani Code Luna, Emporio Armani Diamonds Summer
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Fraiche for Men, Armani Code Sport Athlete, Emporio Armani Diamonds Summer Fraiche for

Women and Armani Code Ultimate.

Azzaro

The Azzaro brand was created in keeping with Loris Azzaro, its founder, who hailed from Sicily

and was born in Tunisia. It can be described as a typical sun infused perfume brand of the

Mediterranean region. Following are its major brands: Decibel, Chrome, Azarro Pour Homme

and Azarro Couture.

Burberry

Burberry was set up during 1856 by Thomas Burberry, a 21 year old man, with previous training

in dress making. Its perfumes are available in four major varieties Body Fragrance, Mens

Fragrance, Womens Fragrance, and Fragrance & Beauty Gifts.

Chanel

At present the production of Chanels fragrances is overseen by Jacques Polge who has been in

the helm from 1978. The company focuses a lot on innovation in products. Following are its

newest offerings: N5 Eau De Parfum Spray, Coco Mademoiselle Parfum, N5 Eau De Parfum,

Refillable Spray, N19 Poudre Eau De Parfum Spray and Coco Noir Eau De Parfum Spray.

Calvin Klein

Calvin Klein is one of the top global brands when it comes to perfumes. It offers separate

products for Europe, the Americas, and the rest of the world. In the international arena its

products can be classified into 3 major groups women, summer scents, and men. Some of its

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leading products are: Calvin Klein Sheer Beauty, Euphoria Men, Calvin Klein Beauty, CK One

Summer and Encounter.

Dior

Dior is one of the leading fashion brands of the world that also specializes in fashion and

accessories, and jewelry and timepieces in addition to fragrance and beauty products.

Following are the leading fragrances on offer from Dior: JAdore, Eau Sauvage, Les Escales De

Dior, La Collection Privee Christian Dior and Dior Homme.

ESCADA

ESCADA, introduced during 1976 by Wolfgang and Margaretha Ley, is right now a leading

name in the global fashion industry. It represents values such as modern elegance, sensuality,

and cool glamour. Its fragrances are primarily for women and come in three major

classifications: Classic, Me House and Summer Fragrances

Estee Lauder

Estee Lauder one of the most prominent names in the world of fashion also deals in make-up and

skincare products apart from fragrances. Its perfumes are available in the following scents: Fresh

Floral, Citrus, Lush Floral, Warm, Fruity and Woods.

Hugo Boss

Hugo Boss offers three major brands of fragrances Boss Black, Hugo, and Boss Orange. Boss

Black is supposed to be of a premium quality and focus on being stylish and contemporary. Boss

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Orange is an urban, fresh, and fun brand while Hugo is associated with being progressive,

individual, and original.

Lacoste

The perfumes from Lacoste for men are available in three major collections Eau De Lacoste

L.12.2, Essential Collection, and Challenge. Its main offering for ladies is the Pink collection.

Nina Ricci

Nina Ricci is a fashion house based in France and was started by Maria Ricci during 1932 with

her son Robert. Its first ever product named Coeur Joie was brought out during 1946. Following

are its latest products: Mademoiselle Ricci, Nina Princesse d'un Jour and Nina Fantasy.

Ralph Lauren

Ralph Lauren deals exclusively in mens fragrances. Following are its major brands: Gift Sets,

Polo, Big Pony, Polo Sport, Red, White and Blue, Romance, Polo Blue, Purple Label, Polo

Black, Safari, Double Black, Explorer and Modern Reserve.

Shiseido

Founded in 1872, the Japanese fashion brand Shiseido deals in hair care apart from perfumes.

The company was established by Arinobu Fukuhara, who worked as the Head Pharmacist for the

Japanese Navy. Following are the brands latest offerings: Zen Secret Bloom, Zen for Men

White Heat Edition and Zen White Heat Edition.

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 CHAPTER 7

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 ONLINE SHOPPING

SITES

While India Inc. is inundated by slowdown, E-commerce business in the country is flourishing.

Flipkart, Myntra, Jabong, Snapdeal and Justdial are top five e-commerce websites that are

booming in India despite the economic deceleration. Out of these, Flipkart, Myntra, Snapdeal

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and Justdial are all Indian firms. In a time when overseas investors are losing faith in Indian

markets, these e-commerce portals are portraying a record growth.

Types of markets include Business-to-Business (B2B), Business-to-Consumer (B2C) and

Consumer-to-Consumer (C2C). Online shopping sites of each of these market types exists in

India.

Indians have always proven themselves to be more technology savvy and more adaptable

towards changes in the technological field. Online shopping also began to receive recognition

with this attribute of the Indian shoppers.

FLIPKART

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From a start-up with an investment of just four lakhs rupees, Flipkart has grown into a $100

million-revenue online retail giant in just five years.

Sachin Bansal, CEO and one of the co-founders of Flipkart, the other being Binny Bansal, is an

ardent believer in the merits of customer service. Both the Bansals, who were colleagues at IIT-

Delhi, and then at Amazon.com, thought, why not start an e-commerce site? That was the

genesis of Flipkart. From an initial investment of $8,000, this humble seed of desire has

germinated into a $100 million e-retailing favourite. The founders' passion for the consumer

Internet space manifests itself in the brand, which is synonymous with customer service and

satisfaction. Don't count your customers before they smile' is the company's operating mantra.

Flipkart.com, other than being India's largest online bookstore, offers various products ranging

from fashion to fitness, accessories, gadgets and from electronics to home and lifestyle. The

secret being the popularity of Flipkart.com are attractive prices and great delivery service. A

firm that the Bansals started by funding themselves with just, Rs. 400,000 now has a strength of

4500 employees. The entrepreneurship generated a revenue of Rs. 500 crore during 2011-12.

MYNTRA

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Myntra.com is an online shopping retailer of fashion and casual lifestyle products. The online

store has joined hands with top retail brands such as Lee, John Miller, Indigo Nation, etc.. The

store also stocks a wide range of sports and fitness merchandise from Nike, Reebok,

Puma, Adidas, etc. Myntra was founded by IIT alumnis Mukesh Bansal, Ashutosh Lawania and

Vineet Saxena in 2007. The company started as a B2B firm and shifted its sphere to B2C soon

thus stepping into fashion and lifestyle products. The firm runs by procuring various brands

merchandise and making them available to its customers.

