CHAPTER I

INTRODUCTION
1.1 PROJECT PROFILE
The "consumer" is the one who consumes the goods and services
produced. As such, consumers plays a vital role in the economic system of a
nation because in the absence of the effective demand that emanates from
them, the economy virtually collapses. Mahatma Gandhi said a customer is the
most important visitor in our premises. He is not dependent on us, we are on
him. He is not an interruption to our work, he is the purpose of it.

Typically when business people and economists talk of consumers they

are talking about person as consumer, an aggregated commodity item with
little individuality other than that expressed in the buy/not-buy decision.
However there is a trend in marketing to individualize the concept. Instead of
generating broad demographic profiles and psycho-graphic profiles of market
segments, marketers have started to engage in personalized marketing,
permission marketing, and mass customization.

Consumer behaviour is the study of when, why, how, and where people
do or do not buy a product. It blends elements from psychology, sociology,
social anthropology and economics. It attempts to understand the buyer
decision making process, both individually and in groups. It studies
characteristics of individual consumers such as demographics and behavioural
variables in an attempt to understand people's wants. It also tries to assess

influences on the consumer from groups such as family, friends, reference

groups, and society in general.

Customer behaviour study is based on consumer buying behaviour, with

the customer playing the three distinct roles of user, payer and buyer.
Relationship marketing is an influential asset for customer behaviour analysis
as it has a keen interest in the re-discovery of the true meaning of marketing
through the re-affirmation of the importance of the customer or buyer. A
greater importance is also placed on consumer retention, customer relationship
management, personalisation, customisation and one-to-one marketing. Social
functions can be categorized into social choice and welfare functions.

Each method for vote counting is assumed as social function but if

Arrows possibility theorem is used for a social function, social welfare
function is achieved. Some specifications of the social functions are
decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity and
weak and strong Pareto optimality. No social choice function meets these
requirements in an ordinal scale simultaneously. The most important
characteristic of a social function is identification of the interactive effect of
alternatives and creating a logical relation with the ranks.

This study aims to out answers to some questions in respect of buyers of

Television. Some of the questions are as below.
How many sources of information do consumers consult before they

buy?
Do the sources vary in number in terms of product?
Which source of information is perceived by the consumer to be
important?
What factors the consumer considers at the time of making his choice?
Search process precedes the purchase. A consumer with high
information requirements may presumably invest more effort into his search. If
information is not readily available to the consumer, his effort might be
directed at finding more. If such information is accessible to that consumer, his
search effort may consist in sorting out those clues that are relevant to him.
Either way, the procured information may not fully satisfy the consumer's
requirements. So, consumers with high search effort tend to express greater
purchase satisfaction than those win low effort, even when the product
evaluation falls below satisfaction.
Some consumers, who are acquisition minded and anxious to finalize
the purchase, may lack the patience and interest to engage themselves in
extended search procedures. They are consumers with low information
requirement who spend less effort in their search. Some may lack knowledge
of appropriate information sources.
Inspite of many devices, measures and laws, which bring protection to
consumers, consumerism in India is not successful. But steps have been taken
in recent years to support consumerism and upgrade consumer protection.
Rising incomes and the range of new products have multiplied the number,
value and variety of consumer market transactions. Therefore, there are far

more opportunities for consumer deception than ever. The movement towards
the consumer's welfare and protection is called 'Consumerism'.
A consumer needs guidelines and product data and information so as to
be provided with market transparency. Consumer is lacking that information
and as a result he is ill-equipped to make intelligent choices. It is the fault of
the business community, which is either unable or unwilling to provide the
information, which consumers require for intelligent decision-making.
After acquiring the needed product information through proper search,
the consumer has to evaluate the competing alternatives to arrive at a purchase
decision. This involves the interaction of different factors like price, brand
popularity, technical performance, service and availability of spare parts, size,
colour, design, warranty, discounts and gifts, etc. Based on the evaluation of
important factors, the consumer makes a purchase decision.
INDIAN MARKETING ENVIRONMENT
India is the second largest market in the world if people constitute
markets. The needs of 750 million people of the country are of enormous
magnitude. Geographically, the Indian market is scattered over six lakhs
villages and five thousand small and big towns. The Indian market is not only
vast and scattered but is extremely complex. The vast population of the land
with their extreme diversities in terms of religion, customs and language
present the most bizarre market of the world. There are six religions and
hundreds of sects and sub sects. The people speak seventeen different
languages and hundred of local dialects. There is no common life style and
consumption habit.

In India,

the state plays a regulatory role.

While analyzing

the Indian market environment, it has to be noted that it is the by-product

of an

economy

characterized

by licensing,

tariff protections

and

restrictions over corporate investment. Not only in the matter of investment

decisions, but also even in the case of pricing, distribution and competitive
aspects of various sectors, the state plays a key role.

