What

factors drive
brand
loyalty in
FMCG
products?
Dommeti Gaayathri - DM 17215
Nadesakumar - DM 17224
Priya RJ - DM 17234
Sai Vishnu M - DM 17244
Surekha R - Dm 17253
Tara Vinyasa - DM 17256

Section 02 | Group 04

TABLE OF CONTENTS:
I.

Introduction

II.

Abstract

III.

Qualitative research

IV.

Hypotheses

V.

Questionnaire Design

VI.

Analysis

VII.

Method Used

11

VIII.

Regression

13

IX.

Demographics of Respondents

15

X.

Conclusion

16

XI.

References

16

Introduction
India's FMCG market is flooded with local as well as global brands that constantly compete for every
consumer's attention. In this world of increased brand presence, and the varieties each brand has to
offer. Brand Loyalty is an often debated topic, and is one of the important factors that contributes
towards increased purchase of one's brand. The FMCG industry is one of the most dynamic industries
worldwide. Also known as Consumer Packaged Goods or CPG its total worth is $570 Billion of which the
Indian FMCG industry forms about $55 Billion. That's approximately 10% of the Global FMCG market. It
is the fourth largest sector that contributes to the Indian Economy where some of the companies have
been around for almost two centuries now. A typical product would be toothpaste or soaps or
detergents, and some of the famous brands that have housed some of our favourite products include:
Unilever LTd, Procter & Gamble, ITC Ltd and so on.
It is one of the most established industries, and while some people may hold deeply held values towards
using some of these brands, there are others who would switch from one brand to another based on
some kind of internal or external trigger. In similar studies conducted earlier, product attributes,
marketing capabilities, aesthetics, depth of product line and brand popularity, value and perceived
benefits among others were some of the driving factors of brand loyalty.
This study seeks to explore the various drivers for consumers what gives them an innate sense of loyalty
towards a particular brand? The research goes on to fill in the gaps from previous studies, consider
those unique variables which were not considered earlier.
The FMCG sector has developed at an average of 11% annually, over the last decade. The FMCG
market is expected touch US$ 110.4 B by 2020, with the rural FMCG market anticipated to increase at
17.7% which would be worth US $100 B by 2025.

Indian FMCG Market

Food Products
Personal Care
Fabric Care
Other products

Abstract
This paper examines some of the key factors that drive brand loyalty among Fast Moving Consumer
Goods products. The main aim behind this study was to develop an insight as to what drives people to
remain loyal to the various brands they use in their everyday lives. It was observed that brand loyalty
depended on a number of reasons including (but not exclusive to) the duration of use of the particular
product, the availability in local stores/supermarkets, the quantity of consumption, the frequency of
use, brand popularity, online brand visibility and so on.
Keywords: brand loyalty, fmcg, brand benefits

Qualitative research
Choice of Research: Focus Group Discussion
A Focus Group Discussion was conducted, the sample of 10 participants chosen were homogenous.
They were between the age group of 21-25, and were consumers of several leading brands such as
Colgate toothpaste, Lux soap, Dove soap/shampoo, Surf Excel, Ariel and so on. The discussion was
moderated and the neutral tone of the conversation was retained.
Why FGD?
A common topic such as brand loyalty on FMCG products could be easily talked and discussed. Also the
topic is open-minded and demands fresh insights and factors which drives them to be loyal to the
brand. The insights could be easily articulated by the customers with proper moderation. Hence,
default option of Focus group discussion was our choice.
The reason this discussion was conducted was to gain clarity behind each of their brand sentiments.
The overall line of discussion was centred around: What made them loyal to the brands they have been
using for more than 5 years? On the flip side, the discussion also touched upon; if they had switched
from one brand to another recently and the reason for the same. While one participant held one
particular brand close to their heart, the same brand wasn't considered as good by another participant.
Findings from FGD
The reasons were discussed out, it was observed that a majority of the participants were inclined
towards a particular brand mainly for its functional benefits. For example, if it was a shampoo,
depending on the hair type was it able to deliver what was expected such as removing frizziness,
dandruff control, protection from further damage. An aspect of hedonic benefits was also present
however, it was not the key driver for brand loyalty. The various independent variables mentioned
earlier were all discussed and a qualitative analysis was done.

