Brand Loyalty in the Sports Drinks Market
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BRAND LOYALTY IN THE SPO TS DRINKS MARKET Neo Phiri short dissertation submitted as partial fulfillment of the requirements for the degree Magister Commercii in Business Management in the Faculty of Management at the University of Johannesburg Johannesburg Supervisor: H B Klopper 2007 ABSTRACT This study focuses on the South African sports sector. This sector, despite being relatively small, continues to grow due to growing consumer health consciousness. Health and energy are the biggest trends which drives this sector. It is a competitive market where companies use aggressive advertising to gain market share, and growth is driven partially by the augmented health consciousness of South African consumers including consumption by athletes during exercise. World Soccer Cup to be held in South Africa in 2010 may be prompting many South African food and beverage companies to be watching the sports world trends. In 2006, the South African sports drinks market estimated at R853.8 million grew by 7.7% to a volume of approximately 78.7 million liters. This sector offers a cost saving benefit in terms of Rand per liter compared to ready-to-drink products. Sports drinks will continue to increase, due to consumption by many athletes during exercise. The following study concerns the extent of brand loyalty amongst university students attending campus gyms in the Gauteng province, specifically at the University of Johannesburg, Kingsway campus (APC), University of Pretoria and Monash University. More specifically, it focuses on aspects that play a significant role in consumers decision making process, and factors that are considered when sports drinks are being purchased. A total of 196 interviews have been conducted, 18 were not fit for analysis therefore 178 were fit for response rate 178/196=90.8%. These questionnaires were designed to specifically measure the extent of brand loyalty amongst university students. A number of factors were identified as the main influencers and deterrents of sports drink purchase. Nutritional information on the packaging label and functional benefits were perceived to be of the utmost importance in the purchasing decision. Due to the fact that this study was implemented within the three stated universities in the Gauteng province, it is important to note that the findings of this study cannot be generalised, thus providing an opportunity for future comparative research. Acknowledgement I would like to thank the following people whose continuous guidance, support and love have made completing this research a reality: The Almighty, my Lord and Saviour, who has made all this possible. My parents, Batho and Sonono Phiri, for instilling the culture of learning in our family. My siblings, Comfort, Karabo, Piletso and Omphile for tolerating and loving me. Tshepo, for loving me, encouraging and continuously challenging me. My friends, for listening to me and supporting me. My mentor and friend, Dr Melanie Louw for always believing in me. Mr HB Klopper, thank you for all your help in supervising and advising me through this study and for your experience, insight, guidance and patience. vvnacnaa TABLE OF CONTENTS ABSTRACT ACKNOWLEDGEMENTS LIST OF FIGURES LIST OF TABLES CHAPTER 1 RIENTATION 1 1.1. INTRODUCTION 1 1.2. PROBLEM STATEMENT 3 1.3. THE PURPOSE OF THE STUDY 7 1.4. RESEARCH OBJECTIVES 7 1.4.1. Primary research objective 7 1.4.2. Secondary research objectives 7 1.5. RESEARCH METHODOLOGY 8 1.5.1. Sampling 8 1.6. NATURE AND FORM OF RESULTS 8 1.7. THE IMPORTANCE OF THE STUDY 9 1.8. VALUE OF THE STUDY 9 1.9. DEMARCATION AND SCOPE OF THE STUDY 10 CHAPTER 2 AN OVERVIEW OF BRAND LOYALTY 12 2.1. INTRODUCTION 12 2.2. CONCEPT OF BRANDING AND BRAND LOYALTY 12 iii 601.8 1111,011111.0 2.2.1. Product versus Brand 14 2.2.2. Brand loyalty defined 16 2.2.3. Strategic value of brand loyalty 21 2.2.4. Measuring brand loyalty 31 2.2.5. The Stages of brand loyalty 33 2.2.6. Maintaining and enhancing brand loyalty 35 2.3. CONCEPT OF CONSUMER BUYING BEHAVIOUR 37 2.3.1. Consumer Behaviour Theory 37 2.3.2. The Consumer Decision making process 39 2.3.3. Factors influencing the consumers decision making process 42 2.3.4. Brand loyalty and repeat buying behaviour 44 2.3.5. Generation Y 46 2.4. CONCLUSION 55 CHAPTER 3 OVERVIEW OF THE SPORTS DRINKS MARKET 56 3.1. INTRODUCTION 56 3.1.1 Manufacturers 59 3.1.2 Packaging Trends 62 3.1.2.1 Industry Packaging Trends and Characteristics 63 3.1.2.2 Global Trends 73 3.1.2.3 Primary Packaging 74 3.1.2.4 Plastic 74 3.1.3 Outlet Distribution 75 3.1.4 New Products and Promotions 77 3.1.5 Consumption per capita 77 3.1.6 Historical Average Retail Selling Price 78 3.1.7 Growth Prospects 80 iv %ALM ICH lb" 