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Team Felicitas

Introduction
Consumer Lifestyle Drivers
Busy consumers: lack of time to prepare and cook their own snacks at home Increased consumer demand for slimming and weight-loss products Women aspirations: thin and some seek size zero Men aspirations: fit and muscular Healthier lifestyle: 30% in per capita spending on health and wellness products between 2006 and 2011 Spend more time and money on fitness, exercise and weightloss programmes

Traditional Retail Formats Indian Snacking Industry


Along with the changing snacking preferences of Indian consumers, advent of Health seekers, and other trends like variety seeking behavior, localization in the product flavors, it is critical for the Indian Snack manufacturers to understand the purchasing behavior of the Indian consumers in various retail environments and identify opportunities in exploiting the Snacking market Unorganized retail is highly prevalent in Rural and sub-urban Proximity of the stores, increased convenience favors Unorganized sector Includes provision stores, bakery shops, mithai shops and local supermarkets

Snacking Habits
Snack times for kids: School snack break & evening tea breaks For adults: Evening during the tea break. Indian consumers taste: salty, sweet and savoury snacks rather than chocolate and confectionery Kids prefer smaller packs for one snacking session Opting for healthier snacks- low-fat, low-sodium and baked rather than fried Tea almost always accompanied by namkeen/other snacks

Secondary Research
Retail Sales in Snacking Market Emerging Trends in Snacking Industry

2006 2007 2008 2009 2010 2011

Sales % by Distribution Format


100 80 60 40 20 0

Supermarkets/Hypermarkets Independent Small grocers Other Grocery Retailers

Convenience Stores Forecount Retailers

Key players for Snacking food market in India: 1. Hindustan Unilever (biscuits; pulses etc) 2. Nestle (milk and milk products; ready-to-eat foods) 3. PepsiCo (snacks) 4. ITC ( snacks, Biscuits etc) 5 Kraft cadbury (Chocolates, Biscuits etc ) 6 Amul (Chocolates, Ice creams etc)

Indian Snack industry is expected to grow at 15% CAGR with average unit price rising up to 5% Demand for snacks is very strong due to rising disposable income combined with consumers habit of frequent snacking A number of products are getting introduced which are catering to the needs of Indian Consumer tastes by introducing local flavors As part of the urbanization process, modern retailers are gaining importance amongst Indian Consumers During 2006-2011, Indian Snacking industry has witnessed a lot of new product innovation in terms of flavors and types Youth is driving the consumption of the packaged foods such as packaged soups, cup noodles etc who have a higher tendency of impulse purchase Indian Consumers are moving towards healthier snacks moving towards low fat or no fats which has led in turn to the advent of new category products Independent grocers continue to be the most popular channel for the consumers in villages and small towns with modern trade slowly capturing the trend Urban Consumers are preferring retail outlets for wider product selection and more comfortable shopping ambience Organized retail sales in Indian Snacking sector is expected to grow at more than 14 % CAGR in future with Indian economy opening up the FDI in Retail

Problem Definition
To provide information and knowledge of snack shopping behaviour and motivators in the different REs and identify opportunities in store

Objective
Understand the dynamics of retail environment and consumer buying behaviour Understand consumer preferences about snacks category in traditional retail environments To determine different purchase segments of the snacking market To identify the drivers for shopping behaviour for snacks in retail environments To determine positioning of Kraft brands visa-vis competitors in the purchase structure

Outcome
Find the various snacks segments in the market based on retail buying patterns Determine product and store choice criteria for snacks Help introduce/align products based on more detailed customer insight. Key criteria which help the customer make their purchase decision

Different consumer segments in snacks category


Key trigger for snacking
Triggers

Hunger pangs

Boredom buster

Comfort food
Consumers can be defined in below categories depending on the importance they assign to health, novelty and taste while choosing a snack

Decision making on the basis of consumer archetype

Snacking options are evaluated on the basis of which archetype the consumer belongs to

Health Seekers Health Novelty Taste


Snacks for these consumer archetypes

Explorers Health Novelty Taste


Snacks as Luxury Snacks as Discovery

Easy going Health Novelty Taste


Snacks as pick me up Snacks as Convenie nce

Snacks as Healthy indulgence

Snacks as guilt free sin

Snacks as Control

Insights from Consumers definition of Snacks


Easy going consumers tend to snack more on wholesome and filling items earlier in the day to satisfy hunger Snack on more indulgent-tasting and rewarding items in the later half of the day Health seekers think it is better to have fruit between meals as compared to unhealthy snacking Not easily swayed by novel snacking flavours or ingredients, if there is no tangible health benefit.