Product Used

Category

Brand Name

Duration Of
Use

Tresseme

Shampoo/conditioner

Unilever

2 years

Loreal Paris

Shampoo

Loreal

6 years

Dove

soap

Unilever

More than 7
years

Dove
Lux

shampoo
Soap

Unilever
Unilever

2 years
6 years

Colgate

Toothpaste

ColgatePalmolive

6 years

Head &
Shoulders

Shampoo

P&G

7 years

Ariel

Detergent

P&G

2 years

Parachute

Oil

Marico

8 years

Maggi

Noodles

Nestle

15 years

Bournvita

Chocolate mix

Cadbury

10 years

Lakme

Sun Screen

Unilever

3 years

Possible
Reason for
Loyalty
Suits her hair
very well, for
salon effect,
variants
Its effective in
smoothening
hair
Moisturizer
effect, soft on
skin
Soft on skin
Smell, soft,
suits her skin
very well
Used since
childhood
Effective
dandruff
control unlike
other anti
dandruff
shampoos
Gentle on
clothes, no
discolouring
Maintains
health of hair
Best snack
idea
Best taste
when mixed
with milk
effective

For products like toothpaste, participants tend to stick to the product which there were using
right from their childhood. They dont shift the product until and unless an explicit need arises.
For instance, they shift to another toothpaste only when the doctor advises to do so.

 80% of the respondents would try any new product launched by the same brand. Whereas,
respondents werent ready to try the same product or to say, similar product launched by
another brand. But, to an extent, it also depends on the perception of the brand. If the persons
brand perception is high, then he might try the product and if he likes it, he will definitely switch
to it.
Respondents normally prefer the brand which suits their personal selection criteria.
When the respondents got to get some negative insights on the product which they were using
now, initially they would check on the authenticity of the information and then decided on
quitting or not. Also, they wont switch unless and until they personally experience the same
problem. If one defective product (handling) might not have produced the proper results, it
doesnt mean that the product is not good.
Respondents prefer products in high volume since they are sure about not shifting.
Once people are loyal to the brand, they care least about the packaging.
Suppose you are using a brand and it doesnt have a particular feature which you wanted.
Another brand is coming up with the same feature, would you like to shift?
o Respondents Insights:
I will try the new brand if the feature is important for me.
I will read the reviews before experimenting the new product and also i will make sure that it is
not degrading the earlier qualities.
Respondents unanimously agreed that they dont shift brand when they see a bad
advertisement of the brand which they are using now. But they also pointed out that they start
buying few products when they find an attractive advertisement, which is quite contradictory.
Also perception of advertisement differs from person to person.

Hypotheses
Our choice of product to test our hypotheses was Shampoos.
Decision Variables
Dependent variable: Brand Loyalty
Independent variables: brand popularity, brand image, value and perceived benefits, Family/Peer
Influence, advertisement, substitution, consumer satisfaction
Control Variables: Age, Gender, Hair length

Main Hypothesis
Null Hypothesis (H0) - Consumers are not loyal to the shampoo brand they use
Alternative Hypothesis (H1) - Consumers are loyal to the shampoo brand they use.

Set of Hypothesis for Independent Variables

1) H0: Brand popularity has no bearing on brand loyalty.
H1: There is a positive relationship between online brand popularity and brand loyalty.
2) H0: Brand image does not affect brand loyalty.
H1: There is a positive relationship between brand image and brand loyalty.
3) H0: Value and perceived benefits are not a driver of brand loyalty.
H1:There is a positive relationship between value and perceived benefits and brand loyalty.
4) H0: Advertisements of shampoos are not a driver for brand loyalty.
H1: Advertisements have a bearing on brand loyalty.
5) H0: Substituting of shampoos has an no effect on brand loyalty.
H1: Substituting of shampoos has an effect on brand loyalty.
6) H0: Consumers who are satisfied with their brands are not brand loyal.
H1: Consumers who are satisfied with their brands are brand loyal.
7) H0: There is no interaction between brand popularity and brand image.
H1: There is a positive interaction between brand popularity and brand image.
8) H0: There is no interaction between brand popularity and customer satisfaction.
H1: There is a relationship between brand popularity and customer satisfaction.

Questionnaire Design
The scale of measurement used here is the 5-point Likert Scale.
Brand loyalty
1.
2.
3.
4.