JABONG

Jabong.com is an Indian fashion and lifestyle electronic commerce portal of a German business

incubator Rocket Internet. The firm follows both inventory model (where products are sourced

from various brands and stored in Jabong warehouses) and controlled marketplace model

(Jabong just takes care of the fulfillment, customer service and returns if any). Aiming at

superior customer satisfaction, Jabong has a brilliant logistics department that delivers orders on

the same day in Delhi/NCR and within 48 hours in top 10 cities. Delivery in other cities is

accomplished within 23 working days. Headquartered in Gurgaon, the third most visited online

shopping website Jabong gets 14000 orders on daily basis of which 60% orders are from small

towns.

SNAPDEAL

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Snapdeal.com has a different than usual online shopping concept. Founded by Wharton graduate

Kunal Bahl and IIT Delhi alumnus Rohit Bansal in February 2010, the daily deal website has

grown to become one of the largest Indian eCommerce websites shipping more than 25000

products daily. Snapdeal later expanded into product retailing and since 2013 has started moving

towards pure marketplace model. The online retail chain offers a wide range of products from

electronics, clothing, accessories, furnishing to sports and fitness products. The daily deal

website comes up with attractive discounts and deals over a wide variety of retailed products

almost every day. Recently in its third fundraising of $50 million, Ebay invested heavily in the

firm and became a commercial partner with an access to Snapdeals 20 million registered users.

JUSTDIAL

Justdail.com, headquartered in Mumbai, is a local online search engine or telephonic service

provider in India. Founded by V. S. S. Mani, the idea occurred to him while he was working for

United Database India (UDI) in 1987. Just dial started its journey as a phone service and

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expanded to online search engine. Lately the company has started online food booking as well

and along with this there are many more projects lined up. Justdials foundation was laid in 1996

with a finance of Rs. 50,000 and a staff of 6 workers. The internet service was launched in 2007.

According to a March 2013 data, the company has a staff of around 7457 employees.

HOME SHOP 18.COM

HomeShop18 is an online and on-air retail and distribution venture of Network 18 Group, India.

HomeShop18 was launched on 9 April 2008 as India's first 24-hour Home Shopping TV channel,

where anchors performed live demonstration of products on sale similar to HSN or QVC in

USA. The television channel established HomeShop18's foothold in Indian retail because of high

television penetration. Later, as the internet reach grew all over the country, HomeShop18

launched www.homeshop18.com which was ranked as the No. 5 most trafficked Ecommerce

portal in India by Comscore in July 2013.

The abovementioned sites operate as B2B and B2C. The sites mentioned below specifically

operate in the C2C format.

CUSTOMER TO CUSTOMER (C2C)

Customer-to-Customer (C2C) markets are innovative ways to allow customers to interact with

each other. While traditional markets require business to customer relationships, in which a

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customer goes to the business in order to purchase a product or service. In customer-to-customer

markets the business facilitates an environment where customers can sell these goods and or

services to each other.

OLX

OLX (short for online exchange) operates local online classifieds marketplaces accessible

through the internet and through native apps on mobile phones. OLX operates in 40 plus local

countries with offices and local operations in Argentina, Bangladesh, Brazil, India, Indonesia,

Portugal, Poland, Romania, Hungary, Bulgaria, Panama, Switzerland, South Africa, Kenya,

Nigeria, Thailand, Philippines, Pakistan, Kazakhstan and others. Originally founded in March

2006 by Internet entrepreneurs Fabrice Grinda and Alec Oxenford, OLX is now owned by

global media and digital company Naspers.

Online classifieds are an evolution of traditional methods of online marketing which are still

largely found in newspapers. This type of classifieds made its entrance in the early 90s when

internet usage got popular. It was sensible to do online classifieds as there was so much money

made by printing corporations in this way. The decision to create online classifieds platform was

reached when technocrats saw the multi-billion dollar chance the internet created. There were

immense advantages to online trading compared to traditional methods. People had a chance to

manage their ads online and this made online classifieds famous among them. People became

more attracted to online classifieds as the internet grew.

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The industry is now filled with some key players and eons of smaller sites that experts classify

into four categories; General local, general global, vertical local and vertical global. OLX is an

example of general sites which includes classifieds from buyers and sellers in myriad categories.

The classifieds sites make their money from advertising, featured listings and other value added

services.

OLX The Success Story Of OLX Classifieds

OLX was co-founded in 2006 by Fabrice Grinda and Alec Oxenford who wanted to create a

secure platform for trade featuring no costs for the users. This site has seen major success in the

past years especially in Nigeria, Kenya and South Africa where it even runs ads on TV due to its

popularity. The popular slogan is sell it as they try to woo people into selling stuff they do not

need through the OLX classifieds site. The OLX adverts on TV have increased its reception

because they provide a clear step by step guideline on how to go about selling. OLX is so

popular that it is used in more than 150 countries in as many as forty languages.

The site is easy to navigate and focuses on mobile and proper advertising. Customers are

allowed to post a free ad on the site and leave their contact information. Once this is done, all

customers have to do is sit back and wait for a buyer to call. OLX does not act as a middleman

but rather marketplace. People actually give testimonials of how they sold and bought stuff on

this classifieds site with incredible ease.

The company has a super lean organizational structure where the business resources are

absolutely committed to its growth. Proper advertising and myriad marketing strategies have

made this site very exciting and it is for this reason that OLX has experienced tremendous

growth in the short time it has been in the market.

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QUIKR

Pranay Chulet spent more years in regular jobs than most others did before chasing his dreams

and the big bucks. When Quikr.com, a Mumbai-based online and mobile classifieds firm, raised

Rs 550 crore ($90 million) from foreign investors, the company drew attention like never

before. No other online company in the listing or classified business had gone in for such a big

round of funding ever. Armed with IIT-IIM degrees, this entrepreneur is like many others who

have made it big in e-commerce and other online businesses. Chulet calls the current round of

funding led by Swedish investor AB Kinnevik a small step in the long journey ahead. Since

2008, the company has raised a total of $140 million (Rs 870 crore), and the new funds will go

into marketing and expanding the talent base in the organisation. Across the globe, there are

examples of online classifieds successes like Craigslist in the US and Trademe in New Zealand,

but someone needed to do it right in India. Chulet did it, and he refers to himself as a made-in-

India product

Quikr essentially enables people, many without Internet access, to sell things that they may not

need. The pace at which such deals take place on the site reflects in the brand name of the

company - Quikr.

The company has endeared itself to users by exploiting a very Indian thing - missed calls. The

potential seller is required to give a missed call to the company, which will then contact the

caller for the ad to be put on the site.