The control over the

economy might have impaired the rate of growth of certain business.

But it has not eliminated the opportunities for employing innovative marketing
strategies. Indian economy is a mixed economy. More and more investment
areas are throwing open to the private sector. India today is nearer to a free
market economy.
Seller's market conditions do prevail in certain sectors of the Indian
Economy. At the same time, the seller's market conditions are not true of all
sectors of the Indian economy. In any sector, there is vibrant competition. Even
in those sectors where demand is more and supply is less, competition is
present and a choice is available to the customer.
The existing manufacturing capacities are being enhanced in almost all
sectors of the Indian business. New investment, new manufacturing units, and
new business houses are giving a new dimension to the Indian marketing
profile. This means that the production will not just get sold unless every
producer promotes his product or brand. Brand competition has become a
striking feature of the marketing scene in India in both consumer goods and
Industrial goods.

This is evident from the level of advertising and sales promotion

activities that is going on in India.
There is a special challenge in marketing communications due to the
extreme diversity of the Indian market. A marketer who has to approach the
entire Indian National Market will find national advertising and nation wide
sales promotion bristling with complexities. The market cannot be reached
through any single language or idiom. It is also not possible to make a uniform
approach to influence the buying behaviour of the vast masses of Indian
consumers. From one segment of the market to the other, there is a
considerable variation in the psychological profile of the consumers in India.
Another notable feature of the Indian marketing environment is the
predominance of the urban market. A major chunk of the consumer goods
produced is consumed by the urban market. The producers of consumer goods
and services have mostly been concentrating on this urban market consumer,
having a highly discretionary income at their disposal. But of late, this
preoccupation with the urban market is giving place to steady exploitation
of the hidden potential of India's rural market. There is a good demand base for
several new products and services in the fast developing rural India.
INDIAN CONSUMER
It is true that every consumer is a product of his own economic and
social environment. One has to be very cautions, when one is applying the
theories to understand the behavioural dynamics of the Indian consumer. Most
of the buyer behaviour models and findings have been developed with the
sophisticated western
peculiarities of the

buyer

as

the

focus. But to understand the

Indian consumer, to construct his buying profiles, he

has to be studied in relation to his environment, culture and tradition, his level
of exposure and the degree of his sophistication, his educational and economic
status.
No comprehensive study of the Indian consumer has been undertaken so
far. Of course, quite a few studies have been conducted by academic
institutions and individual researches on isolated aspects of the buying
behaviour of the consumer in India.
Indians as a class present a striking contrast to the people of the west.
By and large, they are not an adventurous; thrill seeking, highly strong
community. Basically they are conservative mind and tradition bound people.
It is not an exaggeration to say that more than the future; it is the past that
influences their style of living.
They do not seek after events for their happiness. Expensive holidays
and sightseeing are something alien to their normal life style. They are content
with the small happenings in the family or community.
It will be more practicable to classify the Indian consumers on the basis
of their economic status as the rich Indian consumer, the middle class
consumer and the lower class consumer. Numerically the first category is a
negligible minority. Though this group indulges in conspicuous consumption
of a high order, it does not form a demand base large enough for any
manufacturing firm to concentrate upon. The third category, the lower class
consumer group, stands out as striking contrast to the first. Its purchasing
power is very low.

It receives the benefits of several social, educational and economic

programmes of the nation and over a period of years, the upper strata of this
group may advance economically and merge into middle class consumers.
For any marketer in the country, the middle class offers maximum scope
the maximum demand potential. The Indian middle class consumer can
objectively be further classified into urban middle class and semi-urban middle
class consumers because of certain interest distinctions in the buying habits,
motives and need levels. The demand and requirements of city life are vastly
different from those of the semi-urban life. This difference will reflect on
consumption patterns and buying patterns. A family living in a two roomed flat
in a crowded city will be using several consumer items and gadgets as
necessities which its semi-urban counterpart many consider to be available
luxuries.
An urban consumer is willing to learn and is receptive to new ideas as
he is relatively better educated. He wants economic and emotional stability. He
will not normally do something that is likely to upset his emotional ties. His
need for love and the level of satisfaction of this need are vital factors deciding
his emotional balance. He wants social security also. He wants to be part of the
social set up in which he lives. The urban middle class consumer lives on a
fixed income. The introduction of consumer credit by several marketing
agencies in the country has benefited them to a great extent. Practically
anything is available to him on installment payments.
Compared to the urban counterpart, the semi-urban consumer's
effective demand is limited.
power.
wage

This is mainly because of his poor purchasing

The majority of the semi-urban consumers

earners

like

are

not

monthly

urban consumers. The literacy level of many of these

consumers is still very low. They are careful while buying and their decisions
are slow and delayed. They are by and large more cautious and skeptical in
their approach to buy.
Consumer behaviour is a subset of human behaviour. This does not
mean that all human behaviour is consumption oriented. Human behaviour
refers to the total process of which individuals interact with the environment.
Chocolate in the 20th and 21st Century
In 1905 Cadbury launched the world-famous Dairy Milk bar and its
still going strong over 100 years later. But what else has happened?