If I like a brand, I rarely switch from it just to try something different

I get bored of using the same brand of shampoo even if it is good for my hair
Once I find a shampoo that suits my hair, I stick with it
The shampoo brand I'm using suits me well

Substitution
1.
2.
3.
4.

I enjoy exploring several different alternatives (like shikhai) or brands while shopping
A lot of the time I feel the urge to buy something really different from the brands I usually buy.
I am the kind of person who would try any new brand in the first chance I get
How likely would you switch brands if alternative brand was cheaper?

Family/peer influence
1.
2.
3.
4.

I would rather wait for my friends to try a new brand of shampoo, rather than try it myself
I would go for the same brand of shampoo that my family uses.
It is important for me that my friends approve of the brand of shampoo I use
I frequently gather information from my friends or family before I purchase a brand

Advertisement
1. It's hard to put in words, but this commercial leaves me with a good feeling about using this
brand
2. I can get an idea of the true benefit by watching my brand's advertisement
3. I could really relate to the hair related issues discussed in the ad
4. This ad was meaningful to me
Value and perceived benefits
1.
2.
3.
4.

Using this brand makes me feel good about myself

I choose brands because of the quality they represent
The brands I use reflect my social status
I can tell a lot about the product's quality from the brand name

Brand image
1.
2.
3.
4.

I buy brands that are consistent with my values

I choose brands because I support the values they stand for
I prefer buying those brands that have a good public standing
This is a good brand (that I'm using), I wouldnt hesitate recommending it to others.

Brand popularity
1.
2.
3.
4.

I prefer buying the best selling brands.

The most advertised brands are usually very good choices.
I only look for the utility value and not whether it is famous .
I buy based on celebrities that endorse the brand

Consumer satisfaction
1. What is your general experience with your shampoo? (1= much worse than expected, 5 = better
than expected)
2. This brand matches my ideal product in the shampoo category
3. Functional performance of brand is satisfactory
Age
1. You belong to the age group:
10 - 18
18- 25
25-40
40 and above
Gender
Please state your gender
Hair Length
I have :
short, cropped hair
shoulder length hair
hip length hair

Analysis:
Scale: CRONBACH FOR BRAND LOYALTY - DEPENDENT VARIABLE
Case Processing Summary
N
Valid
Cases

Excluded
Total

%
164

100.0

.0

164

100.0

a. Listwise deletion based on all variables in the

procedure.

Reliability Statistics
Cronbach's Alpha

N of Items

.737

Scale: CRONBACH FOR ADVERTISEMENT

Case Processing Summary
N
Valid
Cases

Excluded

Total

%
164

100.0

.0

164

100.0

a. Listwise deletion based on all variables in the

procedure.
Reliability Statistics
Cronbach's Alpha

N of Items

.752

Item-Total Statistics
Scale Mean if Item

Scale Variance if

Corrected Item-

Cronbach's Alpha if

Deleted

Item Deleted

Total Correlation

Item Deleted

ad1

9.0671

7.069

.590

.672

ad3

9.5549

6.629

.600

.664

ad4

9.0549

7.549

.493

.723

revad2

9.4390

7.094

.511

.716

Scale: CRONBACH FOR CUSTOMER_STATISFACTION

Case Processing Summary
N
Valid
Cases

Excluded

Total

%
164

100.0

.0

164

100.0

a. Listwise deletion based on all variables in the

procedure.
Reliability Statistics

Cronbach's Alpha

N of Items

.769

3
Item-Total Statistics

Scale Mean if Item

Scale Variance if

Corrected Item-

Cronbach's Alpha if

Deleted

Item Deleted

Total Correlation

Item Deleted

cs1

7.42

1.767

.593

.700

cs2

7.59

1.654

.600

.691

cs3

7.52

1.564

.616

.674

Scale: CRONBACH FOR BRAND_POPULARITY

Case Processing Summary
N
Valid
Cases

Excluded

Total

%
164

100.0

.0

164

100.0

a. Listwise deletion based on all variables in the

procedure.
Reliability Statistics
Cronbach's Alpha

N of Items

.613

4
Item-Total Statistics

Scale Mean if Item

Scale Variance if

Corrected Item-

Cronbach's Alpha if

Deleted

Item Deleted

Total Correlation

Item Deleted

revbp1

6.7378

5.066

.453

.502

revbp2

6.9268

4.903

.411

.529

revbp4

5.9512

5.102

.310

.610

bp3

6.4329

5.057

.410

.530

Scale: CRONBACH FOR SUBSTITUTION

Case Processing Summary
N
Valid
Cases

Excluded
Total

%
164

100.0

.0

164

100.0

a. Listwise deletion based on all variables in the

procedure.