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Quikrs revenue model is somewhat different from those of others in the same business, such as

Olx and Zomato. These companies list for free and make money through advertisements, but

Quikr primarily gets its revenue from paid listing and lead generation for small businesses

EBay

eBay Inc., (stylized as ebay), is an American multinational corporation and e-

commerce company, providing consumer-to-consumer sales services via the Internet. It is

headquartered in San Jose, California. eBay was founded by Pierre Omidyar in 1995, and

became a notable success story of the dot-com bubble; it is a multi-billion dollar business with

operations localized in over thirty countries. The company manages eBay.com, an online

auction and shopping website in which people and businesses buy and sell a broad variety of

goods and services worldwide. In addition to its auction-style sales, the website has since

expanded to include "Buy It Now" shopping.

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 CHAPTER 8

SITES FAMOUS FOR

PERFUMES AND

DEODORANTS
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There are several sites which solely sell perfumes and fragrances. They specialize in them.

They would be either producers like reehat.com, which produces fragrances and attars and sells

them through the online mode or they would be online stores which procure stocks from

producers all over the world and then sell them through the online mode, like eBay, Amazon etc.

Below given are examples of solely selling perfume and fragrances website as well as websites

which sell perfumes and fragrances among the other products.

Websites Selling Solely Perfume

Fragrancex.Com Inc. engages in the distribution of perfume, cologne and skin care products. The

company was founded in 2001 and is based in Hauppauge, New York. The company's goal is to

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provide its customers with the largest selection of perfumes and cologne at the lowest prices.

The selection consists of over 9500 brands including many discontinued perfumes and colognes.

All the products are 100% authentic designer brands and it claims not to be selling any imitations

or fakes.

The company through online shopping mode offers over 15000 brand name real fragrances,

skincare and cosmetics products at up to 80% off. They Promote their brand with confidence,

and offer Free Shipping and a 30 day money back guarantee. Fast shipping is available to over

230 countries. The company has teamed with Commission Junction to provide its publishers

with trusted third party tracking, real-time reporting and monthly commission checks.

The orders are subject to import duties and taxes, which are levied once a package reaches the

destination country. The company has no control over these charges and cannot predict what the

costs may be. Customs policies vary from country to country and the customer ordering the same

should contact their local customs office for information about the same. The company stocks

thousands of fragrances, many of which have been discontinued. They travel the globe

purchasing entire inventories hard to find or discontinued fragrances to store in their temperature

and humidity controlled warehouse.

Escentual.com is the Premier Beauty Destination which was established in 2000. Founded

upon the fundamental belief of "Quality, Service and Satisfaction", Escentual is a fully

authorised premium beauty retailer that strives to provide quality products at the fairest prices.

They maintain fantastic, direct relationships with the brands that they stock, meaning that they

can offer their customers the very best in haircare, beauty and fragrance.
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They currently have around 7,000 products - and they are constantly growing. Their product

range evolves alongside the needs and requests of their customers, and they stock an extensive

range which includes mainstream, niche and hard-to-find brands. Their customers are their

world here at Escentual. They strive to exceed expectations with their customer service by

offering speedy delivery times, fantastic communication across all channels, and a really

enjoyable shopping experience. They love to hear what their customers think of them, their

products and their service. Hence they constantly seek feedback and review from their

customers, especially about the products they have tried.

The company proudly announces the 'Beauty, Perfume and Cosmetics' category of the Online

Retail Awards 2011' and requests their customers to believe in them. The company is also listed

on the recommended site on thegoodwebsiteguide.co.uk

It is not just the industry that's recognising their good work but also their customers through the

good reviews.

All our staff can be contacted by telephone, fax, or email - so if a customer has any queries, they

can contact for a conversation on Facebook, Twitter, @ Escentual, @EscentualEmma and

@EscentualRakesh.

As the online division of the Central Pharmacy and Perfumery and Clarins Gold Star Beauty

Studio in Cardiff , they combine the convenience of online shopping with the excellent service of

a specialist perfumery and beauty studio. They have a wealth of industry knowledge, with

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perfume experts and beauty therapists (fully trained by Clarins and Dior) on hand to answer their

customers' cosmetics and skincare queries.

Perfume Point believes that the elements of luxury, sensuality and refinement that are

synonymous with branded fragrances should not be lost in a discounted fragrance environment.

The motto of the company is, 'Grab it while it lasts'. The company is committed to the

enhancement of the Company culture through staff professionalism, which is an essential

element in the maintenance of a premium level of customer service. The company's

management has well over 30 years combined experience in both the wholesale and retail side of

the perfume, skincare and cosmetic industry.

The company describes Perfume Point as not just a website but an online store which is

designed to promote a premium level of service while delivering good value perfume and

aftershave to the customers.

The company invites anyone who has a website to join them in selling perfumes and earn upto 7

percent commission by joining their affiliate program.

This online store currently has eight retail stores in designer factory outlet locations and is based

on a clear proposition offering consumers the highest quality designer fragrances at the lowest

prices available.

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Online PerfumePoint.co.uk has the same clear value proposition and provides some of the

cheapest prices on the web on huge brands such as Armani, Calvin Klein, Diesel, Jean Paul

Gaultier, Paco Rabanne, Gucci, Versace and many more.

The following are just some of the few reasons why people love to buy their fragrance from

PerfumePoint:

Free perfume samples are sent alongwith the ordered products

All products offered are held in stock ready for dispatch

Order if placed before 2 pm are dispatched on the very same day.

They have specialist and experts and hence can offer excellent customer service

Websites Selling Other Products Inclusive of Perfumes & Deodorants

The vision, at Amazon, is to be Earth's most customer centric company; to build a place where

people can come to find and discover virtually anything they want to buy online. At Amazon.in,

they endeavour to build that same destination in India by giving customers more of what they

want low prices, vast selection, fast and reliable delivery, and a trusted and convenient

experience and provide sellers a world-class e-commerce platform.

Amazon.in is operated by Amazon Seller Services Private Ltd, an affiliate of Amazon.com, Inc.

(NASDAQ: AMZN). Amazon.com, Inc. is a Fortune 500 company based in Seattle, that opened

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on the World Wide Web in July 1995; and today offers Earths Biggest Selection. Amazon and

its affiliates operate websites, including www.amazon.com, www.amazon.co.uk,

www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, www.amazon.cn,

www.amazon.it, www.amazon.es and www.amazon.co.br.

They are committed to ensure 100% Purchase Protection for the shopping done on Amazon.in so

that customers can benefit from a safe and secure online ordering experience, convenient

electronic payments and cash on delivery, easy returns, Amazons customer service with 24x7

support, and a globally recognised and comprehensive purchase protection provided by

Amazons A-to-Z Guarantee.

