Pacific Business Review International

Volume 6, Issue 5, November 2013

A Study of Consumers' Preference towards Branded & Loose Tea:

With Reference to Indore City

Satnam Kour Ubeja* Abstract

Dhara Jain** The beverages sector in India has undergone significant transformation in the
past 12 years. Within the beverages sector, Tea industry in India is to grow 25-
30 % annually and would double or triple times in the size by 2014. This
industry is gradually inching its way towards becoming the next booming
industry. Tea is available in two broad forms i.e. branded tea and loose tea. A
*Asst. Professor, Prestige Institute of Branded tea meant by those all tea brands which are known at national level
and are performing very well in the market, while a loose tea means all tea
Management and Research, Indore
brands which are known at regional level and are performing very well with
competing in local market in every city. Consumer preferences are defined as
Asst. Professor, Swami Vivekanand the subjective (individual) tastes, as measured by utility, of various bundles of
School of Management, Indore goods. Main objective of this paper is to explore the market potential of
branded and loose tea. The research has conducted in Indore city between 200
active consumers. The consumer preference were identified by structured
questionnaire and captured in 6 factors for branded tea and 5 factors for loose
tea of consumer preferences, with the help of these factors we have found the
effect of these factors on age and income. The study will help the retailers to
understand the underlying consumer preference factors for the branded tea
and loose tea and help them to craft their marketing strategies. Profiling option
of tea by their choice of consumer preferences provides more meaningful
ways to identify and understand various customer segments and to target each
segment with more focused marketing strategies.

K eywords:
Consumer preference, Loose tea, Branded tea, Retailers

Introduction
The beverages sector in India has undergone significant transformation in the
past 12 years. Within the beverages sector, Tea industry in India is to grow 25-
30 % annually and would double or triple times in the size by 2014. This
industry is gradually inching its way towards becoming the next booming
industry. The consumer's objective is to choose the bundle of goods which
provides the greatest level of satisfaction as the consumer defines it. Tea is the
most versatile beverage ever discovered by man- a kind of one-drink-for-all
reasons-all-seasons. Tea warms when it is cold; cools when it is hot; cheers
when depressed; calms when excited; awakens when sleepy- and available at
every street corner. In short, tea is therapy- in-a-cup.
Tea is available in two broad forms i.e. branded tea and loose tea. A Branded
tea meant by those all tea brands which are known at national level and are
performing very well in the market i.e. Taj Mahal tea, Red label, Tetly Tea,

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 Pacific Business Review International

