CUSTOMER PERCEPTION TOWARDS BRAND

ASSOCIATION: A CASE STUDY REFERENCE TO

AVAILABLE POWDERED FULL CREAM MILK BRANDS
IN SRI LANKA

Prepared by

M.G.L.P.B.Dayawansa

Registration No: 0000015902

Integrated Research Project (SYL402)

June 2014 Examination

Post Graduate Diploma in Marketing

SRILANKA INSTITUTE OF MARKETING

1
Table of content

1. The Background of the problem.......................................................................................2

1.1 Fonterra......................................................................................................................3
2. The Significance of the problem......................................................................................5
3. Objectives of the report....................................................................................................6
4. Methodology of Perspective............................................................................................6
4.1 Literature of view.......................................................................................................6
4.1.1 Customer perception...........................................................................................6
4.1.2 Brand association................................................................................................7
4.2 Conceptual Framework..............................................................................................9
4.3 Operationalisation......................................................................................................9
5. The Approach to Data Collection and Analysis.............................................................10
6. Delimitations of the Study..............................................................................................11
7. The Time Plan................................................................................................................12

2
1. The Background of the problem

The world is changing dramatically and consumer needs and wants are also changing in
every single minute. Therefore there are bundle of opportunities for businesses to take
competitive advantage in the world. Most of the firms sustain their loyal customers and
overcome the challenge for the continued existence and growth. This industrial growth
directly does an impact for the national growth. The dependency of the successful
business totally on their loyal customer satisfaction in terms of fulfillment of their desire
need and demands (Junaid Shehazd, 2012). There are so many business categories in the
world. But one of the most talking topics in any era is Fast Moving Consumer Goods
(FMCG). Fast moving consumer goods (FMCG) or Consumer Packaged Goods (CPG)
are products that are sold quickly ( Ramanuj Majumdar, 2004), Sean Brierley, 2002).
FMCG is one of the most contributed industries in an economy for any country. FMCG is
a massive sector and always connected with human needs and wants. Therefore FMCG
sector is playing a vital role in todays economic environment.

Out of different categories, there is a one sector always highlighted in the Sri Lankan
economy and that sector is powdered milk sector. In the Sri Lankan context powdered
milk products can be categories to three sectors. They are

Infant milk products

Adult non fat milk products
Full cream milk products

Out of above three milk powder categories this study will only focus on the full cream
milk powder sector. The following details will give a brief analysis about available
powdered full cream milk brands in Sri Lanka.

N e w z e a A l a u n s td r a P l i Lr a o on d c P ua rlc o Pt ds r u o c d t u s c t s

M a l i b a n

A m b e w e l a
H i g h l a n d
P e l w a t t e
N e s p r a y
A n c h o r
R a t h t h i
L a k s p r a y

3
 According to the above analysis most of the powdered full cream milk brands are
imported ones. Past several years this sector was dominated by players like Anchor,
Raththi, Nespray, Lakspray, and Maliban. New Zealands Anchor and Ratthi brands
control 60 % market share of powdered full cream sector. The balance comes from
Lakspray (12 %) and Nespray (8 %) which is also sourced from New Zealand (The
Sunday Times, May 19, 2013). Apart from that Maliban brand which sources milk
powder from Australia has a 12 % share of the market. Of the local milk powder brands,
Highland has 8 per cent market share while two other local brands Ambewela and
Pelwatte sell very small quantities.

1.1 Fonterra

Fonterra is a global, co-operatively-owned company with its roots firmly planted in

New Zealands rich land, working to unlock every drop of goodness from the 22 billion
liters of milk collect each year and sharing it with the world. Their business is based on
sourcing secure, high quality milk and unlocking its natural goodness in ways that add
real value to our customers and consumers around the world. This giant company is
operating over 100 countries across the world.

Sri Lanka is one of the dominance markets for Fonterra over the past several years.
Especially Fonterra dominated there power in the powdered full cream milk sector. Iconic
brands Anchor and Raththi control over 60% market share in the full cream milk powder
category in 2012.

The total picture was going well for Fonterra until 2012, but in 2013 the total picture of
powdered milk industry was attacked by DCD chemical. A controversy has arisen with
the suspicion that milk powder containing DCD aka Dicyandiamide, a hazardous
agrochemical, has entered into the Sri Lankan market. The agro chemical was identified
in milk powder produced by New Zealand Dairy Company Fonterra whose flagship
brands Anchor and Raththi are widely popular in Sri Lanka This total drama was
highlighted by all media channels and people were confusing about whats going on,
because some reports in New Zealand say that the levels of DCD are safe and mostly
less than 1 part per million, some categorically assert that this poses a serious threat to the
public health (The Nation, March 17,2013).