Snacks as Convenie nce

Snacks for on-the-go consumption appeal to the increasing tendency of consumers to multitask Busy working professionals have snacks substitutes to full meals when short on time

as

Snacks as Healthy indulgence

Snacks as Control

Parents prefer biscuits and corn flakes to chips and chocolates for children Health seekers increasingly snack to avoid overeating during meals Consumers with blood pressure problems look for snacks with reduced salt variants.

Explorers are driven by desires to experiment different snacks & get influenced by package design &graphics

Snacks as Discovery

Explorers are more impulse purchasers and look for snacks in smaller SKUs

Among health seekers, women snack to practice a diet plan while men associate some guilt with snacking Need to reduce unhealthy image of snacks as consumers look for guilt-free options when snacking

Snacks as guilt free sin

Snacks as Luxury

SEC A consumers prefer serving premium snacks to the guests SEC A Explorers get more influenced by premiumness associated with packaging of snacks

Easy going consumers at all kind of REs buy snacks like biscuits and chips towards the end of shopping spree Consumers generally buy chips and candies along with the birthday cakes at bakery shops

Snacks as pick me up

Children check for freebees while buying chips Children look for chocolates, chips, candies and gums at entry point of the provision stores and food shops

Retailer Insights: Consumers behavior in REs


When and where do consumers go for snacks shopping
Event Monthly/fortnightly home grocery shopping Type of Consumer/Shopper Housewives Stores they visit Large provision store, supermarket

Unanticipated guest visits


Parties (kitty parties, bday parties, festive parties) Travelling Daily Pocket money allowances Craving for snacks

Children & Men


Husband and wife Teenagers and Adults Children Children, Teenagers & Adults

Small provision store, bakery shops, halwai shops


Large provision store, bakery shops, halwai shops Nearby provision store, outlets at boarding point Small provision store Nearby provision or food stores

Large provision store

Small provision store

Bakery Shop

Women pick biscuits frequently when seen next to the health drinks for children in large departmental stores Instant noodles are placed near the ketchup bottles in large provision stores

Children visit nearby small provision stores to purchase smaller SKUs snacks from pocket money SEC C Housewives look for chocolates, chips and biscuits in small SKUs for children at the billing counter of small provision stores

School and college going students come to bakery shops with friends almost daily for evening snacks In bakery shops consumers go mainly so that they can get baked biscuits rather than branded ones

Exploratory Research
Focus Group Discussions In Depth Interviews Observation Studies Retailer Interviews
2 FGDs, Each comprising of 8 participants from both genders across different age groups 30 IDIs conducted with snacks shoppers at different Retail Environments- Small provision stores, Larger provision store, Food stores, Supermarkets, Pharmacist shops from different age groups and both genders Purchase behavior of snacks customers studied by making thorough observations at all the above mentioned RE categories 4 interviews with retailers in Lucknow from REs: 1 Small Provision Store, 1 large provision store, 1 Supermarket, 1 Bakery Shop

Sampling for Qualitative Research


Qualitative Research Technique Employed
No of Participants/ Interviews S. No Conducted 1 2 1 2 3 8 8 10 10 10

Gender
SEC A B A B C Male Female 10-18 4 3 4 5 4 4 5 6 5 6 0 0 1 1 0

Age Group
19-25 5 4 3 3 3 25-35 3 4 4 3 5 35+ 0 0 2 3 2

Focused Group Discussions

In-depth Interviews

Research Objectives & Hypothesis (1/3)


Research Objective 1: To Understand snacks shoppers needs in different Retail Environments
Hypotheses
H1: SEC A & SEC B women prefers to purchase from super markets and large provision stores once a month and stockpile H2: SEC C women prefer small provision store near their houses for snacks shopping H3: In case of unanticipated guest visits, children and men visit nearby small provision store and food store for snacks purchase

Variables
Preference for super market and large provision stores, frequency of visits, Income & education level Preference rating for small provision store s for snacks shopping , Income & education level Consumer buying patterns (Use of Likert scale to get desired information) , Age, Gender

Data Analysis Tool


Cluster analysis + Discriminant analysis Cluster analysis + Discriminant analysis