Agni tea, Tata tea etc. While a loose tea means all tea brands which India.
are known at regional level and are performing very well with
Monirul I. & Han J. H., (2012) states the demand of coffee is
competing in local market in every city. Branded tea market is
more than tea and earning good amount of profit. It is assumed that
expected to double in the next 5 years on consumer's preferences
about 20 billion cups of hot drinks are sold every year.
over branded packet of tea over the open weight dominated
unbranded products. Sharma M., (2012) Consumer preferences are defined as the
subjective (individual) tastes, as measured by utility, of various
Consumer preferences are defined as the subjective (individual)
bundles of goods. They permit the consumer to rank these bundles
tastes, as measured by utility, of various bundles of goods. They
of goods according to the levels of utility they give the consumer.
permit the consumer to rank these bundles of goods according to
Note that preferences are independent of income and prices.
the price levels of utility they give the consumer. Ability to
Ability to purchase goods does not determine a consumer's likes or
purchase goods does not determine a consumer's like or dislikes.
dislikes. This is used primarily to mean an option that has the
Consumer preferences are more complex and even more important greatest anticipated value among a number of options.
for retailers today than in past. Individual customer has a set of
Shendge, (2012) Preference (or "taste") is a concept, used in the
preferences and values whose determination is outside the realm of
social sciences, particularly economics. It assumes a real or
economics. They are no doubt dependent upon cultures, education,
imagined "choice" between alternatives and the possibility of rank
and individuals tastes, among the plethora of other factors.
ordering of these alternatives, based on happiness, satisfaction,
Preference indicates choices among neutral or more valued
gratification, enjoyment, utility they provide. More generally, it
options available. Consumer preference is measured in terms of
can be seen as a source of motivation. In cognitive sciences,
the level of satisfaction the consumer obtains from consuming
individual preferences enable choice of objectives/goals.
various combinations of bundles of goods.
Vakhariya S. And Chopde V., (2011) Private labels in India are on
In order to become a successful marketer, he must know the liking
the growth path. With the emerging private players, national brand
or disliking of the customers. He must also know the time and
manufacturers will have to compete with the competition within
quantity of goods and services, a consumer may purchase, so that
the sales promotion and distribution channel, which needed to
he may store the goods or provide the services according to the
change in marketing strategy, locally.
likings of the consumers. Gone are the days when the concepts of
market was let the buyer's beware or when the market was mainly Virmani R. T., (2011) stated the reasons for preference of the
the seller's market. In this sense, “consumer is the supreme in the brands ranged from quality to availability. But it was quality that
market”. A consumer plays a very vital role in the health of the was ranked as the No. 1 parameter for brand preference. Most of
economy local, national or international. the consumers reported that they do get carried away by
advertisements sometimes but in the end it is the quality of the
Review of Literature
product that is a decisive factor for purchase.
Dölekoğlu (2008) and Mucuk (2001) According to the report,
Objectives of the Study
with the exception of cleaning products, consumers' loyalty to
private brand products was found to have increased for products in · To identify the factors of consumer preference towards
all categories. Despite the growing demand for private brand branded and loose tea in Indore city.
products, consumers have different reasons for their preferences
that are sensitive to product type and price, and the socio-economic · To study the consumer preference with special reference to
status of consumers. age and income.
Jack and Rose, (2000) It would be difficult and almost impossible Hypotheses
to create quantitative variables to describe the overall appearances
To know the effects of seventeen influencing factors on consumer
of the main characters combining varying views (e.g., price, taste,
preference, the following null and alternative hypothesis have
quality, hygiene etc.) as well as the dynamic design, colors, and
framed:
sounds of the machine in that vending solution, which may have a
significant impact on consumers' preferences. Null Hypothesis H01: There is no significant impact or difference
in mean preference of consumers for branded or loose tea with
Jain M., (2012) discussed about major players offering different
special reference to age.
types of tea, in different parts of the country, with special focus on
quality perception under specific demographic region. Major Alternative Hypothesis H01: There is significant impact or
players are offering different types of tea in different parts of the difference in mean preference of consumers for branded or loose
country with a focus on the quality perception of the particular tea with special reference to age.
demography.
Null Hypothesis H02: There is no significant impact or difference
Mathur M. K ., (2012) explained that most of the companies have in mean preference of consumers for branded or loose tea with
tea in all pack size - 2kg, 1kg, 500gm, 250gm, 100gm, 50gm and special reference to income.
25gm packaging. There are also sachets, which are priced as low as
Alternative Hypothesis H02: There is significant impact or
Re.1. Various regions have distinctive packaging preference for
difference in mean preference of consumers for branded or loose
poly pack and box pack (mono cartons). 250 gm size is the most
tea with special reference to income.
preferred size. Branded tea penetration is quite high in cities like
Delhi and Ahmadabad when compared to other major cities in

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Volume 6, Issue 5, November 2013

