A

RESEARCH REPORT

ON Consumer behavior regarding tea industry

SUBMITTED TO:KURUKSHETRA UNIVERSITY KURUKSHETRA

In Partial fulfillment for the degree of M.B.A Session 2011-2013

SUBMITTED TO: MS.VASUNDRA SAINI Assistant Professor. MBA

SUBMITTED BY: SAHIL SHARMA MBA -IV SEM UNIV. ROLL NO

Swami Devi Dyal Institute Of Management Studies Barwala, Panchkula (Haryana)

SR NO.

CONTENTS
Certificate of company Acknowledgement Preface Declaration

PAGE NO.

III IV V VI

Chapter 1

Introduction Introduction of the company

7-15 16-36

Chapter 2

REVIEW OF LITERATURE

37-40

Chapter 3

RESEARCH METHODOLOGY
Research design Scope of the study Objectives of study Limitation of the study

41 42 43 44 45

Chapter 4

DATA ANALYSIS AND INTERPRETATION Data analysis & interpretation 54-77

46-59

Chapter 5

FINDINGS & SUGGESSTIONS

60-62

Chapter 6

CONCLUSION QUESTIONNAIRE BIBLIOGRAPHY

64 65-68 69

CERTIFICATE
This is to certify that SAHIL SHARMA has completed the project entitled Consumer Behavior Regarding Tea industry under my supervision. To the best of my knowledge, the report consists of result of the empirical study conducted by the student. In my opinion, the work is of requisite standard expected of an MBA student. Therefore, I recommend the same to be sent for evaluation.

Research Guide

Principal

ACKNOWLEDGEMENT
Gratitude is the hardest of emotions to express and one often does not find adequate words to convey what one feels and trying to express it The present project file is an amalgamated of various thoughts and experiences .The successful completion of this project report would have not been possible without the help and guidance of number of people and specially to my project guide .I take this opportunity to thank all those who have directly and indirectly inspired, directed and helped me towards successful completion of this project report.

I am also immensely indebted to my guide, Ms.Vasundra Saini Assistant Professor(MBA) for her illumining observation, encouraging suggestions and constructive criticisms, which have helped me in completing this research project successfully.

There are several other people who also deserve much more than a mere acknowledgement at their exemplary help. I also acknowledge with deep sense of gratitude and wholehearted help and cooperation intended to me by them.

SAHIL SHARMA

PREFACE
Research Project is the bridge for a student that takes him from his theoretical knowledge world to practical industry world. The main purpose of it is to expose for industrial and business environment, which cannot be possible in the classroom. The advantages of this sort of integration, which promotes guided to corporate culture, functional, social and norms along with formal teaching are numerous.

1) To bridge the gap between theory and practical. 2) To install the feeling of belongingness and acceptance. 3) To help the student to develop the better understanding of the concept and questions already raised or to be raised subsequently during their research period. The present report gives a detailed view of the Consumer Behavior Regarding Tea industry. The research is definitely going to play an important role in developing an aptitude for hard self-confidence.

DECLARATION
I hereby declare that, the project entitled Consumer Behavior Regarding Tea industry assigned to me for the partial fulfillment of MBA degree from Kurukshetra University, Kurukshetra. The work is originally completed by me and the information provided in the study is authentic to the best of my knowledge.

This study has not been submitted to any other institution or university for the award of any other degree.

SAHIL SHARMA .

CHAPTER-I INTRODUCTION

Consumer Behavior
Consumer Behavior may be defined as the interplay of forces that takes place during a consumption process, within a consumers self and his environment. This interaction takes place between three elements viz. knowledge, affect and Behavior; it continues through pre-purchase activity to the post purchase experience; it includes the stages of evaluating, acquiring, using and disposing of goods and services. The consumer includes both personal consumers and business/industrial/organizational consumers. Consumer behavior explains the reasons and logic that underlie purchasing decisions and Consumption patterns; it explains the processes through which buyers make decisions. The study includes within its purview, the interplay between cognition, affect and behavior that goes on within a consumer during the consumption process: selecting, using and disposing of goods and services. Cognition: This includes within its ambit the knowledge, information processing and thinking part; It includes the mental processes involved in processing of information, thinking and interpretation of stimuli (people, objects, things, places and events). In our case, stimuli would be product or service offering; it could be a brand or even anything to do with the 4Ps. Affect: This is the feelings part. It includes the favorable or unfavorable feelings and corresponding emotions towards stimuli (e.g. towards a product or service offering or a brand). These vary in direction, intensity and persistence. Behavior: This is the visible part. In our case, this could be the purchase activity: to buy or not a buy (again specific to a product or service offering, a brand or even related to any of the 4 Ps). The interaction is reciprocal between each of the three towards each other and with the environment. OTHER DEFINITIONS: The behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. - Schiffman and Kanuk ..the decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services." - Loudon and Bitta The study of consumers as they exchange something of value for a product or service that satisfies their needs - Wells and Prensky Those actions directly involved in obtaining, consuming and disposing of products and services including the decision processes that precede and follow these actions.

-Engel, Blackwell, Miniard the dynamic interaction of effect and cognition, behavior and the environment by which human beings conduct the exchange aspects of their lives American Marketing Association During the process of evolution of the field of consumer behavior, researchers drew on various disciplines, ranging from psycho-physiology to literature (Solomon 1995). A list of professional associations that sponsor the Journal of Consumer Research provides a glimpse of the number of disciplines working together in the field. The diverse disciplines employed by researchers approach consumer issues from different perspectives. In addition to the many disciplinary orientations, perspectives on consumer behavior are broadly differentiated by their emphasis on internal influences (drawing on theories from psychology) and on external influences (drawing on theories from sociology). Furthermore, methodological inclinations and fundamental assumptions about the unit of analysis - the consumer, differ radically between perspectives. Thus, varying perspectives present different views of aspects on consumption (as emphasized from the consumers perspective), research orientations (as emphasized from the researchers perspective), and focus (micro/individual or macro/social) on consumer issues. Research that studies consumer behaviour as a sub discipline of marketing with the aim to identify how consumer research can be put to use in marketing practice, regards the field of consumer behaviour as an applied social science. Accordingly, the value of the knowledge generated should be evaluated in terms of its ability to improve the effectiveness of marketing practice. According to this perspective, marketing management inevitably rests upon some conception of how consumers behave and of the Consequences their reactions to product, price, promotion, and distribution strategies are likely to have for the attainment of corporate goals. In affluent, competitive economies, successful marketing depends above all on matching the marketing mix, which results from the integration of these strategies with the willingness of consumers to buy and in doing so more effectively than ones rivals. The consumer-oriented management which results from such matching is a response to the enormous discretion exercised by purchasers in these economies. Moreover, the choices made by consumers have consequences not merely for competing companies within a given, traditionally-defined industry; because of the high levels at which discretionary income is running, companies are increasingly forced to compete across the conventional boundaries of markets and industries. Recently, though, some researchers have argued that consumer behaviour should not have a strategic focus at all. It should instead focus on 2 The American Statistical Association, the Association for Consumer Research, the Society for Consumer Psychology, the International

Communication Association, the American Sociological Association, the Institute for Operations Research and Management Sciences, the American Anthropological Association, the American Marketing Association, the Society for Personality and Social Psychology, the American Association for Public Opinion Research, the American Association of Family and Consumer Sciences, and the American Economic Association (Source:

http://wiscinfo.doit.wisc.edu/jcr/policy_board.htm). Moneesha Pachauri the understanding of consumption for its own sake, rather than because the knowledge generated can be applied by marketers (Holbrook 1985). While this view has emerged relatively recently, it has encouraged many to expand the scope of their work beyond the fields traditional focus, on the applied benefits of undertaking consumer studies. This more critical view of consumer research has also led to the recognition that not all consumer behaviour and/or marketing activity is necessarily beneficial to individuals or society. As a result, current consumer research is likely to include attention to the dark side of consumer behaviour, such as addiction, prostitution, homelessness, shoplifting, or environmental waste (OQuinn and Faber 1989; Barron 1989). This activity builds upon the earlier work of researchers who have studied consumer issues related to public policy, ethics, and consumerism. There is a growing movement in the field to develop knowledge about social marketing, which involves the promotion of causes and ideas, such as responsible drinking, energy conservation, and population control. This article presents a review of the literature, in the field of consumer behaviour. The first section, describes the dominant, positivistic consumer perspectives. The second section, presents a methodological and analytical overview of the traditional perspectives, already discussed in section one. Further discussion on the paradigm shifts within consumer research, is supported by a diagrammatic representation of the evolution of the field of consumer behaviour. The remainder of this section is devoted to presenting the highlights of the debate between the recent non-positivist perspectives and the traditional positivist-based approaches. This discussion surrounds the issues of fundamental assumptions and techniques of analysis of various alternative modes of enquiry. And finally, the last section presents an overview of the developments within the field of consumer research. Tea is the most widely consumed beverage in the country India and China are respectively the largest and second largest producers and consumers of tea. These two countries are together account for half of world's tea production. However they export less than a quarter of their production, due to large domestic demand. As per a survey on consumption of beverages, Tea accounts for 90% Filter coffee 4% Malted health beverages 2% instant coffee 2% and carbonated soft drinks just above 1% of total

