CHAPTER 1

INTRODUCTION

1
1.1 Introduction

Toilet soap industry is one of the oldest Fast Moving Consumer Goods
(FMCG) industry in India. It is among the highest penetrated category
within FMCG sector reaching an estimated 95% urban and 87% of the
rural households. It is also a sector which is characterized by a high level
of intense competition. The competitors in this sector ranges from MNC’s
like Unilever, Henkel, P&G to local bigwigs like Wipro, Nirma and
Godrej.

With an array of products in all category of soap markets HUL is the

market leader in all category. They are the leaders in economic category
with Lifebuoy, in popular category with Lux and in premium category
with Dove. There is a paradigm shift taking place in toilet soap industry.
The economic category which used to be the most popular category in the
past has been experiencing sluggish growth for the past few years. The
premium category and the popular category are the sectors which are
experiencing high growth rate. The popular and economy segments
account for about four-fifths of the entire market for soaps. The future
growth of toilet soap is in the premium category.

To fight competition, major players HUL, GCPL, Dabur India and Wipro
consumer care & lighting are now drawing up fresh game plans. And the
accent is clearly on the innovation to gain mind share as well as market
share in this overcrowded category.

2
Toilet soaps, despite their divergent brands, are not well differentiated by
the consumers. It is, therefore, not clear if it is the brand loyalty or
experimentation lured by high volume media campaign, which sustain
them. A consequence is that the market is fragmented. It is obvious that
this must lead to a highly competitive market. Toilet soap, once only an
urban phenomenon, has now penetrated practically all areas including
remote rural areas. The incremental demand flows from population
increase and rise in usage norm impacted as it is by a greater concern for
hygiene. Increased sales revenues would also expand from up gradation of
quality or per unit value.

As the market is constituted now, it can be divided into four price

segments: premium, popular, discount and economy soaps. Premium soaps
are estimated to have a market volume of about 80,000 tonnes. This
translates into a share of about 14 to 15%. However, by value it is as much
as 30%.

Soaps are also categorized into men's soaps, ladies' soaps and common
soaps. There are a few specialty soaps as transparent Glycerine soaps,
sandal soaps, specially flavored soaps, medicated soaps and baby soaps.
Specialty soaps are high valued but enjoy only a small share of the market
in value terms.
The market is growing at 7% a year. This means that the incremental
demand generation is 5% over and above the population growth. With
increasing awareness of hygienic standards, the market could grow at a
rate higher than 8% annually. Interestingly, 60% of the market is now
sourced from the rural sector. This means that the variance between the

3
two segments is not very large. Since upper-end market focus is the urban
areas, margins come from the urban sector.

1.2 Objectives of the study

• To find out brand preference of customers in a particular town.
• To find out category preference.
• To find out brand loyalty of customers.
• To find out the source of influence of customer purchase.
• To rank the various attributes while selecting a brand.

1.3 Scope of the study

• This study helps to understand the consumer buying pattern. This
study helps to understand the consumer buying pattern.
• The result can be used in deciding the channel selection for
distribution of toilet soap.

1.4 Research Methodology

The present study is carried out among the toilet soap users in Kolenchery
town, to study the consumer buying behaviour with respect to the same.
The task of data collection begins after a problem has been defined and
research design/plan chalked out. While deciding about the method data
collection, the research should keep in mind two types of data viz, primary
and secondary. The primary data are those which are collected fresh and
for the first time and thus happen to be original in character. The
secondary data are those which have already been collected by someone
else and which have already been passed through the statistical process.

4
Population and size of the sample:
A sample of 30 respondents was taken for the study. Convenience
sampling method was used.
Data Collection:
Primary Data
A structured questionnaire was prepared and data was collected from
respondents. The sampling technique used in this survey is convenience
sampling.
Secondary Data
Data on industry profile and market profile has been collected from text
books, periodicals, brochures and internet.
Tools used for data collection:
Data was collected by using a self-constructed questionnaire from 30
respondents. The study was conducted for a period of two weeks.

Statistical Analysis:
Percentage analysis has been used for analysis and interpreting data.
Analysed data are displayed in the form of table, pie chart and bar chart.
Chi-square test is conducted to determine the acceptability of the null
hypothesis formulated for the study.