Research Methodology considered desirable to use the highest factor loading criterion to
select consumer preference included in all group of factors. This
Data Sources
criterion was uniformly used in the factor analysis carried out on
To design the structured questionnaire the 17 items of consumer the total sample of the study.
preference for tea are taken from extensive study of consumer
ANOVA Test
preference literature viz. journals of marketing, international
journals of marketing, various business review and marketing The generated factors which have got with factor analysis by using
management magazines etc. SPSS software ( 16) version, with the help of these factors we have
applied ANOVA test by using SPSS software (16 version) to
The primary data was collected from 200 consumers of different
measure the variance among different variables. Tukey Karner
areas across Indore city and having above 20 yrs age and already
multiple comparison has been used to get the mean difference and
consuming tea whether purchased from organized outlet or
analyzing the results. It has been applied on 5% level of
traditional unorganized outlet.
significance, to test the variance between different demographic
Definition of Variables variables on consumer preference.
After an extensive study of consumer preference for literature Method for Data Analysis
following consumer preference factors are considered for this
Data was analyzed using statistical techniques (at 5% level of
study: Name/Fame, Price, Quality, Packaging, Offer, Taste,
significance), ANOVA.
Promotion, Availability, Size, Family Liking, Time, Evaluate,
Shifting, Product Class, Personal Importance, Choice, and Alike. Reliability Test
Apart from these 17 factors, four categorical variables are also After the testing of questionnaire we have tested reliability of
used to know the effects of all 17 consumer preference factors on whole data on all factors. Reliability test has been made on whole
the consumer preference. Two Categories have been selected for 200 samples for testing the reliability of consumer preference.
the study are–Age and Income. With the help of Coefficient (Cronbanch Alpha); we have tested
the reliability of factors. Reliability of 200 samples for consumer
Sample and Design
preference has Cronbach's Alpha (.762) (see Annexure 1) which is
The design of the present study is descriptive as well as empirical excellent, according to different theory of reliability value above
in nature. The main purpose of the study is to find the impact of 0.6 is appropriate, low value below the 0.5 implies that reliability
consumer preference regarding the type of tea in Indore city. The may not be appropriate. No items have been removed from the
sample size is 200 consumers. The sample comprised of the questionnaire.
respondent above 20 years age & having experience of preferring
Results and Discussion
tea. The independent variables comprises of age and income. The
entire universe has been divided as: Impact of Age and Income on Consumer Preference with
reference to Brand Tea
· Age: The age group were 20-30, 30-40, 40-50, 50 and above.
This was kept so as to cover maximum percentage of Factor analysis was adopted to capture the consumer preference in
universe, grouping in class interval helped in easy tabulation. different areas of Indore city. (Annexure 2) It summaries the result
of the factor analysis, that was run using the Principal Component
· Income: It contained the choices of 1-2 lakhs, 2-3 Lakhs, 3-4 Approach with a varimax rotation.
Lakhs, and 4 Lakhs and above.
Bartlett's test of sphericity and Kaiser- Olkin (KMO) measure are
Data Collection adopted to determine the appropriateness of data set for factor
analysis. High valued (between 0.5to 1) of KMO indicates that the
The questionnaire is split into two sections. The first section deals
factor analysis is appropriate, low value below the 0.5 implies that
the demographic factors. Second section related to 17 consumer
factor analysis may be appropriate. In this study, the result of
preference factors. The questionnaire has given five point scales
Barteltt's test of sphericity (0.00) and KMO (0.751) indicates that
rating Highly Dissatisfied to Highly Satisfied and comparative
the data are appropriate for factor analysis.
weight one to five, where five is the highest rank. The data
collected from consumers of different areas of Indore city on the In this study, factor analysis was carried out in two stages. In stage
basis of age and income. one; known as the factor extraction process, objective was to
identify how many factors to be extracted from data. Using
Tools for Data Analysis
principal component analysis, 17 items were extracted by four
Factor analysis and ANOVA test applied to minimize the factors to factors. Only the factors having latent roots or eigen value greater
find their effectiveness & variances. The statistical package like than 1 were considered significant' all factors having eigen value
SPSS (version 16) used, MS- Excel also used for analysis. The less than 1 were considered insignificant and were discarded. All
level of significance was tested of five percent level. the six factors together accounted 66.81% of the total variance.
Factor Analysis In the second stage, all the factors were interpreted and labeled.
Items having factor loading more than 0.4 were included in the
The normal varimax solution is not obtained directly from a
interpretation. More detailed description of the factors is presented
correlation matrix. It is obtained by rotating other types of factor
in the next section.
solutions to the varimax form. In the present study it was

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 Pacific Business Review International

Impact of Demographic Factors on Consumer Preference as Factor 4: Design & Promotion