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consumption squashes, Concentrates, Mineral water account for a minuscule part of the consumption. There are other export driven tea producing countries like Kenya, Sri Lanka and Indonesia who produce only 25% of world tea but control 50% of global trade. They export almost 80% of their production. In the last five decades, tea production in Kenya, Malawi, Sri Lanka and Indonesia has increased at a rapid pace. While the Government set up a target of 10000mn kg by year 2012, as per historical trend, actual production is unlikely to exceed 900mn kg. Production is FY 99 is estimated at 870mn kg. Out of the entire tea produced in the country, about 24% is exported. In the domestic market, only 30% of the tea produced is sold in packaged/ branded from while 46% is sold in loose form. Tea plantations in India are concentrated in North East (Upper Assam and West Bengal) and South (Kerala AND Tamil Nadu). North-East account for 75% of production while the Southern region accounts for the balance. Although, yield pore hectare is lower in North east tea quality is superior. For a long time, Indian tea producers were getting artificially high price for tea as the erstwhile USSR used to buy under bilateral treaty. The rouble (USSR currency) was artificially overvalued. The collapse of the USSR has been a major blow to the industry. Paradoxically, India is not globally competitive in production of tea which is labor intensive. Competing countries Kenya. Sri Lanka are also underdeveloped and have comparatively lower labor costs and much liberal labor laws. More importantly, average age of tea bushes in India is relatively high, therefore productivity is lower. Income tax liability for tea companies is calculated in a unique way. 60% pre-tax profits are deemed to be agricultural income, taxable by the State Government and 40% corpora earnings taxable as corporate profits. The effective tax rate works out to be significantly higher.

DETERMINANTS OF CONSUMER BEHAVIOUR Cultural Factors: Cultural factors exert the broadest and deepest influence on consumer behavior. It encompasses the social values, attitude towards, social intercourse, language, belief customs and traditions etc. it includes: 1) Culture: The culture is the sum total of learned beliefs, values and customs which serve to guide and direct the consumer behavior of all the members of the society.

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2)

Sub Culture: A sub culture is an identifiable and distinct group that has unique characteristics. A sub culture is a psychological, religious, social or geographical source of group identification. These sub culture are used by companies as the basis of segmentation.

3)

Social Class: Virtually all human societies exhibit social stratification it sometimes takes the form of caste system where the members of different caste are reared for certain roles and can't change their caste membership and they are known as social class. Social classes are relatively homogenous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behavior.

Social Factors: Customer is a social being and its behavior is influenced by several social factors such as reference groups, family and roles and statuses.

1)

Reference Group: A person's reference group consists of all the groups that have a direct or indirect influence on the persons attitudes and behavior. Group having direct influence on a person are called membership.

2)

Family: Family is most important consumer buying organizations in society and it has been researched extensively family members. reference group. Constitute the most influential primary

3)

Roles and statuses: A person participants many groups throughout life-family, clubs, organization. The person's positioning each group can be defined in terms of roles and statuses. A role consists of the activities that a person is expected to perform and each role carries the status. Marketers are aware of the status symbol potential of product and brands.

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Personal Factors: A buyers decisions are also influenced by personal characteristics these include: 1) Age and stage in the life Cycle: People buy different things over their lifetime and they buy it according to their age and stage in life cycle e.g. if they are old. They will not buy the baby cycle. 2) Occupation: A person's occupation also influences his or her consumption patterns. A blue collar worker will buy the bicycle whereas the company president will buy the car.

3)

Economic Circumstances: Product choice is greatly affected by one's economic circumstances People's economic circumstances consists of their spend able income, savings and assets, debts and attitude toward spending and saving.

4)

Life Style: A person's life style is the person's pattern of living in the world as expressed in person's activities interests and opinions. People use to buy the products according to their life style.

5)

Personality and self concept: Each person has a distinct personality that influences his or her buying behavior.

PSYCHOLOGICAL FACTOR: A person's buying choices are influenced by four major psychological factors such as: 1) Motivation: Motivation refers to the way a person is enthused it intensify his willingness to us his potentiality for the achievement of his objectives. Motivation has close relationship with the behavior of human beings; it explains how and why the human behavior is caused. 2) Perception: Perception is the process by which an individual selects, organizes and interprets information inputs to create a meaningful picture of a world. A motivated person is ready to act. How the motivated person actually acts is influenced by his or her perception of the situation.

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3)

Learning: Learning involves changes in an individuals behavior arising from experience. It also affects the consumers buying behavior.

Belief and Attitudes: Through doing and learning people acquire beliefs and attitudes. These in turn influence their buying behavior. A belief is a descriptive thought that a person holds about something.

BUYING BEHAVIOUR A basic Requirement of Marketing: 1) 2) 3) 4) What motivates the buyers? What induces him to buy? Why does he buy specific brand from a particular shop? What are the stages he travels through before he makes the decision for buy?

Knowledge of the consumer and his buying motives and buying habits, is thus a fundamental necessity for the marketing man.

"Phillip Kotler has given the buyer decision making model and also the factors which determine his buying behavior" Decision Making Process: To be successful, marketers have to go beyond the various influences on buyers and develop and understanding of how consumer actually make their buying decision. Steps in buying decision making process are:

Problem Recognition: Buying process starts when the buyer recognizes a problem or need. The need can be triggered by internal or external stimuli. Information Research In aroused customer will be inclined to search more information. Customer information sources fall into four groups.

1)

Personal sources

Family, friends, neighbor

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2) 3)

Commercial sources : Public Sources :

Advertising, sales, person dealers, packaging, displays. Mass media, Consumer rating Organizations.

4)

Experimental sources :

Handling, Examining, using the Product.

Evaluation of Alternatives: In this consumer process the competitive brand information and make the final judgments for value.

Purchase Decision: In the evaluation stage the consumer forms preferences among the brand in the choice set. The consumer may also form an intention to buy the most preferred brand. A consumer's decision to modify, postpone or avoid a purchase decision is heavily influenced by perceived risk.

Post Purchase Behaviors: After purchasing the product the consumer will experience some level of satisfaction or dissatisfaction. The marketers job does not end when the product is bought but continues into the post purchase satisfaction, post purchase actions and post purchase use and disposal.

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HISTORY OF TEA
Tea is nearly 5,000 years old and was discovered, as legend has it, in 2737 B.C. by a Chinese Emperor when some tealeaves accidentally blew into a pot of boiling water. In the 1600s, tea became popular throughout Europe and the American colonies. Since colonial days, tea has played a role in American culture and customs. Today American schoolchildren learn about the famous Boston Tea Party protesting the British tea tax one of the acts leading to the Revolutionary War. During this century, two major American contributions to the tea

industry occurred. In 1904, iced tea was created at the World's Fair in St. Louis, and in 1908, Thomas Sullivan of New York developed the concept of tea in a bag. Tea breaks down into three basic types. Black, Green and Oolong. In the U.S. over 90 percent of the tea consumed is black tea, which has been fully oxidized or fermented and yields a hearty-flavored, amber brew. Some of the popular black teas include English breakfast (good breakfast choice since its hearty flavor mixes well with milk). Darjeeling ( a blend of Himalayan teas with a flowery bouquet suited for lunch) and Orange Pekoe ( a blend of Ceylon teas that is the most widely used of the tea blends). Green tea skips the oxidizing step. it has a more delicate taste and is light green/golden in color. Green team a staple in the Orient is gaining popularity in the U.S due in, part to recent, scientific studies linking green tea drinking with reduced cancer risk. Oolong tea, popular in China, is partly oxidized and is a cross between black and green tea in color and taste. While flavored teas evolve from these three basic teas, herbal teas contain no true tealeaves. Herbal and "medicinal" teas are created from the flowers, berries, peels, seeds, leaves, and roots of many different plants.

