This midterm report primarily focuses on defining the Management Decision Problem, Management Research Problem, Research Questions and Hypotheses. It also includes secondary data analysis – depth interview, focus group discussion, expert interviews and a questionnaire checklist.
management decision problem
Should ITC introduce products in the male skincare/grooming/cosmetics industry in India, and if so what should be their range across categories?
Marketing Research problem
To determine consumer preferences and purchase intentions for the range of products to be introduced by ITC into the male grooming industry market in India
Research Sub Problems
- To determine if a market exists for male skincare/grooming/cosmetics industry and if so, estimate the market size for the industry in India
- Identify the various product categories within this industry and the emerging trends influencing consumer purchase in these categories
- To determine the category wise positioning of the existing players in the industry
- To understand the differences in attitudes and perception of men towards male and female grooming products
- To identify the key determinants for men while buying grooming products at the point-of-sale, and establish the key influencers to their purchase behavior and the preferred positioning in the stores.
- To quantify the perception of the users of the male grooming products and thus determine a possible range of products which could be introduced by ITC
hYPOTHESIS
Hypothesis 1
H0: Men feel that male grooming products are different (in terms of physical attributes) from corresponding female products.
H1: Men feel that male grooming products are the same (in terms of physical attributes) from corresponding female products.
Hypothesis 2
H0: The ideal target group in terms of age is the same across all product categories
H1: The ideal target group depends upon the type of product category
It was found from factor analysis that age is not one of the important factors
Hypothesis 3
H0: Point-of-sale promotion is the primary influencer of the purchasing decision.
H1: Point-of-sale promotion is not the primary influencer of the purchasing decision.
Promotion and advertisements were one of the foremost factors unearthed using the factor analysis technique.
Secondary data analysis
Men's grooming products was one of the most dynamic sectors in cosmetics and toiletries in 2008. It posted the third highest growth rate of all sectors globally, only marginally lower than that of baby care and sun care. With value sales of US$27 billion, men's grooming account for 8% of total industry value and is currently the sixth largest sector globally. The BRIC nations are expected to be major contributors to absolute growth in men's lines over 2008-2013. They will predictably generate additional value sales of over US$1 billion, which will equate to around a third of an anticipated US$3 billion in overall additional sales globally.
OBSERVED TRENDS IN THE INDIAN INDUSTRY
- Skewed growth
- Indian Men are Seeking Male specific skin care
- Indian Men are Seeking Targeted products for skin & hair care
- Indian Men’s hair care segment is growing slowly
- Indian men are increasingly shopping by themselves
- Indian Men’s grooming purchase is influenced by advertisements
- Sachet packet marketing is driving growth in the segment for lower income users
- For Indian Men, Fairness is synonymous with status
- Indian men are routing their apparel budget into grooming
PLAYERS IN THE INDUSTRY
The major players in the skin-care segment are HUL (Fair & Lovely, Lakme, Ponds) with a market share of 53%, followed by CavinKare- Fairever with a market share of over12% and Godrej-Fair Glow with a market share of 3.4 %. The other players with a smaller presence are Emami (Gold Turmeric and Naturally Fair), Revlon (Fair & Glow).
SYMBOLIC ANALYSIS
Depth Interviews
- Most users have shifted from being secondary buyers to primary buyers
- Frequent users showed an interest towards using herbal/natural products
- Brand loyalty was generally low
- Most users preferred brands that had a distinctly different product range for men as opposed to women cosmetics
Focus Interviews
- Most participants were of the view that women and men products must be distinctly separate
- Some participants vehemently advocated that products, especially hair oils should be herbal
- Most participants unanimously agreed that word-of-mouth marketing and expert advice is the key driver as far as their purchase decision is concerned.
