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Factors affecting customer perception of Nestle in Pakistan

4398 words (18 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Research Paradigm:

My research is qualitative as well as quantitative. The major portion of the research is qualitative as most of the data is non-numeric, used in theory building, having small sample size and the results are not generalized. The assessment of income levels are covered under quantitative paradigm. Basic information is qualitative in nature but I have operationalised all the variables to measure them quantitatively. I have measured the scores using nominal and ordinal scales. E.g. for measuring the scores of customer perception i have used the Likert scale where score ranges from 1, indicating strongly disagree , to 5, very strongly agree. Therefore in mine research both approaches are moving side by side.

My research is deductive as i have stated the problem statement initially and then have broken down the statement into parts research questions. i selected the sample size of 18 and have made a sampling framework and questionnaire, collected the data and analyzed it using SPSS and qualitative methods and have made conclusions.

It is interpretive research as i have taken sample’s data and then interpret it according to people’s thinking, knowledge and preferences, this suggest more flexible approach to data collection.

The research is non-experimental as i did not focus on the control or focus group. i have conducted the research for existing group i.e. Social Economic Classes. The survey is conducted in natural setting the sampling technique is the non probability sampling technique , and i have used convenience and quota sampling for this purpose ( see figure 1)

The research is mixture of descriptive and exploratory research as it describes the factors affecting customer perception and exploratory as measures the magnitude and direction of relations between variables.

The Research Objective

This research is significant for ‘Nestle’ as they can judge the perception of their customers and to judge how customer respond when company launches new variant, nestle can use it for analyzing the acceptability of iron added milk. It can also analyze the product life cycle stages and can make defensive strategies to maintain its position as a market leader like nestle this study is useful for any packaged milk company as it can use it for competitor analysis. Furthermore, any company who want to launch iron added milk in the market can use it for checking customer response and perception of customers. i will analyze the factors that make up customer’s perception; companies can work on those factors to make their products differentiated from the market.

Data Preparation, Reduction and transformation:

The purpose of this study is to analyze the factors that affect customer perception leading towards purchase decision about Nestle Milkpak with Iron. We extracted some factors from literature review and used those factors in building questionnaire. The extracted factors are customer knowledge, quality, availability, price, promotion, packaging and positioning. These factors lead to customer perception which ultimately leads to the purchase decision of Milkpak with Iron.

Each factor is used in multiple questions in order to extract result from different dimensions. For instance, customer perception is operationalised through questions 9 and 14 of the questionnaire. (See questionnaire in Appendix)

Coneceptual Framework

Detailed Framework

Customer Perception

Customer Sophistication

Customer Knowledge

Importance of Iron for body

Milkpak

Iron

Brand

Image

Quality

Packaging

Purchase

Decision

Milk

Benefits

Promotion

The independent variables are; Promotion, Packaging, Quality, Brand, Importance of Iron for body, Customer Sophistication, Benefits, Milk, Customer Knowledge, Milkpak. These variables can affect the level of intensity in the dependent variable ‘Perception’ which ultimately leads towards another dependent variable i.e. Purchase Decision.

The above variables are operationalized through questionnaire using different scales. The summary of operationalization is given below:

Factors

Question Numbers

Operationalization Tools (Scales)

Functionality

Q14

Ordinal scale

Price

Q10

Ordinal scale

Packaging

Q11

Ordinal Scale

Availability

Q13

Ordinal Scale

Benefits

Q9

Ordinal Scale

Brand recall

Q4, Q5,Q6

Nominal Scale

Milk and Milkpak usage

Q2, Q3,Q7,Q8

Nominal Scale

Purchase

Q1, Q13

Nominal Scale

For data collection i have approached members from three SECs (Socio-Economic Classes) who use milkpak with iron. i divided my samples in two age groups the young one between age of 16 to 30 and the aged group ranging from 30 to 45. The rationale behind selection of these two groups is their influence on Purchase decision. i approached individuals using milkpak with iron. The questionnaire i prepared contained the nominal and ordinal scales. Initial questions of questionnaire are about the usage, purchase pattern and brand recall. The scale used for this purpose is the nominal scale. The last consists of the question which is measured by Ordinal Scale.