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STORY OF TEA
According to legend, the Shen Nong, an early emperor was skilled ruler, creative scientist, and patron of the arts. His far sighted edicts required, among other things that all drinking water be boiled as a hygienic precaution. One summer day while visiting a distant region of his realm, he and the court stopped to rest. In accordance with his ruling, the servants began to boil water for the court to drink. Dried leaves from the nearby bush fell into the boiling water, and a brown liquid was infused into the water. As a scientist, the Emperor was interested in the new liquid, drank some, and found it very refreshing. Therefore, according to legend, tea was created (This myth maintains such a practical narrative, that many mythologists believe it may relate closely to the actual events, now lost in ancient history).

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THE TEA INDUSTRY

India has the distinction of being the largest consumer and producer of tea in the world. The country accounts for 30 per cent of global tea production. It is the only country which produces both CTC orthodox teas in sizeable quantities. It has a share of 15 percent of the world's tea exports. This year, production is expected to exceed 850 million kg as projected by the Federation of All India Tea Traders Association (FAITTA). In 1997 there was a record production of 810 million kg against 780 million kg in 1996. South India alone accounted for over 180 million kg which exceeded the production of countries like Turkey and Indonesia. Organic farming of tea is fast gaining ground in Darjeeling as well. Such organic farming practices wholly depend on the use of natural fertilizers and insecticides. Apart from clinching better export deals in the European market, such kind of farming has also helped in retention of top soil and keeping it alive with micro-organisms, according to the planters who have resorted to organic farming practices. The use of such practices is on the rise as export markets like Germany are becoming more stringent on the quality aspect of premium teas. With exports of organic tea on the rise, most growers are contemplating a conversion of the tea growing area for organic cultivation. As many as 11 gardens in Darjeeling have become fully bio-organic.

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MAJOR PLAYERS
Tea is a natural oxidant and a source of natural flouride. India is one of the big players when it comes to tea production. Tea is exported in large amounts from India. India coounts for 31% of global production of tea and is thus one of the world leaders. India has been producing tea for the last 150 years. India offers a wide range of tea such as the original Orthodox to CTC and Green Tea. The tea leaves from Darjeeling and Assam have their own rich aroma in which can take a lot of pride. The total turnover of the tea industry of India is around Rs. 10,000 crores. Here is a list of the most popular Tea Brands of India.

Tata Tea

Tata Tea Limited is owned by the Tata Group. It is Indias best and most widely consumed Tea Brands and is the worlds second largest manufacturer and distributor of tea. Tata Tea has launched a social campaign named Jaago Re! to awaken the youth against corruption. Tata Tea is the biggest player in the Tea Industry of India. Tata Tea owns five brands in India: Tata Tea, Tetley, Kanan Devan, Chakra Gold, and Gemini. Tata Tea has subsidiaries in Australia, Great Britain, United States, Czech Republic and India.

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Society Tea

Society Tea is owned by Hasmukhrai & Co. established 75 years ago. They are the key tea manufacturers in India since 1933, and today, Society Tea is known for its consistent taste and richness of quality. Society is synonymous to a fragrant aroma and is known nationally as well as internationally for it. Society has an innovative advertising campaign and strong distribution network.

Duncans Double Diamond Tea

A premium CTC leaf brand, Double Diamond represents strength that of character, achievement and elegance. Just a spoonful of this tea brews a rejuvenating cup, where strong flavor and aroma co-exist in fine balance. Packaged in the Duncans home colours and iconised diamonds, this flagship brand is the chosen cup of the educated, young and forward-looking couples of today, who believe in the right quality at the right price. A trendsetter in the jar segment, Double Diamond maintains an attractive inventory of jars and is also available in small packs.

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Brooke Bond Red Label Tea

Red Label is for the housewife who seeks to bring her family together over a cup of great Red Label with its perfect strength taste and colour. With the tag line ChuskiyaanZindagiki, It is the second largest tea brand in the country. Red Label is a 107 year old brand and has tremendous equity and heritage in the Indian market. Red Label holds the Guinness Record for the worlds largest tea party. It is now proven that regular consumption of 3 cups of Red Label Natural Care every day can enhance ones immunity and help one fall ill less often.

Taj Mahal Tea

Brooke Bond Taj Mahal- Indias best tea since 1966. For over four decades, Taj Mahal has been the gold standard of tea in India. It has been a pioneer of innovations in the Indian tea market. Taj Mahal was the first to introduce tea bags and also the first to usher-in new formats like instant tea and dessert tea. Taj Mahal is the most premium brand of tea in the Indian market. Since 2006, Saif Ali Khan is the brand ambassador of Taj Mahal Tea. Taj Mahal is special because it is made from the rarest and the best tea leaves.

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WaghBakri Tea Group

Waghbakri tea house is a premium tea house in inception since the year 1892. The tea baron, Sir Narandas Desai started the company in Ahmadabad being experienced in the art of blending and tea growing which he learned while owning a tea estate in South Africa. Sir Narandas Desai was praised by Mahatma Gandhi for his commendable work. The generations that followed gave boost to his pioneering efforts and developed the business to its present status of being one of the largest tea houses in India. Lipton Tea

Lipton is a very famous brand of Tea in India, currently owned by Hindustan Unilever. Lipton teas are a blend selected from many different plantations around the world, from well-known producing countries like India, Sri Lanka, Kenya, and China. Lipton Yellow Label is blended from as many as 20 different teas. Available in over 110 countries, Lipton is particularly popular in Europe, North America and the Middle East, parts of Asia and Australia. Liptons main pillar brands are Lipton Yellow Label and Lipton Iced Tea. Other product lines exist as well, like the Lipton pyramid range in Europe and North America, and Lipton Milk Tea in East Asia.

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Tetley Tea

Tetley, a wholly owned subsidiary of Tata Global Beverages, is the worlds second largest manufacturer and distributor of tea. Owned by Indias Tata Group, Tetleys manufacturing and distribution business is spread across 40 countries and sells over 60 branded tea bags. It is the largest tea company in the United Kingdom and Canada and the second largest in the United States by volume. Tata Tea Group, now Tata Global Beverages, is the second largest manufacturer of tea in the world after Unilever. Marvel Tea

Marvel, a leading branded organization, is one of the Indias most recognized and respected brands. Conceived in 1994 by Shri R.C.Jain, the Marvel group has gone on to grow very successful business in sectors ranging from FMCG, Real Estate and Health Care. Marvel Tea Estate (India) Limited is amongst Indias top 3 branded tea packaging companies, with over 3000 distributors network. It has a unique brand identity and tea taste which is the key strength of the company. Marvel Tea is Rich in taste, flavor and aroma and is Made for premium class segment.

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Pataka Tea

Pataka Tea, the flagship unit of the beverages ventures of Pataka Group, was set up in 2000 for operations in the packet tea industry. The offerings entail a diverse portfolio of brands, namely Premium, Mukta and Special, which are increasingly gaining popularity with the countrys tea enthusiasts. Pataka Tea and the family of beverages to follow are in coherence to maintain the highest standards of inclusive corporate ethics, and commitment to the communities and environment.