Products on amazon.in range from; Books, Music, Movies & TV shows; the Kindle family of E-

Readers, Tablets and eBooks; Computers & Accessories; Mobiles & Accessories; Cameras &

Photography; Portable Media Players; Toys & Games; Video Games;Baby Products; Personal

Care Appliances; Health Care Devices; Pet Supplies; Clothing &

Accessories; Sunglasses; Watches; Fashion Jewellery; Shoes; Handbags & Clutches; Luggage &

Bags; Home & Kitchen; Beauty, Sports, Fitness & Outdoors, Health & Personal Care products

and e-Gift Cards.

In February 2012, Amazon Seller Services made its foray into the Indian market with the launch

of Junglee.com, enabling retailers in India to advertise their products for free to millions of

Indian shoppers and drive targeted traffic to their stores. With the introduction of the Amazon.in

marketplace and launch of two new programmes Sell on Amazon and Fulfilment by

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Amazon' sellers across India now have access to unlimited and free virtual shelf space and a

scalable, pay-as-you-go fulfilment and customer service offerings. Both programmes have

successfully been used by more than two million sellers globally to sell to over 200 million

customers worldwide and boost their sales. The company promises to continue to strive to

become a trusted and meaningful sales and logistics channel for retailers of all sizes across India

by doing the heavy lifting, enabling them to focus on their core business functions and efficiently

grow their business online.

e-Bay

To look at eBay today you'd never guess that it sprang from a modest, even comical beginning.

Lacking is the glamour of the hotshot enterpreneurial firm and high-voltage venture capital so

commonly seen in other companies that are babies of the dot-com bubble. Instead, eBay can be

traced back to a home page and a broken laser pointer.

Sometime before September, 1995, 28-year-old software developer Pierre Omidyar, who had

previously worked with Claris developing software for Apple computers, sat down to write the

code that would eventually evolve into what we know as eBay today. Originally called

AuctionWeb and hosted on the same server as Pierre's page about the ebola virus, the site began

with the listing of a single broken laser pointer. Though Pierre had intended the listing to be a

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test more than a serious offer to sell at auction, he was shocked when the item sold for $14.83.

Pierre knew that he had created something big as soon as he contacted the winning bidder to ask

if he understood that the pointer was broken. "I'm a collector of broken laser pointers," came the

reply.

AuctionWeb soon took over Pierre's entire domain, www.ebay.com, short for Echo Bay, which

was the name of his consulting firm at the time. By 1996 the company was large enough to

require the skills of a Stanford MBA in Jeffrey Skoll, who came aboard an already profitable

ship. Meg Whitman, a Harvard graduate, soon followed as President and CEO, along with a

strong business team under whose leadership eBay grew rapidly, branching out from collectibles

into nearly every type of market. eBay's vision for success transitioned from one of commerce

buying and selling thingsto one of connecting people around the world together. With

exponential growth and strong branding, eBay thrived, eclipsing many of the other upstart

auction sites that dotted the dot-com bubble. By the time eBay had gone public in 1998, both

Omidyar and Skoll were billionaires and the rest is history.

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 CHAPTER 9

RESEARCH

METHODOLOGY

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In this project, exploratory research was adopted to analyze the following:

(1) Profile of consumers choosing to transact / shop online

(2) Level of trust and preference among Indian consumers about online shopping

(3) Factors influencing consumers buying decision through the online media

Data Collection

Primary Data

Primary data was collected in the following ways:

(1) appropriate sample groups were created in order to survey consumers preferred mode

of shopping

(2) Interviews of online shoppers were conducted through the questionnaire

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 (3) Questionnaires to online shoppers were personally administered or sent by mail or

done through telephonic interviews

CHAPTER 10

PRIMARY STUDY

ANALYSIS (Consumer

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 Behaviour-Gender Wise)

The questionnaire was administered to 200 individuals from the age group of 21 years to 55

years, of whom 100 were males and 100 females. This was done in order to study the online

buying consumer behaviour of people from the metropolitan city of Mumbai. This study is done

to understand the behaviour of online shoppers by categorising the respondents by their age and

gender.

The intervals of the age wise distribution of respondents were : 21-25, 26-30, 31-35, 36-40, 41-

45, 46-50 and 51-55 years. There were 29 respondents in each of the groups.

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Analysis of the Data Collected (Gender-wise)

1 How often do you shop for perfumes and deodorants online

Parameters Males Females Total

Weekly 0 0 0
Monthly 0 04 04
On Occasions (birthdays, anniversaries 39 45 84
etc)
Festivals 27 30 57
Based on Mood 41 14 55
Total 100 100 200
Source : Author's Compiled

From the above table it is very evident that as the product has a long shelf life, it need not be

purchased so often. It is not a product that has to be routinely purchased. Also as it is a product

that could be considered as a good gift item, it is often preferred to be purchased on occasions or

on festivals.

Frequency of Shopping for Perfumes & Deodorants

Online
Males Females

45
14
30

39 41
4 27
0 0
Weekly Monthly On Occasions Festivals Based on Mood

2 What are the sources / ways of finding out the new trends and fashion in

perfumes and deodorants

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 Parameters Males Females Total
Fashion Magazines 0 07 07
Newspapers 0 0 0
Malls 10 11 21
Friends / College campuses or Office 02 06 08
Internet 41 25 66
Retail shops in Markets 34 63 97
Any other 0 01 01
Total 100 100 200
Source : Author's Compiled

People generally have several ways of finding the new trend in the market. It is evident from the

data collected that people in Indian metros are getting more fashion conscious. They want to

possess and purchase products that are trendy. And hence they do a lot of research before they

purchase the product. They search on the internet and even visit retail shops which have

perfumes as their main products. They rely more on what they feel of the product when they

actually try it.

Sources of Finding New Trends / Fashion in Perfumes &

Deodorants
Males Females

63

41
34

25

10 11
7 6
0 0 0 2 0 1

Fashion Newspapers Malls Friends / Internet Retail shops Any other

Magazines College in Markets
campuses or
Office

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3 Is there a budget for your spending on Perfumes and deodorants, if yes, please

provide the per month approximate figure

Out of 200 respondents only 24 replied in positive that they do have a budget for

purchase of perfumes and deodorants and they were all females. They had an

approximate budget of Rs. 2000 to Rs. 6000 per month.

4 Which of the below given factors help you decide about your purchases of Perfumes

and deodorants

Parameters Males Females Total Percentage

Brand Name 87 81 168 84
Ingredients / Flavour / Aroma 93 86 179 89.5
Quality 91 93 184 92
Price of the Product 84 92 176 88
Peer Influence 63 51 114 57
Fashion and Trends 21 27 48 24
Source : Author's Compiled

It is evident from the data collected that people in the Indian metros are very choosy and

picky about the products they use. They give equal importance and weightage to the

brand, the aroma and the quality of the product. They are buyers who want value for

their money, and hence weigh the price against the quality and the brand.