discussed above, different items have been extracted (Annexure 3)
The factor measures the design, packaging, promotion, and size
with the help of factor analysis and ANOVA was used to study the
influence in choosing the brand tea in Indore city. Consumer who
variation in the consumer preference across demographic
scores high on this factor is very design & promotion conscious
variables. The six factors are summarized in the Annexure 3.
that they prefer brand tea for its design. The highest loading (.717)
Factor 1: Personal & Family influence item in this factor is “Packaging”.
The factor measures the personal importance and family liking It (Annexure 2 and Annexure 3) indicates the effects of various
influence in choosing the brand tea. It measures the brand loyalty demographic variables on consumer preference in accordance to
of a consumer in Indore city, and also measures that if preferred Indore city. It (Annexure 3) indicates that the significance value of
brand tea is not available at the store, how much is they loyal to that F for age and income is greater than 0.05. So Indore city's
brand whether they shifts towards loose tea or not. Consumer who consumer of brand tea does not have significant impact on
scores high on this factor is very choice conscious that they packaging, promotion, size, and alike for brand tea preference with
received the information which is contrary to choose his brand tea respect to these demographic variables.
in that product class prefers brand tea. The highest loading (.716)
Factor 5: Offer
item in this factor is “choice”.
The factor measures the offer influence in choosing the brand tea in
It (Annexure 2 and Annexure 3) indicates the effects of various
Indore city. Consumer who scores high on this factor is very offer
demographic variables on consumer preference in accordance to
conscious that they prefer brand tea for its offer. The highest
Indore city. It (Annexure 3) indicates that the significance value of
loading (.862) item in this factor is “Offer”.
F for age and income all are greater than 0.05. So Indore city's
consumer does not have significant impact on personal importance It (Annexure 2 and Annexure 3) indicates the effects of various
and family liking for brand tea preference with respect to these demographic variables on consumer preference in accordance to
demographic variables. Only education has impact on choice of Indore city. It (Annexure 3) indicates that the significance value of
brand tea preference in Indore city. In our sample in Indore city F for age and income and is greater than 0.05. So Indore city's
post graduate (mean=16.18), are more conscious of choice for consumer of brand tea does not have significant impact on offer for
brand tea preference other than any post graduate in Indore city. brand tea preference with respect to these demographic variables.
It reveals that the consumers in Indore city of brand tea are not offer
Factor 2: Quality Consciousness
conscious.
The factor measures the quality and taste influence in choosing the
Factor 6: Brand Consciousness
brand tea in Indore city. Taste is the main concern for purchasing
the tea and consumer of Indore city who scores high on this factor The factor measures the evaluation and name or fame influence in
is very quality conscious that they prefer brand tea also for its taste. choosing the brand tea in Indore city. Consumer who scores high
The highest loading (.799) item in this factor is “Taste”. on this factor is very naming i.e. brand conscious that they prefer
brand tea for its brand name. The highest loading (.625) item in this
It (Annexure 2 and Annexure 3) indicates the effects of various
factor is “Name/ Fame”.
demographic variables on consumer preference in accordance to
Indore city. It (Annexure 3) indicates that the significance value of It (Annexure 2 and Annexure 3) indicates the effects of various
F for age and income all are greater than 0.05. So Indore city's demographic variables on consumer preference in accordance to
consumer does not have significant impact on quality Indore city. It (Annexure 3) indicates that the significance value of
consciousness for brand tea preference with respect to these F for age and income is greater than 0.05. So Indore city's
demographic variables. consumer does not have significant impact on quality
consciousness for brand tea preference with respect to these
Factor 3: Price Pay & Availability
demographic variables.
The factor measures the duration of recognition about the brand,
Impact of Age and Income on Consumer Preference with
product class, and price that a consumer pays for it and also the
reference to Loose Tea
availability of product at nearby store. Quality and taste influence
in choosing the brand tea in Indore city. Consumer who scores high Factor analysis was adopted to capture the consumer preference in
on this factor is very conscious about duration of recognition of the different areas of Indore city. (Annexure 5) It summaries the result
chosen brand that they have preferred. The highest loading (.830) of the factor analysis, that was run using the Principal Component
item in this factor is “Time”. Approach with a varimax rotation.
It (Annexure 2 and Annexure 3) indicates the effects of various Bartlett's test of sphericity and Kaiser- Olkin (KMO) measure are
demographic variables on consumer preference in accordance to adopted to determine the appropriateness of data set for factor
Indore city. It (Annexure 3) has revealed that the significance value analysis. High valued (between 0.5to 1) of KMO indicates that the
of F for age and income is greater than 0.05. So Indore city's factor analysis is appropriate, low value below the 0.5 implies that
consumer of brand tea does not have significant impact on price, factor analysis may be appropriate. In this study, the result of
availability and product class for brand tea preference with respect Barteltt's test of sphericity (0.00) and KMO (0.702) indicates that
to these demographic variables. the data are appropriate for factor analysis.
In this study, factor analysis was carried out in two stages. In stage
one; known as the factor extraction process, objective was to