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Tata Tea Ltd. Tata Tea is the leading tea plantation company in India. It is the largest integrated tea producer in the world. The company has 55 tea estates across the country covering 140790 acres of land. Of this about 63480 acres are under tea cultivation. The company produced 59mn kgs of tea in FY01. Sales declined by 10% yoy to Rs. 8.23bn in FY01. Sales and profitability has been adversely affected due to depressed tea prices at auctions and lower sales of valued added brands, which face competition from the local unorganized players. Tata Tea leaped into the international league when it acquired world's second largest branded tea company Tetley last year, The $271mn acquisition was financed through a GDS issue of 45mn, loan from banks and 15mn were generated through internal resources. The company has invested an additional 10mn in the company in FY01. India is the largest producer and consumer of tea. Approximately 1.05mn acres of land in India is under Tea cultivation. More than 3/4th of the tea produced is consumed domestically, while rest is exported. Indian tea bushes are very old and therefore productivity is quite low. Tata Global Beverages Limited (TGBL) is an emerging player in the globalbeverage market. The company has made a strategic shift from being a local teacompany to a global beverage company through various acquisitions andstrategic partnerships with global beverage giants like PepsiCo and Starbucks. Asa result, the company has made an entry into the top 10 global companies list inthe hot drinks category, posing a challenge to global players like Nestl, Unileverand Kraft Foods. The companys product portfolio comprises leading globalbrands like Tetley, Eight O Clock and local brands like Tata Tea.Bottomed-out margins; expect a positive surprise: We model in TGBLs OPM toimprove by ~150bp over FY2011-13E from 8.6% in FY2011 to ~10.1% inFY2013E, driven by a shift in the companys focus from the plantation business tobranded products and rationalization in the operating cost structure. WhileTGBLs focus on volume growth remains intact, selective price increases andstable ad spends will further aid in margin improvement. Also, with the Tea Boardof India estimating higher tea production in 2011 as compared to 2010 (~5%higher production), we expect auction prices of tea to soften, thereby providing arelief to the company from heightened input cost pressure.Estimate ~40% plus adjusted EPS CAGR over FY2011-13E: We model a ~40% EPS CAGR over FY2011-13, led by (1) 9% revenue growth and (2) a ~150bpmargin improvement. We believe the company is set to outperform the industrysgrowth, with the help of selective price increases and strong brands like Tata TeaPremium, Tata Tea Gold, Agni Dust and KananDevan.Key valuation trigger: Despite its leadership position in the Indian packaged teamarket, No. 2 position in the global tea market and generating ~90% of its totalrevenue from

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branded products, TGBL is trading at 12.2x FY2013E EPS (which isat a discount to its FMCG peers, trading at 20x35x FY2013E EPS). Also, on EV/Sales basis, the stock is trading at 0.6x FY2013E EV/Sales (historical averageof 1x EV/ Sales). Hence, we initiate coverage on the stock with a Buyrecommendation and a target price of `97, based on 14x FY2013E EPS of`6.9(0.8x FY2013 EV/Sales). Brooke Bond Red Label nation's cup of tea Brooke Bond Red Label Tea was launched in the year 1903, which makes it one of the oldest brand of tea in the country. It also has the distinction of being the largest brand of tea in India and has a truly national presence. For years, Red Label has stood for good quality tea and it can be easily called as one of the India's favourite tea brands. The brand was relaunched in the year 2000 with a new product

formulation, wherein long Assam orthodox tea leaves were added to the base CTC tea to deliver enhanced taste. These are referred to as 'Assam Super Tasters' in the brand's

communication. The new campaign highlights the irresistible taste of the new Red Label Tea through executions that revolve around a very catchy base line Don't Mind Ek Cup Aur Ready for another cup. Brooke Bond Red Label, one of the oldest tea brands in the country and the largest selling one, celebrated Mother's Day today by greeting and commending a cross section of mothers in the cities of Delhi, Mumbai and Bangalore. The mothers ranged from housewives to working mothers and even celebrities. Over 500 mothers in each of the three cities were pleasantly surprised when they were paid an unannounced visit by a Brooke Bond representative. Aimed at recognising the tears and sweat that mothers go through to bring up their children and keep a happy home running, they were presented with flowers, cards and a sample product of the company.

The Red Labelbrand, has the mother as the key brand ambassadors in its current 'Jiyo Mere Lal' advertising campaign. The advertising campaign reflects the macro family issues of urban India with the mother in control. The underlying theme has been to depict Red Label as a trusted support to the mother, its satisfying taste helps her diffuse tensions in the family and promote happiness, harmony and togetherness. The Jiyo Mere Lal campaign has in fact tried to depict issues which symbolize the changing nature of Indian society, like the father and son generation gap, inter-caste marriages and, now, gender divide which will be aired from the middle of May.

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Brooke Bond one of the world's largest recognized tea brands was established in the U.K. in 1869. Brooke Bond belongs to Hindustan Lever Limited, the Indian subsidiary of Unilever. Red Label was the first brand launched under the Brooke Bond umbrella in India. This was followed by brands like Taj Mahal Tea, Super Dust 3 roses and A1. The beverages business of Hindustan Lever Limited had a turnover of Rs. 1786 crores in 1998, with the Brooke Bond tea brands having a leading share of it.

Brooke Bond has consistently led the Indian tea market because of its unmatched insight into tea and the needs of the Indian consumer. Today, this tea insight is being harnessed through an aggressive innovation programmed led by a team from the innovation centre at the Hindustan Lever Research Center (HLRC), based in Bangalore. This insight led Brooke Bond to pioneer most innovations in the Indian tea market like CTC tea, soft packs, the CEKA carton, Paisa packets, Tea bags and pet jars.

Pataka Tea
Pataka Tea is the main product of the beverages division of the well known Pataka Group. Pataka Tea was set up during 2000 so that the group could venture into the business of packed tea. Following are its other major verticals:

Biri Textiles Food Healthcare

At present tea prices have gone up owing to dry weather during the initial part of 2012 followed by the recent floods in Assam. The demand and supply scenario of the tea industry is such that prices are expected to go further up. In 2011 the industry produced 988 million kilos of tea and the total production for 2012 is expected to be the same.

During January to July, 2012 the tea production in India was 4 percent lesser than the similar period in 2011. The demand has been increasing steadily in the interim and this has led to an increase in prices of products such as black tea whose average price has increased by 10 percent compared to the previous period.

In July 2012 tea prices had increased by 18 percent when compared to July 2011. The average auction prices of Indian black tea in northern and southern India are supposed to remain more

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than INR 100 per kilo till 2020. From 2001-2010 this figure was INR 73. This will happen as throughout the demand for black tea will be more than the production levels.

The pace of re-plantation is on the slower side and this means that tea production will always be lower than the demand. In the other leading tea producers of the world there has been no increase in the area under tea cultivation. This is also another important factor in this regard.

India along with Kenya and Sri Lanka is one of the major producers of tea in the world. If any local or climatic problem disturbs the tea production in these countries, then coupled with the price issues, there could be some serious concerns for the global tea industry.

Experts have already portrayed a grave scenario regarding the balance between tea production and consumption. There has been a serious decline in inventory as is evident from statistics.

India along with Kenya and Sri Lanka accounts for 60 to 62 percent of the global supply of black tea. However, India is the biggest consumer of black tea and exports 17 to 20 percent of the total production as opposed to Kenya and Sri Lanka who export 90 to 95 percent of the aggregate production because of the smaller markets.

It is possible that the tea export segment of India might face problems if inventory levels continue to fall, production is slow, and domestic usage goes up. Old bushes comprising 25 thousand hectares were replanted from 2006 to 2011 and these areas take up the maximum portion of the area that has been added for tea cultivation in the recent times.

A part of the tea, supposed to be used for exports, is being redirected for local consumers in India. In 2011, 192 million kilos were exported but in 2016 the figure is supposed to come down to 127 million kg.

It is expected that till 2017 tea production in India will increase at a compounded annual growth rate of 1.6 percent while for consumption in the same period the rate has been estimated at 1.8 percent.

However, this will not have any effect on the success of the tea companies as tea prices in India are equal with any other place in the world because of the overall quality of products available.

