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A STUDY ON CONSUMER BUYING BEHAVIOR

TOWARDS TWO WHEELER BIKES

Submitted By:
Ankit Bir Pandey
Exam Roll No:
PU Registration No:

A Graduate Research Report Submitted to


South Asian Institute of Management (SAIM)
Pokhara University

Submitted for the degree of


Master of Business Administration (Global Business)

Kathmandu
February, 2015

ACKNOWLEDGEMENT

First of all I would like to express my sincere gratitude to my thesis supervisor Dr. Bijay K.C.,
Dean, South Asian Institute of Management (SAIM) for his continued guidance, encouragement,
motivation and support at each step of the study. His regular and extensive guidance,
constructive comments, suggestion and encouragement are the main source of inspiration to
accomplish this study successfully.
Lastly, I would also like to express my sincere thanks to SAIM Family and my friends for their
kind support during my study period. Likewise, I would also like to thank all the respondents
who took time off their busy schedule to fill up the research questionnaire. This study may not be
possible without their help and cooperation.

Ankit Bir Pandey

Approval Sheet

Recommendation for Approval


This GRP report prepared and submitted by Mira Khadgi in partial fulfillment of the
requirements for the degree of Master of Business Administration (Global Business) has been
supervised by me and recommends it for acceptance.

Dr. Bijay K.C.


Date: ...

Acceptance of the External Examiner


I approve the GRP submitted by Mira Khadgi. The grade sheet has been submitted to the Dean,
School of Business, and Pokhara University through the college on a separate evaluation sheet.
External Evaluator ..
Date:

Viva Examination
The candidate has successfully defended the GRP. We recommend it for acceptance. The grade
sheet has been submitted to the Dean, Pokhara University through the college on a separate
evaluation sheet.
External Examiner: ..
Dr. Bijay K.C. ..
Other members:
Date:

Certificate of Authorship

I hereby declare that this submission is my own work and that, to the best of my knowledge and
belief, it contains no material previously published or written by another person nor material
which to a substantial extent has been accepted for the award of any other degree of a university
or other institution of higher learning, expect where due acknowledgement is made in the
acknowledgements.

......................................
Mira Khadgi

Contents
CHAPTER 1................................................................................................................. 1
INTRODUCTION........................................................................................................... 1
1.1

Background.................................................................................................... 1

1.2 Statement of Problem........................................................................................ 5


1.3 Objectives of the study..................................................................................... 7
1.4 Significance of the study...................................................................................8
1.5 Limitations......................................................................................................... 9
1.6 Operational Definitions...................................................................................... 9
CHAPTER 2............................................................................................................... 12
LITERATURE REVIEW AND THEORETICAL FRAMEWORK.............................................12
2.1 Literature Review............................................................................................ 12
2.2 Theoretical Framework.................................................................................... 37
2.3 Research Gap.................................................................................................. 38
CHAPTER 3............................................................................................................... 39
RESEARCH DESIGN AND METHODOLOGY..................................................................39
3.1 General Background........................................................................................ 39
3.2 Research Plan and Design...............................................................................40
3.3 Description of the Sample............................................................................... 40
3.4 Instrumentation............................................................................................... 40
3.5 Data Collection Procedure and Time frame.....................................................41
3.6 Validity and Reliability..................................................................................... 41
3.7 Analysis Plan................................................................................................... 42
CHAPTER 4............................................................................................................... 43
DATA PRESENTATION AND ANALYSIS.........................................................................43
4.1 Presentation of Results.................................................................................... 43
4.2 Analysis of Survey Data................................................................................... 47
CHAPTER 5............................................................................................................... 68
SUMMARY AND CONCLUSION.................................................................................... 68
5.1

SUMMARY OF FINDINGS............................................................................... 68

5.2 RECOMMENDATION......................................................................................... 70
5.3

CONCLUSION................................................................................................ 71

Bibliography............................................................................................................. 73
Appendices............................................................................................................... 74

List of Tables

Table 1: Evolutions of Dairy Companies in Nepal4

Table 2: Age group of the respondents.44


Table 3: Occupation of the respondents46
Table 4: Time of purchase of pouch milk..47
Table 5: Number of packets of milk purchase...48
Table 6: Satisfaction of pouch milk with other substitutes...52
Table 7: Importance of attributes of the product...53
Table 8: Satisfaction about the product.54
Table 9: Mean of attributes of product in general and satisfied about the product...55
Table 10: Cross tabulation between age and milk brand...57
Table 11: Cross tabulation between milk brand and number of packets of milk..63
Table 12: Mean of product attributes according to the gender..64
Table 13: Mean of satisfaction level and the brand of milk..66

List of Figures
Figure 1: Buying Decision Process....24

Figure 2: Theoretical Framework......37


Figure 3: Gender of the respondents..43
Figure 4: Education level of the respondents.45
Figure 5: Brand of milk..49
Figure 6: Reasons behind the purchase of particular brand...50
Figure 7: Modes of advertisement.56
Figure 8: Comparison between the milk brand and quality...58
Figure 9: Comparison between the milk brand and availability59
Figure 10: Comparison between the milk brand and taste.....60
Figure 11: Comparison between the milk brand and nutrition..61
Figure 12: Comparison between the milk brand and packaging...62

List of Abbreviations

DDC:

Dairy Development Corporation

DOA:

Department of Agriculture

GoN:

Government of Nepal

FAO :

Food and Agriculture Organization

Ltd.:

Limited

NDDB:

Nepal Dairy Development Board

Pvt:

Private

SMP:

Skim Milk Power

TQC:

Total Quality Control

TQM:

Total Quality Management

WFP:

World Food Program

WMO:

Whole Milk Powder

EXECUTIVE SUMMARY
Milk is one of the most nutritionally essential foods to human beings as it contains nearly all
nutrition. Hence, it is advisable to consume an adequate amount of milk and milk products for
healthy lifestyle.

At present there are different brands of milk available in the market such as DDC, Sitaram,
Today Milk, NDs Dairy and others which make the marketers of these products to differentiate
and sell their products to the consumers. These brands of milk are competing with each other in
order to survive in the market.
To get a better grasp of the target consumers, the marketers have to better understand the buying
behavior of the consumers. The main objective of this study was to identify the consumers
buying behavior towards the pouch milk. To better understand the consumer buying behavior a
sample size of 150 respondents were chosen.
From the study it was found that DDC was the most popular brand followed by Sitaram and
Today Milk. The dairy market is dominated by DDC as most of the consumers prefer DDC over
other brands. Products have different attributes like quality, availability, price, taste, nutrition,
packaging etc. The attributes of the product play a vital role in buying behavior. The main reason
for the purchase of the particular brand of milk was availability followed by quality. Availability
of the pouch milk is important when the consumers decide to purchase pouch milk. Many
consumers purchase that brand of pouch milk which is easily available in the market. The dairy
companies know the importance of making their product available to the consumers and thus
they create a strong distribution channel. Since, milk is an edible product; quality of the product
surely plays a vital role in the purchasing decision. The study showed that DDC is very popular
among consumers of all ages, followed by Sitaram and Today Milk.
Although various substitutes to pouch milk are available in the market, ranging from powered
milk to skimmed milk, the pouch milk still has a fair share of market as about 56% of the
consumers said they are satisfied with the brands of pouch milk they are consuming compared
with the other substitutes available in the market. Consumers naturally places higher importance
on nutrition, freshness, quality and availability but the dairy companies are yet to achieve the full
potential of the mentioned product attributes. Hence, the dairy industry should focus on safety
and quality of the product through an effective pricing system which provides strong incentives
for farmers and other value chain actors to improve product quality. Also, dairy companies
should use media and promotions in an effective and better way to achieve the believes and also
to create the brand image in the consumers mind.

CHAPTER 1
INTRODUCTION

1.1 BACKGROUND
Milk is the most nutritionally essential food to humans and contains nearly all nutrients.
Therefore, it is advisable to consume an adequate amount of milk and milk products for
healthy lifestyle. However, there is a significant gap between developed and developing
countries in terms of fluid milk consumption. In developed countries, fluid milk
consumption patter has changed significantly over the last several decades. Due to health
concerns, aging of the population, increased education and income level factors in
developed countries low fat milk consumption has shown an increase but per capita
consumption of whole fat milk has decreased. In contrast, consumption of fluid milk in
developing countries has not peaked yet and unpacked fluid milk takes a significant share
of fluid milk consumption.
Organize dairy development activities in Nepal began in 1952 with the establishment of a
Yak cheese factory in Langtang of Rasuwa district under Food and Agriculture
Organization (FOA) assistance in 1953. In 1954, a Dairy Development Section was
established under the Department of Agriculture (DOA) and also a small scale milk
processing plant was started in Tusal, a village of Kavre district. In 1955, a Dairy
Development Commission was formed.
The first five year plan (1956-61) stressed on the need to develop a modern dairy
industry. Accordingly, in 1956, a Central Dairy Plant, with an average milk processing
capacity of 500 liters per hour was established in Lainchaur, with the financial assistance
from New Zealand and technical assistance from FAO. Around the same time, a second
mini milk processing plant was established at Kharipati, in Bhaktapur district. The plant
started processing milk and marketing activities from 1958. In the process, prior to 1960,

two additional cheese factories were established under the DOA in other two alpine
districts of the country. In 1960, a Cheese Production and Supply Scheme were also
established. The Dairy Development Commission was converted to the Dairy
Development Board in 1962. So as to meet the growing demand for milk in Kathmandu,
the Board was converted to Dairy Development Corporation (DDC) in 1969.
HISTORY OF MILK
Dairying not only represents one of the basis agricultural industries of consumers
engaged in producing milk and milk products but also a way of life for most of the
consumers to satisfy their necessary want of food.
The history had already proved that the consumers of central Asia and Arab as well as
Africa were well known about the consumption of milk. They had also known to make
different products from milk such as curd, butter, cheese etc. Hindu culture and religion
also had known the importance of milk from very ancient time, which is known from the
help of Hindu Vedas written in 1400 B.S., has mentioned the use of butter as a food. The
ancient Greeks and Romans also had used milk, cheese, and butter as a common food.
They had known how to make cheese, butter and sweets and also the way of making
skimmed milk. In recent days, milk and milk products are sold in bottles, plastic packets,
cartons and cans only after the pasteurization.
Since traditional system as household of valley consumed milk from Gwalas of
dairying was defective and unhygienic, man being a conscious animal thought about
regulating the dairy system in a scientific way the result of which it is come to know that
the man succeeded dairying is a scientific way after 19th century.
Nepalese consumers are being more and more conscious about the healthy diet. So, it has
been realized that every household in Nepal has importantly bearing with dairy products.
It has become necessary to make available the pouch milk for the consumers.
It is only after 1951 that HMG of Nepal realized the need for the development of dairy
program inside the country to provide better and hygienic food for the consumers. For the
welfare of general consumers the dairy scheme was formulated and handled by the
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livestock section under the Department of Agriculture, which was established at Singh
Durbar. But this scheme could not provide adequate quantity of milk. The demand for
milk and milk products gradually increased up which forced the Government to
established a separate institution named Dairy Development Center at Bhotahity in
year 1955. To increase the processing capacity as to meet increasing demand, there was
inadequate space. That is why this center was shifted to Lainchour in the year 1958
adding some new equipments and machines and has received ISO: 22000:2005
certifications. This center got a lot of popularity among the consumers of Kathmandu
when the new products from new machines came into the existence. Due to many reasons
like rapid growing populations, establishment of various offices and institutions,
development of tourism and migration of rural consumers led to the multiplicity of the
demand and expand the activities of dairy scheme more effectively. This center was
shifted to the name of Dairy Development Commission in the Fiscal Year 1962/63 and
later on HMG changed this commission in the name of Dairy Development Corporation
in B.S. 2026 (1969) under the Corporation Act, B.S. 2021 (1964). Its aim and objectives
are to provide guaranteed market and fair price to the rural milk producers and to supply
hygienic pasteurized milk and other standard dairy products to the urban consumers.
Prior to the establishment of the Corporation a separate Dairy Development Board was
constituted to carry out the task of dairy development in Nepal in a wider scale. The dairy
development activities in Nepal started in Tusal Village of Kavre district B.S. 2009
(1952) on experimental basis with a small-scale milk processing plant under the
Department of Agriculture. In the year B.S. 2010/2011, at the initiative of Dairy
Development Board, the Central Dairy Plant was established and it started milk
collection, processing and marketing activities from the year B.S. 2014 (1957).
DDC expanded its activities by establishing various other milk supply schemes. It aims to
promote and develop dairy industry through country multiplying the collection and
distribution centers with the sound management. It has also aims to promote public health
supplying standard quality of dairy products at a reasonable price rate. Though the
progress achieved by the DDC is satisfactory. Due to many reasons like rapid growing
population, consumers being conscious about health diet; dairy products demand etc.

made many entrepreneurs to establish such other corporations in Nepal. Nepal Dairy
Development Board (NDDB) was also established at Pulchowk, Lalitpur.
Table 1
Evolutions of Dairy Companies in Nepal
S.