1.4 Limitation of the study

The study was conducted on a small sample size of 30 respondents due to

time and other resource constraints.

5
 CHAPTER 2
INDUSTRY PROFILE

6
FMCG sector is one of the largest growing sectors in Indian market. The
FMCG sec provides largest amt of revenue. In this sec, there are lots of
companies competing with each other. FMCG refers to consumer non-
durable goods required for daily or frequent use [1]. Typically, a consumer
buys these goods at least once a month.
Some FMCG Products are:
Detergents
Toilet soaps
Toothpaste
Shampoos
Creams
Powder
Food products
Confectionaries
Beverages
Cigarettes

Typical characteristics of FMCG products:

1. Individual products are of small value. But all FMCG products put
together account for a significant part of the consumer’s budget.

2. The consumer keeps limited inventory of these products and prefers

to purchase them frequently, as and when required.

3. Many of these products are perishable.

7
 4. The consumer spends little time on the purchase decision. Rarely
does he/she look for technical specifications.

5. Brand loyalties or recommendations of reliable retailer/ dealer drive

purchase decision.

6. Trial of new product, i.e. brand switching is often induced by heavy

advertisement, recommendations of the retailer or friends.

7. These products cater to necessities, comfort as well as luxuries.

Toilet soap industry in India: [1]

Toilet soap industry is one of the oldest FMCG industries in India. It is
among the highest penetrated category within FMCG sector reaching an
estimated 95% urban and 87% rural households. Soaps form the largest pie
of FMCG market with bathing and toilet soaps accounting for around 30%
of the FMCG market. In value terms the industry is worth Rs 6500 Cr.
And in volume terms it is worth 6 million as of 2008. The Indian toilet
soap industry is growing at approx 3-4 % in volume terms and around 10%
in value terms. Penetration of toilet soaps is high at 88.6%.. However per
capita consumption levels remain low India’s per capita consumption of
soap at 460 gms/ annum is lower than that of Brazil at 1100 gms per
annum. The main characteristics of the industry were severe competition
and high level of brand proliferation. The prod categories can be classified
into 3 segments.

8
 • Premium soap category (>Rs. 25 for 75gm)
- Lux, Dove, Pears etc.
• Popular soap category (Rs. 15-25 for 75 gm)
- Cinthol, Dettol etc
• Economic soap category (<Rs. 15 for 75 gm)
- Lifebuoy, Godrej No.1, Santoor etc

Raw materials for soap:

[11]
Soap requires two major raw materials: fat and alkali. The alkali most
commonly used today is sodium hydroxide. Potassium hydroxide can also
be used. Potassium-based soap creates a more water-soluble product than
sodium-based soap, and so it is called "soft soap." Soft soap, alone or in
combination with sodium-based soap, is commonly used in shaving
products.

Animal fat in the past was obtained directly from a slaughterhouse.

Modern soap makers use fat that has been processed into fatty acids. This
eliminates many impurities, and it produces as byproduct water instead of
glycerin. Many vegetable fats, including olive oil, palm kernel oil, and
coconut oil, are also used in soap making.

Additives are used to enhance the color, texture, and scent of soap.
Fragrances and perfumes are added to the soap mixture to cover the odor
of dirt and to leave behind a fresh-smelling scent. Abrasives to enhance the
texture of soap include talc, silica, and marble pumice (volcanic ash). Soap
made without dye is a dull grey or brown color, but modern manufacturers

9
color soap to make it more enticing to the consumer. The steps in the
continuous process of making soap are explained below.

Splitting
The first step of the continuous process splits natural fat into fatty acids
and glycerin. The equipment used is a vertical stainless steel column with
the diameter of a barrel called a hydrolizer. It may be as tall as 80 feet (24
m). Pumps and meters attached to the column allow precise measurements
and control of the process. Molten fat is pumped into one end of the
column, while at the other end water at high temperature (266°F [130°C])
and pressure is introduced. This splits the fat into its two components. The
fatty acid and glycerin are pumped out continuously as more fat and water
enter. The fatty acids are then distilled for purification.

Mixing
The purified fatty acids are next mixed with a precise amount of alkali to
form soap. Other ingredients such as abrasives and fragrance are also
mixed in. The hot liquid soap may be then whipped to incorporate air.