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TATA TEA: Super brands Market: Tea is the most versatile beverage ever discovered by man a kind of one-drink-for-all reasons-all-seasons. Tea warms when it is cold; cools when it is hot; cheers when depressed; calms when excited; awakens when sleepy and available at every street corner. In short, tea is therapy-in-a-cup. It is savored equally at roadside stalls as incorporate boardrooms, in a silver tea service as in a clay cup. Tea drinking is hardwired into the Indian DNA. Over 400 billion cups of this brilliant beverage are consumed each year in India pushing annual per capita consumption to over 700 grams. Tea only trails water as the beverage-of-choice with the highest share-of throat in the country. India is the largest producer of tea in the world with the branded tea market pegged at some 450 million kilos valued at over Rs. 4000crore (US$ 833.30 million) (Source: Tea Board).After a period of stagnation India's tea production grew 2% in the 2011/12 financial year to touch 1000 million kilos. Correspondingly, its exports also grew from200 million kilos to 203 million kilos in the same year (Source: Tea Board).Achievements As recently as the early 1980s, tea was a commodity tightly controlled by a handful of brands. Remarkably, the companies that owned these brands rarely, if ever, grew the teas they marketed. The advent of the Tatas in the branded tea business in 1985 ushered in sweeping changes in an industry hidebound by decades of tradition. As a standalone brand, Tata Tea played a crucial role in transforming the Indian tea market from a staid, boring mlange of players to a young and vibrant business. The first thing Tata Tea did was to change the way tea was purchased from planters and sold to consumers. Owning their own estates gave the company complete control over their operations. The second thing they did was to inject effervescence into their packaging. In a single stroke, they dispensed with the sedate cardboard box and introduced an attractivepoly pack. Innovations such as these earned Tata Tea several consumer and marketing awards and a place in the homes and hearts of people. The AMGF Mere Brand award and the Readers Digest Trusted Brand Platinum award in2006 and the Most Preferred Brand of Tea in India in the CNBC sponsored Consumer Awards in 2007, were conferred on the company. Tata Tea was also rated the Second Most Preferred Beverage Brand in India in the Brand Equity Survey of 2008.In The Economic Times Most Trusted Brands Survey in the same year, Tata Tea was ranked20th the only tea brand which figured in the top 50.The latest accolade is its 25th rank in Indias Top 50 Most Valuable Brands released by Brand Finance. While winning at competitive forums was good for the mind, winning in the market place was a stunning achievement for the soul. In a June 2007 study, Tata Tea outperformed competitors, achieving a volume share of19.20% (Source: ACNielsen). For a

29

company less than 25 years old besting rivals 200 years in the business was truly commendable. History The Tata Tea ancestry goes back to the 1880swhen James Finlay Plc., a Glasgow-based company, owned and run by the Muir family, developed tea plantations in Assam and Theodoras. For the next three quarters of a century Finlay controlled large swathes of properties and grew some of the finest qualities of tea in the world.. Tata Tea Limited then a full-fledged plantation enterprise was born. Tea is often a victim of the vicissitudes of the commodity market. To insulate itself and leverage its home tea plantation advantage the company took a decision to shift focus from commodity sales to branded tea. Tata Tea, the brand, was introduced in 1987 changing forever the course of the industry. At the turn of the century, Tata Tea acquired the UKbased Tetley the worlds second largest tea brand and a company three times its own size. Overnight, Tata Tea was catapulted onto the world stage and joined a handful of powerful international beverage brands. By integrating its strengths with those of Tetley, Tata Tea now has an influential presence in matured markets of the US, the UK, Canada, Australia and Europe. Product In 24 years since launch, Tata Tea has powered itself into peoples lives across metros and hamlets, in equal measure. Every fifth cup drunk in India is a Tata blend. The brand straddles the Indian firmament like a colossus, placing in each socio-economic segment, one brand that controls the market. Its flagship brand, Tata Tea Premium, proudly labeled as the worlds number one tea, is the countrys largest packet tea brand. It singlehandedly accounts for an all India value share of 10.20%and dominates Indias North, East and West geographies (Source: Nielsen).As the markets grew people in the higher SEC sought an upgraded version of Tata Tea Premium. The company launched Tata Tea Gold in 2003filling this emerging need-gap. Today, Tata Tea Gold is not just the companys image driver it is also the only successful launch in the packaged tea market in more than a decade. The price conscious economy segment is the battleground for the fiercest wars in the tea market .Littered with scores of regional and local brands,Tata has a telling presence here. Its Tata Tea Agni has proved to be a star performer, eroding the market shares of established brands and taking on strong regional players on their own turf. The brands winning formula is an innovative blend consisting of 10% high-quality extra strong leaf tea coupled with stylized superior quality packaging, unmatched in this segment. The health and wellness, value-add segment is the latest market to emerge in India. Here, Tata Tea Life, introduced in 2007 and the four variant in the Tata Tea family, offers a regular every day tea enhanced with the nature goodness of Brahmi, Tulsi, Ginger, Cardamom and Mint. Recent Developments March 2009 was a defining moment for Tata Tea. For the first time, this young brand jumped to the top of the table cornering a combined value market share of 15.70% (Source: Nielsen).There cent

30

consolidation of Tata Tea Premium, Tata Tea Gold, Tata Tea Agni and Tata Tea Life, under the Tata Tea umbrella brand has contributed to the success story by enabling the company to communicate a single, unified message to consumers. Tata Tea has also recently signed a joint venture agreement with the Zhejiang Tea Import& Export (ZTIE) Company in China for manufacturing and marketing green tea polyphones, other green tea extracts, cold and hot water soluble instant tea, liquid tea concentrates and several value-added tea beverage products. Promotion through the years Tata Tea has communicated its promotional messages using high impact payoff lines and jingles. Over the years, its advertising has made evolutionary shifts in its brand positioning, moving from a functional promise in the AsliTaazgi (real freshness)campaign to AsliTaazgi , AsliMaaza (real freshness, real pleasure) which laddered Taazgito a higher benefit. But irrespective of its evolving strategy, the one element that has never changed in nearly 25 years of advertising is its young, fresh, modern and energetic image. This has been constantly renewed by young and effervescent brand ambassadors of their times, such as Amjad Khan in the 1980s and JuhiChawla and Sonali Benders in later years. One of the more memorable commercials was for Tata Tea Gold with the tagline NaaKahoge to Pachtaoge (say no and regret). It featured four young friends one of whom refused the offer of tea only to find himself unhappily left out of the pleasure the others derived. The advertising campaign for Tata Tea Premium moved the brand to another platform: it sold a dream through its tagline Taste KamyabiKa (the taste of success) epitomized by its high-achieving brand icons, Sonia Mize and SunidhiChauhan.Thethought is simple: effort makes everything possible. However, the brands most recent campaign and possibly the highpoint in its evolution, so far was the high describelJaago Re (awaken) campaign.This outstanding creative effort sought to elevate the role of tea from being just a wake-up drink to a medium of awakening Her Sabah Sir Utah Mat, Jaago Re(each morning dont just awaken your body, awaken your soul).The campaign received both critical acclaim as well as positive consumer feedback. Launched just before the general elections of 2009 the campaign achieved the dual purpose of imparting a socially relevant message as well as the fine association with the product. This call for awakening has also been extended to the field of soccer with Tata Teabag Re Soccer Stars (awaken, you soccer players).This initiative is a unique programmed signed to identify grassroots talent in soccer and select them for further training, under FC Arsenal coaches in India and London. Brand Values Tata Tea is a remarkable case study of brand development in a market fragmented by200-year old brands on the one hand, and a plethora of loose tea blends and small, local tea packers on the other. Its success is largely attributed to a daring in challenging norms and bringing energy to an industry, which even if it

31

was selling a beverage to awaken the body, simply appeared tired and fatigued. No one has put it better than George Orwell who said, Anyone who has used that comforting phrase a nice cup of tea invariably means tea from India.He could well have been talking about Tata Tea.www.tatatea.com SUPERBRANDS 177Every month people in India drink over 2100 million cups of Tata Tea One in six cups of tea drunk in India is a TatablendTata Tea has the largest tea plantation base in India, employing over 50,000 people Tata Tea was one of the first Indian brands tousle the Taazgi (freshness) platform in the foodscategory50 million households buy Tata Tea each year Things you didnt know about Tata Tea.