Name of Manufacturing

N.

Corporation

Place

Established

Name of

Year

Product

(B.S.)
1.

2.

Dairy Development

Lainchour,

Corporation

Kathmandu

Nepal Dairy Pvt. Ltd.

Mahabauddha,

2026

DDC

2037

Nepal

Kathmandu
3.

Himalaya Dairy Products

Eteetole, Lalitpur

Dairy
2039

Pvt. Ltd.
4.

Bhaktapur Dairy Pvt.

Today
Milk

Bhaktapur

2039

Sheetal

Kharipati,

2047

Amrit

2052

Sitaram

2052

KDC

Ltd.
5.

Sainju Dairy Pvt. Ltd.

Bhaktapur
6.

7.

Sitaram Gokul Milk Ktm.

Dudh Pokhari,

Ltd.

Kirtipur

Kharipati Dairy Pvt. Ltd.

Kharipati,
Bhaktapur

8.

Kalika Dairy Company

Kharipati,

Pvt. Ltd.

Bhaktapur

2058

9.

Kathmandu Dairy Pvt.

Babarmahal,

Ltd.

Kathmandu

2053

Snow Fun

These corporations are giving their best services to consumers of Kathmandu. Emergence
of such corporation held high level competition among them. The equipment cost is very
high as it is imported from foreign countries, totally automatic and computerized. The
high cost of establishment and high level of competition emerge the need of sales
promotion.
Due to patent right, as corporation being governed by the Board of Directors formed by
Nepal Government of Nepal, high capacity and scientific equipment, DDC is in the top
position among other corporations. World Food Program (WFP) had supported DDC for
about a decade in the early years. The New Zealand and Danish Government had
contributed towards the establishment and rehabilitation of milk processing plants.
USAID and Danish Government have been the major donors.
1.2 STATEMENT OF PROBLEM
After the restoration of democracy in 1991, Nepal government followed a policy of
liberalization and privatization. This encouraged foreign investments as well as private to
invest in different sectors. As a result it not only led the country towards the
industrialization but also brought competition. In the field of dairy, before restoration of
democracy there was only one company, Dairy Development Corporation (DDC, Nepal)
to supply the dairy product in the country. After the restoration of democracy, due to the
changes in the government policies, private sector also entered in this filed but they are
still emerging and operating in small scale.
Dairy Development Corporation (DDC) is one of the leading public enterprises
(Government owned) which collects milk, produces diary product and distributes them to
the customers. DDC was established in 1969 with the main objectives of providing
guaranteed market and fair price to the rural milk producers and supplying hygienic

pasteurized milk and other standard dairy products to the urban consumers. This
corporation was established by the government to provide a guaranteed market for milk
to the rural farmers with fair price, supply pasteurized milk products to urban consumers,
develop organized milk collection system to meet increasing demand for pasteurized milk
and milk products, develop an organized marketing system for milk and milk products in
urban areas.
The private sector started getting involved in the dairy-processing sector from late 1970s
with very small-scale operations in Kathmandu. Today, there are many private dairies of
various sizes both within and outside the Kathmandu valley. Prominent among the private
dairies with modern milk processing facilities are Nepal Dairy, Himalaya Dairy, Sitaram
Dairy, Anmol Dairy, Kathmandu Dairy, Adhunik Dairy etc in Kathmandu Valley; Sujal
Dairy in Pokhara Valley, and Kamdhenu Dairy in Sunsari. These dairies produce
pasteurized milk and other dairy products such as yoghurt, ice-cream, butter, ghee and the
like. Besides, there are many small scale mechanized dairies and numerous cottage type
dairies handling limited quantity of milk for producing different milk products
particularly pasteurized milk, ghee, ice cream and yoghurt. According to available
information, altogether 250 dairies of varying scale are in operation in Nepal.
Milk products being available in the local urban markets indicate that there is ample
demand for the modern as well as traditional dairy products. The demand for dairy
products in the urban markets is expected to grow in the future mainly due to the
increasing population and rise in income. Additionally, exposures to outer world mainly
through the TV have particularly attracted the educated younger generation to consume
the modern dairy products. Today, consumption of milk has become more popular in the
market of Kathmandu Valley from the past years due to the changing lifestyle of the
people. People rarely consume cows and buffaloes milk these days. With the rapid
urbanization, these pouch milks have become more popular. Since the hygienic quality of
milk in Nepal indicated that the current situation need real improvement and lack of
refrigeration facilities of milk during transportation from production to site. Therefore,
maintaining standardization, quality and hygiene during production of pasteurized milk
has been very crucial for all dairy companies.

In recent years, competition has grown high because many companies are involved in
manufacturing milk in Nepal. Due to the entry of new players in dairy business the milk
market has become complex and challenging. Various brands of locally produced as well
as imported modern and traditional milk products of varying categories are sold in the
urban markets of Nepal, Kathmandu Valley being the main market of the milk products.
The major milk products available in the markets are imported Skim Milk Powder
(SMP), Full Cream Milk or Whole Milk Powder (WMO), infant milk formula, dairy
whitener, cheese, butter, sweetened condensed milk, ice cream and ghee; and locally
produced cheese, butter, ghee, ice cream, paneer and yoghurt. Milk products from more
than 20 countries from Asia, Europe, Australia and North America complete in the
Nepalese market. Different varieties with various sizes and from ordinary to advanced
packaging are available for most of the products.
Recently, private companies like Himalaya Dairy, Sita Ram Gokul Milks Ltd. and others
are promoting and marketing their products aggressively to be ahead in the milk market.
Also, with the recent increase in price of pouch milk from all the dairy companies
including DDC, there has been a change in customer perception and the consumer may
be thinking of switching to substitute products. Therefore, how has the consumers brand
preference of milk changed, it will be the main objective of this thesis. The prime
questions under this research will be:-What is the present situation of dairy industry?
How far are consumers sensitive towards brand? And how do the factors like price,
packaging, availability, and quality etc. of pasteurized milk affect the buying behavior of
the consumers?
1.3 OBJECTIVES OF THE STUDY
The main objectives are:

To evaluate the dairy industry in Nepal.

To identify the consumers preference towards the different brands of pouch milk
in Kathmandu Valley.

To identify the factors like, price, quality, taste, packaging, availability that
influence the purchase decision of pouch milk.

To know whether promotion plays an important role in buying decision.

To know the level of satisfaction towards the quality, taste, nutrition etc. of the
products that are purchased by the consumers

1.4 SIGNIFICANCE OF THE STUDY


Consumer buying behavior 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
economies. It attempts to understand the buyer decision making process, both
individually and in groups. It studies characteristics of individual consumers such as
demographics and behavioral variables in an attempt to understand what consumer wants.
It also tries to assess influences on the consumer from groups such as family members,
friends, reference groups, and society in general. Customer behavior study is based on
consumer buying behavior, with the customer playing the three distinct roles of user,
payer and buyer. This study need to understand the behavior and preferences of milk
consumers in the study area.
Milk has become more popular in the market of Kathmandu Valley from the past years
due to the changing lifestyle of the people. People rarely consume the cow and buffalo
milk these days. With the rapid urbanization, these pouch milks have become more
popular.
Therefore, the study would contribute to both milk manufacturing company and also their
marketers by identifying the influencing factors that would affect the consumers
decisions for purchase of milk.
This study would provide a better insight into these areas:

The identification of influencing factors in buying decision of milk.

The role of branding in buying decision.

The substitute brand in the unavailability of the product.

1.5 LIMITATIONS
The limitations of the study are as follows:

Due to the limitation of time and resources this study only confines to Kathmandu
Valley only.

The studies consider only those consumers who are the consumers of pouch milk.

The sample size taken for this study is 150 respondents of Kathmandu Valley.

There might be chance of response errors because of factors such as unawareness


of the respondents, hesitation of respondents, misinterpretations etc.

The findings of the result are based on the research done via questionnaire.

The survey is conducted via online with the help of Google document and also the
questionnaires were distributed individually to the respondents.

1.6 OPERATIONAL DEFINITIONS


Marketing: Marketing is identifying and meeting human and social needs. According to
Kotler and Keller (2009) the shortest definition of marketing is Meeting needs
profitably.
Consumer Behavior: According to Kotler and Keller (2009), Consumer Behavior is the
study of how individuals, groups, organization select, buy, use, and dispose of goods,
services, ideas or experiences to satisfy their needs and wants.
The consumer buying behavior is influenced by various factors such as cultural factors,
personal factors and social factors. (Kotler and Keller, 2009).

Buying Behavior is the decision processes and acts of people involved in buying and
using products.

Need to understand:

Why consumers make the purchases that they make?

What factors influence consumer purchases?

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A
firm needs to analyze buying behavior for:

Buyers reactions to a firms marketing strategy has a great impact on the firms
success.

The marketing concept stresses that a firm should create a Marketing Mix that
satisfies customers, therefore need to analyze the what, where, when and how
consumers buy.

Marketers can better predict how consumers will respond to marketing strategies.

Brand: The American Marketing Association defines a brand a name, term, sign,
symbol, or design, or combination of them, intended to identify the goods or services of
one seller or group of sellers and to differentiate them from those of competitors (as
cited in Kotler and Keller, 2009).
A brand is a promise to deliver on what an organization claims.
Brand is defined as the recognition and personal connection that forms the hearts and
minds of the clients and other key audiences through their accumulated experience at
every point of contact. One must ensure the brand that emerges in a positive one, leading
to trust, loyalty and advocacy of the offerings. Branding at its best is more than a
marketing responsibility. It must both reflect and inform decisions and guide all of points

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of contact. A brand is everything an organization stands for. It represents a way of


thinking and a management lens through which decision are made.

Brand Preference
Brand preference is a phenomenon in which consumers associate specific qualities with
a particular brand name, and will choose the products marketed under that brand above
the similar products offered by competitors. This type of consumer activity is found with
a number of different types of goods and services, with consumers gravitating toward
brand names in telecommunications services, electronics, supermarkets, restaurants, and
even basic products like food condiments. In this scenario, consumers will only consider
other brands if the favored brand is not currently available, or the pricing or claims of a
competitor is attractive enough to merit consideration.
The development of brand preference normally occurs as the result of an ongoing effort
of the brand owner to convince consumers that the goods and services sold under that
brand are the most desirable in terms of quality and sometimes price. Providing a
consistently high quality often helps to establish the brands reputation, sometimes to the
point that the products marketed under the brand become the standard by which similar
products are judged.

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CHAPTER 2
LITERATURE REVIEW AND THEORETICAL FRAMEWORK
2.1 LITERATURE REVIEW
According to Howard K. Wolf & Prem R. Pant, The purpose of literature review is to
find out what research studies have been conducted in ones chosen field of study, and
what remains to be done. It provides the foundation for developing a comprehensive
theoretical framework from which hypothesis can be developed for testing. The literature
survey also minimized the risk of pursuing the deal ends in research. (Howard K. Wolf
& Prem R. Pant, A Hand Book for Social Science Research and Thesis writing 1999,
p30).
In order to develop a framework for the study consumer behavior it is helpful to begin by
considering the evolution of the field of consumer research and the different paradigms of
thought that have influenced the discipline. As described in this article a set of
dimensions can be identified in the literature, which can be used to characterize and
differentiate the various perspectives on consumer research.
2.1.1 Market/ Marketing: Meaning & Concept
The market is the place where buyer and seller meet and function, goods & services
offered for sale and transfer for ownership of little occur.

