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THE PURCHASING BEHAVIOUR IN THE DETERGENT INDUSTRY: A PMB CASE STUDY ON THE FEASIBILITY OF STARTING A NEW DETERGENT BUSINESS VENTURE by DEEPESH NAVNITLAL GHELA B. se (Chem. & Chem. Tech.), PGDIP (Mgt) (Natal) Submitted in partial fulfilment ofthe requirements for the degree ofMaster ofBusiness Administration at the School ofManagement, UKZN, Pmb November 2006 Supervisor: Professor 0 Mahadea Abstract This study analyses the purchasing behaviour of households and briefly on industrial consumers with regard to their detergent purchases. Following from this analysis, the scope for a new detergent business venture will be investigated. The local industry has a plethora of detergent manufacturing companies supplying the retail and industrial markets, thus an appropriate analysis and strategy developed from this study will enable a new detergent business venture to have an improved understanding of the detergent industry in Pietermaritzburg leading to some minimisation of the risks for potential detergent entrepreneurs. The objectives for the study is detailed below. Primary Research Objectives: 1. To examine whether mcome accounts for household purchasing preferences between branded and non-branded detergents. 2. To determine whether location is a factor that must be considered m the marketing ofdetergents. 3. To examine whether there are gender differences in the purchasing behaviour of detergents among households. 4. To determine which are the major factors that influence detergent buying behaviour among industries. Secondary Research Objective: To determine whether there is scope for the introduction of a new detergent venture among households in Pietermaritzburg. This study found that income accounts for differences in purchasing of detergents. The manufacturer of detergents needs to be aware that location is a factor that must be considered in the marketing of detergents. Branded detergents carry a premium price whereas non-branded detergents are cheaper. Correspondingly, the marketer must match the type ofdetergent product to the consumer profile ofthe location in which the business is operating. It was found that gender does not account for differences in monthly expenditure on detergents. Price and quality of detergents were found to be important characteristics for both the household and business user. In addition, it was found that consumers were willing to support a new detergent business venture in Pietermaritzburg. The major variables influencing detergent brand choice in the Pietermaritzburg market seem to be attitudinal variables such as perception regarding the efficacy (QUALITY) of the brand, closely followed by the perception on the value­ for-money (PRICE). Field level promotional activities such as price-offs, freebies associated with different pack sizes of the same brand also seem to impact the choice of the brand, although the impact was low. Base price reduction is generally resorted to quite infrequently and hence a price elasticity measure may be found to be statistically insignificant. A critical result drawn from this study is the importance of attitudes in affecting behavior in the purchase of detergents. In the South African market, it is generally believed that brand attitudes are primarily influenced by advertising. If this assertion is assumed to be true, this research makes a case for better management of consumer attitudes through the deployment of appropriate advertisements using the correct media (Banerjee, 2004: 3). The major recommendations from this study found that manufacturers of household detergents need to dedicate resources to print media when advertising their products. Targeting the most appropriate consumer and capturing potential consumers by television should be looked at by marketers (Dutta-Bergman, 2006: 103). Liquid detergent manufacturers need to major more on the price of the product and the quality. These two factors are critical in ensuring a new detergent business venture is successful and sustainable. Davis (1993: 19) punts 'green marketing' as one of the strategies that may shift consumers to purchase products. Accordingly, companies that can market a 'green' detergent product would have a greater chance of penetrating the market, and gaining market share from the dominant and larger multi-national detergent companies. 