1 sample T test
1 sample T test 1 sample T test 1 sample T test 1 sample T test

H4: SEC B housewives visit large provision stores along with Consumer buying patterns (Use of Likert scale to get their husbands to purchase snacks for parties desired information), Income & education level

H5: Children (5-14 years) visit nearby small provision stores Consumer buying patterns (Use of Likert scale to get to purchase snacks with their pocket money desired information), Age
H6: Youngsters (15-25 years) prefer to visit nearby bakery shop along with friends for evening snacks H7: During travelling, consumers buy chips, biscuits and chewing gums from small provision stores enroute Consumer buying patterns (Use of Likert scale to get desired information), Age Consumer buying patterns (Use of Likert scale to get desired information)

Research Objective 2: To understand the consumers perception of snacks category


Hypotheses Variables Data Analysis Tool
Perception Map Perception Map H8: Youngsters (15-25 years) perceive light and crispy food Rating of snacks across different food product items as snacks which they can eat while studying, attributes ( like crisp, light, sweetness etc.) watching TV etc Rating of snacks across different food product H9: Adults (aged 30+) define snacks as biscuits low in attributes ( like crisp, light, sweetness etc.) sweetness to have with evening tea or coffee

Research Objectives & Hypothesis (2/3)


Hypotheses
H10: Parents with kids aged 4-12 years buy snacks which have nutritive value for their kids H11: Busy working professionals perceive ready to serve packaged foods as snacks

Variables
Rating of products across different food product attributes ( like crisp, light, sweetness etc.) Rating of products across different food product attributes ( like crisp, light, sweetness etc.)

Data Analysis Tool


Perception Map Perception Map

Research Objective 3: To understand the purchase behavior of snacks shoppers in a retail environment
Hypotheses Variables Data Analysis Tool
1 sample T test H12: Children (5-14years) look for chocolates, chips, Consumer buying patterns (Use of Likert scale to get candies and gums at the entry point of the provision stores desired information), age and food shops H13: Most consumers tend to purchase snacks at the end of their shopping for utilities H14: Easy going consumers prefer to buy chocolates or biscuits along with chips and namkeen H15: Most consumers who buy cake or pastry at bakery shops purchase chips along with it H16: Children (5-14 years) prefer snacks which have freebies H17: Health conscious consumers attach higher importance to product information on package while making the purchase decision of snacks Consumer buying patterns (Use of Likert scale to get desired information) Psychographic characteristics of the consumers, Consumer buying patterns (Use of Likert scale to get desired information) Consumer buying patterns (Use of Likert scale to get desired information) Preference (On a scale of 1-5) for snacks which have freebies , age Importance rating of product info on package while making purchase decision, degree of health consciousness among consumer

1 sample T test

Cluster + 1 sample T test

Cluster + 1 sample T test 1 sample T test

Cluster + Discriminant analysis

Research Objectives & Hypothesis (3/3)


Research Objective 4: To understand different purchase segments of the snacking market
Hypotheses
H18: Large SKU premium biscuits and chocolates are purchased for gifting

Variables

Data Analysis Tool


Cluster + Discriminant analysis 1 Way ANOVA Cluster + Discriminant analysis Cluster + Discriminant analysis 1 Way ANOVA 1 Way ANOVA 1 Way ANOVA

Preference rating for different snacks categories for gifting purposes purposes by sec A consumers H19: Biscuits and salted snacks are preferred for serving to guests Preference rating for different snacks categories for guests H20:Health seekers regularly consume snacks having high nutritional value Consumer preference rating on different snacks attributes H21: High social status is the driver for Sec A shoppers to visit large Importance rating of different store selection drivers provision stores and supermarkets H22:Comparison shopping is the main driver for SEC B explorers to visit Importance rating of different store selection drivers supermarkets and large provision stores H23: Comparison shopping is the main driver for SEC C explorers to visit Importance rating of different store selection drivers small provision and food stores H24: Availability of sugar-free snacks is the driver for health seekers to visit Importance rating of different store
large provision stores and supermarkets

selection drivers
Monthly expenditure on packaged food Paired Sample T test Paired Sample T test Paired Sample T test Paired Sample T test Paired Sample T test Paired Sample T test

H25: Branded packaged snacks face a severe competition from private label
snacks in food stores