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A market consists of all the potential customers sharing a particular need or want that
can be satisfied through the exchange and distribution. The market depends on the
number of persons who exhibit the need interest others and are willing to offer these
resources in exchange for what they want. (Kotler Philip & Armstrong Gray, Principles
of Marketing, 1999, p. 215).
A market will be defined as people with needs to satisfy, the money to spend and the
willingness to spend it. Thus, in the market demand for any given product or service the
market three factors to consider market= people with need or wants plus money to spend
plus willingness to spend it. (Stanton William, J., Fundamentals of Marketing, 1978,
p.72)
Marketing is the management function, which organizes and directs all those business
activities involved in an assessing and converting customer purchasing power in to
effective demand for a special customer. So, product or service and in making the product
or service to the final, as to achieve the particular or other objective set by the company.
According to Philip Kotler, Marketing is a social process by which individuals and
group obtain what they need and what though through cresting offering and freely
exchanging products and services of value with others. (Kotler & Philip, Marketing
Management, Analysis, Planning, Implementation & Control, 1997, p.9)
Marketing is typically seen as the task of creating, promotion delivery goods and
services to consumer and business. In fact, marketing people are involved in marketing
types of entities- goods, services, experiences, events, person, places, properties,
organizations, information, and ideas. (Kotler Philip, Marketing Management, 1999,
p.3)
According to American Marketing Association, Marketing is the process of planning and
executing the conception, pricing, promotion and distribution of ideas; good services to
create exchange that satisfy individual and organizational goods. (Koirala K.D,
Marketing Management, 1999, p.1)

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Thus, through these definitions we can deduce that, Marketing is a social process
preformed by individuals and groups marketing are also concerned with creating offering
and exchanging products and services.
Marketing has been developing together with development in human civilization. We
trace three-four hundred years back to the history of human civilization. We find
marketing of that time by modern standard was relatively uncultured. They did not need
mechanism or tools or techniques of marketing as used today. But now all the situations
have changed and the needs and wants have also changed. Human aspiration for excellent
and better status have given birth to thousands of discoveries, inventions and established
thousands of units of different types of industry to fulfill that aspiration. These changes in
turn not only indented different sophisticated tools and techniques and effective strategies
for successful marketing but also made the marketing a most competitive field.
In recent years some have questioned whether the marketing concept is an appropriate
philosophy in a world faced with a major demographics and environmental challenges.
The societal marketing concept holds that the organizations task is to determine the
needs, wants and interest of target markets and deliver the desire satisfaction more
effectively and efficiently than competition in a way that preserve or enhances the
consumers and the societys well beings. The concept calls upon marketers to balance
three considerations. Namely Company profits, Consumer satisfaction and Public
interest. (Kotler Philip, Marketing Management, 1999, p.29)
2.1.2 Marketing Mix: Concept
Marketing mix is one of the key concepts in modern marketing. It refers to set of
variables that the business uses to satisfy consumers need, namely product, price,
promotion and place. Each company should deeply study the marketing mix to run the
business. A successful company will have effective knowledge over the marketing.
Marketing mix is the set of marketing tools that organizations use to pursue their
marketing objective in the target market. (Agrawal G.R, Marketing in Nepal, 1999,
p.28)
2.1.3 Product: Concept
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A product is anything that can be offered to the consumer satisfaction. Products can differ
in size, quality, feature, brand, packing etc. This is the most important variable of
marketing mix, a company should deeply think over the quality of the product before
market penetration. (William J/Michael J. and Bruce J, Fundamental of Marketing,
1994, p.211)
In marketing we need a broader definition of product to indicate that consumers are not
really buying set of attributes, but rather benefits that satisfy their needs. A product is a
set of tangible and intangible attributes, including packing, color, price, quality, an brand,
plus the sellers services and reputation A product may be a good, service, place, person,
or idea.
2.1.4 Products Quality: Concept
Quality is the improved form of product, to satisfy the needs of the consumers, improving
product quality has become a top priority for marketing. There is an intimate connection
among product quality, customer satisfaction and objective achievement. The dimensions
of quality can be performance of the product, durability of the product, serviceability of
the product & feature of the product etc. Quality is the Totality of features and
characteristics of a product that bear on its ability to satisfy stated or implied needs
(Agrawal G.R., Marketing in Nepal, 1999, p.161). While considering the physical
product apart from the additional attributes, real or fancied, bestowed on it by an effective
marketing program, the manufacturers attention is usually centered on product quality. In
this context product quality is often measured in terms of the purity or grade of materials
used the technical perfection of design, and exacting standards of production. The level of
quality is usually set in terms of either meeting of beating competition. Once a level of
product quality, in this sense, has been determined, most firms carry out rigorous
programs of quality control and product testing to ensure that technical standards of
product quality are upheld.
2.1.5 Brand& Branding: Meaning & Concept
Brand is the name of the product. Branding differentiates the products from marketers,
sellers & consumers. They convey attributes, image, values & benefits.
15

A Brand is a name, terms, signs, symbol, or design or a combination of the intended to


identify the goods or service of one seller or group of seller and to differentiate from
those competitors. (Kotler Philip, Marketing Management, 1999, p.404). It is clear
from above definition that brand identifies the goods to market. It can be a name, trade
mark, logo or other symbol. It differs from other assets such as patents and copy rights;
which have expiry date.
Branding constitutes an important part of product mix. The word brand is comprehensive
encompassing others narrower terms. A brand name consists of words, letters or number
that can be vocalized. A trademark is the part of the brand that appears in the form of a
symbol, design or distinctive color or letter. A brand mark is recognized by sign and
differentiates its product from competing products.
Nowadays, market is being much more competitive. Every company should carry out a
research before launching a new brand. As the customer is the king of the market in
todays liberal economy companies cannot afford to be only product oriented. There is no
specific formula for success. Market is different from place to place, consumers need
taste and interest may vary from one place to another. In many cases affordability,
geographical location, culture and religion also determine peoples need. Therefore,
success of brand largely depends on the different factors such as innovation, quality,
attractive, packing, reasonable price, availability, good publicity brand positioning,
unique selling proposition, value addition relationship etc.
2.1.6 Price and pricing: Meaning & Concept
Price is an important component of marketing mix. Price is the value of goods and
services in terms of money. It depends upon the willingness and ability to pay, which in
turn depends upon the value in use and value in exchange. Pricing is the process of
determining the price of the product. The price determined by the company or the
marketers should be responded by the consumers in the target market. It is another
variable of marketing mix that creates revenue. Consumers pay price to buy products for
their need satisfaction. It may be fixed on the basis of cost demand and competition. It
may involve discount, allowances, credit facility etc. Price has become the important

16

variable of marketing mix because a marketing manager always look forward for the
price of the product so that he can penetrate the market as their capacity to pay.
Traditionally, price had operated as the major determinant of buyer choice. This is still
the case in poorer nations, among poorer groups, and with commodity-type products.
Although non price factors have become more important in buyer behavior in recent
decades, price still remains one of the most important elements determining company
market share and profitability. Consumers and purchasing agents have more access to
price information and price discounters. Consumer shops therefore, carefully force
retailers to lower their prices. Retailer put pressure on manufacturers to lower their price.
The result is a market place characterized by heavy discounting and sales promotion.
Price is the marketing mix element that produces revenue, while the others produce costs.
Price is also one of the most flexible elements. It can be changed quickly, unlike product
features and channel commitments. At the same time, price competition is the number
one problem facing by the companies. Yet many companies do not handle pricing well.
The most common inflexibilities in handling them are:

Pricing is cost-oriented.

Price is not revised often enough to capitalize on market changes.

Price is set independent of the rest of the marketing mix rather than as an intrinsic
element of market positioning strategy, and

Price is not varied enough for different product items market segments, and
purchase occasion. (Kotler Philip, Marketing Management, 1999, p.456)

In setting its pricing policy, a company usually follows the following six step producer:1. It selects its pricing objective survival, maximum current profit, maximum market
share, maximum market skimming, or product quality leadership.
2. Its estimates the demand curve, the probable quantities will select each possible
price.

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3. It estimates how its cost varies at different levels of output, at different levels of
accumulated production experience, and for differentiated marketing offers.
4. It examines competitors cost, price and offers.
5. It selects a pricing method.
Finally, it selects the final price, taking into account psychological pricing, and the
influence of other marketing mix elements on price, company pricing policies, and the
impact price on other parities.
Company do not usually set a single price, but rather a pricing structure that reflects
variations in geographical demand and cost, market segment requirements, purchase
timing order levels, and other factors.
Several price adaptation strategies are available:I.
II.

Geographical pricing.
Price discounts and allowances

III.

Promotional pricing

IV.

Discriminatory pricing

Product mix, pricing, which are included setting prices for product lines, optional
features, captive products, two part items, by-product, and product bundles. (Kotler
Philip, Marketing Management, 1999, p.482/83)
2.1.7 Promotion: Meaning & Concept
Promotion is the element of an organizations marketing mix that serves to inform,
persuade and remind the market of a product and for the organization selling it, in hopes
of influencing the recipient feelings, beliefs, or behavior. (William J/Michael J. and
Bruce J, Fundamental of Marketing, 1994, p.456)
Promotion is another variable of marketing mix which communicates to the ultimate
consumer about goods and services. It involves those activities which inform, educate

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and stimulate the demand for the product. Company should follow effective promotional
medias to inform the consumer about the product. A good marketing manager always
looks towards effective promotional media to compete with other brands. This variable is
very important to stimulate sales. (Agrawal G.R. Marketing Management in Nepal,
2059, p.47)
The marketing mix activities of product planning, pricing, and distribution are performed
mainly within a business or between a business and the members of its distribution
channels. However, through its promotional activities, a firm communicates directly with
potential customers.
2.1.8 Place: Meaning & Concept
Place is another variable of marketing mix which takes product to consumer. It is
concerned with distribution, channels of distribution and physical distributions. It is also
concerned with selecting channels of distribution and place for the physical movement of
the product.
A good marketing manager always thinks of an effective channel and physical
distribution system for the smooth flow of the goods at the right time at the right place
and to the right person or market. (Agrawal G.R.,Marketing Management in Nepal,
2059, p.4)
Philip Kotler defines marketing mix as the set of marketing tools that the firm uses to
pursue its marketing objectives in the target marketing. The popularized a four factor
classification of these tools called the four Ps (product, price, promotion and place).
2.1.9 Advertising and other promotional activities: Concept
The word advertising is derived from the Latin word Adverto. Ad means towards and
verto means turn. So, the meaning of advertising is to turn people towards specific
thing. In other words, advertising is to draw peoples attention to certain goods.
Advertising is one of the main tools in marketing used tools in marketing used to
influence the consumers awareness, interest and response to the product in order to
increase the firms sale and profit. It is an important element in modern marketing
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process but it can produce consistently profitable result only when the entire structure is
sound and coordinated.
Advertising is the most visible marketing tool, which seeks to transmit an effective
message from the marketer to a group of individuals. The marker pays for sponsoring the
advertisement. Activity advertising unlike salesmanship, which interacts with the buyer
face, is non-personnel. It is directed towards a mass audience, and coast at an individual,
as in personnel selling.
Advertising is defined as a firm of mass communication where message in through
different sources and is acquired by the consumers. It is referred as non-personal,
presentation because non-personal media are used to convey the message. Basically,
media of mass communication are only two viz., publications and electronic media such
as radio and television.
The advertiser needs to have comprehension of psychology. The effective advertising
needs to be familiar with certain effects that lead to certain response. Advertising is a
method of communication, which is one of the most important aspects of human
behavior.
Today business organization, social organization, political organization and governmental
and non-governmental organizations are also using advertising as tools of promoting and
services as well as political candidates for votes.
Advertising can be understood as form of communication, which aims at bringing about
some change in the behaviors of the target audience, particularly the potential buyers of
non-buyers towards the product or service advertised. A generally theoretical model seeks
to identify a step wise behavioral progression of non-buyers towards buying action.
Simply advertising stimulates the potential buyers to go to the store to buy actual
advertised products. In general, advertising is done in expectation of tangible gains such
as favorable attitudes, better image of the firms, and increased sales. The techniques of
advertising depending upon the situation however, it is the matter of decision of the
marketing manager to blend all promotional tools advertising, personal selling, and sales