Red Label
Mumbai: Red Label, the largest tea brand from the house of Brooke Bond, for the first time in its history of 140 years, has roped in Indian televisions smart bahu Hina Khana a.k.a. Akshara from Yeh Rishta Kya Kehlata hai for its latest ad campaign. The latest Brooke Bond ad campaign starring four smart bahus from across the country, aims at repositioning Red Label Tea as the trusted choice of a contemporary Indian housewife. The ad goes on air from October 1st, 2011. The ad campaign focuses on re-positioning Red Label Tea as not just a healthy but also a reasonably-priced tea available in packs that fit every housewifes budget. As a part of the campaign, the stars will be seen urging viewers not to trust everything they hear and see. The television commercial has the actress re-assuring the audience that contrary to general misconception; Red Label Tea offers not just superior-quality taste and health benefits but also suits every familys pocket. Commenting on the new Brooke Bond Red Label campaign, Mr. Arun Srinivas, Vice President, Beverages, Hindustan Unilever Ltd, said, Our latest ad campaign plans to establish Red Label as a tea that is not just consistent and high on quality and health benefits, but also fits every housewifes budget. The actresses, perceived as the smart bahus of the 21st century on the television shows will come to the forefront in their off-screen avatars and campaign for the countrys oldest tea brand, Red Label. The ad campaign will also feature their on-screen mother-in-laws which makes it even more interesting and engaging for the viewers. Ms. Hina Khan, on being inducted to the Red Label family, commented Drinking Red Label has been a part of my daily regime since my teenage years. When Red Label offered me the chance to endorse the brand, I jumped at the opportunity. It was a wonderful experience to see my on-screen character Akshara, the smart bahu of Indian television blending in perfectly with the campaign.

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So Bahuranis! Pick your pack of Red Label tea-the best quality tea that is not only healthy but also affordable

TEA VARIETIES
Tea can be distinguished as green and black depending on the apparent colour. Black tea manufactured by deliberate fermentation of leaf juice, has stronger taste and liquor. Green tea manufactured by preventing the fermentation, is light and perceived to have medicinal values. Leaf tea can be processed as orthodox or CTC (crush, tear and curl). CTC production entails an accelerated fermentation. Quality of tea is measured on parameters of liquor, aroma/ flavor, leaf appearance etc.

Tea is also classified on the basis of area of cultivation. The most common varieties are Darjeeling Tea, Assam Team, Dooars Tea, Ceylon Tea, Chinese Tea and Kenyan Tea.

Consumer Habits and Practices: Consumers differentiate tea quality on attributes of taste, pungency, strength, freshness, color, packaging etc. Convenient drinks like instant tea (i.e. soluble tea powder), tea bags (bags are dipped in hot water) and ready to drink flavored tea (vanilla, strawberry flavored etc) are popular in developed countries and have negligible market in India. Popularity of tea is significantly higher in the North. This could be due to relatively lower cost and habits formed over the years. Preferred variety of tea varies from one region to another. Dust which brew into stronger tea is preferred in the South. The western states of Gujarat and Maharashtra offer market for good quality loose and packet tea. While in the northern state of Rajasthan, CTC fannings are liked, other states prefer CTC broken. Central India is again a dust market.

Awareness and penetration: Tea is by far the most popular beverage in India. Its penetration in urban areas is 89.3% and 72.6% in rural areas. At all India level, tea penetration averages 77.2%

33

Interestingly, tea penetration is higher in medium sized towns (0.5 1mn population) at 93.3% compared to 90.5% in metros (population above 1mn). This could be due to the fact that coffee penetration is significantly higher at 24.2% in metros (above 1mn population) compared to 16.7% in medium sized towns with population between 0.5 and 1mn. Awareness about tea is close to universe in urban areas and 80% in rural areas.

Packet tea: Between 1970 and 1985, tea consumption in the country grew at the rate of 4.5% p.a. The entire growth was however was in loose tea segment and the relative share of branded tea declined from 42% in 1970 to 25% in 1985. This was due to excise duty on packet tea and higher inflation, which compelled consumers to switch to loose tea for economy. The Union Budget 1998-99 had levied an 8% excise on packet tea above 100gm, Demand for tea is highly price sensitive and consumers tend to shift to relatively cheaper varieties of loose tea, when price of branded/ packaged tea rises. The levy of excise had a negative impact and branded tea segment which was steadily rising witnessed a decline in consumption in 1998. With heavy lobbying by the tea industry, the Government has again withdrawn the excise levy in the recent Union Budget 1999-2000.

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MANUFACTURING PROCESS
Black tea can be processed as CTC or orthodox. About 4-5kg of green tea leaves are required to produce 1kg of made tea (made tea is what we buy off- the-shelf). Freshly plucked tea leaves are withered (dried) with the help of ambient or warm air for 24 hours. For orthodox tea, leaves are twisted in rollers, juiced and enzymes are released to act on the polyphones. CTC processing involves passing the leaves through a pair of cylindrical rollers fitted with rotary segments (tooth like sharp edges) rotating at different speed. After rolling, leaves are fermented through the process of oxidation. Leaves are left in fermenting drums at high humidity for 45-60 minutes. In this process, chemical changes takes place and color, strength, liquor and aroma are developed at this stage. Fermentation process has to be arrested at right time. The mass is fired a exposed to hot air (90-120) which destroys enzymes and stops fermentation process. Due to this firing, leaves turns black. Bulk tea is sorted by size with the help of sieves and density through winnowing. Fiber, dust, broken leaves are separated and good quality tea is packed in tea chest or consumer packs.

35

CHAPTER-II REVIEW OF LITERATURE

36

Literature Review
Consumer Behavior Christopher (1989) studied the shopping habits of consumers to form an idea of whether or not the store concepts, product ranges and strategies of the companies are appropriate towards consumer requirements. He believed that consumer behaviors are unpredictable and changing continuously changing; while trying to under try to understand how individual or group make their decision to spend their available resources on consumption-related items. These are factors that influence the consumer before, during, and after a purchase (Schiff man and Kanuk, 1997), for example, feedback, from other customers, packing, advertising, product appearance, and price (Peter & Olsonetc, 2005). The essence of this approach is critical for organisational success, so that they can have a better understanding of their customer behaviours (Solomon et al., 2006). The physical action or behaviour of consumer and their buying decision every day can be measured directly by marketers (Papanastassiu and Rouhani, 2006). For that reason many organisations these days are spending lot of their resources to research how consumer makes their buying decision, what they buy, how much they buy, when they buy, and where they buy (Kotler, Amstrong, 2001). To get a well coherent result, organisations normally looked at these behaviour base their analysis on difference conceptions; whether customers buying behaviour were measured from different perspectives, such as product quality and better service, lower price structured etc (Papanastassiu and Rouhani, 2006) Different theories and researchers have claimed that when organisation fully meet all aspects of its customer needs, the result enhances their profitability (Chaudhuri, 2006), and also enable them to develop a better tackling strategies for consumer (Asseal, 1998). Possibly, the most challenging concept in marketing deals with the understanding why buyers do what they do and what method or philosophy are they using to evaluate the product after the transactions and what might be the effect on future transaction (Schiffman, 2004). The reason why marketer chooses to learning about consumers buying behaviour is, from a business perspective; to be able to be more effectively reach consumers and increase the chances for success (Sargeant& West, 2001). Therefore the field of consumer behaviour has take a tremendous turn in the commercial world and became the fundamental concepts of achieving company goal (Schiffman and Kanuk, 2007). More recently, different researchers and author have given their definition and meaning of consumer behaviour. For Michael R. Solomon (2001) consumer behaviours typically analyse