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 Factors Influencing Purchase Decisions of Perfumes &
Deodorants
Males Females

81 86 93 92
51

87 93 91 84 63 27
21
Brand Name Ingredients / Quality Price of the Peer Influence Fashion and
Flavour / Product Trends
Aroma

5 Which mode of shopping do you prefer for perfumes and deodorants

Parameters Males Females Total Percentage

Shopping it Physically 66 89 155 77.5
Shopping it Online 34 11 45 22.5
Total 100 100 200 100
Source : Author's Compiled

The product is such that it requires to be physically tried and then purchased, unless it is a

product which has already been used and its aroma is already known. Hence, most of the

respondents preferred that perfumes and deodorants be purchased physically rather than online.

The male respondents had repetitive use of the perfumes and deodorants and hence happened to

buy the product online more than the females.

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 Preferred Mode of Shopping for Perfumes &
Deodorants
Shopping it Physically Shopping it Online

11
34
89
66

Males Females

6 Do you think shopping online is a safe mode of making transactions

Parameters Males Females Total Percentage

Yes 36 14 50 25
No 64 86 150 75
Total 100 100 200 100
Source : Author's Compiled

Those who think that shopping online is not a safe mode of shopping, the reasons are,

that they are apprehensive of hackers, e-frauds, e-thefts, scams, no confidence on

vendors, safety of product etc.

The respondents do purchase the product online but however their opinion about

shopping online is that, it can be unsafe, if the credit or debit card is not secured with a

pin for online transactions, which not many people bother to do. They are also of the

opinion that often due to assuming that they may forget the pin, people often store these

passwords in mobiles, diaries etc which can be accessed and misused.

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 Is Online Shopping a Safe Mode of Transacting
Yes No

64
86

36
14

Males Females

7 Are you comfortable buying Perfumes and Deodorants online, If yes

Parameters Males Females Total Percentage Percentage

of on Total
Parameter (200)
(45)
Saves time 34 05 39 86.7 19.5
Ability to shop at any 29 11 40 88.9 20
time of the day
Lower prices due to 34 11 45 100 22.5
discounts
Wide variety - 21 10 31 68.9 15.5
viewing various
brands at one time
Easy comparison of 24 07 31 68.9 15.5
both price and quality
of various brands
Reduces other 33 03 36 80 18
expenses (parking
charges, eating
outside, travelling
etc)
Source : Author's Compiled

It is evident from the data collected that males are more frequent buyers on the internet.

This could possibly be due to the fact that they are mostly in many households the

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 decision makers and the bread winners of the family. The 45 respondents who prefer to

buy through the online mode have indicated that the reasons for the preference is that it

saves time and that purchases can be made at any time of the day. One does not need to

take leave from office or one does not have to actually travel to the stores to purchase the

product. Their reasons for preference is more a matter of convenience.

The male respondents particularly feel that there is too much of added expenses when

they have to go shopping, like trouble to search for parking and pay for the parking, and

then it is also accompanied by other expenses of visiting a restaurant or a nearby eating

joint.

Factors Due to Which Online Purchase is Made

Males Females

11
5 11 3
10 7

34 34 33
29
21 24

Saves time Ability to shop at Lower prices due Wide variety - Easy comparison Reduces other
any time to discounts viewing various of both price and expenses (parking
brands at one quality of various charges, eating
time brands outside, travelling
etc)

If no, the reasons

Parameters Males Females Total Percentage Percentage

of on Total
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 Parameter (200)
(155)
Unsecured money 64 89 153 98.7 76.5
transactions
Cannot feel the 46 82 128 82.5 64
product
Long wait for the 27 85 112 72 56
product delivery
Not sure of size 34 86 120 77 60
Description may not 23 79 102 65.8 51
match actual product
Picture may not 26 81 107 69 53.5
match product in
terms of colour
No specified return, 59 39 98 63 49
exchange or refund
policy of purchasing
online
Source : Author's Compiled

Majority of the respondents were not comfortable purchasing through the online mode as

they felt unsecured about making transactions through debit or credit card online. Also

as the product was perfumes, it has to be very meticulously chosen through its aroma,

which cannot be felt when purchasing online. Also majority of the females were of the

opinion that the description of the product on the site may not really match the product.

Also the unit of sale is in milliliters and hence it is difficult to understand how big or

small is the bottle.

It is observed from the data collected that the major concern of the males were no proper

return or refund policy is generally specified, if the product is not acceptable or liked by

the buyer.

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 Factors Due to Which Online Purchase is Not Made
Males Females

89
82
86 39
85 79 81

64 59
46 34
27 23 26

Unsecured Cannot feel Long wait for Not sure of Description Picture may No specified
money the product the product size may not not match return,
transactions delivery match actual product in exchange or
product terms of refund policy
colour of purchasing
online

8 Are you aware, stores sell Perfumes and deodorants through the online mode at a

much lesser price than the one when displayed at the stores

Parameters Males Females Total Percentage

Yes 42 12 54 27
No 58 88 146 73
Total 100 100 200 100
Source : Author's Compiled

Males seem to be more aware than females, of the fact that Perfumes and deodorants can

be procured at a much lower rate than the price that it is sold at in the retail stores.

But in general there is a very low rate of awareness of the fact that the product can be got

at a price lower than that of the retail stores' prices.

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 Awareness of Lower Prices When Purchased
by Online Mode
Yes No

58
88

42
12
Males Females

9 Do you shop online regularly for any product other than Perfumes and deodorants,

if yes, please specify

Many respondents have replied in positive that they shop online for products like air

tickets, bus tickets, train tickets, movie tickets, mobiles, books, clothes, shoes and toys.

10 How important are the following factors in your decision to purchase Perfumes and

deodorants from the internet

Very Unimp Unimp Neutral Imp. Very Imp.

Parameters M F Tot % M F Tot % M F Tot % M F Tot % M F Tot %
Delivery
time - - - - - - - - 28 07 35 42 46 88 30 47 77
Reputation
of the
company - - - - 9 14 23 19 32 51 46 31 77 26 23 49
Guarantees
and
Warranties
- - - - 8 22 30 11 13 24 43 35 78 38 30 68

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Privacy of
the
information
- - - - - - - - - - - - 38 45 83 62 55 117
Good
description
of products
- - - - - - - - - - - - 36 33 69 64 67 131
Security - - - - - - - - - - - - 34 29 63 66 71 137
Prices - - - - - - - - - - - - 35 31 66 65 69 134
Source : Author's Compiled

Majority of the respondents feel that the above factors are important or very important in helping

them make decisions towards purchasing products like perfumes and deodorants online. Their

major concerns revolve around privacy and security in doing online transactions. Getting the

branded products at a lower price is also one of the major factors, which help in taking decision.