Swiss confectioner Jules Sechaud invented a machine for making filled

chocolates in Montreux in 1913. Boxes of chocolates stopped being so
expensive and this made it available to the general population.

Cadbury bought Frys in 1919 and the company grew, producing

chocolate on an industrial scale that could be enjoyed by everyone. Other big
manufacturers appeared: Mars and Hershey in America, Nestl and Lindt in
Switzerland, Rowntree in the UK. Cadbury and other manufacturers started
making Countlines bars with other ingredients like nougat, wafer and
honeycomb, covered in chocolate think of Crunchie and Double Decker.

During the Second World War, different manufacturers worked together,

so for instance if a huge Government order came in that couldnt be filled,
Nestl would make a Cadburys bar or vice versa. Cadbury Dairy Milk
disappeared during the war years, because there was no fresh milk available
instead there was Ration Chocolate made with powdered milk.

It was 15 years before rationing ended and manufacturers could return

back to normal.
Throughout the 20th century there was fierce competition chocolate
had become a huge business, and details of new bars were kept top secret to
stop rivals copying them!

These days there are thousands of types of chocolate to choose from

you can drink it, eat it, spread it on a sandwich, pour it on your ice cream or
make cocktails with it. Theres also a growing interest in organic cocoa and
wellbeing. The World Cocoa Foundation was founded in 2000 by a group of
manufacturers including Cadbury, in order to safeguard the interests of cocoa
farmers around the world.

An example of Cadburys continued support for cocoa farmers is

through the Cadbury Cocoa Partnership. Cadbury is providing millions of
pounds worth of investment to help boost crops and make the lives of cocoa
farmers better its both a link back to the Cadbury familys principles and a
way of guaranteeing the supply of cocoa for future chocolate lovers.

1.2 COMPANY PROFILE

Kraft Foods
Northfield, Ill.-based Kraft Foods Inc. (NYSE: KFT) is a global snacks
powerhouse with an unrivaled portfolio of brands people love. proudly
marketing delicious biscuits, confectionery, beverages, cheese, grocery
products and convenient meals in approximately 170 countries, Kraft Foods
had 2010 revenue of $49.2 billion, more than half of which was earned outside
North America. Twelve of the companys iconic brands - including Cadbury,
Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer,
Philadelphia, Trident and Tang - generate revenue of more than $1 billion
annually, and 40 have been loved for more than a century. A leader in
innovation, marketing, health & wellness and sustainability, Kraft Foods is a
member of the Dow Jones Industrial Average, Standard & Poor's 500, Dow
Jones Sustainability Index and Ethibel Sustainability Index. For more
information,

visit

www.kraftfoodscompany.com

and

www.facebook.com/kraftfoodscorporate

Heritage: We have come a long way since J.L Kraft started selling
cheese from a horse drawn wagon in 1903. Hard work, imagination and
commitment to bring the world its favorite foods has helped us grow into a
company that touches more than a billion people in approximately 170
countries. Every day. One at a time.
Some quick facts on the combined company:

Kraft Foods is a global snacks powerhouse with an unrivaled portfolio of

brands people love.

We are the worlds second largest food company with annual revenues
of $49.2 billion

Millions of times a day, in approximately 170 countries, consumers

reach for their favorite Kraft Foods brands.

Twelve of the companys iconic brandsincluding Cadbury, Jacobs,

Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer,
Philadelphia, Trident and Tanggenerate revenue of more than $1 billion
annually, and 40 have been loved for more than a century.

More than 80 percent of our revenues come from products that hold the
No. 1 share position in their respective categories. And more than 50
percent of our revenue is driven by categories where our market share is
twice the size of the nearest competitor.

We make a delicious difference by fighting hunger and encouraging

healthy lifestyles. Over the past 25 years, weve donated nearly a billion
dollars in cash and food.

A leader in innovation, marketing, health & wellness and sustainability,

Kraft Foods is a member of the Dow Jones Industrial Average, Standard &
Poors 500, Dow Jones Sustainability Index and Ethibel Sustainability
Index.

Kraft Foods business in India

Cadbury India Ltd. is a part of Kraft Foods. Cadbury India operates in
five categories Chocolate confectionery, Beverages, Biscuits, Gum and
Candy. In the Chocolate Confectionery business, Cadbury has maintained its

undisputed leadership over the years. Some of the key brands are Cadbury
Dairy Milk, Bournvita, 5 Star, Perk, Bournville, Celebrations, Gems, Halls,
clairs, Bubbaloo, Tang and Oreo. Our core purpose "make today delicious"
captures the spirit of what we are trying to achieve as a business.