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Volume 6, Issue 5, November 2013

identify how many factors to be extracted from data. Using It (Annexure 5 and Annexure 6) indicates the effects of various
principal component analysis, 17 items were extracted by four demographic variables on consumer preference in accordance to
factors. Only the factors having latent roots or eigen value greater Indore city. It (Annexure 6) indicates that the significance value of
than 1 were considered significant' all factors having eigen value F for age and income is greater than 0.05. So Indore city's
less than 1 were considered insignificant and were discarded. All consumer does not have significant impact on product availability
the five factors together accounted 56.79% of the total variance. for loose tea preference with respect to these demographic
variables.
In the second stage, all the factors were interpreted and labeled.
Items having factor loading more than 0.4 were included in the Factor 4: It's time to pay for design
interpretation. More detailed description of the factors is presented
The factor measures the price, packaging, time, and alike influence
in the next section.
in choosing the loose tea in Indore city. Consumer who scores high
Impact of Demographic Factors on Consumer Preference as on this factor is very price conscious that they prefer loose tea for
discussed above, five items have been extracted (Annexure 6) with its price. The highest loading (.627) item in this factor is “Price”.
the help of factor analysis and ANOVA was used to study the
It (Annexure 5 and Annexure 6) indicates the effects of various
variation in the consumer preference across demographic
demographic variables on consumer preference in accordance to
variables. The five factors are summarized in the Annexure 6.
Indore city. It (Annexure 6) indicates that the significance value of
Factor 1: Personal & Family influence F for age and income is greater than 0.05. So Indore city's
consumer does not have significant impact on time and packaging
The factor measures the size, evaluation, personal importance,
for loose tea preference with respect to these demographic
shifting i.e. brand loyalty, choice influence in choosing the loose
variables but it was observed that these types of consumers are
tea in Indore city. Consumer who scores high on this factor is very
more prices sensitive and since income has significant impact on
size conscious that they prefer loose tea for its size. The highest
the price factor. Only income has impact on choice of loose tea
loading (.748) item in this factor is “Size”.
preference in Indore city. In our sample of Indore city's consumer
It (Annexure 5 and Annexure 6) indicates the effects of various having income of 1lakhs to 2 lakhs (mean=16.34), are more
demographic variables on consumer preference in accordance to conscious of price factor for loose tea preference other than any
Indore city. It (Annexure 6) indicates that the significance value of income group in Indore city.
F for age which is greater than 0.05. So Indore city's consumer does
Factor 5: Family Taste
not have significant impact on personal & family influence for
loose tea preference with respect to this demographic variable. The factor measures the taste and family liking influence in
Only income has impact on choice of loose tea preference in Indore choosing the loose tea in Indore city. Consumer who scores high on
city. In our sample of Indore city's consumer having income this factor is very taste conscious that they prefer loose tea for its
between 3 to 4 lakhs (mean=19.00), are more conscious of taste. The highest loading (.678) item in this factor is “Taste”.
personal importance & family influence for loose tea preference
It (Annexure 5 and Annexure 6) indicates the effects of various
other than any income group in Indore city
demographic variables on consumer preference in accordance to
Factor 2: Quality Promotion Indore city. It (Annexure 6) indicates that the significance value of
F for income is greater than 0.05. So Indore city's consumer does
The factor measures the quality, fame, name, offer and promotion
not have significant impact on family taste for loose tea preference
influence in choosing the loose tea in Indore city. Consumer who
with respect to these demographic variables. In our sample of
scores high on this factor is very quality conscious that they prefer
Indore city's consumer having age between 40-50 yrs
loose tea for its taste. The highest loading (.782) item in this factor
(mean=8.38), are more conscious of family liking and taste for
is “Quality”.
loose tea preference other than any age group in Indore city.
It (Annexure 5 and Annexure 6) indicates the effects of various
Conclusion
demographic variables on consumer preference in accordance to
Indore city. It (Annexure 6) indicates that the significance value of When consumers buy a product they normally consider different
F for age which is greater than 0.05. So Indore city's consumer does types of attributes which we saw the same in case of both type of
not have significant impact on quality promotion for loose tea tea i.e. brand as well as loose also. The product examined in this
preference with respect to these demographic variables. Only research study was branded and loose tea offers by various
income has impact on choice of loose tea preference in Indore city. marketers. This paper focused on consumers' preference towards
In our sample of Indore city's consumer having income of 4 lacks branded and loose tea.
and above (mean=16.34), are more conscious of quality &
Consumers had an overall more positive attitude and preference
promotion for loose tea preference other than any income group in
towards their respective preferred brand in the product class over
Indore city.
other. Findings from this study should assist in filling the
Factor 3: Product Availability substantial knowledge deficit that exists regarding tea research in
marketing or business field.
The factor measures the product class and availability influence in
choosing the loose tea in Indore city. Consumer who scores high on According to this research 110 consumers prefers Loose Tea out of
this factor is very product class conscious that they prefer brand tea 200 & only 90 prefers branded tea. One of the reasons is that people
for its product class and its availability. The highest loading (.780) like loose tea as its taste is very good. Another reason is that loose
item in this factor is “Product class”. tea is available in all variety and size to our sample which influence