Analysis:

i have made descriptive stats for analysis in the beginning .In the initial questions i have calculated the central tendency and frequencies to find how Milkpak with iron is positioned as well as to find purchase intention and retention level of its users.

For the second half of our report i have used inferential statistics. i have stated our null and alternative hypothesis. Then i checked the level of significance and found the correlation between customer perception and individual factors which make up customer perception. (See our data sheet in annexure)

Descriptive Statistics:

My first question in survey is about the retail outlet. The rationale for including this question is that i can analyze from which SEC (A, B or C) and age group, the customer belongs. It can help companies to give better understanding from where the target market shops. Companies can apply better promotional techniques on those outlets to have a competitive edge.

From the data given below i observed that my target market purchase milk from departmental and general stores.

Purchase

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Departmental Store

5

27.8

27.8

27.8

Super Market

3

16.7

16.7

44.4

General Store

5

27.8

27.8

72.2

Retail Store

1

5.6

5.6

77.8

Pharmacy

4

22.2

22.2

100.0

Total

18

100.0

100.0

Second and third question is about the average consumption of packaged milk and Milkpak consumption. These questions help the company to make distribution strategies according to the demand of SKUs

Statistics

consumption

Consumption Of Milkpak

N

Valid

18

18

Missing

0

0

Mean

3.6111

2.6667

Consumption of Packaged Milk

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1 Liter

4

22.2

22.2

22.2

1.5 Liter

3

16.7

16.7

38.9

2 Liters

7

38.9

38.9

77.8

Any other

4

22.2

22.2

100.0

Total

18

100.0

100.0

Consumption of Milkpak

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1/2 Liters

5

27.8

27.8

27.8

1 Liter

6

33.3

33.3

61.1

2 Liters

4

22.2

22.2

83.3

Any other

3

16.7

16.7

100.0

Total

18

100.0

100.0

From the above data i concluded that the average consumption of packaged milk is 3.6 and average consumption of Milkpak with iron is 2.66. Demand for packaged milk SKU is more for 2Liters pack and demand for 1Liter Milkpak pack is more than other SKUs.

Question number 4, 5 and 6 are designed to test brand recall and evaluation of advertising campaigns of MilkPak with Iron compared to other brands. Question number 4 evaluates the likability of Ads of milkpak as compared to other brands, fifth question evaluates the add frequency and question number 6 evaluates brand recall.

Likability of Ads:

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Olpers

11

61.1

61.1

61.1

Good Milk

1

5.6

5.6

66.7

Nestle Milkpak With iron

5

27.8

27.8

94.4

Any Other

1

5.6

5.6

100.0

Total

18

100.0

100.0

Frequency of Ads

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Hala

1

5.6

5.6

5.6

Haleeb

1

5.6

5.6

11.1

Olpers

10

55.6

55.6

66.7

Good Milk

1

5.6

5.6

72.2

Nestle Milkpak With iron

4

22.2

22.2

94.4

Any Other

1

5.6

5.6

100.0

Total

18

100.0

100.0

Brand Recall

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Today

1

5.6

5.6

5.6

Within Last 7 Days

9

50.0

50.0

55.6

Within this Month

4

22.2

22.2

77.8

More than a month Ago

4

22.2

22.2

100.0

Total

18

100.0

100.0

From the above data i have analyzed that the likeability, Recall and Ad frequency of Nestle milkpak with iron is less than Olpers which is the direct competitor of Milkpak, but is more than other brands in the market. According to the table of brand Recall more than 50% of the respondents have seen the ad in the week the response is taken.