20

promotion to arrive at a right mix. Each of the promotional tools has got unique
characteristics and is complementary.
It should be made clear here that advertising and promotion though seems same are not
exactly the same thing. Promotion is a broad from whereas advertising is just a part of
promotion. Promotion generally includes publicity, personal selling, public relation and
advertising, but advertising comprises the most of the portions that comprises promotion.
Advertising promotion consists of other four element personal selling, sales promotion,
public relation and publicity.
a. Personal Selling
Personal selling consists of face to face communication between the sales persons to their
prospects. Unlike advertising, it involves personal interactions between the source and
the destination. The most effective method of promotion probably is to have sales persons
call upon every target consumer. For many institutions, especially those that appeal to the
mass market, this world be terribly inefficient. As a result, they employ mass marketing
techniques such as advertising. Personal selling is very important in industry.
b. Sales Promotion
According to the American Marketing Association, sales promotion consists of those
marketing activities, other than personal selling, advertising and publicity that stimulate
consumer purchasing and dealer effectiveness, such as display, shows, and expositions,
demonstrations, and various non-recurrent selling efforts. Sales promotion has increased
considerably in importance in recent years as management has sought measurable, shortterm sales result. Sales promotion should receive the same strategic attention that a
company gives to advertising and personal selling.
c. Public Relation
Marketers engage in public relation in order to develop a favorable image of their
organizations and product in the eyes of the public. They are public at large, labor union,
the press and environmental groups. Public relation activities include sponsoring,
lobbying and using promotional messages to persuade members of the public to take up a

21

desired position. The term public relation refers to a firms communications and
relationships with the various section of the public. These sectors include the organization
customers, suppliers, shareholders, employee, the government, the general public and the
society in which the organization operates.

d. Publicity
Publicity is a means of promoting the mass market, and is similar to advertising except
that it is freely found in the additional portion of the news media, and pertains to
newsworthy events. The most common type of publicity is news releases, photographs
and feature stories. Promotion can be directed towards final consumers, middlemen, or a
company own employees. Public relations and publicity are the last two promotional
methods. Public relations are the broad, overall promotional vehicle for improving or
maintaining an organizations image and its favorable relationship with its public.
Publicity is any promotional communication regarding an organization and its products
that are not paid for by company benefiting from it. Typically these two activities are
handled in a department separate from the marketing department is a firm
2.2 The Buying Decision Process: The Five Stage Model
There are five stages of consumer buying behavior which plays an important role in the
understanding of how consumers go through different stages while buying a product.
a. Problem Recognition
The buying process starts when the buyer recognizes the problem or need to have
something which is initiated or triggered by internal or external factors. With internal
factors, one of persons normal needs like hunger, thirst, sex which rises to a threshold
level and become a drive; or a need can be aroused by external stimulus. Marketers need
to identify the circumstances that trigger a particular need by gathering information from
a number of consumers. They can then develop marketing strategies that trigger
consumer interest. The marketers can know about the consumption behavior and form the
strategies for their brand to be more successful.
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b. Information Search
The next step in the model is the information. The major information sources can be
divided under the following groups and they are as follows:

Personal: This group includes family members, friends, neighbors and many other
who are directly related with the buyer.

Commercial: This includes advertising, website, salespersons, dealers, displays


and many more other sources and the advertisements are the major sources for the
marketers today.

Public: This group includes mass media, consumer rating organizations and many
other sources which directly or indirectly relate with the product.

Experimental: This group includes the person handling, using and examining the
product. The past experience about the product also plays a vital role.

c. Evaluation of Alternatives
The next step of the buying process is the evaluation of the alternatives. In this stage a
consumer goes through identifying various alternatives for the product and selecting the
best among them which satisfies the every need of the consumer. Some basic concepts
will help us understand consumer evaluating processes. First, the consumer is trying to
satisfy a need. Second the consumer is looking for certain benefits from the product
solution. Third the consumer sees each products as a bundle of attributes with varying
abilities for the delivering the benefits sought to satisfy this need. The attributes of
interest to buyers vary by product. Consumers will pay more attention to the products
which will offer post purchase benefits.
d. Purchase Decision
In this stage the consumer selects the best option and purchases the product.
e. Post Purchase Behavior

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After the purchase of the brand of product consumer might experience dissonance that
might occur from hearing either good favorable things or non-favorable things about
other brands and will alert to information that supports his/her argument about the
purchase decision of the brand. ( Kolter & Keller, 2009).
Figure 1
Buying Decision Process
Need Recognition and Problem Awareness

Information Search

Evaluation of Awareness

Purchase

Post- Purchase Evaluation

Dairy industry also accelerates diversifying to develop special food ingredients. Food
ingredients derived from milk can be deployed advantageously to improve the sensor
quality attributes, which include fractionated castigates. They proclaim concentrated
enzymatic hydroly states are prepared by employing innovative energy efficient unit
process. Packaging is another area which receiving intensive R&D inputs for developing
low cost biodegradable material to prevent further damage to the environment and ensure
greater food safely.

24

There are four type of consumer buying behavior:


A .Routine Response/ Programmed Behavior
Buying low involvement frequently purchased low cost items; need very little search and
decision effort; purchased almost automatically. Examples include soft drinks, snack
foods, milk etc.
B. Limited Decision Making
This involves those products which are bought occasionally. When you need to obtain
information about unfamiliar brand in a familiar product category, perhaps it requires a
moderate amount of time for information gathering. Examples include ClothesKnow
product class but not the brand, greeting card- like the message written but not the brand.
C. Extensive Decision Making
These are complex high involvement, unfamiliar, expensive and/or infrequently brought
products. It requires high degree of economic/performance/ psychological risk. Examples
include cars, homes, computers, education. Spend a lot of time seeking information and
deciding.
Information can be entertained from the companies, friends and relatives, store personnel
etc. This require going through all six stages of the buying process.
D. Impulse buying, no conscious planning
The purchase of the same product does not always elicit the same Buying Behavior.
Product can shift from one category to the next. For example: going out for dinner for
one person may be extensive decision making (for someone that does not go out often at
all), but limited decision making for someone else. The reason for the dinner, whether it

25

is an anniversary celebration, or a meal with a couple of friends will also determine the
extent of the decision making. Consumer behavior is affected by many uncontrollable
factors. Just think, what influences you before you buy a product or service? Your friends,
your upbringing, your culture, the media, a role model or influences from certain groups?
Culture is one factor that influences behavior. Simply culture is defined as attitudes and
beliefs. But how are these attitudes and beliefs developed? As an individual growing up, a
child is influenced by their parents, brothers, sister and other family member who may
teach them what is wrong or right. They learn about their religion and culture, which
helps them develop these opinions, attitudes and beliefs. These factors will influence their
purchase behavior however other factors like groups of friends, or people they look up to
may influence their choices of purchasing a particular product or service. Reference
groups are particular groups of people who may look up to that have an impact on
consumer behavior. Opinion leaders are those people that you look up to because your
respect their views and judgments and these views may influence consumer decisions. So
it may be a friend who works with the IT trade who may influence your decision on what
computer to buy. The economical environment also has an impact on consumer behavior;
do consumers have a secure job and a regular income to spend on goods? Marketing and
advertising obviously influence consumers in trying to evoke them to purchase a
particular products or service.
Peoples social status will also impact their behavior. What is their role within society?
Are they Actors, Doctors, office worker and mothers and fathers also? Clearly being
parents affects your buying habits depending on the age of the children, the type of job
may mean you need to purchase formal clothes; the income which is earned has an
impact. The lifestyle of someone who earns Rs. 250000 would clearly be different from
someone who earns Rs. 25000. Also characters have an influence on buying decision.
Whether the person is extravert (outgoing and spends on entertainment) or introvert
(keeps to themselves and purchases via online or mail order) again has an impact on the
types of purchases made.
Rees (1992), in his study revealed that factors influencing the consumers choice of food
are flavor, texture, appearance, advertising, reduction in cooking time, fragmentation of
26

family means and an increase in snacking. Demographic and household roles have been
changed and produced changes in eating habits. Consumers are responding to messages
about safety and healthy eating. They are concerned about the way in which the food is
produced and want safe, natural and high quality food at appropriate price.
Some published articles regarding the situation of milk market
The Kathmandu Post (1st September, 2013), Demand for milk products soars as Teej
approaches; the article explains that there is a stiff competition among the different
brands of milk and milk products. The information provided from that article concludes
that the most widely celebrated Hindu festivals Teej, has given a big boost to demand for
milk and products like ghee, curd, butter, cheese, paneer and ice cream. Some dairies
have doubled their production to meet the market demand. According to Siya Ram Prasad
Singh, General Manager of DDC says, they are witnessing a big growth in demand for
dairy products and are finding it difficult to fulfill demand for some of DCC products.
Similarly, Bishwo Ram Khadka, president of the Dairy Producers Association, said that
the rival of the festive period had given a boost to the countrys dairy market. An
increase in demand for dairy products is normal during the festive period. This time too,
the market has swelled significantly, said Khadka. Apart from the festive demand, the
consumption pattern of dairy products has been rising constantly over the past few years.
The dairy market is estimated to be growing around 10 percent annually, said Khadka.
According to him, increasing urbanization and awareness among the people about the
benefits of dairy products have played a key role in the growth of the countrys dairy
market. The inflow of remittance has brought economic prosperity to the people living
in remote villages. Due to this, consumption of dairy products in villages has gone up,
The supply of milk from farmers has been decreasing constantly since the past few
months. However, there wouldnt be a shortage of items like milk as DDC had purchased
adequate amounts of powdered milk and has been importing milk from India.
Meanwhile, Khadka added that the market might face a shortage as consumption goes up
in villages during this period, and farmers will have less to sell to dairy firms.

27

The Kathmandu Post (27 November, 2013), the article explains that the dairy industry
in Parsa has been producing less milk than its capacity as cows and buffalos are not being
reared commercially. Even though farmers in the neighboring districts of Chitwan and
Makwanpur have been raising cows and buffalos with great success, the locals are least
interested in doing so.
According to Shyam Badan Yadav, manager of the milk factory says, the dairy has not
been able to get milk in adequate quantities as farmers have been reluctant to engage in
raising animals for milk.
The farmers here have not been able to turn rearing animals into a business, said Yadav.
Most farmers seem to be doing it just to fulfill their immediate needs. Kalash Dairy,
which has been operating for the past three years, has a daily requirement of 10,000 liter
of milk. However, it can hardly obtain 3,000 liter to 4,000 liter.
The dairy produces products like milk, ghee, curd, butter and ice cream, among others.
The products are sold in the market from two sales outlets in Birgunj. According to the
company, consumers like their products, but they have not been able to fulfill demand
due to the unavailability of raw materials.
According to Yadav, business has suffered due to its inability to operate at full capacity
despite mounting demand. Earlier, the dairy had bought a number of buffalos and given
them as gifts to neighboring farmers to develop the habit of rearing animals in them.
However, this plan did not succeed as the farmers showed no interest. Due to the
difficulties of procuring milk for its plant, Kalash Dairy has planned to set up a separate
operation named Kalash Cattle Farming to raise cows on its own. The project is at the
final stages of preparation.

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Samuel (2009), conducted research on the Consumer Behavior and Satisfaction of


AMUL Milk. The following results were found out:

Females are the main decision maker for the milk. As per the data 65% of female
and 35% of male makes purchase decision.

Based on the occupation of the customer, it is found in the survey that 65% are the
housewives and 35% are from various occupations such as a businessman,
employee etc for the AMUL milk.

Income less than 5000 to 10,000 is more attracted to AMUL milk. As per the data,
79% of the respondents income is under this group.

The main purchasing factors for the AMUL milk are Quality and Brand image.
The data reveals that 42% influences on Quality and 32% influenced for the
Brand.

88% of the total respondents are using product since from a long time. The
majority of the respondents are using AMUL milk & milk products from more
than 3 years.

96% of the respondents think that purchasing AMUL milk is value for the money
i.e. AMUL milk is valuable product for them.

It is found in the survey that consumer are influencing through Word of Mouth.

Panchal (2010), conducted research on the Consumer preference and brand recall
ability of milk in Baroda district in India showed the following result:

People from the age group of 21-40 consume more milk.

