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FACTORS AFFECTING THE BUYING DECISION OF THE BEVERAGE
INDUSTRY
Research Project I
Waqas Wahid
GR No. 202117
In partial fulfillment of the requirement of the degree of the Bachelor of Business Administration
Under the supervision of
Mr. Shahid Rasheed
Hamdard Institute of Management Sciences
HAMDARD UNIVERSITY, KARACHI
Fall 2014
1
ACKNOWLEDGEMENT
First of all I am thankful to my almighty ALLAH who help me a lot and I have no words to
spoke for my ALLAH. After this I would like to thanks to my respected teacher Mr. Shahid
Rasheed who really helps me very much for the completion of this report and my classmates who
help me very much Faryal, Saqib Ali, Joan Rizvi, Sameed Ezazi and Mansoor Mustafa. Thank
you every one.
2
CONTENTS
ABSTRACT..............................................................................................................5
1. INTRODUCTION...............................................................................................6
1.1 Problem Statement..................................................................................................................6
1.2 Purpose of Study.....................................................................................................................6
General Purpose..............................................................................................................................7
Specific Purpose..............................................................................................................................7
1.3 Basic Purpose..........................................................................................................................7
1.4 Theoretical Framework...........................................................................................................7
1.5 Hypothesis/Aims/Objectives...................................................................................................8
2. LITERATURE RIVIEW.....................................................................................9
3. RESEARCH METHODOLOGY......................................................................12
3.1 Population.............................................................................................................................12
3.2 Sample...................................................................................................................................12
3.3 Sample Design......................................................................................................................12
3.4 Research Tools......................................................................................................................13
3.5 Steps in Instrument Designing:-............................................................................................13
3.6 Methods and Instruments of Data Gathering........................................................................13
3.7 Statistical Treatment.............................................................................................................13
4. DATA ANALYSIS & FINDINGS...................................................................14
4.1 Descriptive Statistics Analysis..............................................................................................14
4.2 Correlation Analysis.............................................................................................................15
4.3 Regression Analysis..............................................................................................................16
3
5. CONCLUSION&ROMMENDATION.............................................................18
5.1 Conclusion............................................................................................................................18
5.2 Recommendations.................................................................................................................18
6. Works Cited.......................................................................................................20
4
ABSTRACT
The industry of beverages is growing very rapidly as the beverages are considered as the
worldwide business and running a business in today’s globalized world does not often easy
time. The research is conducted to find out the factors that influence the consumer buying
behavior that why the people in Karachi prefer to buy international cola instead of local cola.
The factors are Brand name, taste, packaging and advertisement. In this research qualitative
approach is used for the collection of data through primary source. Questionnaires were used
for the collection of the data from consumer in order to get first-hand knowledge. The sample
size of this population of the research is 70.
5
1. INTRODUCTION
Beverages are considered as the worldwide business among the world and this business has a
large scope along with greater competition. Running a business in today's globalized world does
not often offer easy times, as Pakistan normally scores quite low on global competitiveness
indicators. One such industry in Pakistan, that seems to be bucking this trend however, is the
Beverage industry.
The industry of beverages grown over the time in Pakistan. The industry produces juice colas
squashes and milk. With about almost 170 units are in operation throughout the country. Both
upstream and downstream businesses have developed and are flourishing.
1.1 Problem Statement
What are the factors that influence the consumer buying behavior that why they prefer
international cola over local cola?
Is brand name influences the consumer buying behavior that why people prefer international cola
over local cola?
Are taste influences the consumer buying behavior that why people prefer international cola over
local cola?
Is packaging influences the consumer buying behavior that why people prefer international cola
over local cola?
Is advertisement influences the consumer buying behavior that why people prefer international
cola over local cola?
1.2 Purpose of Study
The purpose of the study is to find out the factors which have significant effect of consumer
buying behavior while purchasing soft drinks.
6
General Purpose
To develop a study on determinants of consumer buying behavior that helps every soft drinks
firm in the world to work on their growth of sales.
Specific Purpose
To design a work frame that helps the Pakistani colas firms to evaluate the factors that helps to
identify the areas why their sales are affected by international competitors.
1.3 Basic Purpose
Within the last few year as the beverages has now become the fashion for serving beverages on
every event like marriages, parties etc. and sometimes after meal as beverages are now become
the supporting complimentary items after meal. Therefore, beverages industry requires lots of
effort in order to compete in this industry.