Cooling and finishing

The soap may be poured into moulds and allowed to harden into a large
slab. It may also be cooled in a special freezer. The slab is cut into smaller
pieces of bar size, which are then stamped and wrapped. The entire
continuous process, from splitting to finishing, can be accomplished in
several hours.

10
Milling
Most toiletry soap undergoes additional processing called milling. The
milled bar lathers up better and has a finer consistency than non-milled
soap. The cooled soap is fed through several sets of heavy rollers (mills),
which crush and knead it. Perfumes can best be incorporated at this time
because their volatile oils do not evaporate in the cold mixture. After the
soap emerges from the mills, it is pressed into a smooth cylinder and
extruded. The extruded soap is cut into bar size, stamped and wrapped.
Glycerin is a very useful byproduct of soap manufacture. It is used to
make hand lotion, drugs, and nitroglycerin, the main component of
explosives such as dynamite.

Distribution Network
Soaps are available in 5 million retail outlets in India, 3.75m of which are
in the rural areas. Therefore the availability of these products is not a
problem. 75% of India’s population is in the rural areas; hence about 50%
of the soaps are sold in the rural markets.

Growth
Rural demand growth is expected to occur mainly with consumers moving
up towards premium products. But in the past, the proportion of premium
soaps to economy soaps has not changed much, in volume terms. This is
because as some consumers move up the value chain with increase in
disposable incomes, some consumers move down looking for cheaper
substitutes as prices move up. This has been the case especially, as growth
in soap prices has generally outpaced overall consumer inflation.

11
Indeed innovation has encompassed product. Forms as well as companies
have products that could once be found only on in hand up squeeze tubes
not to mention liquid soaps in pump raising the consumers outlay on
personal hygiene is vast even where usage penetration is high. In village
heat and dust is reason enough to press on. Most soap marketers are busy
making the best; of what they can overall a sharpened consumer focus has
meant better corporate performance.

Overview of the Indian Soap Category [2]

India is a vast country with a population of 1,030 million people.
Household penetration of soaps is 98%. People belonging to different
income levels use different brands, which fall under different segments
(see table below), but all income levels use soaps, making it the second
largest category in India (detergents are number one). Rural consumers in
India constitute 70% of the population. Rural demand is growing, with
more and more soap brands being launched in the discount segment
targeting the lower socio-economic strata of consumers.

Brand Positioning
Soap manufacturers originally targeted their products to the lowest income
strata in urban as well as rural areas, positioning their brands as a way to
remove dirt and clean the body. For some brands, that positioning persists
even today with a focus on removal of body odour and keeping the user
healthy. However, soap positioning is moving towards skin care as a
value-added benefit.

12
Consumer Preferences
Consumer preferences are varied and are more regionally specific. India is
divided into four regions: North, East, West, and South.
Consumers in the North prefer pink coloured soaps, which have floral
profiles. Here the fragrance preference is for more sophisticated profiles
reflecting their lifestyles. Freshness soaps with lime and citrus notes are
also popular preferences as the climate in the North is very hot and
citrus/lime scented soaps are seen to be refreshing.
The East is not a big soap market; hence no particular preference skews.
Consumers in the West exhibit preferences for strong, impactful
fragrances and somewhat harsher profiles compared to the North.
Preferences are more for the pink soaps with floral fragrances, primarily
rose, which are positioned on the beauty platform.
In the South, the skew is towards specific soap segments like the
Herbal/Ayurvedic profiles and also the Sandal profiles. Consumers here do
not exhibit high brand loyalty and are ready to experiment and try out new
brands. Hence, most fast moving consumer goods companies tend to
launch their new brands in these markets, which they call test launch
markets.

Marketing
Soap is primarily targeted towards women, as they are the chief decision-
makers in terms of soap purchase. Medicated positioning like germ killing
and anti-bacterial are marketed to families.
Toilet soap market in India is a highly fragmented mkt. there were 45
leading national brands. None of the national brands had more than 5%
market share and many more regional and unorganised sec/local brands.

13
HUL was the market leader with about 30 toilet soap brands with a total
market share of 53.2% in 2007. GCPL continues to be the second largest
toilet soaps player with a market share of 9.4% for the toilet soap category.