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It is also found out during the study that milk is the brand that remains at the top
of the mind among maximum number of respondents. While ghee and thick shake
is not at the top of the mind among any of the surveyed consumers.

It is also been found out that milk is 1st favorite brand among the surveyed
respondents and while rajwadikadhi and dry sweets were not preferred as the 1 st
favorite brands by the any of the consumer.

While it is also found out that ice-cream is the 2 nd favorite brand among most of
the consumers.

It was also found out that milk and ice-cream is the most recommended brands to
others by the consumers whereas rajwadikadhi is the least recommended brand to
others.

It was also found out that out of 100 respondents, 49 respondents daily consume
their 1st favorite brand while not a single respondents consume their 1st favorite
brand in once in a six months.

From the research it is also found out that maximum consumers daily consume
their 2nd favorite brand.

The average amount spent by the maximum number of consumers (39


respondents) on the Baroda dairys products is between the range of Rs. 401 to
Rs. 600 and the least (3 respondents) amount spent by the consumers is below Rs.
200.

It is also found out that out of total 100 respondents, maximum respondents i.e. 92
are satisfied with the quality of the milk that they are consuming now.

63 respondents are agreeing towards the price charged by the milk producers
while 13 respondents are not agreeing towards the same.

The attribute price is more important for the majority consumers while purchasing
the milk products.

30

It is also found out that the quality attribute is the most important for the
consumers while making the purchase of the products of the dairy.

Further, it is also found out that availability attribute is also more important for
the consumers.

While it is also found out that the variant attributes is somewhat important for 52
consumers and least important for just only 3 consumers out of the 100 surveyed.

Moreover, it is also found out that the packaging attribute is somewhat important
for 43 respondents and it is least important for only 2 respondents.

The attribute quantity is more and most important for 51 respondents while it is
little and least important for only 10 respondents.

Smith (1999) conducted the research A study of milk marketing by selected dairy
companies in Port Elizabeth and the following conclusions were drawn:

The trend of milk consumption has been decreasing in United States of America.

Consumers are more using alternative beverages to the milk.

Dairy industry is doing little to increase awareness of the benefits of the milk or
to create the favorable image.

It is important to segment the market and each segment requires different


advertising means.

The increasing competitiveness in the milk industry is forcing dairy companies


to sell the milk at low profit margins.

Packaging which is one of the components of marketing has caused slight


problem to dairies. The cheapest way of packaging is in the form of sachets.
However, the high rate of breakage/leakage. The high percentage of breakages
has forced producers to look for alternative methods of packaging.

31

Promotion is that mix element that is essential for the survival of the milk
industry. The lack of promotion is regarded as one of the major reasons for the
less consumption of milk.

The cheapest milk on the shelf sells.

84% of the respondents purchased fresh milk.

Price was the most important factor.

52.4% respondents purchased the cheapest milk on the shelf.

The most respondents use milk for whitening tea/coffee.

The general perception that people had bout milk was that it was very healthy
and was as enjoyable tasting beverage.

Virdi (2007) in their research titled Consumer Behavior Regarding Branded vis--vis
Unbranded Milk found out the following results:

There is relationship between the income level and the use of branded milk. With
the variation in the income level, the tendency to switch between branded and
unbranded milk amplifies.

There is no association between profession and the use of branded milk.

There is no association between the purchase of the particular brand and the factor
affecting its choice.

According to the research conducted by Hatiril (2004) the following results were
found out:

The average annual household income was $ 7380 out of which 28.2% were
spending on food expenditures.

32

35.14% of households purchase unpacked fluid milk, 32.29% and 32.57% choose
processed-unpacked and processed fluid milk as primary fluid milk purchasing
sources.

The monthly per-capita consumption quantities of unpacked and processed fluid


milk were found as 3.60 and 2.36 kg respectively.

The majority part of unpacked fluid milk consumption (67.5%) was devoted to
other usages such as yogurt, cream-cake etc.

About 32.5% of unpacked milk was purchased for drinking purposes.

The households choices of fluid milk sources were significantly influenced by


the number of children. Specially, households who have children under the age of
six are less likely to choose unpacked fluid milk over the processed fluid milk,
whereas more likely to consume processed-unpacked and processed fluid milk as
the primary source.

Results show that average household size is significant with a positive sign for
unpacked fluid milk alternative and a negative but not significant for processedunpacked fluid milk choice. This finding suggests that households whose average
size is higher than average tending to choose unpacked fluid milk alternative.

High-income level has a significant influence on the households decision in


choosing of fluid milk alternatives. Households with high-income level appeared
to choose less likely unpacked and processed-unpacked fluid milk choices than
low-income level households. Households with middle-income level were more
likely than low-income level households to choose unpacked and processedunpacked fluid milk, but it was found statistically not significant.

Households choices of purchasing fluid milk sources were significantly


influenced by the price level. In fact, survey results showed that there is about
twofold price difference between unpacked and processed fluid milk.

33

Price difference between unpacked and processed fluid milk was the most
important factor on household choice.

According to the research conducted by (Kumar, 2008) on the AMUL Pouch Milk in
different cities in India, the following results were found out:

In the cities where the research was conducted in the cities, milk purchase is an
activity which is associated with timing of morning walk of men and for ladies; it
is done along with dropping children at their bus stop.

Regarding the consumer preference about the variants of the milk, 55% of
respondents were willing to try if consistently available in the market at
reasonable prices.

About the consumer perception regarding the pouch milk in the market where the
dominant players are loose milk, around 40% using loose milk identified lower
prices of loose milk and credit facility provided by the local milkmen as the major
factor for their preference to pouch milk.

There were a significant proportion of respondents, especially among loose milk


consumers who saw smaller pack sizes at reasonable price a value preposition.

Consumers with low purchasing power who are willing to buy good quality milk
but are unable to do so because smaller pack sizes are not available in the market.

Availability and healthiness are the most significant factors for the people.

The three important factors for the consumer satisfaction was the three most
important factors for consumers are quality of the milk, timeliness of supply and
price of the milk used.

34

The three most important factors for retailer were identified as timeliness of
supply, margins available and consumer demand.

Kripa Shakya (2011), conducted a research on Consumer Buying Behavior and


Satisfaction of pouch milk
In this study, the researcher analyzed the buying behavior of consumers on pouch milk.
Objectives:

To know the factors that influences the purchase decision of pouch milk.

To know the brand preferences of the consumers

To know whether promotion plays an important role in buying decision.

To know what importance does a brand name plays in purchasing of a brand of


pouch milk.

Findings:

DDC is the most favorite brand in Kathmandu Valley.

Quality was the most important factor that influences the purchase decision of
pouch milk.

Monthly family income did not have influence on the monthly expenditure on
milk.

Type of housing had relationship with the total consumption of milk.

The respondents of all age group gave importance on the television advertisement.

35

Occupation did not have significant relationship with familys recommendation,


brand, promotions, quality and availability.

Miru Vaidya (2011), a student from ACE, conducted a research on Consumer Buying
Behavior in regards on pasteurized milk market. This was a research done as a part of
graduate research project. It was done in order to understand the buying behavior of
consumers in Kathmandu valley. A market survey was conducted with the help of a
structured questionnaire whereby respondents were asked to fill in their responses in the
questionnaire presented. The research tried to see what are the most preferred brands of
pasteurized milk in the market. It tried to understand the consumer response towards
price, taste, availability, health etc.
Findings:

It turned out that the most preferred pasteurized milk from the consumers is
DDC milk and Sitaram milk.

It was found out that male were focused on brand name whereas the female
were focused on the health. In case of references, 71.7% were influence by the
family to buy pasteurized milk.

According to the survey, the most attractive promotional tool was newspaper
whereas TV ad becomes a secondary to buy them.

In Nepal first DDC Corporation is established as first company to produce


DDC pasteurized milk. Within decades various dairy companies have been
established making tough competitors. According to this survey, consumers
are being more sensitive in quality of milk in the market. According to the
consumes perception on quality, 97.3% consumers preferred the hygiene milk
then after freshness, taste and packaging respectively.

Regarding availability of product, consumers are only satisfied with the


availability of the milk.

36

2.2 THEORETICAL FRAMEWORK


Figure 2
Theoretical Framework
Demography
Price
Quality
Availability

Consumer buying behavior of pouch milk

Taste
Nutrition
Packaging
Advertisement
Brand

The theoretical framework of the research was based on the dependent and independent
variables that were related to the consumer buying behavior where the buying behavior
decision is itself the dependent variable whereas the other influencing factors are the
independent variables.

37

As the theoretical framework is concerned, the researcher also has taken inference from
the marketing mix concept which includes independent variables demography, quality,
availability, taste, nutrition, packaging, advertisement and brand whereas dependent
variable is buying behavior of consumers.

2.3 RESEARCH GAP


There is a gap between the present research and the previous researches. Previous
researches conducted on the topics concerning on the brand. Most of the study were
based on brand name only rather than attributes of the milk. Most of the previous
researches did not disclose what attributes of milk affects the buying behavior of the
consumer. Thus, to fill up those gaps the current research is conducted.

38

CHAPTER 3
RESEARCH DESIGN AND METHODOLOGY

3.1 GENERAL BACKGROUND


Research methodology is a way to solve the problem. Market research specifies the
information requires addressing these issues, designs the methods of collecting
information, manages and implements and data collection process analyzed the results
and communicate the findings and their implication.
The research design is a plan of how we are going to answer our research question
(Saunders etal, 2007). It is based on the research questions to decide whether we employ
qualitative or quantitative technique. They explain that a quantitative method is based on
conclusions derived from numbers, data is standardized and results are in numbers and
final analysis is conducted with the help of statistics and diagrams. Whereas qualitative
data is based on results expressed through words, it is a non standardized data required to
be categorized and analysis is based on conceptualization.
Quantitative research methods have been known for their advantages but are also
criticized by some academics. It has been discussed by ( Jick, 1979) that quantitative
research is not efficient in understanding the setting or context in which people talk but
on the other had qualitative research makes up for such weaknesses. It is also believed
that quantitative research is not efficient in taking the data of daily life activities but
qualitative research helps the researcher understand the daily life patterns of the target
population because of the personal interpretations made by the researchers.
(Churchill, 1995) explains that we cannot generalize the data in qualitative research when
studying a large group of people because we can only study few of them. But in the case
39

of quantitative research you can generalize your research as you study all the participants.
In this way, quantitative research eliminates the weaknesses of qualitative research and
both the methods complement each other.
3.2 RESEARCH PLAN AND DESIGN
A descriptive as well as exploratory research was carried out for the purpose of this
research. Further the data used in this research will be qualitative as well as quantitative.
The findings of this research will be based upon the primary survey. The data will be
collected by formulating a set of questionnaire and the questionnaire shall be distributed
to all the respondents who are the consumers of pouch milk. The findings will be totally
based on the data and facts provided by the respondent.
Apart from questionnaire the export opinion will be also obtained depending upon the
necessity of the research. The secondary data will also be obtained from various sources
such as internet, books, journals, articles so that it will be easy for the researcher to
formulate research problems and research questions.
3.3 DESCRIPTION OF THE SAMPLE
The population of the study area was the residents of Kathmandu Valley. The sample size
for the survey was 150. The sample was chosen from online via Facebook, Gmail by
inquiring if they buy pouch milk or not. The sample was chosen targeting only the users
of pouch milk. The sample was chosen taking into consideration of various elements like
age, occupation, education, etc.
3.4 INSTRUMENTATION
Instrumentation can be basically explained as the tools used in data collection and
analysis. Thus, the major tool used in data collection was questionnaire. These were
distributed to many individuals on the basis of convenience and needed information was
collected. There was only one set of questionnaire instruments designed to seek
information about the buying behavior of consumers in Kathmandu Valley which
included 18 questions. These questions were both in the form of multiple choices and
open ended.
40