1.4 Theoretical Framework
7
Consumer Buying
Behavior
Packaging
Advertisement
Brand Name
Taste
1.5 Hypothesis/Aims/Objectives
H○: Brand name does not have significant effects on consumer buying behavior relating to
beverages in Karachi.
H1: Brand name has significant effects on consumer buying behavior relating to beverages in
Karachi.
H○: Taste does not have significant effects on consumer buying behavior relating to beverages in
Karachi.
H2: Taste has significant effects on consumer buying behavior relating to beverages in Karachi.
H○: Packaging does not have significant effects on consumer buying behavior relating to
beverages in Karachi.
H3: Packaging has significant effects on consumer buying behavior relating to beverages in
Karachi.
H○: Advertisement does not have significant effects on consumer buying behavior relating to
beverages in Karachi.
H4: Advertisement has significant effects on consumer buying behavior relating to beverages in
Karachi.
8
2. LITERATURE RIVIEW
There are many determinants of consumer buying behavior the one factor that influence the
consumers buying behavior is self-esteem as the research of which is conduct by Tariq Jalees
show that there some factors that influence the consumer behavior which are post purchase guilt
tendency to spend reactive aspects and most importantly self-esteem. These all factors have a
great impact on the buying behavior of consumers as people care about their status and they want
to have other people have good opinion about them. (Jalees, Identifying deteminants of
compulsive buying behavior, 2007)
There are many other factors that are important with respect to buying behavior the other factor
that is influence to the buying behavior is brand locality. It is important because people now a
days are brand loyal as they like to buy with the same manufacturer because they like there
product and they have faith in their product. Consumers are so loyal to the product that
consumers do not want to change present brand. Nourishment is the main important between
choosing among the different brands of healthy foods or beverages. Consumers are very
conscious towards the healthy food it means they will go for the quality in foods that they want
hygienic and healthy food. (Motwani & Agarwal, 2012)
As we all know that now a days advertisement is directly proportional to the product sale as
much as you have advertise the product you will get the results as quickly. Nowadays there are
many types of advertisement for e.g. Electronic Media, Newspaper, Magazine, Radio, Bill
Board, Online etc. It is the basic need such as a product for sale. Advertisement tends to possess
and emotionally bond between product and consumers even this emotional inheritance enhances
the consumer towards the brand. As we all seen that the international colas companies spend a
big amount of money towards advertisement as compare to our Pakistani local companies. The
outcomes of the research study mainly demonstrate that there retreats a feeble companionship
between natural reactions with the buyer purchasing behavior. In the research that purchasers
buy item in the territories of their areas by passionate reaction, rather than natural reaction. As in
the research it shows that consumer buys those items form which shop kippers are passionately
connected. (Saleem & Saleem, 2011)
9
Popular beverages have also effects on the consumer’s consumption worldwide. There are some
factors that make these beverages popular like price, color, brand name, taste etc. popularity of a
particular beverage depends on its taste, color, brand loyalty these factors are highly effects the
consumption of the beverages. Tastes are considered most important among these factors with
respect to price, packaging color, brand name etc. because people choose especially for products
like beverages according to their taste. But taste can be persisted for a longer period of time but it
can be changed. (Ghosh & Arindam, 2013)
Clients have moral goals and taste preferences, it appeared that accommodation is liable to
influence their choice. As in the study shows that consumer buying behavior is also affected by
the consumers loyalty the study also shows that the environment also affect the consumption of
the beverages if there is a relaxing atmosphere consumer tend to consume more beverages.
Environment and weather conditions matters a lot in case of every types of beverages. The
consumption of beverages effected as the weather and environmental changes. (Abel, 2009)
It was affirmed that clients decide to make their buys from a shop where much time is not
squandered to find answers for their requirements for instance, placing the shop exceptionally
near the client, a shop which offers reasonable costs, a shop which treats clients with deference, a
shop which takes care of clients issue, a shop where the deals faculty associate enthusiastically
with clients, and a shop which propels the clients for instance, offering normal bargains
advancement. (Asamoah, 2012)
Hypermarkets are also considered as the place where people use to buy FMCGs product. Mostly
people use to visit hypermarkets for buying of FMCGs product in bulk quantity for weekly and
monthly planned budgets and purchase product like beverages that are usually unstructured that
they just attract from packaging and willing to buy such products. Therefore, it is concluded in
the research that Czech people preferred hypermarkets for the purchasing of beverages. Beside
that 4P`s also play important role in the success of any product in way that if correct need and
want that are people expecting from any product are being recognized so that satisfaction level is
utilized fully, and others place, price and promotion are allocated considering competitors. .