Global market of soaps

The global market for soaps is dominated by a small number of

multinational companies with strong brand identity and enormous
advertising budgets. There is cut-throat competition between these
multinationals. The top global players include Unilever, Procter and
Gamble, Colgate Palmolive and Johnson & Johnson.

Rationalization is taking place among large players as a strategy in terms

of the Brand portfolios. This means concentration on a small number of
key brands and dropping non-performing brands. Such streamlining allows
the manufacturers in general to improve margins by lowering costs for
sourcing manufacturing and distribution. Creating a strong brand name
through advertising is a primary strategy used by most companies in the
industry. They then diversify the brand into another sector or sectors,
thereby benefiting from the brand’s consumer image. Despite the
increasing number of brands and products on the global market,
established brands from the key global players such as Unilever, Johnson
& Johnson, Colgate-Palmolive etc. are proving difficult to displace.
Though these manufacturers' brands are more expensive than national
brands and privately labelled products, consumers seem to prefer familiar
trusted brands.

14
 CHAPTER 3
LITERATURE REVIEW

15
Consumer Behaviour
Belch and Belch define consumer behaviour as the process and activities
people engage in when search for, selecting, purchasing, using,,
evaluating, and disposing of products and services so as to satisfy their
needs and desires. The basic model of consumer decision making involves:

• Problem recognition
• Information search
• Alternative evaluation
• Purchase decision
• Post purchase evaluation

Factors affecting buying behavior

Price is the most important factor which effects the buying behavior of
consumer, by which a consumer goes for the various segment of soap like
premium, popular, sub-popular and carbolic which are basically decided
by the cost factor and fat content in the soap.

The buying frequency is either monthly that is done by the families or in

case of bachelors it is more than once in a month. The occasions when
premium soaps are purchased are usually when there are festivals and
ceremonies. Moti soaps are usually presented during festivals and
occasions for presents and gifts.

16
The promotional techniques help to boost sales. Various tactics like the
price off’s, buy one get two free, free gifts and other schemes help boost
sales in short run and also help in clearing stocks.

One of the important points a soap marketer should note is that the soaps
are usually purchased by women in urban areas as most of the day to day
consumption of personal care products are made by women. A point to
note is that women use more personal care product than men do and hence
premium soaps are mostly targeted at them. Men normally make purchase
decisions in rural areas. Hence the marketer has to adopt different strategy
for such a market.
Penetration
One of the factors, which affect the demand of soaps, is the penetration,
which the products have in market. In case of soaps this has not been a
major issue as the penetration in the rural area is as high as 97% and that
for urban area is around 99%. Thus the approximately the penetration is
around 99% for overall India.

Chi-Square Test [15]

The chi-square (I) test is used to determine whether there is a significant
difference between the expected frequencies and the observed frequencies
in one or more categories. Do the numbers of individuals or objects that
fall in each category differ significantly from the number you would
expect? Is this difference between the expected and observed due to
sampling error, or is it a real difference?

Chi-Square Test Requirements [5]

17
1. Quantitative data.
2. One or more categories.
3. Independent observations.
4. Adequate sample size (at least 10).
5. Simple random sample.
6. Data in frequency form.
7. All observations must be used.

The chi-square formula used on these data is

X2 = (O - E)2/ E

Where,
O is the Observed Frequency in each category
E is the Expected Frequency in the corresponding category
df is the "degree of freedom" (n-1)
X2 is Chi Square

18
 CHAPTER 4
DATA ANALYSIS AND
INTERPRETATION

19
The purpose of the questionnaire was to identify the usage and buying
pattern of the consumers of toilet soap. For this, questionnaires were
administered to 30 respondents. The analysis is done on the basis of the
answers given by the respondents to the questionnaire.

4.1 General Information

4.1.1 Age group

This consists of classification of respondents according to age group. The

following pie chart illustrates this.
Age Group Frequency Percentage
15-25 1 3
26-35 9 30
36-45 14 47
Above 45 6 20
Total 30 100

20
 Fig 1: Classification according to age group

The age groups of the respondents are divided into certain range and the
range is 10. The ages are grouped as 15 to 25, 26 -35, 36-45 and above 45.
Here majority of the respondents belong to the age group of 36 to 45 and is
about 47%. 30% of them are from the age group of 36 to 35.