37

the processes of group selected or individual purchases/dispose of product, service, concept or experiences to satisfy their need and desires. Additionally, Kotler (1996) suggested that consumer behaviours have a huge impact in a firm marketing decision making process every year. There is a risk that what a consumer does will inflict on his or her behaviour and generate consequences. (Snoj, PisnikKoda&Mumel, 2004). The user and the purchaser can be different person, in some cases; another person may be an influencer providing recommendations for or against certain products without actually buying or using them (Solomon 1999; Solomon et al. 1999). In this case, most of the large consumer electronics retailers tend to gathered more information about customers motivating factors and what influences their buying behaviours Solomon & Stuart (2000). To get in-depth understanding consumer behaviour concepts will gives us an idea on how its plays significance role in our life and in the whole trend of business profit to various firms which will allow the researcher to get the analysis and determine product positioning, develop the message and targeting strategy in order to reach to the market (Holskins J, 2002). Consumer behaviour involves lot aspects, such as; Complex Buying Behaviour This kind of buying behaviours significantly involved the consumers when making a purchase decision. This kind of buying behaviours demand consumer to highly involve within the process. In case of high involvement, consumers distinguish salient differences among the competing brands (Kotler, Wong, Saunders, Armstrong, 2005). This phenomenon is particularly essential for Dixons consumers to highly involve, and engage in extensive research about the product category and make a good purchase decision about the firm own manufacturing products, in case they invent a new technology electronics products or audio-video equipment that is too expensive. Dissonance reducing buying behaviour This type of buying behaviour also has high consumer involvement. In terms of expensive and infrequent purchase, consumer also undergoes reducing dissonancy behaviour. It is extremely difficult for consumers to differential among brands in this type of buying behaviours (Kotler, Wong, Saunders, Armstrong, 2005). Differentiating Dixons electronics products/equipments

38

in the same store from PCWorld or Currys is a daunting task and consumer buying these products may encounter dissonance reducing buying behaviour, as electronics are usually expensive and self-expressive. Consumer may easily assume that the available electronics brands in the store/market within a certain price range to be of the same quality. Then if the product does not meet customers expectations, it will result to consumer to experience post purchase dissonance (after sales discomfort) (Kotler, Wong, Saunders, Armstrong, 2005). Habitual Buying Behaviour Contrariwise, in this type of buying behaviour consumers have lesser levels of involvements. It implies that consumer do not have to bother to retrieved information about the available products and brands in the market. So therefore, there are no potential differences between the different brands. Whether this factor will have damaging effects on Dixons will be analyse at the findings and analysis chapter below. Because of the less level of involvement, in habitual buying behaviour consumers dont often go to the stores to purchase product, (Kotler, Wong, Saunders, Armstrong, 2005). However, some believed that if the consumer persistently purchasing the same product repeatedly, it becomes habit and their mindsets and perceptions changes overtime about the brand and the provider (Cohen and Manion, 1987). This conception will portray the consumer to have unconscientiously developed a brand loyalty to that particular brand due to the consumer regular buying habits (Cohen and Manion, 1987). Variety Seeking Buying Behaviour This type of consumer level of involvement is low. However consumer may became critical in terms of brand differences. Additionally, consumer may easily switch from PC World to Currys i.e. from one brand to another. The consumers can now have beliefs about the various brands and choose a brand without much evaluation. But they evaluate that product at the time of purchase. In this high technology world, consumer switches their brands not because of dissatisfaction but because of that enormous trend of technological equipment (Aaker, 1991).

39

CHAPTER-III RESEARCH METHODOLOGY

40

RESEARCH METHODOLOGY
The research study has been carried out by the way of consumers sampling and the target were retailer and customers in the Shahzadpur. The objectives of research study were met by understudying a survey of customer and retailers.

The research is descriptive in nature; conducted to find out the market potential of tea in Shahzadpur.The tools used for survey were questionnaire to customers and retailer in Shahzadpur and getting the questionnaire filled on the spot. All the questions in the questionnaire are closed ended.

41

SCOPE OF THE STUDY:

The study is basically about the analysis of the ongoing trends in customer behavior regarding Tea. He size of sample for customers in 100 of Shahzadpur (Ambala). The scope of the study has been kept restricted due to individual researcher. Sample Size : 100

Result have been enumerated in the findings Data source Research Approach Research Instrument Sampling Out : : : : Primary data and Secondary data Survey Questionnaire Shahzadpur

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OBJECTIVE OF THE STUDY

To know which brand is more preferred by the customers to purchase

To study the effect of various promotional schemes given by the companies

To study whether the customers are brand loyal or not.

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LIMITATIONS OF THE STUDY

Following have been the limitation of the percentage study: The sample size of only 100 people was taken from the large population for the purpose of study. The present study was related to rural people only. The study was related to the customer satisfaction in respect of tea and no attempt has been made to study the consumer behavior in respect to other durable goods. Due to constraints of time only a few aspects of buying behavior of tea users. For the same time due to paucity of time the statistical methods used are limited to the collections of percentages only. Influence of certain interviewing variables like culture, sub culture on customer behavior and satisfaction could not be studied in detail.

44

Chapter-IV DATA ANALYSIS AND INTEREPRETATION

45

Q.1

Which schemes do you prefer most?(Customer)

Schemes Refill Jar Free Gift Cash Discount Coupon Lucky Draw Extra Quantity

No of Respondents 05 40 26 10 07 12

Refill Jars

7% 10%

Free Gift

12%

5% 40%
Cash Discount Coupon Lucky Draw Extra quantity

26%

Interpretation: According to the data collected by me through the survey of 100 respondents maximum respondents prefer free gifts that is 40% 26% of respondents prefer cash discounts, 10% of them prefer coupons 7% of them prefers lucky draw schemes, 12% of respondents prefer extra quantity of tea and rest 5% respondents prefer refill jar.

46

Q.2

You prefer any particular brand, if yes, which brand are you using?(Customer) Brand No. of Respondents Taj Mahal 30 Super Cup 15 Tazza 17 Double Diamond 8 Tata Tea 30

Taj Mahal

30% 17% 8%

30% 15%

Super Cup Tazza Double Diamond Tata Tea

Interpretation: According to the data collected by me through the survey of 100 respondents maximum respondents prefer a particular brand like 30% of respondents prefer Taj Mahal, 30% of them prefer Tata Tea, 17% of them refersTazza, 15% of them prefer Super Cup and 8% of them prefer Double Diamond.

47

Q.3

In your choice of tea what will you prefer first, Give rating choice Brand name Price Packing & advertising Quality Scheme No. of Respondents 30 17 15 30 8

brand name

30% 17% 8%

30% 15%

packing&advertising price scheme quality

Interpretation: According to the data collected by me through the survey of 100 respondents maximum respondents prefer a particular brand like 30% of respondents prefer Brand name, 30% of them prefer Quality, 17% of them refers Price, 15% of them prefer Advertising and 8% of them prefer Scheme.

48

Q.4

Do you shift from one brand to another on the basis of scheme and gifts and after what time? Brand No. of Respondents After 2 months 38 After 4 months 24 After 6 months 24 After 1 year 14

14% 24% 24%

38%

After 2 months After 4 months After 6 months After 1 year

Interpretation: According to the data collected by me through the survey of 100 respondents maximum respondents shift from one to another brand on the basis of scheme, 35% of them changes their brand after 2 months, 25% changes it after 4 months, 25% of them changes after 6 months and 15% of them changes after 1 year.

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Q.5

For how many years you have been using this particular brand?

Time period 6 months to 1 year 1-3 years 3-5 years 5 years and above

No. of Respondents 50 25 18 7

18% 25%

7% 50%

6 months to 1 year 1-3 year 3-5 years 5 years & above

Interpretation: The data in above table shows out of 100 respondents 50 are using a particular brand from 6 months to 1 year, 25 of them using a particular brand from 1-3 years, 18 are using it 3-5 years and rest of 7 are using a particular brand from 5 years and above.

50

Q.6 Which package do you prefer to use?

Pack 50 gm 100gm 250gm 500gm 1 Kg. 2kg. & above

No. of Respondents 1 3 56 25 13 2

50gm

2% 1% 3% 13% 25%

100gm 250gm

56%
500gm 1kg. 2kg & above

Interpretation: According to the data collected by me through the survey of 100 respondents shows 56% of them prefer 50gm. pack, 25% of them refers 500gm pack, 13% refers 1kg. pack, 3% refers 100gm and rest 1% for 2kg and above.

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Q.7 How many times do you take tea in a day?

Usage of tea in a day One time Two time Three time If more, specify

No. of Respondents 9 35 40 16

16% 40%

9% 35%

One time Two time Three time If more, specify

Interpretation: According to the data collected by me through the survey of 100 respondents shows 40 of them take tea thrice a day, 35% twice a day, 16 of them more than thrice and rest 9% take for it single time a day.

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Q.8

Do you prefer sale of any particular brand? If yes, why?

