Study Consumer Behaviour of Low Cluster Pyramid Assignment

Study Consumer Behaviour of Low Cluster Pyramid Assignment Words: 3274

“To Study the Consumption Pattern of Bottom of Pyramid Group in Noida and Recommend a Product based on the Analysis” (A Consumer Behavior Assignment) Submitted to: Submitted by: Ms. Mamta Mohan E – 38 to E – 55 CB Group: 3 [pic] Amity Business School Noida List of Team Members: 1. E38Pradeep Kapil 2. E40Arpit Shukla 3. E41Sagar 4. E42Ankit Rajvanshi 5. E43Vishal Sishodia 6. E44Manish Raj Singh 7. E45Vaibhav Taneja 8. E46Kamal Kumar 9. E52Piyush Aggarwal 10. E53Lalit 11. E54Ankit Podder 12. E55Ashish Gupta Table of Content

Abstract Introduction Bottom of Pyramid Literature Review Objective of Study Research Design Limitation of Study Data Collection Data Analysis Conclusion Product Recommended Annexure – I: Sample Questionnaire List of diagrams Abstract Bottom of pyramid is the socio-economic group which constitutes the largest chunk of population and is the poorest section. The potential of this group has been found to be enormous in past few years. Researches and concept by Mr. C. K Prahalad has been very popular in this field.

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Many products such as Tata Nano, Shampoo Sachets etc have been the result of this concept. Further products could be developed keeping in mind the demography and consumption pattern of this group so as to cater to the enormous potential which they provide. The research aims at deriving the consumption pattern of this group clustered on the basis of occupation. The research shows how people in this group are merely able to spend on their basic needs and have no funds for luxuries or entertainment.

Various facts have been drawn out in the paper regarding the said subject. The analysis also enables us to suggest some products which could be targeted for the BoP group. Introduction: Bottom of pyramid is constituted of the largest but poorest part of the population. Being the largest part of population this group is of special interest to present day marketers. The buying power of India as a whole has tremendously increased in past decade with a sustained growth rate of well over 7%.

This has empowered the BOP also. The consumption of this group has also seen a surge. The urban markets are getting matured and customer is much more aware now, the competition is very stiff in these markets and very less scope for differentiation is left. In the given scenario exploring a new segment of market with a carefully designed product for them is very important. This new segment is the bottom of pyramid which has a tremendous potential and a huge consumption capacity.

In order to cater their needs precisely and retaining them it is very important to understand the consumer behavior of this segment. Many researches suggest the growing strength of the base. Getting a clear idea about the lifestyle of the said group and its consumption pattern will help the companies to decide as to where is the gap in fulfillment of their needs and hence enable them to target the right market with the right product.

The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how consumers think, feel, reason, and select between different alternatives; how the consumer is influenced by his or her environment; the behavior of consumers while shopping or making other marketing decisions; limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome and how marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

NOIDA (New Okhla Industrial Development Area) has emerged as a planned, integrated, modern Industrial City, well connect to Delhi through a network of roads, national highways and the ultra – modern DND flyover, offering inter – road linkages to all parts of the country. It is one of the largest industrial townships of Asia along with it about 33% of area is dedicated towards development of residential townships. The city has a population of more than 6,00,000 settled in well developed sectors and 81 villages out of which 31 are developed.

Being an industrial township the city has got corporate offices for many well known companies. IT, media, electronics are some of the sectors which constitute the industrial bouquet of the city. Huge manpower (skilled, semi skilled and unskilled) is required to operate these industries and it creates tremendous job opportunities. People (at all levels of pyramid) from different places have settled in Noida to fulfill the requirements. This has further helped the city to grow faster. The average consumption of the city is much higher than other tier II cities.

The population distribution of the city can be better understood with the help of concept of bottom of pyramid. Bottom of Pyramid: In economics, the bottom of the pyramid is the largest, but poorest socio-economic group. In global terms, this is the 2. 5 billion people who live on less than $2. 50 per day. The term is particularly used by the people who develop new models of doing business that deliberately target that demography. The population of Noida may be divided into three levels based on the income levels of the people.