4.1.2 Gender wise classification

The respondents group includes males and females. 57% of the
respondents are females and 43 % are males. There is high proportion of
females.

Gender Frequency Percentage

Female 17 57
Male 13 43

21
Total 30 100

The following bar graph will illustrate the gender wise classification.

Fig 2. Gender wise classification

4.1.3 Marital Status

The respondents are classified into married and single to see any
difference in the usage pattern and the buying behaviour. The respondents
are 10% single and the rest 90% are married which shows a comparable
distribution for the analysis. The data analysed is shown in the table
below.
Frequenc Percenta
Marital Status y ge
Single 3 10
Married 27 90
Total 30 100

22
Hence majority of the user base lies in the married youth but the unmarried
people also forms a comparable share in the bar graph.

Fig 3: classification based on marital status

4.1.4 Occupation
The respondents group includes 3 categories of people- employees,
professionals, self-employed and others. The employed group forms the
chunk of the user base as per the research with 44%. Professionals form
37% of the population. The data in table format is shown below.
Category Frequency Percentage
Employed 13 44
Self-
Employed 4 13
Professional 11 37
Student 0 0
Others 2 6
Total 30 100

The analysed data is illustrated in the following bar graph.

23
Fig 4: classification based on occupation.

4.1.5 Usage pattern of soap

The usage pattern has been divided as per the frequency and includes
alternate days, once a day, twice a day and others.
Frequenc
Usage Pattern y
Once a day 11
Twice a day 17
Alternate days 0
Others 2
Total 30
The percentage of respondents who uses soap twice a day forms the
maximum. This is illustrated in the bar graph shown below.

24
Fig 5: based on usage pattern.

4.1.6 Using Specific Brand

Frequency of the people using a specific brand for a considerable period of
time constitutes 34% of the population. The remaining doesn’t have a
specific brand preference. This is illustrated in the following bar graph.
From the bar graph we can find that more than half of the respondents are
those who does not use a specific brand for a considerable period of time.
This shows that brand loyalty among soap buyers in Kolenchery is very
low.

Fig 6: specific brand preference

4.1.7 Brand Preference

The most popular soap brand among the customers is Lux. Pears is the
second popular soap among the respondents. The preference is shown in
the bar diagram shown below.

25
Fig 7: brand preference.

4.1.8 Category of soap

Popular category soaps forms the most popular among the respondents.
More than 50% of the customers favours popular category. It includes
brands like lux, pears, cinthol, hamaam etc. The following bar graph will
illustrate this.

Fig 8: category preference.

4.1.9 Buying behaviour when brand is not available

When a brand is not available in the store the possible events from the
consumer side can be- select another brand, go to another outlet for
purchasing that particular brand or postpone the purchase to buy that

26
particular brand. The buying behaviour is illustrated in the bar graph
shown below.

Fig 9: buying behaviour when brand is not available.

4.1.10 Preferred Packet size

Out of the sample surveyed majority of the people purchase 75 gm
packets. The second position is for 125 gm packets. This is illustrated in
the bar graph shown below.

Fig 10: Packet size preference.

4.1.11 Store preference

27
From the survey it’s found out that majority of the people prefer to buy
soaps from supermarkets. This may be due to the popping up of large
number of supermarkets across Kolenchery town. Thus it is essential for
soap companies to formulate strategies focused on customers who buy the
product from supermarkets. This is illustrated in the bar graph shown
below.

Fig 11: store preference.

4.1.12 Purchase decision

Purchase decision of the consumers is governed by different factors. Prior

experience of the product is the major factor that influences purchase
decision. Majority of the respondents subscribed this as the major factor.
This is illustrated in the bar graph given below.

28
Fig 12: factors affecting purchase decision.

4.1.13 Factors to be considered in soaps for ranking

From the survey it is found that quality of soap is the paramount criteria
while selecting soap. Brand name of the product is another criterion along
with the fragrance of the soap. Price is another criterion which is rated
high but is found to have less rating than quality.