4
 Other major issue was most of the available imported milk brands buy milk from
Fonterra. After that government took action against all import milk powder brands and
government checked the samples of every import milk powders in Sri Lanka and some
samples were tested in aboard because did not possess the technical capabilities to
conduct such tests. A Sri Lankan court on Friday, August 16, 2013 issued an order
preventing the sale, distribution and advertising of all Fonterra milk products for two
weeks. Finally the court and government suspend the band and ordered Fonterra to
remove those milk powder batches which contained DCD before starting operations.

According to the industry sources total Anchor and Raththi milk powder consumption
was around 85,000 metric tons (MT) in 2012 and it has dropped to around 46,000 metric
tons in 2013 ( The Island January 10, 2014). After the DCD issue in the powdered milk
market, the customer perception was damaged related to the product category. This
situation leads to increase the competition between local brands and imported brands.
Most of the local brands used marketing strategies against Fonterra to attract customers
towards their brands and while Fonterra also engage in building their reputation again.

It was an unexpected drama for every imported powdered full cream milk brands and
they were earned huge amount of profits over the past several years. But the damage has
done with DCD and especially local brands got a massive boost and beneficiary from this
scenario. Researchers purpose of this study is to identify the current perceptions of
customers about available powdered full cream milk brands and the areas need to be
concern to have a better future for every player in the market.

5
2. The Significance of the problem

Powdered full cream milk sector is highly competitive in Sri Lanka. Local and
imported full cream milk powder brands compete with each other to gain a high market
share to enjoy benefits. Apart from that day by day total milk powder consumption is
increasing in the country according Central Bank Annual reports.

Implications of this study will beneficiary for parties like powdered full cream milk
companies to strategies their branding process and new product developments according
to the customer requirement within an ethical framework. Apart from that this study will
beneficiary for so many parties who clearly linked with full cream milk powder industry.
Therefore, the research question pertinent to this research is,

What is the current perception of customers towards the brand association of powdered
full cream milk brands available in Sri Lanka?

The following parties will able to use the implications and results of this research study in
to their purposes.

This study will enable the Fonterra brands (Anchor & Raththi) which threatened
by DCD to realize and overcome deficiencies and barriers in expanding their
market share by satisfying the needs and wants of the customers in the market.
Local powdered full cream milk brands will able to get thorough knowledge about
customers current view and areas they need to improved.
Government of Sri Lanka will able to gain views why consumers are closely
linked with powdered full cream milk brands than fresh milk.
Those companies who willing to enter to this full cream milk powder sector will
enable to use the results of this study.

6
3. Objectives of the report

The objectives of the study are formulated as follows based on the broader research
question state above.
1) To evaluate the customer perception towards the different brand association
variables of the full cream milk powder brands.
2) To evaluate the significant variables comparatively between imported and
local brands.
3) To identify the most important areas of brand association needs to be
improved by full cream milk powder brands.

4. Methodology of Perspective
4.1 Literature of view
4.1.1 Customer perception

Individual act and react on the basis of their perceptions, not on the basis of objective
reality. Thus, perceptions are much more important. Perception can be described as How
we see the world around us. Perception is defined as the process by which an individual
selects, organizes, and interprets stimuli in to a meaningful and coherent picture of the
world. Customers are individuals, and each customer perceives things differently in the
same situation. Solomon and Stuart (2000) also stated that Perception is the process by
which people select, organize, and interpret information from the outside world. People
receive information in the form of sensations by sensory receptors; eyes, ears, nose,
mouth and fingers.

People interpret the sensations they receive by their past experiences. The perception
process is very important for marketers because it is difficult even to make consumers
notice their ads. Although consumers notice it, there is no guarantee that they will
perceive as marketers want. Therefore, marketers need to care the whole process
including exposure, perceptual selection and interpretation. Perception of the product is
more important than the product itself and product perceptions manifest themselves in
brands

7
 4.1.2 Brand association

Brand association is anything relate to the preference of a brand (Aaker, 1991, p.109;
Keller, 1993). This factors in brand association assist in the building brands image (Biel
1991). Brand image is seen as the perceptions-reasoned or emotional- consumers attach to
specific brands (Dobni & Zinkhan, 1990). Brand image consists of functional and
symbolic brand beliefs. It is based on the suggestion that consumers buy not only a
product but also the image association of the product, such as power, wealth,
sophistication, and most importantly identification and connection with other users of the
brand (Evans et al., 2006, p.138). The product attributes, the benefits/consequences of
using a brand, and brand attitude are the three key components of the brand association
which lead to create the brand image (Plummer, 2000).