Quality, packaging, advertisement, price and brand also have their significant importance that
attracts consumers while products choosing among different brands. (Foret & Prochazka, 2006)
10
Consumer behavior varies from person to person with respect to time. Consumer behaviors
matters a lot in the consumer`s purchasing decisions. While launching any product cognitive and
emotional elements are being involved according to the norms and culture that cover the
specified target area which attracts customers towards purchasing of products. Consumer buying
behavior is being considered whether it is cognitive or emotional in order to influence according
to their needs. Alcoholic and non-alcoholic drinks are best example how it effects consumer
buying behavior especially in Muslim countries that alcoholic drinks are not advertise
commercially and openly because of Islamic obligations therefore, alcoholic beverages
companies are not likelihood to launched their products in such countries due to emotional
factors. (Pelau, 2012)
Product packaging is the sources of indirect communication that derive the need and components
present in the products for FMCGs products. How much the product packaging is designed
appropriately considering all elements like pricing, colors, ingredients and nutritional facts etc.
people are more willing to for such type products and also among with brand logo as brand
experience is main factor that people usually consider most while purchasing products. People
are brand loyal and purchase product among their specific brands so that brand experience are
also main aspect for the purchase decision when consumer pay for any product. As it is
concluded that how strong brand name is, the lesser contribution are being required for the
consumer criteria for the challenging consumer behavior development. (Variawa, 2010)
11
3. RESEARCH METHODOLOGY
This research is a descriptive study with data collected from the primary source. Questionnaires
were used for the collection of the data from consumers in order to get the first-hand knowledge.
This basically relates to the collection of primary data.
For this study different respondents have been surveyed with their demographic characteristics
are mentioned below,
House hold income: 8000 & above.
Age group: 20 & above.
Education: Matriculation & above.
Residence of different towns.
3.1 Population
For my research I have selected the population of Karachi as Karachi is the heart of the Pakistan
and the estimated population of Karachi is about 13.38 million on 9 Dec, 2013. (Malik, 2013)
3.2 Sample
Sample size for Karachi population is calculated through sample size calculator and according to
it the appropriate sample size for Karachi population is 68 in which acceptance of error margin is
10% along with confidential level is 90%. (http://www.raosoft.com/samplesize.html)
3.3 Sample Design
Non- probability sampling method is used for the gathering of data in which respondent are
selected on random basis as the people who use beverages can be anyone but still there is age
limitation i.e. above 20 years for making judgmental and reasonable responses and it is necessary
the respondent must be a resident of Karachi.
12
3.4 Research Tools
Following are the tools used in this research.
Questionnaire
Microsoft Word
Microsoft Excel
SPSS v20
3.5 Steps in Instrument Designing:-
Close ended and Likert scale questionnaire has been designed for this research. Close ended
questionnaire are those questionnaire in which there is only specified options for the question
and Likert scales questionnaire has ranking from 1-5 for the calculation of weights of respondent
opinions.
3.6 Methods and Instruments of Data Gathering
The questionnaires were filled for the collection of primary data. The design of the questionnaire
is kept simple and short in order to save time of the respondent and can be easily understandable
by the respondents. Close ended and Likert scale questions are the ingredients of questionnaire.
3.7 Statistical Treatment
Statistical Package foe Social Sciences (SPSS) version 20.0.0 is used to analyze the data. The
statistical technique which has been applied over the study is regression analysis. It has been
applied in order to find out the relationship among factors which are responsible for the
consumer buying behavior towards soft drink and also used for the calculation of significance of
the variables. One dependent variable and three independent variables are used in this research
following by the equation in order to check correlation.
Y=β 0+β 1 X 1+β 2 X 2+β 3 X 3+β 4 X 4+ε
PI=β 0+ β 1 ADV 1+β 2BN 2+ β 3 PKG 3+β 4 TST 4+ε
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Purchase intention (PI) as dependent variable and thee independent variables packaging (PKG),
advertising (ADV), brand name (BN) and taste (TST) are used to construct the above equation.
4. DATA ANALYSIS & FINDINGS
The SPSS is used for the analysis of the data and the linear regression statistics technique is used
for the identification of the correlation between the dependent variable and the four independent
variables.