11 DECLARATION: I declare that The Purchasing Behaviour in the Detergent Industry: A PMB Case Study on the Feasibility ofStarting a New Detergent Business Venture is my own work, that it has not been submitted before for any degree or examination in any other university, and that all the sources I have used or quoted have been indicated and acknowledged as complete references. Deepesh .N. Ghela October 2006 Signed: ----t-1T-\--H--7';;L------ 111 ACKNOWLEDGEMENTS I wish to thank the following individuals for their time and effort III helping and supporting me in accomplishing dissertation. Professor D. Mahadea for his invaluable guidance, time, understanding and help on this dissertation. Harshna Munglee for constantly motivating me throughout my career. Thank you for all the time spent supporting me and the time waiting for me. Thank you for helping me with my work, and sacrificing your time. I appreciate it and love you. To my parents, Navnitlal and Bhanoo Ghela - Thank you for inculcating in me the need to pursue education as a way to better my life. Thank you for guiding me on that first day at school and in-graining in me that learning is a Iife-long journey. Shaun Ramroop for conducting the statistical analysis. IV TABLE OF CONTENTS Page Abstract Declaration 111 Acknowledgements IV Table ofContents V Chapter 1: Introduction 1 1.1. Background 1 1.2. Motivation 2 1.3. Research Objectives 3 1.4. Benefits ofthe Research 3 1.5. Chapter Plan 4 1.6. BriefConclusion 5 Chapter 2: The Detergent Industry 6 2.1. Introduction 6 2.2. World Detergent Market 7 2.2.1. The World Market for Soap and Detergents 7 2.2.2. Markets in the Developed World 9 2.2.3. The Market in Developing Countries 12 2.2.4. The World's Two Major detergent Manufacturers 14 2.2.5. Advertising and branding ofthe World's largest detergent Manufacturers 18 2.3. The South African Detergent Industry 19 2.4. Consumer purchasing behaviour ofdetergents 30 2.5. Conclusion 35 Chapter 3: Entry Route and Strategies 37 3.1. Introduction 37 3.2. Start-up 37 3.2.1. Advantages ofStart-ups 39 3.2.2. Disadvantages ofStart-ups 40 3.3. Strategic Management for attaining competitive advantages 41 3.4. ' Conclusion 43 v Chapter 4: Research Methodology 45 4.1. Introduction 45 4.2. Research and questionnaire design 45 4.2.1. Statement ofthe problem / research question 45 4.2.2. Research Objectives 45 4.2.3. Data Sources 48 4.2.4. Questionnaire Design 48 4.3. Sample design 51 4.4. Data collection 52 4.5. Sources oferrors in surveys 54 4.5.1. Errors ofnon-observation 54 4.5.2. Errors ofobservation 56 4.6. Data Analysis 59 4.6.1. Coding and scaling 59 4.6.2. Editing and tabulating 60 4.6.3. Blank responses 61 4.7. Analysing Raw Data 61 4.7.1. Feel for data 62 4.7.2. Testing goodness ofdata 63 4.7.3. Hypothesis Testing 65 4.8. Conclusion 65 Chapter 5: Findings and Discussion 66 5.1. Introduction 66 5.2. Structure ofthe sample 66 5.2.1. Gender profile ofthe sample 66 5.2.2. Gross Monthly Income ofthe respondents 67 5.2.3. Area ofresidence 68 5.2.4. The brands ofliquid detergents currently purchased 69 5.2.5. The detergent purchaser in the household 70 5.2.6. The characteristics that influences the purchasing of detergents 71 5.2.7. The monthly expenditure ofhouseholds on liquid detergents 77 VI 5.2.8. Measure ofthe number ofmembers residing in a household 78 5.2.9. The total quantity (literage) ofliquid detergents purchased by households 78 5.2.1O. The influence ofa television medium in helping to determine the choice ofdetergent to be purchased 79 5.2.11. The influence ofa print medium in helping to determine the choice ofdetergent to be purchased 80 5.2.12. Other media pertinent to detergents 81 5.2.13. Branded, Non-branded or both 81 5.2.14. Circumstance to change to non-branded detergent 83 5.2.15. Support for a new detergent business venture 83 5.2.16. Number ofemployees in a firm 84 5.2.17. Gross turnover ofthe firm 85 5.2.18. Business activity ofthe firm 86 5.2.19. Detergent procurement in the sampled firms 87 5.2.20. Monthly expenditure ofthe sampled firms on detergents 88 5.2.21. Total monthly quantity ofdetergents purchased by firms 88 5.2.23. Influence oflocation on the choice ofsupplier 91 5.2.24. E-commerce influence on a firms decision to purchase detergents 91 5.2.25. Support for a venture 92 2 5.3. Chi-square Tests (X ) 93 5.3.1. Test between gender and monthly expenditure of household detergents 93 5.3.2. Chi-square test between area ofresidence and monthly expenditure 94 5.3.3 The most important characteristics affecting the purchasing ofdetergents for households and businesses 95 5.3.4. Chi-square test for the main characteristics 98 5.3.5. Influence oftelevision media 103 5.3.6. Influence ofprint media 105 5.3.7. Purchasing between branded or non-branded detergents 108 5.3.8. Purchase ofbranded/non-branded detergents by area 110 VB 5.4. Logistic regression 111 5.5. Multiple regression for industrial demand for detergents 113 5.6. Association between attributes that influences a firm to purchase detergents 115 5.7. Test for an association between e-commerce facilities and the firms business activities 118 5.8. Conclusion 118 Chapter 6: Synthesis, recommendations and future research 121 6.1. Introduction 121 6.2. Synthesis 122 Chapter 7: Recommendations, Future Research and Limitations of Study 129 7.1.

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