As already said Noida is developed as an industrial township hence creating a lot of job opportunities at each level of pyramid. • A major part of this population is constituted of unskilled or semiskilled industrial workers which include fitters, carpenters, electricians, technicians, operators, sales force, etc. also the industries have created job opportunities indirectly such as auto-rickshaw drivers, rickshaw pullers, cleaners, domestic helpers, security guards, shop assistants etc. ll these jobs are labour intensive as most of the work has to be done manually & hence involve a large number of people in it who are lowly paid. This part constitutes the bottom of the pyramid. • Another set of population identified is of young executives, people of middle level management, small businessmen/shopkeepers, engineers, IT professionals, etc. who form the next level of pyramid. • At the top are the people of CEO, Country head level & Entrepreneurs who are relatively low in number but have got the highest income amongst the city people. Literature Review: Bottom of pyramid changed business model in India’, TNN, April 19, 2010: the article gives the contribution of Mr. C. K Prahalad in popularizing the concept of BoP and realizing the potential in this group. Due to his concept BoP concept Indian hotel group launched budget hotel chan named Ginger. Along with it Tata Nano, Tata Swach, Tata Housing are the outcomes of the same concept. “His path-breaking work on value of goods and services at the lowest income level transformed corporate thinking and has resulted in some iconic products,” said Jamshyd Godrej, chairman, Godrej & Boyce Manufacturing Co. Vim Bar of HUL coated on five sides to ensure waterproofing is also the result of value and cost concept of Mr. Prahalad. Sachet and mobile revolution is also the outcome of similar concept. “FMCG: Bottom of Pyramid going Strong”, business line, October 30, 2008: the article suggests that lower income groups have increased their expenditure on toilet articles. The statistics given in support of this argument is: the share of the lower two-thirds of the rural population in total expenditure on toilet articles increased from 49 per cent to only 50 plus per cent between 1999/2000 and 2004/5.

Though the corresponding increase in urban areas, from 41 to 47 per cent, was larger, the fact is that rural sales accounted for 58 per cent of total expenditure on toilet articles in 2004/5; and this figure is likely to keep going up, judging by the fact that it increased by 5 percentage points since 1999/2000. “Significance of Bottom of Pyramid for Corporates”, Sud Ritesh, Chotani Pritesh, IMT, Ghaziabad: the article focuses on the rural market. It mentions about the ITC’s e-choupal project and HUL’s ‘Project Shakti’. The paper also gives some of the facts about the rural India which clearly signifies the potential of this market.

Some of these facts are: 742 million reside in rural India compared to285 million in urban, 53% of all FMCG and 59% of consumer durables are sold in rural India, the number of poor households has shrink to half from 1996-97 to 2006-07, rural market possess about half of India’s total disposable income. The paper also suggests some traditional methods of rural marketing in India: modifying the product (sometimes making it inferior), offer product in small unit, using same advertisement by simply dubbing it in region specific language and lower the price of product. Objectives:

Understand the consumption pattern of ‘bottom of pyramid’ group in Noida city. Identify a need of the said group and suggest a product to fulfill that need. Research Design: Secondary data analysis has been made with the major source as internet to get a better idea about demographic profile of Delhi & NCR (Noida in particular). Based on the study a primary research has been designed to achieve the said objectives. The base of the pyramid as explained in previous sections is divided on the basis of income levels and occupations. Eight professions are considered under study: • Auto Rickshaw driver • Rickshaw puller Construction laborer (daily wager) • Security guards • Cleaners • Domestic help • Vendors • Shop assistants A sample survey has been conducted for the above given cluster as follows: Target population: all the people falling in any of the above group and residing in Noida is targeted. Sampling method: the sampling method used is Quota sampling, wherein quotas have been decided based on the occupation. Sample size: sample size is kept to be 80 taking care of the quota. Questionnaire Design: A questionnaire has been prepared to quantify the consumer trends and pattern. The sample questionnaire is attached in the annexure.