Reason Margin Target Intensive Schemes

No. of Respondents 26 17 30 27

27% 30%

26% 17%

Margin Target Intensive Schemes

Interpretation: According to the data collected by me through the survey of 100 respondents shows 29% of them prefer for sale due to incentives, 27% of them due to margin, 27% of them due to schemes and remaining 17% due to target.

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Q.9

Which brand is leader in the Market? Brand Taj Mahal Super Cup Tazza Double Diamond Tata Tea

No. of Respondents 34 23 23 7 13

7% 23%

13%

Taj Mahal

34% 23%

Super Cup Tazza Double Diamond Tata Tea

Interpretation: According to the data collected by me through the survey of 100 respondents shows Taj Mahal is the leader of marked with shares 34%, then Super Cup with shares 23%, then Tazza with shares 23% then Tata Tea with shares 13% and then Double Diamond with 7% share.

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Q.10 Does customer show any particular preference regarding brands (Retailer) Response No. of Respondents Yes No 60 40

40%
Yes

60%
No

Interpretation: According to the data collected by me through the survey of 100 respondents shows most of the consumers are preferred a particular brand 60% of dealers says this and rest 40% say on consumers does not prefer a particular brand.

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Q.11 If the price of branded tea will be decreased by the company, do you think the sale of branded tea will increase Response Yes No No. of Respondents 60 40

40%
Yes

60%
No

Interpretation: According to the data collected by me through the survey of respondents 60% respondents say YES and 40% respondents say NO.

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Q.12. What will be the effect of display tea on sale?

Response Increased sale Decreased sale No effect

No. of Respondents 50 30 20

20%

50%

increased sale decreased sale

30%

no effect

Interpretation:
After survey, it is found that the 50% respondents are say sale is increased & 30% respondents are say sale is decreased & 20% respondents are say there is no effect on sale.

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Q.13 If the schemes are reduced what will be the effect on sale? (Retailer)

Effect Increased Decreased

No. of Respondents 37 63

37%
decreased

63%
increased

Interpretation: According to the data in above table shows that the sales will be decreased after reducing the schemes 63% of respondents say this and 37% says sales will be increased.

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CHAPTER V FINDINGS & SUGGESSTIONS

59

FINDINGS
Retailers and Customers: Taj Mahal is a market leader due to the company provides cash incentives to the dealers and retailers. Tata Tea is followed by Taj Mahal due to good margins are provided by the company. Taaza is also a brand of HLL Company, which come at a third number due to its advertising. Super Cup Tea stands at fourth number due to less margins are given to dealers and retailers. Double Diamond comes at last number in the above five brands due to its less schemes provided to retailers. For display of tea company provides cash incentives to retailers. Mainly retailers suggest a brand on the basis of Margin provided by the company. Due to display of tea the sale of that particular brand increases. If the company reduces schemes, gifts the sale of that tea will decrease. Currently with TajMahal Tea and Taaza the coupon scheme is launched. Godfrey Phillips India Ltd. gives spoon and fork with the Super Cup.

CUSTOMERS: Customer gives first preference to schemes in purchase of tea as compare to quality, brand name. In schemes the customers want more free gifts, cash discounts as compare to refill jar, lucky draw. Customers prefer particular brand, but they prefer Taj Mahal Tea that is according to the survey of 100 customers 38% of respondents prefer Taj Mahal. Customer shift regularly from one brand to another, 40% of customers change their brands after two months. Very few customers prefer from particular brand, which using that brand from six months to one year. Sale of 250gm. packet size is more 55% of respondents prefer 250gm. pack. Very few customers go for purchase of local brand (mainly the workers). More people buy poly bags of tea as compare to tea boxes.

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SUGGESTIONS
Company should give more margins to dealers and retailers . Company should give more and attractive advertising of tea on TV, newspaper etc.

Packaging will have to improved in color, picturisation, font style etc. from time to time

Companies have to maintain their distribution system. So, that regular supplies of tea available to customers at right time and at right price.

Company ought to give some schemes regularly to its customers and in new attractive ways, which persuade the customers to buy.

Companies should see the strategy followed by the competitors so that they adopt according to them . Company should provide more free gifts to customers to increase the sale of tea.

It is find that there are not much promotional schemes for the retailers though there are many schemes for consumers.

The retailers with low turnover are more interested in monetary and immediate benefits.

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CHAPTER- VI

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CONCLUSION
I come to know that the tea market is demand driven and facing cut throat competition. The pull of the consumers is so strong that the dealers are forced to keep the brands of consumer's choice. Moreover, the companies are enchasing upon these. There are as such no lucrative schemes for dealers. The companies just look after the logistic involved in supplying the product at dealers place and its advertising. Still there are some trade promotions schemes. The stocks are supplied at the dealers place on company's cost on condition of buy back in case of low sale. The credit terms of the company ranges from 15-20 days from the day of supply. The dealers margin ranges from 5% - 8%. The bigger and established players such as Taaza, Brook bond, Taj Mahal, Red Label, TetleyTea, MarvelTea, Lipton Tea, Waugh Bakri etc. gives 5% margin. Whereas smaller and new players such asPataka Tea, Jay Shree Tea, etc. generally gives margins upto 8%. Presently, Taaza tea has come up with a display scheme for the dealers. When asked for the most effective consumer promotion scheme most of them pointed out on the spot schemes such as gift inside, cash discount, and extra quantity as the best, Out of these most of them cited cash discount as the best.

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QUESTIONNAIRE
FOR DEALERS AND RETAILERS Name of Dealer Name of the firm Name of Dealer Name of Firm : : : : ____________________________ ____________________________ ____________________________

____________________________

Q.1 a) c) e)

Please specify the respective scheme conference on such products? TajMahal Tazza Super Cup b) d) Tata Tea Double Diamond

Q.2 a) c) e)

Which brand is leader in Market? TajMahal Tazza Super Cup b) d) Tata Tea Double Diamond

Q.3 a) c)

Do you + sale of any particular brand? If yes, why? Margin Incentive b) d) Target Schemes

Q.4 a)

Does customer shows any particular preference regarding brands? Yes b) No

Q.5 a) c) e)

If yes, which brand sells the most? TajMahal Tazza Super Cup b) d) Tata Tea Double Diamond

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Q.6 a) c)

If Yes, How much? 5% 10% b) d) 15% 20%

Q.7

Does company indulge in display and merchandising? If yes, on what terms specify? _____________________________________________________

Q.8 a) c)

What will be the effect of display of tea on sales? Increased Sale No effect b) Decreased Sale

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IN CONSUMER SEGMENT
Name Location Q.1 a) c) e) : : ____________________________ ____________________________

In your choice of tea, what will you prefer first, Give rating? Brand Name Packaging & Advertising Scheme b) d) Price Quality

Q.2 a) c) e)

Do you prefer particular brand, if yes, which brand are you using? TajMahal Tazza Tea Tata Tea b) d) Super cup Double Diamond

Q.3 a) c) e)

Which scheme do you prefer most? Refill Jar Cash Discount Lucky Draw b) d) e) Free Gift Coupon Extra Quantity

Q.4 a) c)

For how many years you have been using this particular brand? 6 months to 1 year 3-5 years b) d) 1-3 years 5 years & above

Q.5

Do you shift from one brand to another on the basis of schemes and gift and after what time?

a) c)

After two months After six months

b) d)

After four months After one year

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Q.6 a) c) e)

Which package do you prefer to use? 50 gm. 250gm. 1Kg. b) d) e) 100gm 500 gm 2 Kg. and above

Q.7

How many times do you take tea in a day?

(a) One time (c) Three time

(b) two time (d) If more, specify

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BIBLIOGRAPHY
BOOKS: Zikmund, William G "Business Research Methods" Johnson South Western, Seventh Edition, 2003. Ram Pal & Gupta, "Articles on Consumer Buying Behavior" The psychology of consumer behavior by Brain Mullen Consumer behavior written by Leon G. Shiffman and Havard Hansen

JOURNALS: Indian Management February, 2005 (Article: Tea Branding)

LINKS: http:\\www.findarticles.com/p/articles/mi m0825/is 3 70/ai/n6237491 http:\\www.findarticles.com/p/articles/mi m2294/is 3-4 51/ai n622706 www.google.com

NEWSPAPERS: Hindustan Times Times of India The tribune

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