4.1 Descriptive Statistics Analysis
The study consists of one dependent variable i.e. consumer buying behavior and four
independent variables i.e. advertising, brand name, packaging and taste. Three different
questions were asked for the analysis of each variable and the results of three questions of each
variables were computed through mean and transformed into a single value which is the average
result for each variables. The table below shows the combined result for the dependent and
independent variables with mean and standard deviation. Packaging has the higher mean value of
3.1143 out of 5 which was scaled 1-5 in Likert scale with standard deviation 1.36777, followed
by advertising variable with mean of 3.0714 and standard deviation 1.54471, taste with mean
value of 2.9714 and standard value 1.36171 and brand name with mean 2.8286 and standard
deviation of 1.50334. Dependent variable i.e. Consumer buying behavior has mean value of
4.0107 and standard deviation 0.69650.
Descriptive Statistics
Mean Std. Deviation N
Consumer_B_Behavior 4.0107 .69650 70
Advertising 3.0714 1.54471 70
Brand_Name 2.8286 1.50334 70
Packaging 3.1143 1.36777 70
Taste 2.9714 1.36171
14
4.2 Correlation Analysis
Correlation analysis shows the degree of the relationship between the dependent and independent
variables that how much dependent variable depend on the independent variables. Pearson
correlation is the technique which shows how much strong relationship exists between the
variables out of 100%. Table below shows that consumer buying behavior is 13.2% dependent on
advertising, 8.5% depend on brand name 6.7% depend on packaging and 18,8% on taste. The
results show that advertising has the strong relationship with consumer buying behavior, then
brand name and followed by both is the packaging taste which has weak relationship as
compared to other two variables.
Correlations
CBB Packaging Taste Brand_Name
Advertisement
Pearson
Correlation
CBB 1.000 .067 .188 .085 .132
Packaging .067 1.000 .562 .426 .373Taste .188 .562 1.000 .571 .373Brand_Name .085 .426 .571 1.000 .561Advertisement -.132 .373 .373 .561 1.000
Sig. (1-
tailed)
CBB . .290 .060 .242 .138
Packaging .290 . .000 .000 .001Taste .060 .000 . .000 .001Brand_Name .242 .000 .000 . .000Advertisement .138 .001 .001 .000 .
N
CBB 70 70 70 70 70
Packaging 70 70 70 70 70Taste 70 70 70 70 70Brand_Name 70 70 70 70 70
Advertisement 70 70 70 70 70
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4.3 Regression Analysis
Model Summary
R R Square Adjusted R
Square
Std. Error of
the Estimate
Durbin-Watson
.299 .089 .033 .68637 1.711
R2 is known as the coefficient of determination and it shows the relationship between dependent
and independent variables. Hence result shows that consumer buying behavior fluctuates 8.9%
when packaging, brand name, advertising and taste change.
Adjusted R2 shows the fitness of the model. Here adjusted R2 shows that model is 3.3% fit.
Durbin Watson is used when data is time series or time based. If Durbin Watson value is equal to
2 then no autocorrelation. If Durbin Watson value is less than 2 then positive autocorrelation
exists. If Durbin Watson is greater than 2 then negative auto correlation exists.
In this model Durbin Watson is 1.711 which is almost equal to 2. Therefore, no autocorrelation
exists in our model which means that no important variable has been taken in the error term.
ANOVA
Sum of
Squares
df Mean
Square
F Sig.
Regression 2.986 4 .746 1.594 .0187b
Residual 30.444 65 .468
Total 33.429 69
F-value in our model is 1.594 and the p-value is given by 0.0187 which is less than 0.05
therefore, result shows that R2 is significant.
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Coefficients
Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std. Error Beta
(Constant) 3.909 .239 16.349 .000
Packaging -.003 .075 -.006 -.043 .966
Taste .118 .082 .231 1.449 .152
Brand_Name .052 .075 .112 .688 .494
Advertisement -.126 .065 -.279 -1.918 .059
Value of constant i.e. α = 3.909, Value of β1 = -0.003, β2 = 0.118, β3 = 0.052 and β4 = -0.126
In this model p-value for regression coefficient of advertising is .059 which is less than 0.05.
Therefore, Ho1 is accepted and it proves that advertising has insignificant impact on consumer
buying behavior.
P-value for regression coefficient of brand name is 0.494 which is greater than 0.05. Therefore,
Ho2 is rejected and it proves that brand name has significant impact on consumer buying
behavior.