Question 7 and 8 measure the usage of Milkpak compared to other brands. Question number 8 is more specific it measures the how many people use milkpak for other uses like for making desserts more than other brands

Usage of MilkPak as compared to other brands

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Olpers

7

38.9

38.9

38.9

Good Milk

1

5.6

5.6

44.4

Nestle Milkpak With iron

8

44.4

44.4

88.9

Any Other

2

11.1

11.1

100.0

Total

18

100.0

100.0

Usage of Milkpak for alternative purposes

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Haleeb

2

11.1

11.1

11.1

Olpers

4

22.2

22.2

33.3

Candia

1

5.6

5.6

38.9

Gourmet

1

5.6

5.6

44.4

Nurpur

1

5.6

5.6

50.0

Nestle Milkpak With iron

7

38.9

38.9

88.9

Any Other

2

11.1

11.1

100.0

Total

18

100.0

100.0

From the data and charts given above i have inferred that people use Milkpak more than other brands either for dessert making or for taking milk. Frequency of Milkpak is more than other brands in both cases.

Question 13 is about the purchase intention, recommendation and brand switching. For these questions ‘yes’ is coded as 1, ‘No’ as 2, ‘don’t know’ as 3. First table evaluates purchase intention. In this table 77% of the Respondents say that they will repurchase the brand. Second table describes that 72% of the Respondents will refer this brand to others. Third table describes the switching trend if respondents will not find this brand. This is alarming for the company that respondents may switch. Company should strive hard to increase its brand loyalty.

Purchase

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1

14

77.8

77.8

77.8

2

3

16.7

16.7

94.4

3

1

5.6

5.6

100.0

Total

18

100.0

100.0

Refer

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1.00

13

72.2

72.2

72.2

2.00

3

16.7

16.7

88.9

3.00

2

11.1

11.1

100.0

Total

18

100.0

100.0

Switching

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

1.00

14

77.8

77.8

77.8

2.00

4

22.2

22.2

100.0

Total

18

100.0

100.0

Inferential Statistics:

In this part i have found the correlation between customer perception and the factors which make up the customer perception. There are five factors which make up the customer perception which i have included in our research. These factors include functionality, price, promotion, availability and benefits. i have used SPSS for finding correlations. For interpretation two important aspects are magnitude and direction of correlation. Coefficient of correlation is the magnitude of correlation and sign of coefficient of correlation determines the direction of correlation.

Method of Correlation and coefficient of correlation: my data is not normally distributed so i will use Kendall’s tau-b Correlation coefficients range in value from -1 (a perfect negative relationship) and +1 (a perfect positive relationship). A value of 0 indicates no linear relationship

Test of Significance: If the relationship is known in advance i can use one tailed but here i don’t know the relation in advance so i will use two tailed Probabilities.

Flag significant correlations: Correlation coefficients significant at the 0.05 level are identified with a single asterisk, and those significant at the 0.01 level are identified with two asterisks.

The data sheet is given below. In this sheet i have included customer perception and factors affecting customer perception.

Hypothesis Statement 1:

H0 (Null Hypothesis): There is no relationship between customer perception and functionality.

H1 (Alternative Hypothesis): There is a relationship between Customer Perception and Functionality.

Nonparametric Correlations Functionality and perception:

Functionality

Perception

Kendall’s tau_b

Functionality

Correlation Coefficient

1.000

.431(*)

Sig. (2-tailed)

.

.018

N

18

18

Perception

Correlation Coefficient

.431(*)

1.000

Sig. (2-tailed)

.018

.

N

18

18

* Correlation is significant at the 0.05 level (2-tailed).

Interpretation:

Magnitude: The correlation coefficient between functionality and customer perception is 0.431 which is nearly moderate.

Direction: The sign with coefficient of correlation is positive which shows there is a direct relation between them which shows, as Functionality increases perception gets strong

Significance: The significance level i defined was 0.05 and table shows the significance level of 0.018 which is less than 0.05 so i will reject our null hypothesis and will say that there is a positive relationship between Functionality and Perception.

Hypothesis Statement 2:

H0 (Null Hypothesis): There is no relationship between Customer Perception and Price.