Again many respondents felt that if the description of the product given on the website is very

informative and all inclusive (like ingredients, allergic information, safety & precaution

measures etc), then it also helps them take a better call on their purchase of the product through

the online mode as it is a product which very much needs to be felt before purchase.

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 CHAPTER 11

PRIMARY STUDY

ANALYSIS (Consumer

Behaviour- Age Wise)

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Analysis of the Data Collected (Age-wise)

Among the 200 respondents who answered the questionnaire, the number of respondents

in each class interval of the age groups is as below:

Age-Group Number of Respondents

21-25 26

26-30 45

31-35 44

36-40 33

41-45 21

46-50 21

51-55 10

Source : Author's Compiled

1 How often do you shop for perfumes and deodorants online

Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total

25 30 35 40
Weekly - - - - - - - 0
Monthly 1 3 - - - - - 04
On Occasions 11 14 12 14 11 15 7 84
(birthdays,
anniversaries
etc)
Festivals 9 15 11 7 7 5 3 57
Based on 5 13 21 12 3 1 0 55
Mood
Total 26 45 44 33 21 21 10 200
Source : Author's Compiled

It was observed that among the respondents, those in the age group of 26 years to 35

years, were the majority to shop for the product online. This could be attributed to the

fact that they are young and hence more brand conscious and also that they are the ones

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 who are earning well, or would have just started getting settled in their careers. Also

there happens to be peer pressure at workplace to be more trendy and hence this could

also be one of the factors why these age groups seem to be more towards purchasing the

product. This age group is more familiar with online processes and are generally aware

of schemes and discounts by purchasing online.

Frequency of Purchase of Perfumes Online

Weekly Monthly
On Occasions (birthdays, anniversaries etc) Festivals
Based on Mood

13
21
12
5 15
3 1
9 11 7 5
7
14 0
3
11 12 14 15
11
7
1 3
21-25 26-30 31-35 36-40 41-45 46-50 51-55

2 What are the sources / ways of finding out the new trends and fashion in

perfumes and deodorants

Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total

25 30 35 40
Fashion 1 2 3 1 - - - 07
Magazines
Newspapers - - - - - - - 0
Malls 5 8 3 3 2 - - 21
Friends / 8 - - - - - - 08
College
campuses or
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 Office
Internet 10 19 16 12 7 2 - 66
Retail shops in 2 16 22 17 12 18 10 97
Markets
Any other - - - - - 1 - 01
Total 26 45 44 33 21 21 10 200
Source : Author's Compiled

Majority of the respondents from the age groups of 21-25, 26-30 and 31-35 are active to

check online for new trends and fashions in perfumes and deodorants. While the older

age groups are more evidently visiting retail shops for information of the perfumes. This

could be attributed to the use of computers which is more frequent in the younger age

groups than the older ones.

Sources of Finding New Trends / Fashions in Perfumes

and Deodorants
Fashion Magazines Newspapers
Malls Friends / College campuses or Office
Internet Retail shops in Markets
Any other

16
22

2 17
10 19 1
16 12
8 12 18
8 3 7 10
5 3
1 2 3 1 2 2
21-25 26-30 31-35 36-40 41-45 46-50 51-55

3 Is there a budget for your spending on Perfumes and deodorants, if yes, please

provide the per month approximate figure

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 9 respondents from the age-group 21-25 years and 15 respondents from the age-group 26-

30 years, responded that they do have a budget for purchase of perfumes and

deodorants. They had an approximate budget of Rs. 2000 to Rs. 6000 per month.

4 Which of the below given factors help you decide about your purchases of Perfumes

and deodorants (tick multiple options)

Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total

25 30 35 40
Brand Name 31 26 32 27 28 21 3 168
Ingredients / 33 27 31 31 29 21 7 179
Flavour /
Aroma
Quality 36 25 32 31 32 21 7 184
Price of the 33 25 31 30 27 21 9 176
Product
Peer Influence 44 39 22 4 5 - - 114
Fashion and 23 21 4 - - - - 48
Trends
Source : Author's Compiled

Through all the age groups, quality and price of the product were important factors to

decide about purchase of perfumes. However, evident from the table above, fashion and

trends for this product was an important factor of consideration especially for the younger

age groups, that is, 21-25 and 26-30 years.

Brand name of the product is important, and it was so among all the age groups, which

can indicate that people in the Indian metros are getting more brand conscious.

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 Factors Influencing Purchase Decisions of Perfumes & Deodorants
Brand Name Ingredients / Flavour / Aroma Quality
Price of the Product Peer Influence Fashion and Trends

23

44 21 4
22
39 4 5
33
31
30 27
25
36 32
31 32 21
25
21
33 31
27 31 29
21
9
31 26 32 27 28 7
21 7
3
21-25 26-30 31-35 36-40 41-45 46-50 51-55

5 Which mode of shopping do you prefer for perfumes and deodorants

Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total

25 30 35 40
Shopping it 15 24 34 30 21 21 10 155
Physically
Shopping it 11 21 10 3 - - - 45
Online
Total 26 45 44 33 21 21 10 200
Source : Author's Compiled

It can be observed from the respondents view that the ones who prefer to shop online are

among the younger age group. And this is mainly due to they being more comfortable to

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 work on computers than the older age groups. Also it is generally observed that the

younger age groups buy smartphones and more sophisticated models of mobiles which

enable online transactions. This could also be the reason why the younger age groups

prefer to buy the product online as they could do purchases on the go after getting the

needed information from the online sources.

Preferred Mode of Shopping for Perfumes & Deodorants

Shopping it Physically Shopping it Online

10
21
3

11
34
30
24 21 21
15
10

21-25 26-30 31-35 36-40 41-45 46-50 51-55

6 Do you think shopping online is a safe mode of making transactions

Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total

25 30 35 40
Yes 14 23 10 3 - - - 50
No 12 22 34 30 21 21 10 150
Total 26 45 44 33 21 21 10 200
Source : Author's Compiled

Those who think that shopping online is not a safe mode of shopping, the reasons are,

that they are apprehensive of hackers, e-frauds, e-thefts, scams, no confidence on

vendors safety of product etc.

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 According to most in the older age groups they feel that shopping physically is a safer

mode of shopping. Also considering the fact that this product comes in glass or

breakable containers, so they are quite hesitant to purchase as they are quiet apprehensive

that it will reach them without being broken while in transit. And also then as it has

already been paid for there is no way of getting a replacement.