3.2. INDUSTRY TRENDS DEFINED BY THE MARKETING MIX CONCEPT 81 3.2.1. Product 81 3.2.2. Price 83 3.2.3. Promotions 84 3.2.4. Place 84 3.2.5. Physical Evidence 86 3.2.6. Processes 86 3.2.7. People 6 3.3. CONCLUSION 87 CHAPTER 4 89 RESEARCH METHODOLOGY AND PROCEDURE 4.1. INTRODUCTION 89 4.2. RESEARCH DESIGN 90 4.3. PRIMARY DATA ANALYSIS 90 4.4. DATA ANALYSIS 92 4.5. METHODS OF COLLECTING QUANTITATIVE DATA 92 4.5.1. Fieldworkers 93 4.6 SAMPLING SIZE DETERMINATION AND THE SELECTION F THE SAMPLING METHOD 93 4.6.1. Sample size 94 4.6.2. Determining the sample size 94 4.6.3. Defining the target population 95 4.7. QUESTOINNAI RE DESIGN 95 4.7.1. Validity 97 4.7.2. Reliability 99 4.7.3. Choice of scale 99 4.7.4. Questionnaire format and content 100 4.8 ANALYSIS 101 %rtIFIllefil5 4.9 DATA CODING AND EDITING 101 4.9.1 Coding 101 4.9.2 Editing 102 4.10 STATISTICAL PROCEDURES 102 4.10.1 Descriptive statistics 102 4.10.2 Statistical techniques and procedures implemented in this research 102 4.10.3 Graphic representation of data 103 4.11 CONCLUSION 104 CHAPTER 5 RESEARCH FINDINGS AND INTERPRETATIONS 105 5.1. INTRODUCTION 105 5.2. FINDINGS 105 5.2.1. Section A: Demographic Information 105 5.2.2. Section B: Consumption Frequency 108 5.3. RESULTS OF STATISTICAL TESTING 114 5.4. CONCLUSION 115 CHAPTER 6 CONCLUSIONS, IMPLICATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH 116 6.1. INTRODUCTION 116 6.2. ACHIEVEMENT OF OBJECTIVES 116 6.2.1. Primary objective 116 6.2.2. Secondary objectives 117 6.3. LIMITATIONS 118 6.3.1. Limitations in the literature review 118 6.3.2. Limitations in the empirical research 118 6.4. RECOMMENDATIONS FOR FUTURE RESEARCH 119 vi %.%/1111C1111Z, 6.5. CONCLUSION 119 CHAPTER 7 REFERENCES 120 CHAPTER 8 APPENDICES 132 8.1. APPENDIX A: QUESTIONNAIRE 8.2. APPENDIX B: FREQUENCIES 8.3. APPENDIX C: CROSS TABULATIONS vii ..onienis LIST OF FIGURES I I Page: Figure 1.2: Alternative Growth Strategies Matrix 4 Figure 2.1: The Stages Of Brand Loyalty 33 Figure 2.2: Consumer decision making process 41 Figure 2.3: Factors influencing consumer behaviour 43 Figure 2.4: Repeat Purchase Behaviour and Brand Loyalty 44 Figure 2.5: Level of Involvement and Brand Loyalty 45 Figure 3.1: Volume of Sports Drinks by Subcategory 57 Figure 3.2: Global Sports Beverage Launches over Past Decade 5 Figure 3.3: South Africa Sports Beverage Launches in Past 59 Decade Figure 3.4: Key Success Factors 62 Figure 3.5: Latest Top Global Trends 63 Figure 3.6: Packaging Trends - Pack Size 64 Figure 3.7: Top 10 Global Flavours - Past 5 Years 65 Figure 3.8: Top 10 Global "Food"/Nutrition Claims-Past 5 Years 67 Figure 3.9: The Four Ps of The Marketing Mix 81 Figure 5.1: Respondent Age 105 viii ,60%.111161 310 LIST OF TABLES Page: Table 2.1: The Definition And Benefits of Brands 15 Table 2.2: The Loyalty Matrix - Priorities 24 Table 2.3: Response To Out-Of-Stock Action 41 Table 2.4: Population Estimates By Gender And Age In Gauteng 51 Table 2.5: Demographic Characteristics Of Generati*n 52 Table 3.1: Sports Drink Manufacturers 60 Table 3.2: Comparison Of Sports Drinks Beverages In SA 61 Table 3.3: The Main Food Labelling Requirements And Examples e Information Than Can Be Provided By Food 71 Manufacturers Table 3.4: Channel Definitions 75 Table 3.5: Outlet Distribution Of Sports Drinks 75 Table 3.6: Historical SA Per Capita Consumption per year selling 76 Price Per Litre Of Sports Drinks Table 3.7: Incidence Of Usage By LSM Group Forecast 78 Table 3.8: Selling Price Per Litre of Sports Drinks 79 Table 3.9: Sports Drink Growth Forecast 80 Table 3.10: Packaging Solutions 83 Table 3.11: General Elements of The Physical Environment 85 Table 4.1: Linkages Between Questions In The Questionnaire, 97 Research Objectives And Research Hypotheses Table 5.1: Demographic Profile 106 Table 5.2: Sports Drinks being sold at gym 106 Table 5.3: Sports Drinks being sold at gym — by University 107 Table 5.4: Branded refrigerator at gym where sports drink is being 108 ix ‘of.71111.G1 1110 sold from Table 5.5: Attendance of gym per week 108 Table 5.6: Number of years going to Gym 109 Table 5.7: Activities Done At Gym 109 Table 5.8: Last purchase of Sports Drink 110 Table 5.9: Frequency of Sports Drinks Consumption 110 Table 5.10: Components of the Package 111 Table 5.11: Ranking of characteristics of Sports Drinks 112 Table 5.12: Characteristics of Sports Drinks 112 Table 5.13: Important factors when purchasing a Sports Drink 113 Table 5.14: Favourite Sports Drinks 114 x Chapter 1 CHAPTER 1 ORIENTATION "Marketing should focus on market creation, not market sharing." - Regis McKenna 1.1 INTRODUCTION Sports drinks are essentially beverages containing nutrients and electrolytes to replace those lost by the body during physical exertion, or to improve and sustain performance (BMI Foodpack, 2007:7).