H1 (Alternative Hypothesis): There is relationship between customer perception and price

Nonparametric Correlations Price and perception:

Perception

Price

Kendall’s tau_b

Perception

Correlation Coefficient

1.000

.628(**)

Sig. (2-tailed)

.

.000

N

18

18

Price

Correlation Coefficient

.628(**)

1.000

Sig. (2-tailed)

.000

.

N

18

18

** Correlation is significant at the 0.01 level (2-tailed).

Interpretation:

Magnitude: The correlation coefficient between price and customer perception is 0.628 which is nearly moderate.

Direction: The sign with coefficient of correlation is positive which shows there is a direct relation between them. As price increases people perceive, its quality is getting better.

Significance: The significance level i defined was 0.01 and table shows the significance level of 0.00 which is less than 0.01 so i will reject my null hypothesis and will say that there is a positive correlation between Price and Perception. Price of Milkpak plays important role in its perception and positioning.

Hypothesis Statement 3:

H0 (Null Hypothesis): There is no a relationship between Customer Perception and Promotion.

H1 (Alternative Hypothesis): There is a relationship between customer perception and promotion.

Nonparametric Correlations Promotion and perception:

Perception

Promotion

Kendall’s tau_b

Perception

Correlation Coefficient

1.000

.415(*)

Sig. (2-tailed)

.

.026

N

18

18

Promotion

Correlation Coefficient

.415(*)

1.000

Sig. (2-tailed)

.026

.

N

18

18

* Correlation is significant at the 0.05 level (2-tailed).

Interpretation:

Magnitude: The correlation coefficient between promotion and customer perception is 0.415 which is nearly moderate.

Direction: The sign with coefficient of correlation is positive which shows there is a direct relation between them. As promotion increases perception of people get better.

Significance: The significance level i defined was 0.05 and table shows the significance level of 0.026 which is less than 0.05 so i will reject our null hypothesis and will say that there is a positive correlation between Promotion and Perception.

Hypothesis Statement 4:

H0 (Null Hypothesis): There is no relationship between Customer Perception and availability.

H1 (Alternative Hypothesis): There is a relationship between customer perception and availability.

Nonparametric Correlations Availability and perception:

Perception

Availability

Perception

Kendall’s tau_b Correlation

1

.572(*)

.013

N

18

18

Availibility

Kendall’s tau_b Correlation

.572(*)

1

Sig. (2-tailed)

.013

N

18

18

* Correlation is significant at the 0.05 level (2-tailed).

Interpretation:

Magnitude: The correlation coefficient between availability and customer perception is 0.572 which is nearly moderate.

Direction: The sign with coefficient of correlation is positive which shows there is a direct relation between them. People perceive it as a good brand if its available in their locality or they find it on the stores from where they shop

Significance: The significance level i defined was 0.05 and table shows the significance level of 0.013 which is less than 0.05 so i will reject my null hypothesis and will say that there is a positive correlation between availability and Perception.

Hypothesis Statement 5:

H0 (Null Hypothesis): There is no relationship between customer perception and Benefits.

H1 (Alternative Hypothesis): There is a relationship between customer perception and benifits.

Nonparametric Correlations Benefits and perception:

Perception

Benefits

Kendall’s tau_b

Perception

Correlation Coefficient

1.000

.669(**)

Sig. (2-tailed)

.

.000

N

18

18

Benefits

Correlation Coefficient

.669(**)

1.000

Sig. (2-tailed)

.000

.

N

18

18

** Correlation is significant at the 0.01 level (2-tailed).

Interpretation:

Magnitude: The correlation coefficient between benefits and customer perception is 0.669 which is nearly moderate.

Direction: The sign with coefficient of correlation is positive which shows there is a direct relation between them. As there are more benefits people perceive it as a better product.

Significance: The significance level i defined was 0.01 and table shows the significance level of 0.00 which is less than 0.01 so i will reject our null hypothesis and will say that there is a positive correlation between Benefits and Perception.

Findings

This research is significant for ‘Nestle’ as they can judge the perception of their customers. Data analysis has given outputs for the factors that were extracted from literature review and then measured through questionnaires. Following results are inferred from the data analysis:

Mostly purchases are made from the departmental and general store.