This shows a shift in consumer taste from being price conscious to quality
conscious. This data shows that customers tend to have a liking for quality
products and for famous brands. The various factors are ranked from 1 to
7. The highest rank, i.e. 7 is for quality and the last rank, i.e. 1 is for
packaging. This is illustrated in the following diagram.

29
Fig 13: ranking of factors.

4.2 CHI-SQUARE Test

4.2.1 Age group and specific brand preference

Age group Using specific brand Total

Yes No
15-25 0 1 1

26-35 4 5 9

36-45 5 7 12

Above 45 1 7 8

30
 Total 10 20 30

Null Hypothesis (H0):

The brand preference is independent of different age groups.
Chi-square test:

Observed Value Expected Value (Oij – Eij )2/Eij

0 0.333 0.333
1 0.666 0.1675
4 3 0.333
5 6 0.1666
5 4 0.25
7 8 0.125
1 2.666 1.0410
7 5.333 0.5210

df= (c-1)(r-1)= (2-1)(4-1)=3

χ2 = Σ (Oij – Eij )2/Eij [14] = 2.937

The table value of χ2 for 3 degree of freedom at 5 per cent level of

significance is 7.815. Since the calculated value of χ2 is much less than the
table value the null hypothesis is accepted.

4.2.2 Age group and usage

Age Alternate Once a Twice a Others total

31
 group days day day
15-25 0 0 1 0 1

26-35 0 1 7 1 9

36-45 0 6 8 0 14

Above 45 0 4 1 1 6

Total 0 11 17 2 30

Null hypothesis (H0):

Soap usage pattern is independent of different age groups.

Chi-square test:
χ2 = Σ (Oij – Eij )2/Eij = 8.488

Degree of freedom is 9 and level of significance is 0.05. The table value of

χ2 for 9 degree of freedom at 5 per cent level of significance is 16.919.
Since the calculated value of χ2 is much less than the table value the null
hypothesis is accepted.

32
CHAPTER 5
33
 FINDINGS AND SUGGESTIONS

5.1 Findings

1. It is found that the people in the age group of 36-45 form the major
chunk of customers. They form about 47% of the customers.
2. More than half of the customers use soap twice a day.
3. Only 10% respondents use specific brand for a considerable period of
time.
4. The popular category soaps forms the most selling category of soaps.
5. 75 g was found to be the most popular volume among customers.
6. Supermarkets are preferred by majority of the respondents to buy soaps.
7. The experience from the product in terms of its quality, value for
money etc has a higher say in purchase decision.

34
8. For a customer the quality of the soap is the paramount criteria while
selecting soap. Brand name of the product is another criterion along
with the fragrance of the soap.

5.2 Suggestions
For soap:
• Reduce burning sensation
• Adopt aggressive marketing strategy for toilet soaps.
• Smaller size of toilet soap’s to enable the travelling people to be
brand loyal
For sales:
• Attractive Packaging
• Incentive to dealers/ distributors
• TV commercials telecasted especially during prime time
• Advertisements through Radio channels during morning and evening
• Outdoor media: billboards at railway stations, buses etc

Since advertising has a critical role in purchasing decision in store

promotions, offers and discounts, media advertisements etc for toilet
brands should be increased. Efforts should be made to improve the
purchasing volume of the customers. For that discounts can be given for
multi packet purchase. Special measures must be taken to woo the
customers.

35
36
 CHAPTER 6
CONCLUSION

The average consumer has become sensitive to value offered by brands,

either in terms of price or in terms of the intrinsic benefit offered at a
higher price point. The emergence of several discount brands and higher-
priced improved offerings can be seen in the soap category. Godrej No. 1
is an example of how the brand initiated the strategy of offering several
variants (like sandal) in the lower segment when such variants have been
associated with higher segments in the category.

Apart from expecting value, the consumer is also caught in generic

competition which may force him/her to downgrade in a few categories
while testing other categories. For instance, the consumer, in order to

37
balance her household budgets, may alternate between a good brand of
soap and a low-priced soap [8].

Balancing functional benefits, symbolic appeals and timing the right

combination of good functional attributes and symbolic brand orientation
(which can be beyond advertising like an event associated with beauty
care/hair care) within a price band is likely to be a conceptual approach to
get over the complexities of the FMCG markets.

38