- Endorsements and large scale advertisements were not considered to be significant influencers of buying behavior
- Participants agreed that the current crop of products in the market does not fulfill their needs adequately
Expert Interviews
The experts who were interviewed include
- Grooming expert from “Shades”, pan-India unisex beauty salon chain
- Hair Stylist from “Smart Guy” (Salon for men at IIMB)
- Hairdresser from “Vinayak Hair Art” a standalone men’s parlor
- Men are not only concerned about their hair but also care about their skin and physical appearance and overall health
- The increase in the number of customers is because of their change in life style and outlook. Men are becoming more open to these cosmetic procedures
- Men are demanding products which are made specifically for them
- Preferences of attributes vary according to the customer segment. For example, some customers (premium) are highly concerned about the quality of ingredients and product as a whole and the price of these products is of secondary importance. Some customers (middle class) are price sensitive and hence they try to get the highest quality in the given price range (low value brand)
- The number and frequency of use increases during specific occasions like fests in colleges, social gatherings like weddings
- Endorsements and advertisements influence the purchasing behavior of the customers to a large extent
- “Word of mouth marketing” also plays an important role in this industry
FACTOR ANALYSIS
- From significance matrix, variables with majority values greater than 0.05 were rejected
- From correlation matrix, variables with any value (except for relationship with itself) greater than 0.9 were rejected
- Kaiser-Meyer-Olkin Measure of Sampling Adequacy for the resulting data was found to be greater than 0.5. This implies that the factors are distinct and reliable.
- Bartlett’s measure is highly significant. Hence, factor analysis is appropriate.
- From the total variance table, SPSS extracts 7 factors which have eigen values greater than 1.
- The high value of communalities shows that a large part of the variance explained by the factors is shared or common. Also, since the average communalities (0.642) is greater than 0.6, the number of factors selected is appropriated.
- From the Component matrix, factor 1 (Age) has maximum loading for all the variables.
- From the Scree plot, retaining 7 factors is justified as after this, the curve begins to tail-off from the inflexion point.
- The content of the questions that load on to the various factors have a common theme
- The questions that load highly on factor 1 seem to all relate to social desirability. Thus, we can label factor 1 as ‘social desirability’.
- Similarly, factor 2 can be named as price-quality relationship.
- Factor 3 – promotional and advertisement
- Factor 4- friends and family
- Factor 5- social stigma
- Factor 6- income
- Factor 7- age
- Three-factor extraction provides us with component plot in rotated space. This plot shows that variance along price-quality factor is high. It also indicates that price-quality is the most important criteria affecting purchasing patterns. None of the consumers buy products solely on the basis of promotions/advertisements and social desirability.
MDS ANALYSIS
- Respondents were asked to rate similarities amongst various brands on a scale of 1 to 10. Mean values of all responses were taken and fed as input to SPSS.
- Goodness of fit data shows that stress level is less than 0.15 and DAF and Tucker’s coefficient of congruence are close to 1. Hence, the data is a good fit.
- Dimension 2 may be interpreted as age of target group in decreasing order (youth v/s middle-aged). Dimension 1 seems to be in line with the perceived price of the brands in decreasing order (income of target group).
- Since almost all points on the residual plot fall on a straight line, the data is a good fit.
CONJOINT ANALYSIS
- In this analysis, the relative importance which consumers attach to salient attributes and their utilities was determined.
- Two analyses were run to determine the i) optimal skin care product and ii) optimal hair care product. In both cases, 4 attributes were used with 2 being product based attributes, and 1 each for packaging and natural ingredients. Each attribute had 2 attribute levels.
- The survey questionnaire consisted of 16 product combinations and customers were asked to give their preference order (from 1 to 16) for the products listed.
- An orthogonal design was generated for the product combinations and the data obtained from the questionnaire was also input into SPSS.
- The conjoint analysis for Hair care products was run using the following Syntax command.
- The orthogonal display for Hair Care products has been shown below.
- The output of the conjoint analysis obtained for Hair Care products is shown below.