In India, Cadbury began its operations in 1948 by importing chocolates.

After over 60 years of existence, it today has six company-owned
manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior),
Bangalore and Baddi (Himachal Pradesh) Hyderabad and 4 sales offices (New
Delhi, Mumbai, Kolkata and Chennai). The corporate office is in Mumbai.

Cadbury India enjoys a value market share of over 70 percent in the

chocolate category and our brand Cadbury Dairy Milk (CDM) is considered
the "gold standard" for chocolates in India. The pure taste of CDM defines the
chocolate taste for the Indian consumer.

In the Milk Food drinks segment our main product is Bournvita - the
leading Malted Food Drink (MFD) in the country. Similarly in the medicated
candy category Halls is the undisputed leader. We recently entered the biscuits
category with the launch of the Worlds No 1 biscuit brand Oreo.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation
in India. For over two decades, we have worked with the Kerala Agricultural

University to undertake cocoa research and released clones, hybrids that

improve the cocoa yield. Our Cocoa team visits farmers and advises them on
the cultivation aspects from planting to harvesting. We also conduct farmer
meetings & seminars to educate them on Cocoa cultivation aspects. Our efforts
have increased cocoa productivity and touched the lives of thousands of
farmers. Hardly surprising then that the Cocoa tree is called the Cadbury tree!
1.3 PRODUCT PROFILE
Cadbury Dairy Milk chocolate is one of the major success stories of the
Cadbury business and one of the world's most famous chocolate brands.

The New Milk Chocolate

The new milk chocolate was introduced to the British market in 1905
and, with its unique flavour and texture, quickly became the market leader.
Milk chocolate was first made by Cadbury in 1897 by blending milk
powder with the basic chocolate ingredients of cocoa butter, cocoa mass and
sugar. By today's standards the chocolate wasn't particularly good - it was very
coarse and dry and neither sweet nor milky enough.
At that time, the Swiss dominate the milk chocolate market with a
product of superior taste and texture produced by Daniel Peters of Vevey, using
condensed milk rather than milk powder.
In the early 1900s, George Cadbury Junior and experts at Bournville took on
the Swiss, researching new recipes and production methods.

By June 1904, the recipe was perfected and a delicious rich and creamy
new milk chocolate was ready for production. Launched in 1905, Cadbury
proudly boasted that its new milk chocolate was not only "as good as," but
better than the European milk chocolate. With its now-famous glass and a half
of full-cream milk in every 200gms, it contained far more milk than any
previously known chocolate.
The special flavours produced when fresh milk, cocoa mass and sugar
are cooked together in the first stages of the chocolate crumb making process
give Cadbury Dairy Milk its unique taste. While advertising and packaging
designs have evolved over the years, along with considerable technological
advances in production, the Cadbury Dairy Milk recipe is still basically the
same as it was in 1905.
Cadbury Dairy Milk blocks comes in a range of sizes suitable for all
ages and occasions - from a quick snack, a self-indulgent treat, something to
share with family or friends or a gift. Cadbury Dairy Milk is sold with a
similar design worldwide - the centerpiece of all packaging is the iconic "glass
and a half " image showing the famous glass and a half of pure full cream milk
flowing into a delicious chunk of Cadbury Dairy Milk chocolate.
Fun Facts

The "glass and a half of full cream dairy milk in every

200gm" slogan with the picture of milk pouring into the chocolate block, is
one of the all-time greats of advertising.

Australians prefer creamier milk chocolate, with the

Cadbury Dairy Milk brand being the market leader.

Dairy Milk chocolate is the main ingredient of many other

Cadbury chocolate favourites such as Freddo.

The original Cadbury milk chocolate faded into obscurity in

1915.

The largest moulded bar in the world was made by Cadbury

Limited in October 1998 to celebrate the re-launch of Cadbury Dairy Milk.

The giant 1.1 tonne block was nearly 9ft high and 4 ft wide. It would take
an average person 120 years to eat!
It takes the whole year's crop from one tree to make 450gms

of Chocolate.

Memorable Advertising
With its simple message of the goodness associated with the "glass and a
half of full cream dairy milk", this successful advertising campaign began in
1928 and served Cadbury Dairy Milk admirably until the late 1980s. A change
in advertising strategy in the 1990s saw a greater emphasis placed on taste in
the bold "Chocolate is Cadbury" campaign.
The message reinforced that no other chocolate compares with the taste
of Cadbury, while successful elements of previous campaign such as the glass
and a half were still included. The clever imagery of this television campaign
played on the theme that chocolate means different things to different people at
different times, but most importantly, Chocolate is Cadbury.