Reliability Statistics
Cronbach's Alpha

N of Items

.671

4
Item-Total Statistics

Scale Mean if Item

Scale Variance if

Corrected Item-

Cronbach's Alpha if

Deleted

Item Deleted

Total Correlation

Item Deleted

revs1

10.6280

7.217

.454

.604

revs3

11.0305

6.594

.557

.531

s2

10.9329

7.867

.328

.684

s4

10.7805

7.129

.481

.586

Scale: CRONBACH FOR BRAND_IMAGE

Case Processing Summary
N

Valid
Cases

Excluded

Total

164

100.0

.0

164

100.0

a. Listwise deletion based on all variables in the

procedure.
Reliability Statistics
Cronbach's Alpha

N of Items

.464

4
Item-Total Statistics

Scale Mean if Item

Scale Variance if

Corrected Item-

Cronbach's Alpha if

Deleted

Item Deleted

Total Correlation

Item Deleted

revbi2

10.5183

3.319

.485

.126

revbi3

10.8049

4.305

.333

.327

bi4

10.5427

5.869

-.004

.610

bi1

10.1341

4.534

.287

.373

As can be seen from the above table, if the variable bi4 is removed from the questionnaire, the
cronbach increases to 0.610

Scale: CRONBACH FOR VALUE_PERCEIVED_BENEFITS

Case Processing Summary
N
Cases

Valid

%
164

100.0

Excluded

Total

.0

164

100.0

a. Listwise deletion based on all variables in the

procedure.
Reliability Statistics
Cronbach's Alpha

N of Items

.603

2
Item-Total Statistics

Scale Mean if Item

Scale Variance if

Corrected Item-

Cronbach's Alpha if

Deleted

Item Deleted

Total Correlation

Item Deleted

vp1

2.48

1.171

.431

vp2

2.91

1.139

.431

Method Used:
Correlation Matrix
REV_VALU

ADVERTIS

CUSTOME

BRAND_P

SUBSTITU

BRAND_IM

E_PROPOS

EMENT

R_STATISF

OPULARIT

TION

AGE

ACTION

ITION
REV_VALUE_PROP

1.000

.156

.273

-.038

.239

.312

.156

1.000

.292

.186

.092

.039

.273

.292

1.000

-.142

.213

.253

-.038

.186

-.142

1.000

-.175

-.135

SUBSTITUTION

.239

.092

.213

-.175

1.000

.321

BRAND_IMAGE

.312

.039

.253

-.135

.321

1.000

OSITION
ADVERTISEMENT
Correlati
on

CUSTOMER_STATIS
FACTION
BRAND_POPULARI
TY

From the above table, it can be seen that none of the independent variables are correlated
with each other.
Communalities
Initial

Extraction

REV_VALUE_PROPOSITION

1.000

.440

ADVERTISEMENT

1.000

.699

CUSTOMER_STATISFACTION

1.000

.492

BRAND_POPULARITY

1.000

.595

SUBSTITUTION

1.000

.454

BRAND_IMAGE

1.000

.497

Extraction Method: Principal Component Analysis.

Total Variance Explained

Component

Initial Eigenvalues
Total

% of Variance

Extraction Sums of Squared Loadings

Cumulative %

Total

% of Variance

Cumulative %

1.934

32.241

32.241

1.934

32.241

32.241

1.242

20.696

52.937

1.242

20.696

52.937

.867

14.444

67.381

.748

12.467

79.848

.656

10.933

90.782

.553

9.218

100.000

Extraction Method: Principal Component Analysis.

From the above table it can be seen that there are 2 eigen values above 1, hence the data can
be effectively segregated into two factors.

As is seen, there is a sharp change between 2 and 3 of the component number axis, thus it is
concluded that the data can be can be categorized into 2 factors.