The questionnaire was broadly divided into three parts. First the demographics of the
consumer was analyzed and then the brand aspects questions were asked and third how
satisfied are the consumer with the choice of brand they are consuming. The related
graduate research project, journal, and articles are referred for the preparing of literature
review. In order to analyze the collected date SPPS and Microsoft Excel was used. They
served as a basis for tabulation, calculation and interpretation of the data collected from
the field.
3.5 DATA COLLECTION PROCEDURE AND TIME FRAME
The data for the research was collected via various journals and articles and from various
websites. After having an idea dairy industry and various brands of pouch milk available
in the market a questionnaire comprising of 18 questions was prepared. The questions
aimed to identify demographics of the consumer, their brand preference and their
satisfaction using those brands. To make it easy for the customers online questionnaires
was circulated via facebook, Gmail and through friends to get prompt response from the
respondents.
Primary Data Collection
The primary data was collected via questionnaire to 150 samples. Questionnaire related
to the topic were asked and their response was recorded using Google document
application. The analysis was done taking various relations between the groups.
Secondary Data Collection
The secondary data for this research was collected through various other reports
regarding the topic and other topics which were similar. Various URL sites of dairy
companies was visited to know about how they operate and to get a glimpse of the dairy
market.
3.6 VALIDITY AND RELIABILITY
Validity is the extent to which differences in observed scale scorers reflect true
differences among objects on the characteristics being measured, rather than systematic

41

or random errors. In order to test the validity of the research, the questionnaires were pre
tested with a certain group of respondents. The response received was that the questions
are clear to understand and could be easily be responded to. Also, the validity was high
because the questionnaire was prepared in guidance of an expert, a professional
researcher who oversaw the entire questionnaire making process and helped to come with
a standard set of question.
Reliability is the extent to which a scale produces consistent results if repeated
measurements are made on the characteristic. To check the quality of data different cross
checking questions were put in the questionnaire and various relation between variables
were done to verify the result matched or not.
3.7 ANALYSIS PLAN
For identifying the categorical responses on the problem in the subject, SPPS and
Microsoft Excel have been used as a tool for analysis. The reason for using this technique
is, it is more analytical and scientific to deal with. The response collected from the
respondents has been coded and entered into SPSS worksheet.
After the coding, the appropriate analysis has been done on the data collected. Various
tools like frequency, cross tabulation and mean were carried out to draw the interferences
from the collected responses.
After the coding, the analysis stage starts with SPSS extracting from googledocs.
Microsoft Excel was also used for the analysis and management of data. Necessary tables
and charts were drawn using the Microsoft Excel. The tables and charts presented in this
report with explanation so that conclusion can be drawn which are required to meet the
research objectives.

42

CHAPTER 4
DATA PRESENTATION AND ANALYSIS
4.1 PRESENTATION OF RESULTS
The results are based on the survey done among the consumers buying behavior of pouch
milk. A total of 18 questions were asked to the respondents to find out the buying
behavior of milk. The survey questionnaire was written down in Google doc and sent to
respondents within Kathmandu Valley via Facebook and Gmail and also the questionnaire
were distributed individually to the respondents. The answers of the 150 respondents
were analyzed and the results are as below:
The demographics of the sample size are as follows:
4.1.1 Gender of the respondents
Gender plays a vital role in purchase decision. Gender classification is required to
marketers because different gender exhibits different perception towards products. The
gender of the consumers is defined below with the help of following figure.
Figure 3
Gender of respondents

(Source: Field Survey, 2014)


43

In the figure above 150 respondents were taken as the sample size among which 37% of
the respondents were male and 63% of the respodents were female.
4.1.2 Age Group of the respondents
The buying behavior of the consumers is highly influenced by the age group of the
consumers. Different age groups have different demand and desire of the product by
nature. The following table shows the affect of the age group on buying behavior of
consumers of this study.
Table 2
Age Group of the Respondents

Age

Frequency

Percent

15-25

57

38.00%

26-35

77

51.30%

36-45

16

10.70%

Total

150

100%

(Source: Field Survey, 2014)


The above table represents the age group of the respondents. The majority of the
respondents are of age group of 26-35 and it is 51.3% of all the respondents. Age group
from 15-25 is of 38% and age group of 36-45 is of 10.7% whereas there was no
respondent in the age group above 45.

44

4.1.3 Education level


Another major factor that influences the buying behavior of the consumer is education
level of the respondents. Education level of consumers largely affects their own buying
behavior.
Figure 4
Education level of the Respondents

(Source: Field Survey, 2014)


In the figure above the sample size was divided in five categories SLC, Plus 2, Bachelors,
Masters and Others. Among the respondents of 150, 4% of the respondents have done
SLC, 7.3% have done Plus 2, 44% are from Bachelor and 44.7% are from Masters.

45

4.1.4 Occupation of the respondents


Occupation of the respondents is also the main factor of buying behavior. Consumers are
from different occupations in the study. To find out the occupations of the respondents
this question was kept. The main occupations of the consumers are: Student, Business,
Unemployed, Housewife and others. The figure of occupations of the consumers of
pouch milk is defined below with the help of table.
Table 3
Occupation of the Respondents
Occupation
Frequency

Percent

68

45.30%

21

14.00%

5.30%

16

10.70%

37

24.70%

150

100%

Student
Business
Unemployed
Housewife
Others
Total

(Source: Field Survey, 2014)


In the table above the respondents are from different occupational backgrounds. Here,
maximum of the respondents are from the student group. The business is 14%, 5.30% are
unemployed, 10.70% are housewife and 24.70% are others.

46

4.2 ANALYSIS OF SURVEY DATA


4.2.1 Time of purchase of pouch milk
The time of purchase of pouch milk was asked in this question. The objective was to
identify the time of the day when consumers purchase the pouch milk. The results are
shown in the table below.
Table 4
Time of purchase of pouch milk

Time of purchase

Frequency

Percent

Mostly in the morning

122

81.3%

Not fixed, buy as needed

28

18.7%

Total

150

100%

(Source: Field Survey, 2014)


Table 4 represents the percentage distribution of time of purchase of pouch milk of the
respondents. The following were observed in the definite description of the respondents;
81.3% of the respondents said that they purchase milk mostly in morning whereas 18.7%
said they purchase as they need. There was no respondent who purchase pouch milk in
afternoon and in evening. So, it is clear that most of the consumers purchase the pouch
milk mostly in the morning for breakfast, which is the most important meal of the day.

4.2.2 Purchase of packet of milk at a time

47

Consumption quality varies with various respondents. Some consumers buy less quantity
and some buy large quantity of milk depending upon their requirement and also the size
of their family. The data is collected to know how many packets of milk they purchase at
a time.
Table 5
Number of packets of milk at a time
No. of packets
purchased

Frequency

Percent

One

35

23.30%

Two

74

49.30%

Three

24

16%

Four

6%

More than four

5.30%

Total

150

100%

(Source: Field Survey, 2014)


Table 5 represents the percentage distribution of purchase of pouch milk at one time.
About 23.30% of the respondents said that they purchase only one packet of milk,
49.30% purchase two packets of milk, 16% purchase three packets, 6% purchase four
packets and only 5.30% of the respondents purchase more than four packets of milk.
Therefore, it is evident that most of the consumers prefer to buy two packets of pouch
milk. This may be due to the reasons that in most of the retail shops pouch milk is
available only in early morning therefore consumers tend to buy pouch milk on bulk as
per their requirements.

4.2.3 Brand of milk


This question was asked in order to find out which brand of pouch milk people
purchased/consumed the most and the results are in the figure below:
48

Figure 5
Brand of Milk

(Source: Field Survey, 2014)


From the survey, it was found that 64% of the respondents consume DDC, 17.3%
consume Sitaram, 12% consume Today Milk, 4% consume NDs dairy fresh and 2.70%
consume others. Other brands include KDC, RDC, Nandini, Anmol etc.
Thus, it is clear that the dairy market is dominated by DDC as most of the consumers
prefer DDC over other brands. The reason for DDC being a choice of many is because it
ranks first in collecting milk. The pouch milk offered by the company is most trusted
product by the consumers and as a result DDC is able to retain and attract new
consumers.

4.2.4 Reasons for purchase of the particular brand


There are different reasons for purchasing a pouch milk and it varies among consumers.
Therefore a question based on the reason behind the purchase of the particular brand of

49

pouch milk was asked. There were six options in the questionnaire i.e. Quality,
Availability, Price, Taste, Nutrition and Packaging. The findings are given below:
Figure 6
Reasons behind the purchase of particular brand

(Source: Field Survey, 2014)

Out of 150 respondents 65.30% gave priority to the availability of pouch milk and
61.30% gave priority to quality. The availability of the pouch milk is important when the
respondents decide to purchase pouch milk. Many consumers purchase that brand of
pouch milk which is easily available in the market. The dairy companies know the

50

importance of making their product available to the consumers and thus they create a
strong distribution channel. Since, milk is an edible product; quality of the product surely
plays a vital role in the purchasing decision.
About 40% of the respondents purchase the particular brand because of the taste. Taste is
one of the most important qualities that determine the acceptability of milk. Even though
milk is highly nutritious, people will not drink it if they do not like it. Hence, milk should
be produced under conditions that give good taste initially.
Only about 15.30% of the respondents think price is an important factor when they
purchase because pouch milk is easily affordable compared to its substitute products.
About 16.70% of the respondents say they purchase the milk due to nutrition value.
Since, milk is widely recognized as a nutritious drink for people of all ages it's a good
source of protein, calcium, vitamin D, potassium and other vitamins and minerals.
Although it is important, respondents seem to be indifferent towards the packaging of the
milk as only 8.70% of the people think that packaging is an important factor.
4.2.5 Satisfaction with pouch milk
Although various substitutes to pouch milk are available in the market, ranging from
powered milk to skimmed milk, pouch milk still has a fair share of market. This question
was asked in order to find out whether consumers were really satisfied with pouch milk
over the available substitutes and the findings are represented in table below.

51

Table 6
Satisfaction with pouch milk compared with other substitutes

Satisfaction with pouch milk


compared to other substitute

Frequency

Percent

Highly satisfied

12

8%

Satisfied

84

56%

Neutral

45

30%

Dissatisfied

6%

Total

150

100%

(Source: Field Survey, 2014)


According to the survey the respondents are satisfied with the brands of pouch milk they
are using compared with the other substitutes like powder milk, condensed milk,
skimmed milk etc available in the market. About 8% of the respondents are highly
satisfied, 56% are satisfied, 30% are neutral and 6% are dissatisfied.
4.2.6 Importance of attributes of the product
The main aim of this question was to understand the importance of attributes of the
product that people generally gave importance to. This question also tries to find the
difference between the actual and generally perceived important factors.

Table 7
Importance of attributes of the product
Product

Not

Attributes

all

at Not

so Not

Important

Important

Somewhat

Moderately

Very

Most

Important

Important

Important

Important

Import
ant
52

Price

4.7%

4.7%

22%

32%

19.3%

8.7%

8.7%

Quality

0.7%

5.3%

3.3%

8%

11.3%

18%

53.3%

Freshness

1.3%

2%

3.3%

12.7%

6%

14.7%

60%

Availability

0%

0%

3.3%

12.7%

19.3%

26.7%

38%

Packaging

3.3%

0.7%

8.7%

18.7%

18%

14.7%

36%

Nutrition

0.7%

4%

2.7%

10.7%

8%

14%

60%

(Source: Field Survey, 2014)


Consumers think that nutrition, freshness and quality are important attributes of pouch
milk. Out of 150 respondents, 60 % say that nutrition and freshness is most important
attribute of pouch milk. Similarly, 53.5% say that quality is most important attribute of
pouch milk. On the contrary, price, availability and packaging were not given too much
importance by the respondents.
4.2.7 Satisfied about the product
This was a question to understand the extent to which the consumers were satisfied with
the brand of milk they were consuming. The satisfaction of the brand depends on various
product attributes like price, quality, freshness, availability, packaging and nutrition.
Considering all these product attributes the consumers have given their satisfaction
degree in the survey and the results are as below:

Table 8
Satisfaction about the product
Product

Not at all

Not so

Not

Somewhat

Moderately

Very

Most

Attributes

Satisfied

Satisfied

Satisfied

Satisfied

Satisfied

Satisfied

Satisfi
ed

53

Price

3.3%

9.3%

17.3%

24%

29.3%

11.3%

5.3%

Quality

0%

6%

7.3%

29.3%

25.3%

20.7%

11.3%

Freshness

1.3%

3.3%

15.3%

22.7%

24.7%

18.7%

14%

Availability

1.3%

0.7%

6%

16.7%

24.7%

29.3%

21.3%

Packaging

2%

3.3%

10%

26%

28.7%

21.3%

8%

Nutrition

4%

5.3%

10.7%

24.7%

20.7%

19.3%

15.3%

(Source: Field Survey, 2014)


According to this question, it was proved that among the different attributes, the
consumers give more importance to availability, nutrition, freshness and quality as a
prime factor for being satisfied with the pouch milk they are consuming.
4.2.8 Comparison of mean of attributes of product in general and satisfied about the
product
The variations in mean has been analyzed in the table below in order to see the difference
between what the consumers generally perceive about pouch milk in terms of price,
quality, freshness, availability, packaging and nutrition and whether or not they are
satisfied about these product attributes in reality.