Mostly selling SKU of Milkpak is 1 liter while the average consumption of milk per day is 2 liters for most of the respondents.

Most of the people like Olper’s ad while Milkpak’s ad likeability is at 2nd rank.

The people, who are not a regular user of Milkpak, prefer Milkpak for desserts.

The most important factor among all the independent factors that effect customer perception is ‘Milkpak Benefits’.

Most of the respondents say that they will repurchase the brand.

Most of the respondents say that they will refer this brand further to others.

Most of the people are likely to switch in case of Milkpak unavailability.

Explanation and Reflection

The findings are based upon the following extracted facts:

Most of the respondents buy Milkpak from departmental and general store which reflects that Nestle must give special attention to the availability of Milkpak in such stores.

The mean usage of milk is 3.6 in which the consumption of Milkpak is 2.6. The average use of milk per day is 2 liters in which 1 liter is of Milkpak.

The usage behaviour of Milkpak is 44.4% with frequency 8 as compared to Olpers (38.9% and 7 respectively).

Milkpak’s ad likeability is 27.8% with frequency of 5 (among respondents) as compared to Olpers’ likeability and frequency i.e. 61.1 and 11 respectively. The advertisement ratio of Milkpak is 22.2% with frequency 4 as compared to Olpers i.e. 55.6% and 10 respectively. Olpers’, stepped into the market by launching a massive campaign featuring some of the biggest stars in Pakistan. Billboards went up at key locations in the major cities, and soon the brand had become a voice above the media clutter-a voice that differentiated Olpers’ brand from the others. This heavy media campaigning has led Olpers to position it strongly in the minds of customers and to grab market share within few years and is now the biggest competitors of Milkpak. Milkpak must take this position and promotion factor into account in order to retain its customers.

77% of the Respondents say that they will repurchase the brand which shows customer satisfaction and trust towards Milkpak.

72% respondents are willing to refer Milkpak to others which shows high recommendation rate and is beneficial for Milkpak.

The only alarming statistics in ‘purchase’ factor is its loyalty measure and intension to switch to other brands. 77% of the respondents are of the view that they will switch to other brand in case of unavailability. This vulnerability shows the lack of customer loyalty towards Milkpak and importance of distribution network for packaged milk brands. This problem can be coped by introducing customer loyality programs and better positioning strategies.

Relationship of Factors with Customer Perception

The magnitude of our all independent variables i.e. functionality, price, promotion, availability and benifits is 0.431, 0.628, 0.415, 0.572 and 0.669 respectively. The correlation range of all the factors with customer perception is moderate.

The maximum magnitude is of ‘benefits’ (0.669) which shows that the perception is affected through ‘benefits’ the most. For instance, Milkpak’s taste, purity, density and nutrition are the factors which the respondents prefer when they have to make decision about Milk and the data shows that most of the respondents are of the opinion that Milkpak provide all of these factors.

The minimum magnitude is of ‘promotion’ (0.415) which shows that Milkpak’s advertisement is not that creative. They have to increase their promotional budget in order to position themselves more strongly as compared to the other brands. For instance, Olpers spend a lot on Below the Line (BTL) promotional activities for example, activities like reaching out to the different locations in various cities and having the housewives participate in learning and showcasing milk-based recipes which intends to create and maintain loyalty amongst the brand’s users. Milkpak must also adopt such promotional activites instead of traditional TV campaigning in order to increase the customer perception and loyalty regarding Nestle Milkpak brand.

Limitations and Mistakes

Following are the limitations of my report.

Time Span

People are reluctant to respond

Access to data

Cost (Paid Articles)

Generalizability

Lack of Expertise

As it is a pilot study and I am not expert, i did not have idea that how i will relate the proposal with the original findings, i found number of lacking in my proposal, so to make it perfect, i had to make some changes in our research questions, conceptual framework and hypothesis as well and finally with come up with this report.

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