Is Online Shopping a Safe Mode of Transacting

Yes No

22
34
12
30
23 21 21
14
10 10
3
21-25 26-30 31-35 36-40 41-45 46-50 51-55

7 Are you comfortable buying Perfumes and Deodorants online, If yes

Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total

25 30 35 40
Saves time 9 18 10 2 - - - 39
Ability to shop at any 8 20 10 2 - - - 40
time of the day
Lower prices due to 11 21 10 3 - - - 45
discounts
Wide variety - viewing 8 14 7 2 - - - 31
various brands at one
time
Easy comparison of 9 13 6 3 - - - 31
both price and quality
of various brands

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 Reduces other expenses 6 19 9 2 - - - 36
(parking charges,
eating outside,
travelling etc)
Number of 11 21 10 3 - - - 45
Respondents who
prefer buying
perfumes and
deodorants online
(Refer Q. 5 above)
Source : Author's Compiled

It is observed from the 200 respondents that actually only 45 really prefer to purchase it online

although all the respondents at some point of time, do purchase the product online. These 45

respondents are in the younger age group and are more comfortable with online transactions

because of the various factors enlisted above in the table.

Factors Due to Which Online Purchase is Made

Saves time
Ability to shop at any time of the day
Lower prices due to discounts
Wide variety - viewing various brands at one time
Easy comparison of both price and quality of various brands
Reduces other expenses (parking charges, eating outside, travelling etc)

2021 19
18
1413
11 101010
98 89 9
6 76

223232

21-25 26-30 31-35 36-40 41-45 46-50 51-55

If no, the reasons

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 Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total
25 30 35 40
Unsecured money 15 23 34 29 21 21 10 153
transactions
Cannot feel the product 13 16 28 26 17 18 10 128
Long wait for the 14 19 21 18 16 16 8 112
product delivery
Not sure of size 14 21 26 21 14 17 7 120
Description may not 6 13 18 19 16 20 10 102
match actual product
Picture may not match 5 15 19 21 16 21 10 107
product in terms of
colour
No specified return, 14 14 11 13 16 20 10 98
exchange or refund
policy of purchasing
online
Number of 15 24 34 30 21 21 10 155
Respondents who do
not prefer to buy
perfumes and
deodorants online
(Refer Q. 5 above)
Source : Author's Compiled

The older age groups do prefer the traditional shopping format. They feel it more apt for the

type of product that is being considered. Besides the unsecured feeling to do any online

transactions, they feel that the picture shown of the product may not be the same as the real

product. They mention that there is so often a note which indicates that : the product is a

representation of the real product and may not match the real product. This is also something

that deters them from purchasing online.

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 Factors Due to Which Online Purchase is Not Made
Unsecured money transactions
Cannot feel the product
Long wait for the product delivery
Not sure of size
Description may not match actual product
Picture may not match product in terms of colour
No specified return, exchange or refund policy of purchasing online

34
28 26 29
26
23 21 21 21 21 21 21
19 1819 18 19 202120
1716 161616 181617
15131414 14 16 131514 13 14
11 1010 8 101010
65 7

21-25 26-30 31-35 36-40 41-45 46-50 51-55

8 Are you aware, stores sell Perfumes and deodorants through the online mode at a

much lesser price than the one when displayed at the stores

Parameters 21- 26- 31- 36- 41-45 46-50 51-55 Total

25 30 35 40
Yes 11 19 13 11 - - - 54
No 15 26 31 22 21 21 10 146
Total 26 45 44 33 21 21 10 200
Source : Author's Compiled

There is awareness among the younger age groups that prices got on the websites are lesser than

those in the stores. This is possible because of the frequency that the younger people surf the

internet in a day. The use of smartphones, playing of online games, where there are often pop-up

ads, which provide information of the same and hence increase the awareness among the

younger age groups.

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 Awareness of Lower Prices When Purchased by Online
Mode
Yes No

26
31
22
15

19 21 21
11 13 11 10

21-25 26-30 31-35 36-40 41-45 46-50 51-55

9 Do you shop online regularly for any product other than Perfumes and deodorants,

if yes, please specify

Many respondents have replied in positive that they shop online for products like air

tickets, bus tickets, train tickets, movie tickets, mobiles, books, clothes, shoes and toys.

10 How important are the following factors in your decision to purchase Perfumes and

deodorants from the internet

CLASS INTERVAL 21-25 (Number of Respondents : 26)

Parameter Very Unimportant Neutral Important Very

Unimportant Important

Delivery time - - - 11 15

Reputation of - 5 8 10 3
the company
Guarantees - 9 3 9 5
and
Warranties

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Privacy of the - - - 18 8
information
Good - - - 9 17
description of
products
Security - - - 14 12

Prices - - - 6 20

Source : Author's Compiled

The respondents in the age group of 21-25 place great importance to delivery time, privacy of

information, security and prices of the products. They do not place so much importance to

Guarantees and are more neutral towards reputation of the company so long as it is a branded

product of good quality. Meaning that has second line of importance in their purchase decisions.

Rating Factors That Influence Purchase of Perfumes & Deodorants Online

: 21-25 Age Group
Very Unimportant Unimportant Neutral Important Very Important

3 5 8
15 12
10 9 17 20

8 3 18
11 14
9 9 6
5
Delivery time Reputation of Guarantees Privacy of the Good Security Prices
the company and Warranties information description of
products

CLASS INTERVAL 26-30 (Number of Respondents : 45)

Parameter Very Unimportant Neutral Important Very

Unimportant Important

Delivery time - - - 23 22

Reputation of - 8 12 18 7
the company

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Guarantees - 6 5 19 15
and
Warranties
Privacy of the - - - 23 22
information
Good - - - 27 18
description of
products
Security - - - 19 26

Prices - - - 9 36

Source : Author's Compiled

The respondents in the age group of 26-30 have nearly the same consumer behaviour as the age

group of 21-25. They too place more importance to delivery time, privacy of information,

security and prices of the products. They do not place so much importance to Guarantees.

Rating Factors That Influence Purchase of Perfumes & Deodorants

Online : 26-30 Age Group
Very Unimportant Unimportant Neutral Important Very Important

7
15 18
22 22 26
18 36
19
23 12 23 27
5 19
8 6 9

Delivery time Reputation of Guarantees Privacy of the Good Security Prices

the company and information description of
Warranties products

CLASS INTERVAL 31-35 (Number of Respondents : 44)

Parameter Very Unimportant Neutral Important Very

Unimportant Important

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Delivery time - - 14 19 11

Reputation of - 3 12 16 13
the company
Guarantees - 4 6 15 19
and
Warranties
Privacy of the - - - 20 24
information
Good - - - 18 26
description of
products
Security - - - 11 33

Prices - - - 13 31

Source : Author's Compiled

The group is of a more matured thinking and it places high importance to most of the factors.