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Thus from the analysis it is clear that, the most important attribute influencing consumer purchase is the ingredients (relative weight of 47.8 out of 100). The next important attribute is that of the product which influences the texture/feel of the skin. The 3rd important factor is the skincare attribute and the least important is the packaging size. Thus there would be a large difference in product profiles containing natural ingredients (most desired) and those containing artificial/ chemical ingredients (least desired).
- From the utilities table, it is clear that sun protection attribute is preferred to dryness removing attribute, products offering ‘smooth and soft skin’ are preferred to those offering ‘oil control’, natural ingredients are highly desired and smaller the package size the more desirable the product.
- Since the utilities are all expressed in a common unit, they can be added together to give the total utility of any combination. Thus the total utility of a skin care product with sun protection, offering smooth and soft skin, with natural ingredients in a sub-100 gm package would be
Utility (Sun protection) + Utility (Smooth and soft skin) + Utility (Natural ingredients) + Utility (Small package) + Constant
= .575 + .025 + 1.425 + 0.15 + 4.5 = 6.675
- The output also displays two statistics, Pearson's R and Kendall's tau, which provide measures of the correlation between the observed and estimated preferences.
- The table also displays Kendall's tau for just the holdout profiles. The holdout profiles (eight in the experiment) were rated by the subjects but not used by the Conjoint procedure for estimating utilities. Instead, the Conjoint procedure computes correlations between the observed and predicted rank orders for these profiles as a check on the validity of the utilities. Generally the holdouts will have lower correlation values.
- However, if no holdouts were used in the experiment, the following output is obtained.
- Similarly a conjoint analysis was run for hair care products. The following outputs were obtained.
- Thus from the output it is clear that the optimal product preferred by consumers is one which nourishes the hair, provides soft and silky hair, has natural ingredients and is in a sub-100 ml package.
Some more insights
Above pie chart clearly shows that there is a huge untapped market for herbal products. This represents customers’ needs that are not yet served.
The perception and attitudes of males towards grooming products have changed dramatically over the last few years. Above diagram indicates that the average male is much more conscious of his looks than ever before.
Conclusion
- From the various statistical analyses conducted, it can be concluded that the perception of men about female products has changed. Currently, men in the age group between 20 – 35 years, are highly concerned about the attributes of the products during purchase, and prefer products which are specially made for men (and not “modified” female products).
- The available product range is not to the satisfaction of the target male population and thus, they are ready to accept the products which meet their specific needs.
- Males belonging to all Socio-economic groups want men’s grooming products. Males belonging to higher income class prefer good quality over low price. Hence, products in this segment should be sold at a premium (i.e. with higher margins). Males belonging middle and lower income range are willing to compromise on quality for lower price and hence there is a need to sell products with low margins but with high volumes.
- From the conjoint analysis it can be concluded that the optimal male hair care product should (i) nourish the hair (ii) provide soft and silky hair (iii) be made from natural ingredients and (iv) be packaged in sub -100 ml packages.
- They optimal male skin care product should (i) offer protection from the sun (ii) provide soft and smooth skin, (iii) contain natural ingredients and (iv) be offered in small pack size (less than 100 gm).
- Thus, we conclude that its feasible and profitable to launch a product in the male grooming industry and the market is ready to accept these products.
Recommendations
- From the analysis, it is clear that ITC should launch products in both the male skincare and hair care categories. There is a demand for herbal products which meet all the attributes mentioned above.
- The products should be sold at a premium and should be targeted at the urban male belonging to an income group earning above Rs. 3 lakh per annum in the age group of 20 to 35 years.
appendix
CATEGORY WISE STUDY
Table 1: Sales of Men’s Grooming Products by Subsector: Value 2004-2009
Table 2: Sales of Men’s Grooming Products by Subsector: % Value Growth 2004-2009
Table 3: Men’s Grooming Product Brand Shares by GBN 2006-2009
Table 4: Forecast Sales of Men’s Grooming Product by Subsector: % Value Growth 2009-2014
QUESTIONNAIRE
http://www.naukrihub.com/india/fmcg/overview/skin-care/