The questionnaire provides: • identity information of the respondent, • basic information on consumption pattern, • information regarding brand awareness The major area of focus has been the usage of electronic items, brand of cosmetic products used, brand of edible oil and common salt used, spending on children education and other basic information. Limitation of Study: • Small sample size may lead to non representative results • Time constraint has narrowed down the scope of research • Possible tendency of the respondents to hide or mislead some of the facts during interview The research has been conducted only in parts of Noida hence can’t be generalized in a broad sense. Data collection: The data has been collected by interview method as the respondents were generally not educated enough to fill the questionnaires themselves. The areas such as village Raipur, barola; sector 105, sector 37; construction sites at sector 125, sector 41 wherein this group resides were visited along with it some of the respondents were interview at there work areas. The task had been taken in a well planned manner.

We divided Noida into different sections and each section being handled by a team of two people from within the group. The data collection played a very crucial role in this study as in process of getting the respondent interviewed it was very important to observe certain things which have helped us to structure the research in a better way and which could not be directly asked to the people. The research tool thus explained is the questionnaire but observation technique has also played a very crucial role in conducting this research. Data analysis: pic] Inference: The bar chart above shows that the monthly income of majority of the respondents in clusters taken is more than Rs. 3000 whereas monthly income for 14. 29 percent of the respondents is below 3000 Rs. The majjority of the respondents in this monthly income range of 1000-3000 Rs is from shop assistants cluster. [pic] Inference: The bar chart above shows that Ghadi and 555 are the most popular brands in Various clusters taken as bottom of pyramid group. Whereas some of the respondents were not even aware of the brands available in market.

They simply responded as we ask ” 5 Rs wala sabun or 10 Rs wala sabun” whereas some of the respondents even responded for good brands like tide, who were mainly from the cluster of domestic help. [pic] Inferece: The diagram above shows that more than 50 percent of the total respondent knows only one brand for salt i. e Tata whereas remaining of the respondents are not aware of any brand and when asked about the brand of the salt they replied “5-8 Rs pack salt ” [pic] Inference: Bar diagram above shows that all the respondent taken are not a resident of Noida and are migratory. 4. 29 percent of the total respondent are from UP itself, 20 percent of the respondent are from Bihar whereas 45. 71 percent of the respondent are from other parts of india as West Bangal and MP. [pic] Inference: The bar diagram above shows that meority i. e more than half of the total respondents are using sarso oil in cooking. The only brands that they are familiar with is parivaar and dalda. Whereas 18. 57 percent of the total respondents are those who buys loose unbranded oil. |What fuel do you use for cooking? do you have LPG connection Crosstabulation | | | | |do you have LPG connection |Total | | | | |yes |no | | |% of Total |18. 2% |81. 8% |100. 0% | Inference: The result for cross tabulation above shows that among 96. 4 percent of the respondents who use LPG for cooking purpose 78. percent of the respondents don,t have an LPG connection and they arrange for LPG gas in black. [pic] Inference: Diagram above shows that around 50% of te total respondents use shampoo whereas others don’t. The respondents who don’t use shampoo quoted “Water here in Noida is salty so it is better to use washing soap for washing hairs” [pic] Inference: Among the respondents who use shampoo for washing hairs almost 90 percent of the people buys sachet only whereas there are only 10 percent of the respondents who go for a bottle packing, shows that the people in this group don’t want to spend the money in bulk on a single community.

Rather they prefer to buy the comodity each and every time they use it. [pic] Inference: The bar diagram above shows that the respondents who use shampoo majority of them are not aware of the brands of shampoos available. While asked about the brand of thhe shampoo they responded “koi bhi 1 Rs. wala shampoo”. the brand which people in this cluster were able to recognise were clinic plus and chic. [pic] Inference: The chart above shows in selected cluster the mobile phone is the most common electronic item, which people are having. 71% of the people are having their own mobile phone.