Table 9
Mean of attributes of product in general and satisfied about the product
Importance of

Mean

Satisfied

attributes of

about the

the product

product

54

Mean

Gap

Importance of
price in general

4.17

Importance of
quality in

Satisfied with
the price

4.22

Satisfied with
5.91

the quality

4.81

general
Importance of
freshness in

6.04

Importance of

the freshness

4.78

5.83

the
availability

Importance of

Satisfied with
5.35

the packaging

5.36

4.74

general
Importance of
nutrition in

1.26

Satisfied with

general

packaging in

1.10

Satisfied with

general

availability in

0.47

0.61

Satisfied with
6.03

the nutrition

4.72

general

1.31

(Source: Field Survey, 2014)


Apart from price, consumers feel that pouch milk is not up to the mark in terms of
nutrition, freshness, quality, packaging and availability. The table shows that there is a big
variation in nutrition (1.31). Consumers feel that pouch milk should provide high
nutrition value but they are not getting it in the actual purchase. Likewise there is gap in
freshness (1.26), quality (1.10), packaging (0.61) and availability (0.47).
4.2.9 Modes of Advertisement
Advertisement campaign is the most effective way to convey message to the consumers.
It is found out that advertisement highly influence the buying behavior. With the help of
advertisement campaigns, the milk brand tries to tempt the consumers to purchase the
55

particular brand. This was a ranking question where respondents were asked to rank
among different advertisements modes. The main aim of this question was to understand
the different modes of advertisement that are most effective for the promotions of pouch
milk.
Figure 7
Modes of Advertisement

(Source: Field Survey, 2014)


As shown in the figure above, 60% of respondents say that television is the most effective
means of promotion for pouch milk. Surprisingly, 18% of respondents tend to believe that
internet promotions are more effective than promotions through print and hoarding
boards. This may be due to the fact that people spend large amount of time using internet
than reading magazines. Promotions of pouch milk through hoarding boards and radio
seemed to be least effective from the perspective of respondents.

56

4.2.10 Comparison on the basis of age group and milk brand consumed most
frequently
Cross tabulation has been performed between age group and brand of pouch milk to find
out which age group consumed different brands of pouch milk. Out of 150 respondents
57 respondents were between 1525 age group, 77 respondents were between 2635 age
group and 16 respondents were between 3645 age group. The findings of choice of
pouch milk among this age group are presented in the table below.
Table 10
Cross tabulation between age group and milk brand

Age

Today

ND's Dairy

DDC

Sitaram

Milk

Fresh

Others

39

10

68.40%

7.00%

17.50%

3.50%

3.50%

50

16

64.90%

20.80%

6.50%

6.50%

1.30%

36-45

43.80%

37.50%

18.80%

0.00%

0.00%

16

Total

96

26

18

150

15-25

26-35

Total

57

77

(Source: Field Survey, 2014)


In the age group of 15-25, 68.40% consume DDC, 7% consume Sitaram, 17.50% Today
Milk, 3.50% consume NDs Dairy Fresh and 3.50% consume other brand of milk. Other
brand includes KDC and RDC.
In the age group of 26-35, 64.90% consume DDC, 20.80% consume Sitaram, 6.50%
Today Milk, 6.50% consume NDs Dairy Fresh and 1.30% consume other brand of milk.
Other brand includes Nandini.

57

In the age group of 36-45, 43.80% consume DDC, 37.50% consume Sitaram and 18.80%
Today Milk.
From the above table we can see that DDC is very popular among consumers of all ages,
followed by Sitaram and Today Milk.
4.2.11 Comparison on the basis of milk brand and quality as reason for purchase
The bar chart below represents the comparative analysis between different brands of milk
consumed and quality being the reason for purchase.
Figure 8
Comparison between the brand of milk and the quality as reason for purchase

(Source: Field Survey, 2014)


70.7% of the respondents who consume DDC said that the reason for purchasing the
particular brand was quality. 15.2% for Sitaram for quality, 5.4% for Today Milk, 6.5%
for NDs Dairy Fresh and 2.2% for others. Here other brand includes KDC, RDC and
Nandini.
The figure clearly shows that consumers regard DDC as having higher quality followed
by Sitraram and Today Milk.

58

4.2.12 Comparison on the basis of milk brand and availability as reason for
purchase
The bar chart below represents the comparative analysis between different brands of milk
consumed and availability being the reason for purchase.
Figure 9
Comparison between the brand of milk and availability as reason for purchase

(Source: Field Survey, 2014)


Regarding the availability as the main reason for purchase, 76.5% of the respondents
consume DDC, 11.2% consume Sitaram, 9.2% for Today Milk, 2% for NDs Dairy Fresh
and 1% for other which is KDC.
Thus, this indicates that the consumers preference for any specified brand is affected by
the availability of that particular brand in the market i.e. consumers tend to switch from
one brand to another in case if the particular brand is not available in the market. Also

59

from the figure above we can see that most of the consumers consume DDC because it is
easily available in the market compared to other brands.
4.2.13 Comparison on the basis of milk brand and taste as reason for purchase
The bar chart below represents the comparative analysis between different brands of milk
consumed and taste being the reason for purchase.
Figure 10
Comparison between the brand of milk and taste as reason for purchase

(Source: Field Survey, 2014)


Regarding the taste as the main reason for purchase, 41.70%% of the respondents who
consume DDC said that the reason for purchasing the particular brand is because of taste.
About 26.90 % consume Sitaram for taste, 44.40% for Today Milk and 42.90% for NDs
Dairy Fresh.

60

Thus, this indicates that the consumers preference for any specified brand is affected by
the taste of that particular brand i.e. the consumers considers taste to be the major factor
before purchasing any specific brand.
4.2.14 Comparison on the basis of milk brand and fat content/ nutrition as reason
for purchase
The bar chart below represents the comparative analysis between different brands of milk
consumed and nutrition being the reason for purchase.
Figure 11
Comparison between the brand of milk and fat content/ nutrition
as reason for purchase

(Source: Field Survey, 2014)


Regarding the nutrition as the main reason for purchase, 18.8% of the respondents
purchase DDC, 7.7% purchase Sitaram and 27.8% purchase Today Milk.
4.2.15 Comparison on the basis of milk brand and packaging as reason for purchase

61

The bar chart below represents the comparative analysis between different brands of milk
consumed and packaging being the reason for purchase.
Figure 12
Comparison between the brand of milk and packaging
as reason for purchase

(Source: Field Survey, 2014)


Regarding the packaging as the main reason for purchase, 9.4% of the respondents
purchase DDC, 7.7% purchase Sitaram , 5.60% purchase Sitaram and 3% purchase other
brand which is Nandini.

4.2.16 Comparison on the basis of milk brand and packets of milk purchased at one
time

62

Cross tabulation has been performed between brands of milk and number of packets
purchased. The objective of this cross tabulation is to find out how many packets of milk
are purchased by the consumer at a time. The findings are presented in the table below.
Table 11
Cross tabulation between milk brand and number of packets of milk
Brand of

One

No. of packets purchased


Two
Three
Four

Milk

More

Total

than

DDC

18

53

15

four
5

96

Sitaram

18.80%
8

55.20%
8

15.60%
5

5.20%
2

5.20%
3

26

Today Milk

30.80%
7

30.80%
8

19.20%
2

7.70%
1

11.50%
0

18

NDs Dairy

38.90%
1

44.40%
4

11.10%
1

5.60%
1

0%
0

Others

14.30%
1

57.10%
1

14.30%
1

14.30%
0

0%
0

33.30% 33.30%
Total
35
74
(Source: Field Survey, 2014)

33.30%
24

0%
9

0%
8

150

Out of the total 96 consumers of DDC, 18.80% purchase one packet of milk, 55.20%
purchase two packets, 15.60% purchase three packets, 5.20% purchase four packets and
5.20% purchase more than four packets of milk.
Out of the total 26 consumers of Today Milk, 30.80% purchase one packet of milk,
30.80% purchase two packets, 19.20% purchase three packets, 7.70% purchase four
packets, and 11.50% purchase more than four packets of milk.
Out of the total 18 consumers of Sitaram, 38.90% purchase one packet of milk, 44.40%
purchase two packets, 11.10% purchase three packets, and 5.60% purchase four packets
of milk at one time. Out of the total 7 consumers of NDs dairy, 14.30% purchase one
packet of milk, 57.10% purchase two packets, 14.30% purchase three packets, and

63

14.30% purchase four packets. Out of the total 3 consumers of others (KDC, RDC, and
Nandini), 33.30% purchase one packet of milk, 33.30% two packets and 33.30%
purchase three packets of milk.
4.2.17 Comparison of mean of product attributes according to the gender
Products have different attributes like quality, availability, price, taste, nutrition,
packaging etc. The attributes of the product plays a vital role in buying behavior. The
perception of gender also plays a crucial role for these different attributes of a product.
The way males decide on the purchase of the product might be different from the
females. For different attributes of the product, the importance placed by male or female
might be different. The objective of this comparison is to find out the importance of
product attributes according to the gender. The findings are presented in the table below.
Table 12
Mean of product attributes according to the gender
Attributes
Male
Female
Total
Mean
Mean
Mean
Quality
4.19
4.49
4.35
Availability

4.07

4.24

4.16

Price

3.29

3.45

3.38

Taste

2.91

2.95

Nutrition

4.15

4.47

4.32

Packaging

3.25

3.12

3.18

(Source: Field Survey, 2014)


The mean in male regarding the quality attribute of the product is 4.19 and in the case of
female is 4.49. Thus, females give more importance to the quality to the product.
The mean in male regarding the availability attribute of the product is 4.07 and in the
case of female is 4.24. Thus, females give more importance to the availability attribute to
the product.

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The mean in male regarding the price attribute of the product is 3.29 and in the case of
female is 3.45. Thus, females give more importance to the price to the product.
The mean in male regarding the taste attribute of the product is 3 and in the case of
female is 3.12. Thus, females give more importance to the taste to the product.
The mean in male regarding the nutrition attribute of the product is 4.15 and in the case
of female is 4.47. Thus, females give more importance to the nutrition to the product.
The mean in male regarding the packaging attribute of the product is 3.25 and in the case
of female is 3.12. Thus, males give more importance to the packaging to the product.
4.2.18 Comparison of mean of satisfaction level and the brand of milk
When consumers are satisfied with a particular brand of product, they tend to stay loyal.
There are usually many reasons pertaining to this phenomenal. Price, quality, availability
and promotions etc. are important factors that determine the brand loyalty of consumers.
When companies set the right mix of these various factors there is hardly any brand
switch among consumers. The main aim of this question is to understand to what extend
the consumer are satisfied with the brand of milk they are consuming and likely to stay
with the same brand in the future.

Table 13
Mean of satisfaction and the brand of milk
Milk Brand

DDC
Mean

Sitaram
Mean

Today Milk
Mean

NDs Dairy
Mean

Others
Mean

I am satisfied
with the brand
of milk that I

1.65

1.80

65

consume.
I am satisfied
with the price.

2.73

I will
2.26
purchase the
same brand
even if the
price
increases.
I believe that
2.06
my choice of
brand has the
superior
quality.
I will continue
2.11
to use the
brand in the
future.
I will
2.1
purchase the
same brand
even in the
absence of the
promotions.
I recommend
2.13
the brand to
the others.
I am satisfied
2.34
with the
availability of
the product in
the market.
(Source: Field Survey, 2014)

2.69

2.20

2.14

2.33

2.91

2.43

2.28

2.27

2.86

2.67

2.31

2.27

3.33

2.44

3.07

2.43

2.67

2.38

2.33

2.67

2.75

2.47

2.33

According to the survey, regarding the satisfaction of the brand, the consumers are highly
satisfied. Regarding the price, the consumers of NDs Dairy Fresh are highly satisfied.
Even in the absence of the promotions, the consumers of DDC brand are more likely to
purchase it. Also, the consumers of DDC believe that their brand has superior quality.
DDC consumers will continue to use the brand in the future and will also recommend the
brand to others.