Only a few feel that reputation and guarantees are an unimportant factor in their purchase

decision. Their decisions are mainly based on security and delivery time and price seems to be

very important to most of the respondents.d

Rating Factors That Influence Purchase of Perfumes & Deodorants Online

: 31-35 Age Group
Very Unimportant Unimportant Neutral Important Very Important

11 13
19
24 26
33 31
19 16
15
12 20 18
14 6 11 13
3 4
Delivery time Reputation of Guarantees Privacy of the Good Security Prices
the company and Warranties information description of
products

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CLASS INTERVAL 36-40 (Number of Respondents : 33)

Parameter Very Unimportant Neutral Important Very

Unimportant Important

Delivery time - - 6 13 14

Reputation of - 3 9 10 11
the company
Guarantees - 3 3 13 14
and
Warranties
Privacy of the - - - 12 21
information
Good - - - 6 27
description of
products
Security - - - 7 26

Prices - - - 14 19

Source : Author's Compiled

Security of online transactions and good description of the product on the websites are of high

importance to the respondents of this age group. None of the mentioned factors seemed very

unimportant.

Rating Factors That Influence Purchase of Perfumes & Deodorants

Online : 36-40 Age Group
Very Unimportant Unimportant Neutral Important Very Important

14 11 14
21 19
27 26
10
13 13
9 12 14
6 3 6 7
3 3
Delivery time Reputation of Guarantees Privacy of the Good Security Prices
the company and information description of
Warranties products

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CLASS INTERVAL 41-45 (Number of Respondents : 21)

Parameter Very Unimportant Neutral Important Very

Unimportant Important

Delivery time - - 5 8 8

Reputation of - 2 5 11 3
the company
Guarantees - 3 2 10 6
and
Warranties
Privacy of the - - - 5 16
information
Good - - - 3 18
description of
products
Security - - - 4 17

Prices - - - 12 9

Source : Author's Compiled

As can be observed the factors that are generally important or considered very important across

all the age groups are nearly common. All are concerned about the description of the product

being right and the security of the transactions. Delivery time is of importance to this age group

as the time wait may cause anxiety, whether the product is going to reach them or not.

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 Rating Factors That Influence Purchase of Perfumes &
Deodorants Online : 41-45 Age Group
Very Unimportant Unimportant Neutral Important Very Important

3
8 6
9
11 16 18 17
8 10
12
5 2
5 3 5 3 4
2
Delivery time Reputation Guarantees Privacy of Good Security Prices
of the and the description
company Warranties information of products

CLASS INTERVAL 46-50 (Number of Respondents : 21)

Parameter Very Unimportant Neutral Important Very

Unimportant Important

Delivery time - - 5 11 5

Reputation of - 2 4 9 6
the company
Guarantees - 3 3 9 6
and
Warranties
Privacy of the - - - 3 18
information
Good - - - 2 19
description of
products
Security - - - 6 15

Prices - - - 8 13

Source : Author's Compiled

Respondents apply high importance to good description of the product mainly because the

payment for the product is done and there is no proper refund or return policy in place for

products shopped for online. So this is a major point of concern for the older groups. Also

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delivery time is important to most of the respondents in this group as none have replied to it as

unimportant or very important.

Rating Factors That Influence Purchase of Perfumes &

Deodorants Online: 46-50 Age Group
Very Unimportant Unimportant Neutral Important Very Important

5 6 6
15 13
18 19
11 9 9

4 3 8
5 6
2 3 3 2
Delivery time Reputation Guarantees Privacy of Good Security Prices
of the and the description
company Warranties information of products

CLASS INTERVAL 51-55 (Number of Respondents : 10)

Parameter Very Unimportant Neutral Important Very

Unimportant Important

Delivery time - - 5 3 2

Reputation of - - 1 3 6
the company
Guarantees - 2 2 3 3
and
Warranties
Privacy of the - - - 2 8
information
Good - - - 4 6
description of
products
Security - - - 2 8

Prices - - - 4 6

Source : Author's Compiled

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Most of the respondents in this age group attached more importance to the privacy of

information and security of transactions as most of the other age groups too were observed to be

paying attention to. However, this age group was more into the understanding part of the

process, especially if it does not go through as a successful transaction. They had doubts like -

what if the computer went off in between or the link to the internet connection was snapped mid-

way through the transactions then how do they proceed with the same.

Rating Factors That Influence Purchase of Perfumes &

Deodorants Online : 51-55 Age Group
Very Unimportant Unimportant Neutral Important Very Important

2 3
3 6 6 6
3 8 8

5 3 2
4 4
1 2 2 2

Delivery time Reputation Guarantees Privacy of Good Security Prices

of the and the description
company Warranties information of products

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 CHAPTER 12

RECOMMENDATIONS

AND SUGGESTIONS

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 CHAPTER 13

CONCLUSION

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_____________________________________________________________________________________
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Reference

Research Report, Indian FMCG Industry, June 30, 2013, by Action Financial Services

India Ltd. (AFSIL)

Research Report, 'Trends in India's eCommerce Market', by Forrester, for

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Research Report, 'State of Ecommerce in India', September 2012, by comScore for

ASSOCHAM, India

E-Research Report on, 'The Indian FMCG Sector- The Innovative Imperative', by PwC,

2013

Research Report, Rebirth of e-Commerce in India, November 2012, by Ernst & Young

Research Report, Online and Upcoming : The Internet's Impact on India, December

2012, by McKinsey& Company

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108 | P a g e
 C, R., & Ganapathy, S. (2002). Key Dimensions of Business-to-Consumer Websites.

Elsevier, Science , 457-465.

Kaur, P., & Singh, R. (1999). Uncovering Retail Shopping Motives of Indian Youth.

Emerald Group Publishing Limited , 128-138.

Prasad, C. J., & Aryasri, A. R. (1973). Effect of Shopper Attributes on Retail Format

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House , 68-86.

Shelly, R., & Ann, H. M. (2003). Gender and E-Commerce : An Exploratory Study.

Hournal of Advertising Research , 322-329.

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http://thetechpanda.com/2014/04/03/e-commerce-industry-india-report-accel-

india/#.U_LCRfmSySo

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http://www.chillibreeze.com/articles_various/fmcg-in-India.asp

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