While cooler and CD players are still not much penetrated in this segment, so there is a huge market of these goods in this segment. Radio is now a out dated item and people generally use their mobile phones for listening the radio. Conclusion: The data analysis clearly shows that the people in the above mentioned clusters with their meager compensations are merely able to meet their basic needs we have seen that not much of people possess various electronic gadgets and also there is not much disposable income left with them after spending for their daily needs.

Another positive aspect which came to light is that even by living hand to mouth most of these people are trying their best to provide their children education. Also we noticed the brand awareness of Tata salt wherein most of the people who said they prefer any brand on provocation could only recall Tata salt. It was also noticed that they do not have much of options and luxuries for entertainment. FMCG products have made a very great penetration even in BoP group as is evident from the use of branded products in this category. This is even supported by an article mentioned in literature review section.

Banking sector has a lot of work to do towards the inclusion of this group in their customer base as most of the people are still unbanked. It was also found that the reason for not having the bank accounts is the complexity in the procedures rather than the lack of money. Various banking schemes such as no frills account has not reached its targeted customer in the desired manner. Products recommended: 1. Low Cost brand of Refined Edible Oil: it has been found in the research that most of the people use mustard oil in cooking because of its cheaper pricing and due to the taste that they have developed since childhood.

Also those who are using refined oil they are left with local brands which have a great threat of adulteration. At first instance it may appear that developing a new taste of refined oil would be a difficult job. But we must remember that a similar transition had to be inculcated in the society at higher level of pyramid few years back and that transition has been fairly successful which gives this product concept an optimist view. Intensive marketing strategies will have to be adopted but with changing trends and lifestyle the product appears to be a success in long run. . Low cost entertainment system: it has been observed that very few people amongst this group go to movie theaters also only few of them have television and CD-players at home. It has also been observed that these people bring the CD players (and televisions in some cases) on rent and enjoy the movie in large groups. As this is the only source of their entertainment that we could find we recommend introducing a low cost television which is integrated with a CD-player.

The technology for such a product already exist Sansui had once launched such a product in India but could not become successful because of its wrong positioning and target customers. This product if provided at very reasonable prices along with attractive credit terms would definitely be able to create a market segment of it. 3. Easy banking solutions: we have also observed that most of the people due to lack of knowledge and education are not able to access the banking facilities.

Although no frills account and other services have been initiated by various nationalized bank to cater to this segment but the product has not reached to the roots in the desired fashion. Banks must design some services which are hassle free with no complexity in documentation. Also agents should be made who could help the illiterate people in accessing these facilities. Amity Business School Consumer Behavior Name Age Occupation Educational Qualification – IncomeHave a bank account – Marital Status Own HouseHouse on Rent Domicile StateSince when are you staying in Noida – Cook at home or eat outside –

Have a gas (LPG) stove or a Kerosene stove – Have a LPG connection – if no from where you arrange the cylinder – Toilet facility – have at home use public convenience Buy grocery from: Departmental Stores Local Kiryana Stores Buy grocery on: Cash termsCredit Terms Vehicle owned….. 1. Bicycle 2. Motorbike. 3. Rickshaw4. Car5. Three-wheeler Haw many children do you have? ___________ How many of them go to school? _________ Monthly expenditure on study of children________ Household own….. 1. TV 2. Mixer grinder3. Washing M/c4. Cooler 5. Sewing M/C 6. Radio7. Mobile 8. Fridge. 9.

CD Player Do you drink…. Yes No If yes, monthly expenditure on alcohol 100-200200-400400-600600-800800-1000more than 1000 No. of time you Watch Movies in Theater in a month. 1-23-55-7more than 7 Brand awareness Do you use any shampooyesNo SachetBottle Which Brand of shampoo do you use? _____________ Brand of bathing soap_________ Brand of Detergent you use ___________ Brand of Refined oil you use___________ Brand of salt__________ Do you own a ration cardYesNo How frequently do you use ration card. Comments ———————– Population pyramid for Noida (based on income level)

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