H26: In large provision stores products face a competition mainly from Monthly purchase of imported brands, standard brands imported brands H27: In small provision stores products face a competition from brands by Monthly purchase of imported standard brands, traditional players brands traditional players Consumer preference of fruits vis-a vis H28:Fruits are a major competitor in the nutritional snack segment healthy snacks among high nutrition alternatives H29:Consumers spend more on Cadbury chocolates as compared to its Expenditure on Cadbury chocolates and competitor brand competitors H30:Sec B consumers spend more on other biscuits brands as Expenditure on Oreo Biscuits and compared to Oreo brand competitor brand

Research Methodology and Timelines


SECONDARY RESEARCH Interviews with industry representatives, in store shopping behavior, Published material, modern retailers websites EXPLORATORY RESEARCH In-depth Interviews: 13 males, 17 females and 4 retailers, 2 Focus Group Discussions QUESTIONNAIRE DESIGN Questionnaire formulation based on the, Secondary research findings, Insights from the FGD, IDI insights GAME DESIGN Game design to capture questionnaire data in a disguised form. INDEX FAIR Data collection by means of disguised marketing research. Element of neutrality to be included to eliminate biases DATA ANALYSIS Perceptual Mapping, Cluster Analysis, Analysis and Preference Map tools SUGGESTIONS Suggestions on consumer behavior in different traditional retail environments, Insights on customer purchase behavior for biscuits, chocolates, candies, gums, salted snacks and instant noodles , Insights on product and store choice criteria Factor
Exploratory & Secondary Research Questioning Guide for in-depth Research In-depth Interviews Discussion guide for FGD FGDs Questionnaire for INDEX Pilot testing of Questionnaire Index Game Design Beta Testing of Game Prop preparation for Index Index 2012 Data Analysis

Timeline2012
Task Name/Week no.

OCT

NOV

DEC

41

42

43

44

45

46

47

48

Report Submission
Final Presentation

Sampling Plan
Sampling Method: Stratified Random Sampling
Qualitative Research No of Gender Age Group Technique Participants Employed SEC /Interviews Male Female 10-16 17-24 25-35 35+
Focused Group A B Discussions C A In-depth B Interviews C A Pilot Survey B C A Questionnaire B pre-test C A Index Fair B C 8 8 0 10 10 10 10 10 10 10 10 10 68 68 68 310 4 3 0 4 5 4 5 5 5 5 5 5 34 34 34 152 4 5 0 6 5 6 5 5 5 5 5 5 34 34 34 158 0 0 0 1 1 0 2 2 2 2 2 2 14 14 14 56 5 4 0 3 3 3 3 3 3 3 3 3 18 18 18 90 3 4 0 4 3 5 3 3 3 3 3 3 18 18 18 91 0 0 0 2 3 2 2 2 2 2 2 2 18 18 18 73

Sample Size Calculation Total


16

Confidence interval = 95% = Population Proportion Z=1.96 =0.5 D=0.0558

30

30

30

Sample Size=310

209

Total

310

Relevance To Management (1/2)


RO 1: To understand snacks shoppers needs in different REs
Business Implications Distribution and promotion strategy of snack products in different types of Retail Environments Communication strategy for specific shopper segment as per the RE they visit for different needs/ occasions Action Points Focus on products and SKU sizes sought by different shopper segments in different REs Devise promotional strategies in different REs for different occasions /needs

RO 2: To understand the consumer s perception of snacks category


Business Implications Action Points

Consumer focused Product development

Capitalize on demand for snacks as mealreplacers by introducing nutritious snacks which are readily served/prepared for busy working people and parents for their kids
Devising communication strategies to highlight the specific benefits such as nutritive value, low calorie which are relevant to target consumer

Devise benefit specific communication strategy

Relevance to Management (2/2)


RO 3: To understand Factors which influence purchase behaviour of snacks shopper in REs
Business Implications Product placement strategy in retail stores Action Points Capitalize on high purchases of combination products by placing them together Leverage customers shopping spree habits and placing the product at strategic points in stores Leverage the preference for healthier snacks and focus on using the front of product packaging to communicate

Leveraging the influencers for purchase decision in the communication strategy

RO 4: To understand Factors which influence purchase behaviour of snacks shopper in REs


Business Implications Product placement strategy in retail stores Action Points Capitalize on high purchases of combination products by placing them together Leverage customers shopping spree habits and placing the product at strategic points in stores
Leverage the preference for healthier snacks and focus on using the front of product packaging to communicate

Leveraging the influencers for purchase decision in the communication strategy