Component Matrix

Component
1
REV_VALUE_PROPOSI

.653

.115

.355

.757

.671

.204

-.273

.721

SUBSTITUTION

.637

-.221

BRAND_IMAGE

.672

-.213

TION
ADVERTISEMENT
CUSTOMER_STATISFA
CTION
BRAND_POPULARITY

Extraction Method: Principal Component

Analysis.
a. 2 components extracted.

As can be seen from the above table, Factor 1 consists of Value proposition, customer
satisfaction, substitution and brand image and Factor 2 consists of advertisement and brand
popularity.
Factor 1 can be known as Customer Perception
Factor 2 can be known as Promotions factor

Regression
Variables Entered/Removed
Model

Variables Entered

Variables Removed

Method

REGR factor score

1

2 for analysis 5,
REGR factor score
1 for analysis 5

a. Dependent Variable: BRAND_LOYALTY

b. All requested variables entered.

. Enter

Model Summary
Model

R Square

Adjusted R Square

Std. Error of the

Estimate

.570

.325

.317

.53546

a. Predictors: (Constant), REGR factor score 2 for analysis 5, REGR factor score 1 for
analysis 5
a

ANOVA
Model

Sum of Squares

df

Mean Square

Regression

22.228

11.114

Residual

46.161

161

.287

Total

68.389

163

F
38.763

Sig.
.000

a. Dependent Variable: BRAND_LOYALTY

b. Predictors: (Constant), REGR factor score 2 for analysis 5, REGR factor score 1 for analysis 5

Coefficients
Model

Unstandardized Coefficients

Standardized

Sig.

Coefficients
B
(Constant)
REGR factor score 1 for
1

analysis 5
REGR factor score 2 for
analysis 5

Std. Error
4.082

.042

.363

.042

-.068

.042

Beta
97.635

.000

.560

8.654

.000

-.105

-1.622

.107

a. Dependent Variable: BRAND_LOYALTY

Unstandardized Equation:
Brand Loyalty = 4.082 + 0.363 * Customer Perception - 0.068 * Promotions
Standardized Equation:
Brand Loyalty = 0.560 * Customer Perception - 0.105 * Promotions
It can be observed that the Factor 2 (Promotions) has no bearing on Brand Loyalty as it is not significant
(p value = 0.107)

Demographics of Respondents
Age Group of Respondents

Gender of Respondents

Hair Length of Respondents

Conclusion:
After analysing the various outputs, following were the observations:

Brand popularity has no bearing on brand loyalty

There is a positive relationship between brand image and brand loyalty.
There is a positive relationship between value and perceived benefits and brand loyalty.
Advertisements of shampoos are not a driver for brand loyalty.
Substituting of shampoos has an effect on brand loyalty.
Consumers who are satisfied with their brands are brand loyal.
There is no interaction between brand popularity and brand image.
There is no interaction between brand popularity and customer satisfaction.
Thus, it can be concluded that from the above variables that have been duly considered and
analysed, they contribute 31.7% towards customers being brand loyal, there are possibly other
factors that may contribute towards brand loyalty.

References:
Indian Institute of Management, Bangalore, Journal of Consumer Behaviour 2005, "Factors
affecting Brand Loyalty: A study in emerging market on fast moving consumer goods" S.Ramesh
Kumar, Jai Yashwant Advani
Journal of Product and Brand Management 2006, "An empirical examination of brand loyalty"
Jan Mller Jensen, Torben Hansen
International Journal of Business and Management, 2010 " Customer Brand Loyalty" Junjun Mao
Journal of International Business Administration, 2014 " Determinants of Brand Loyalty: A Study
of the Experience-Commitment-Loyalty Constructs" Vishwas Maheshwari, George Lodorfos & Siril
Jacobsen
Journal of Sociological Research 2014, " Effect of brand trust and customer satisfaction on brand
loyalty in Bahawalpur" Zohaib Ahmed, Muhammad Rizwan, Mukhtar Ahmad, Misbahul Haq
http://ibef.org/download/FMCG-March-2014.pdf
Journal of Law and Commerce 2014, "Brand Loyalty & Loyalty Of Brands: A Symbiotic
Relationship" Amir H. Khoury
https://www.pwc.in/assets/pdfs/rc-publications/innovation-in-fmcg.pdf
http://www.ibef.org/industry/fmcg-presentation