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CHAPTER 5
SUMMARY AND CONCLUSION

67

5.1 SUMMARY OF FINDINGS


This study is done to acquire the consumers buying behavior of pouch milk in
Kathmandu valley. A detailed analysis of the consumer brand preference among
consumers is done in this report. For this purpose, questionnaire consisting of 18
questions and 150 respondents was taken as a sample size. On the basis of the study
undertaken in the area, the following conclusions can be made regarding consumers
buying behavior of pouch milk in Kathmandu Valley. Following are the major findings
from the survey:

About 81.3% of the consumers purchase the pouch milk in the early morning and
18.7% of consumers dont have the fix time of purchase. It indicates that most of the
consumers purchase the pouch milk mostly in the morning for their breakfast.

The study found out that about 49.30% of the consumers prefer to buy two packets of
pouch milk. In most of the retail shops pouch milk is available only in early morning
therefore consumers tend to buy pouch milk on bulk as per their requirements.

The findings show that DDC is the most preferred brand by the consumers. Since,
DDC is the first national dairy of Nepal; it ranks first in collecting milk. The pouch
milk offered by the company is most trusted product by the consumers and as a result
DDC is able to retain and attract new consumers.

It is found that the main reasons for the purchase of a particular brand of milk are the
availability and the quality. The survey shows that 65.30% of consumers purchase the
particular brand of milk due to its availability and 61.30% for its quality. Consumers
can easily switch to other brand in case of unavailability of preferred brand. There are
many alternative milk brands available in market but consumers seems to prefer those
brands only which they have the perceived quality and which is easily available in the
market.

The finding shows that about 56% of the respondents are satisfied with the pouch
milk they are consuming in comparison with other substitutes such as powder milk,
skimmed milk, toned milk, etc available in the market.
68

Among the different attributes, the consumers gave more importance to availability,
nutrition, freshness and quality as a prime factor for being satisfied with the milk
product they are consuming.

The finding shows that 60% of respondents say television is the most effective means
of promotion for pouch milk. Surprisingly, 18% of respondents tend to believe that
internet promotions are more effective than promotions through print and hoarding
boards. This may be due to the fact that people spend large amount of time using
internet than reading magazines. Promotions of pouch milk through hoarding boards
and radio seemed to be least effective from the perspective of customers.

The most important product attributes that consumers generally gave importance are:
freshness, nutrition and quality. Consumers give their higher preference towards
freshness and nutrition of the particular brand.

As per the findings, DDC is the popular milk brand among consumers of all age
groups followed by Sitaram and Today milk.

Comparing DDC with Sitaram, Today Milk, NDs Dairy and others, it is found that
70.70% of respondents perceive DDC has quality, 15.20% for Sitaram and 5.40% for
Today Milk. About 76.50% of the respondents perceive that DDC is highly available
in the market followed by Sitaram and Today Milk. Similarly, 44.40% of the
respondents perceive that Today Milk is tastier than other milk brands. From the
finding it shows that people do not give much importance to nutrition and packaging.

5.2 RECOMMENDATION
On the basis of the findings of the present study, the following recommendations are
advice to the dairy companies.

In order to increase the availability of the pouch milk, the dairy companies should
increase the production volumes. Consumers can easily switch to other brand in case
of unavailability of their preferred brand. As there are many alternative milk brands
available in market, it is very easy for consumers to switch from one brand to other. It

69

is therefore recommended that pouch milk should be accessible to consumers in every


consumer outlet.

All pouch milk contents 500ml of milk. So, the consumers have limited options. They
have to buy 500ml packet of milk even though they may need less or greater amount
of milk. So, if the companies make 250ml and 1000ml as other options it will be
appropriate for all kinds of consumers.

Dairy industry should more focus to improve the safety and quality of the product
through a pricing system which provides strong incentives for farmers and other value
chain actors to improve product quality.

Taste also plays an important role for using the preferred brand. So, all the dairy
companies should concentrate on taste.

Media and promotions play an important role in buying behavior of consumers. So,
dairy companies have to use media and promotions in an effective and better way.

Apart from the advertisements and other promotion tool, the dairy companies should
sponsor various kinds of programs and sport festivals. For e.g. Sponsoring
entertainment programs in television, organizing football tournaments, cash prizes to
national celebrity etc. will help the companies to create brand image in the market.

5.3 CONCLUSION
Milk is an important human food. It is palatable, easy to digest and highly nutritious. It
contains protein, fat, lactose, minerals and vitamin. Today, many Nepalese consumers are
being more and more conscious about the healthy diet. Due to many reasons like rapid
growing population, consumers being conscious about health diet etc, dairy products
demand made many entrepreneurs to establish dairy companies in Nepal. In the field of
dairy, before restoration of democracy there was only one company, Dairy Development
Corporation (DDC, Nepal) to supply the dairy product in the country. After the
restoration of democracy, due to the changes in the government policies, private sector
70

also entered in this filed. Today, there are many private dairies various sizes both within
and outside the Kathmandu valley. Prominent among the private dairies with modern
milk processing facilities are Nepal Dairy, Himalaya Dairy, Sitaram Dairy, Anmol Dairy,
Kathmandu Dairy, Adhunik Dairy etc in Kathmandu Valley; Sujal Dairy in Pokhara
Valley, and Kamdhenu Dairy in Sunsari.
The consumption of milk has become more popular in the market of Kathmandu Valley
from the past years due to the changing lifestyle of the people. People rarely consume
cows and buffaloes milk these days. With the rapid urbanization, these pouch milks have
become more popular. As the demand for pouch milk is growing rapidly, DDC has
successfully able to meet the requirement of consumer in both the rural and urban area.
Since, DDC is the first national dairy of Nepal; it ranks first in collecting milk. The pouch
milk offered by the company is most trusted product by the consumers and as a result
DDC is able to retain and attract new consumers. Therefore, other dairy companies
should also pay attention to strengthen the value chain to deliver quality product to the
customers.
Also, there are various milk brands introduced to the consumers through different
mediums such as TV advertisements, print media, radio, hoarding board and social media
marketing. There is high competition among the existing milk brands in the market as
there are various substitutes available in the market and in addition new brands are
emerging which leads to heat up the competition among the existing brands.
Maintenance and upgrading the quality of the milk products have been the major concern
among the consumers. Since, the hygienic quality of milk in Nepal indicated that the
current situation needs real improvement and lack of refrigeration facilities of milk
during transportation from production to site. There should be better engagement of the
private sector in both the formal and informal sub-sectors. Dairy industry should
strengthen the linkages between farmers and consumers to deliver a quality product at a
fair price through improving farmer access to marketing channels, increasing
opportunities for smallholders to access the formal sector, strengthening price incentives
to deliver quality milk, creating competitive supply chain conditions, creating fair and
transparent pricing systems, diversifying the range of dairy products on offer, educating
71

consumers on the nutritional benefits of dairy products, stimulating, consumer demand


and reducing losses in the dairy chain. There need to be experiment with strategies for
identification, evaluation and on-farm testing of feed-related interventions through the
activities of local stakeholder platforms. Such approach will lead to information on what
feeding strategies work and are economically viable at the level of dairy cow productivity
and dairy enterprise sustainability.

BIBLIOGRAPHY
Acharya, H. (June, 2009). Supply Chain Challenges in Dairy Development
Corporation, Nepal.
Acharya, S. (2013, November 27). Dairy at low capacity due to milk shortage.
The Kathmandu Post.
Acharya, S. (2013, September 1). Demand for milk products soars as Teej
approaches. The Kathmandu Post.
Agrawal, G. (1999). Marketing Management in Nepal.
Koirala, K. (1999). Marketing Management.
Kotler, P. &. (1999). Principles of Marketing.
72

Kotler, P. (1997). Marketing Management, Analysis & Planning,


Implementations & Control.
Panchal, S. (2010). Consumer preferance and brand recallability of Baroda
Dairy product in Baroda City. Anand Institute of Management.
Patil, B. (March, 2011). Consumer Buying Behavior of Srikirshna Milk.
Rees, A. (1992). Factors influencing consumer choice. Journal of Society of
Dairy Technology.
S, S. S. (2009). Customer bonding towards Amul Milk and Milk Products .
Samuel, R. (2009). Consumer Behavior and Satisfaction for Amul Milk.
Shakya, K. (2011). Consumer Buying Behavior and Satisfaction of pouch milk.
ACE Institute of Management.
Smith, N. (2000). A study of milk marketing by selected dairy companies in
Port Elizabeth. Port Elizabeth Technikon.
UN, C. (June, 2010). Dairy Sector Study of Nepal.
Vaidya, M. (2011). Consumer Buying Behavior in regards on Pasteurized milk
market. ACE Institute of Management.
Virdi, S. (2007). Consumer behavior regarding branded milk vis-a-vis
unbranded milk. Indian Management Studies Journal, 11. 105-125.
William, J. (1994). Fundamental of Marketing.
William, S. (1978). Fundamentals of Marketing.

APPENDICES
Consumer Buying Behavior of pouch milk
I am a MBA student of SAIM College and I am conducting a survey on Consumer
Buying Behavior on pasteurized milk, as a part of my Graduate Research Project
to fulfill the course requirement of MBA, Pokhara University. Please spare few
minutes to fill this questionnaire. I assure you that the information and responses
that you provided in this questionnaire will be kept highly confidential and used
only for my academic purpose.
1. Gender:

73

Male

Female

2. Age:
15-25

26-35

36-45

Above 45

3. Marital Status:
Single

Married

4. Education:
SLC

+2

Bachelors

Maters

Others (Please Specify)

5. Occupation:
Student

Business

Unemployed

Housewife

Others (Please Specify)


6. Do you use pouch milk?
Yes

No

7. What time of the day do you purchase pouch milk?


Mostly in the morning

Mostly in the afternoon

Mostly in the evening

Not fixed, we buy it as we need

74

8. How many packets of pouch milk do you purchase at one time?


One

Two

Three

Four

More than four

9. Which brand of milk are you consuming frequently? (Please tick only one)
DDC

Today Milk

Sitaram

NDs Dairy Fresh

Others (Please specify)

10. What are the reasons behind the purchase of the particular brand? (Multiple
Choice)
Quality
Availability
Price
Taste
Fat Content/ Nutrition
Packaging

11. How satisfied are you with the pouch milk compared with the other substitutes
(example: powder milk, condensed milk, Skimmed milk) available in the
market?

Highly Satisfied

Neutral

75

Highly
Dissatisfied

12. Are you satisfied with the price that you pay for the particular brand?
Yes

No

13. Rate the following attributes of the product (in general) in terms of their
importance in pouch milk. ( 1 being the least important and 7 being the most
important)

Price
Quality
Freshness
Availability
Packaging
Nutrition

14. How much satisfied you are about the product (the one which you purchase
more often) in terms of the following attributes? ( 1 being the least important
and 7 being the most important)
1

Price
Quality
Freshness

76

Availability
Packaging
Nutrition

15. In case of the unavailability of your preferred brand, which other brand of milk
do you purchase? (Only one name)

16. Please rank (1 being most important and 5 being the least important) the
following modes of advertisement for pouch milk in terms of their importance.
Television Advertisement

Print Advertisement

Radio Advertisement

Hoarding boards

Internet Promotions

17. Please indicate how far you agree with the following statements:
Statements

Strongly
Agree

Agree

I am satisfied with the


brand of milk that I
consume.

77

Neutral

Disagree

Strongly
Disagree

I am satisfied with the


price.
I will purchase the same
brand even if the price
increases.
I believe that my choice
of brand has the superior
quality.
I will continue to use the
brand in the future.
I will purchase the same
brand even in the
absence of the
promotions.
I recommend the brand
to the others.
I am satisfied with the
availability of the
product in the market.

Would you like to recommend or suggest anything to the brand of milk you
are consuming?

18.

78