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 Pacific Business Review International

on them to preferred loose tea. Price and income are also very shows that loose tea has better taste and quality than
important factor that influence to choose their preferred tea. branded tea, if consumers are taste and quality conscious
Frequency of advertisement is also important factor for branded
3. Consumers may go with loose tea if consumers want
tea customer to choose their brand. It is also noticed in our study
more quantity of tea in lesser price as our study shows
that promotion scheme & discount are also important to purchase
that loose tea is available at lower price that branded tea
their preferred brand.
and thus it is offered at lesser price than branded tea.
Mostly people come to know about their preferred tea through
Implication
market information and sales person. So those who had interaction
with sales person or get updated with market information are more The research conducted is useful to many people, aspects, on
aware of their preferred loose tea as compare to other medium of which Indore city's consumer prefer branded / loose tea, will help
advertisement & promotional medium. Availability of convince is the marketer to make the strategies according and will also help
also important factor to choose the preferred brand. The customers and focus on particular aspects at time of advertisement,
of branded tea gave importance to the brand ambassador while promotion etc. Today as market has become very crucial for any
loose tea customers have no influence on brand ambassador. Both company to sell its products researchers are taking interest in this
brand customer think that design, feature, and cost is very area and need in –depth knowledge about the subject. As
important so that they proffered there tea according to their questionnaire was used for taking opinions it would also help the
perspective. Thus brand tea marketer has to work more to compete consumer to increase their awareness. It will be also useful to
with loose tea merchant & to lead the market. In addition to this retailers to know what they can focus on having retail strategy in
loose tea merchant must keep their quality, services on track as market.
such no major differences are found in consumer preference for
This study can be implied and helpful to those all who want to
both brands but brand conscious consumer may easily switch
know about the consumer's preference towards brand /loose tea
towards branded tea.
and want to go for further detailed research or who are facing the
Market brands that have provided utilities and presented competition in the same product line.
alternatives to consumers, manufacturer and marketer must be
This study is helpful to carry out the various decisions like
evaluated accurately. In addition, because of low per capita income
marketing strategy, branding, market penetration, indentifying the
and faltered distribution of income in Indore, it is estimated that the
potential customer and also to develop the strategy for retaining the
share of loose tea merchant will be increased in the future in
customer with improving in the quality of both product and
respect of Indore city.
services.
Suggestions
References
For Marketer
Books
1. Marketer can concentrate more on price and quantity of
Chunawalla, S.A, Sethia, K.C. (2008). Foundation of Advertising
the product. According to study, consumers want more
theory & practice. Himalya publication House Delhi, 7th
quantity of tea in lesser price.
revised edition, 45-55&75-95.
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Chhabra, T.N., Grover, S.K. (2005). Marketing Management.
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Dhanpat Rai & Co. Pvt. Ltd., Third revised edition, 15-
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more on advertisement and can maintain quality of the
Krisnawamy, K.N., Shivkumar, A. & Mathirajan M. (2006).
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Kotelr, Philip, Keller, Kevin Koshy, Abraham (2008-09). Jh
with it.
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Nair, R. Suja (2008). Consumer Behavior. Himalaya Publication

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Annexure

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Volume 6, Issue 5, November 2013

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