P-value for regression coefficient of packaging is 0.152 which is greater than 0.05. Therefore,
H03 is rejected and it proves that packaging has insignificant impact on consumer buying
behavior.
P-value for regression coefficient of taste is 0..152 which is greater than 0.05. Therefore, H 04 is
rejected and it proves that taste has insignificant impact on consumer buying behavior.
PI = 3.909 + (-0.126) ADV + 0.052BN + (-0.003)PKG +0.118TST+ µt
17
5. CONCLUSION&ROMMENDATION
5.1 Conclusion
From this extensive and comprehensive study, it is concluded that international are more popular
among the consumers than the local ones.
Those who are more conscious about the brand name, packaging, advertisement and most
importantly about the taste, they are attracted towards the international ones and the other prefer
local ones who are not merely conscious about brand name, packaging, advertisement and taste.
Coca cola that is still in its growth stage in product life cycle is popular in our country more than
Pepsi. It is successful in attracting large number of consumers. Other strong factors of the
international colas are their good quality, therefore the overall satisfaction of users of the
international ones is very high, mainly because of the reasons that the manufacturers of the
international ones spend a large amount of money in the advertisement and have carried out
many campaigns that have helped them in attracting the Pakistani consumers and thus has
increased its sales. Therefore, local soft drink firms are failed to increase their sales and
ultimately the market share.
5.2 Recommendations
It is recommended for the firms, who are engaged in providing local drinks that they should
emphasize on the following aspects:
1) Quality
18
Quality is the main attribute for any product in order to increase sale performance of any product
so that can charge price comparative to that international firms so that they can make
competition along with international brands.
2) Repositioning of the local brands
In order to attract more customers; the local brands should also reposition themselves. Local
colas are popular in the rural areas, mainly because of their cheap price and easy availability. In
some of areas of Karachi, people go for the local drinks because they can afford them and they
are within their reach. Local manufacturers of cold drinks should assure the people that the
beverage that they are providing is of good quality and nutritious. In this way their sales would
increase in big cities also.
3) Promotional strategies
The local drinks firms should also emphasize on their promotional strategies and campaigns so
that their advertisements can also come up to the level of the international ones. For decades
Pepsi has defined itself through the wizardry of the slogan, the jingle and the storyboard and all
that a succession of four ad agencies has spun from them. Therefore it is meant for the local ones
too that they should emphasize on providing good quality beverages.
4) Advertisement
As the international soft drink firms spend handsome amount on their advertisement in order to
capture greater market share likewise local soft drink firms should also spend comparative
amount on advertisement like international local drink firms.
19
6. Works Cited
Abel, N. (2009, May). Determinants of customer loyalty in the specialty coffee industry: The
differences between customer loyalty to an independent coffe shop and Starbucks. 70.
Asamoah, G. (2012). Factors which influence the buying behaviours of customers with multiple
regular customer cards. Degree thesis international business, 74.
Foret, & Prochazka. (2006). Behaviour and decision making of Czech consumers when buying
beverage. Changes in the behaviour of the busi- ness sphere as induced by economic
transformation and new consumption trends, 7, 6.
Ghosh, M., & Arindam, G. (2013, june). Consumer Buying Behavior in Relation to Consumption
of tea – a study of Pune city. International journal of sales & marketing management
research and development, 3(2), 8.
http://www.raosoft.com/samplesize.html. (n.d.). Retrieved from www.raosoft.com:
http://www.raosoft.com/samplesize.html
Jalees, T. (2007, July). Identifying deteminants of compulsive buying behavior. Market forces,
3(2), 27.
Malik, G. H. (2013, December Monday). Retrieved from www.maverickpakistan.com:
http://www.maverickpakistanis.com/2010/06/karachi%E2%80%99s-population-growing-
at-5pc-a-year/
Motwani, D., & Agarwal, K. (2012, July). Customers' behavior in health food drink product
category. 5(1), 78.
Pelau, C. (2012). Romanian consumer behavior for alcoholic and non-alcoholic beverages.
Journal of Eastern Europe research in business & economic, 20(12), 8.
Saleem, Z.-U.-A., & Saleem, S. (2011). Effective advertising and its influence on consumer
buying. European journal business and administration, 3(3), 12.
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Variawa, E. (2010, November 10). Buying behaviour and decision-making criteria of Base of the
Pyramid consumers: the influence of packaging on Fast Moving Consumer Goods
customers’ brand experience. 91.
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