Product attributes
Product attributes can be categorized in a variety of ways. Keller's (2006) broad view
of product attribute notion suggests that attributes are those descriptive features that
characterize a product. Stockmans' (1999) narrow view indicates that a product can be
viewed as a bundle of intrinsic and extrinsic attributes, or as a bundle of perceived
attributes. The intrinsic attributes of the product are information cues directly linked to
the product, and the extrinsic attributes are information cues, which are indirectly
connected to the product. The consumer uses perceived attributes in the decision-making
process (Puth 1999).

Product benefits
Perceived benefit is what consumers think the product can do for them (Keller, 2006);
it is associated with perception of product attributes and brand personality. Benefits are
what consumers seek when purchasing a product/brand (Kotler, 1999). These benefits
lead to certain end states or values that consumers wish to achieve (Kotler, 1999).
Numerous previous studies have demonstrated a positive relationship between perceived
benefit and consumer decision making (e.g. Cho, 2002; Bove and Johnson, 2000).

8
 Attitude
"An attitude is an index of the degree to which a person likes or dislikes an object, where
'object' is used in the generic sense to refer to any aspect of the individual's world" (Ajzen &
Fischbein, 1980: 64). Thus, the attitude is considered here unidimensional (Lutz, 1991),
consistent with some recent writings (Engel, Blackwell & Miniard 1995; Machleit, Allen &
Madden, 1993). Note that our interest is not the predictive power of attitude, but rather an
affective feeling toward the brand. According to Mikulincer (2007), brand attachment is the
critical factor which assists to measure attitude.

Brand attachment refers to the strength of the bond connecting the brand with the self
(Shaver 2007). This bond is exemplified by a rich and accessible memory network (mental
representation) that involves thoughts and feelings about the brand and the brands
relationship to the self.

Keller (1993) distinguishes between brand associations and secondary associations. The
latter are associations that are linked to a brand association but not directly related to the
product or service. He adds that "Because the brand becomes identified with this other
entity, consumers may infer that the brand shares associations with that entity, thus
producing indirect or secondary links for the brand. Aaker (1991) and Keller (1993)
conceptualize that apart from main three components the corporation also is a main
dimension of brand association.

The corporation
This category refers to knowledge of facts related to the firm: its country of origin, its
strategy, its story, and so forth. Statements relative to the notoriety of the brand are
included in this category, because the brand is itself a part of the company (Olins, 1989).
This category doesnt appear in previous typologies (except for the country of origin
notion), even though consumers may elicit statements more related with the firm itself
than with the brand

9
 4.2 Conceptual Framework

In conceptualizing the study, researcher have attempted to build a relationship between

key variables i.e., customer perception (independent variable) and brand association
(dependent variable).

Brand attachment

Brand Association
Customer Perception Perceived product
attributes

Perceived benefits

Corporation

Construct Dimension Indicators Measurement Questionnaire

Brand attachment Trustworthiness Numbers/Likert For each dimension
,, Scale
Satisfaction,
Customer
product attributes Packaging, Numbers/Likert For each dimension
perception
Product quality, Scale
Towards
Price,
Brand association
Communication
Distribution
Product benefits Food safety, Numbers/Likert For each dimension
Nutrition, Scale
Value

Corporation CSR, Numbers/Likert For each dimension

Country of Scale
origin

Source: ( Korchia Micheal ,2007)

10
 4.3 Operationalisation

5. The Approach to Data Collection and Analysis

Secondary Sources
Literature Review-Journals/Articles
Books
Internet
Government Reports ( CB Annual report)

Primary Sources
Questionnaire
Likert scale (5 point) measuring the gap of five dimensions
Rank data for demographic variables

Descriptive Statistics
Mean scores

Frequency counts

Percentages

Standard deviation

Inferential Statistics
Correlation- will be used to see the relationship between the independent and
dependent variable

Contents of the approach Explanation

Sample frame
People in Kandy district

Sampling
Cluster and Stratified sampling

11
Sample size
100

Data collection approach

Survey

Survey instrument
Questionnaire

Contact method
In person (Delivery and collection
questionnaire)

Data analysis technique

Descriptive statistics and Hypothesis

Data analysis tool

MS Excel

6. Delimitations of the Study

Time Constrain-

Due to the limited time frame it is difficult to cover large sample.

Sample Size

Due to the time constrain only 100 numbers of respondents will be

selected for questionnaire.

Data availability and Accuracy

The availability of Secondary information relating to powdered milk

industry is limited.

Geographical restrictions

12
 Due to limited resources this research cannot cover all the areas in Sri
Lanka researcher will conduct this study in the Kandy District

7. The Time Plan

Activity February March April May June July

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Collecting secondary
data
Preparing research
proposal
Consideration from
supervisor/discussions
Research proposal
Presentation
Submitting RSD
assignment
Gathering primary data
Preparing research
project
Supervisor discussions
Research report
submission
Viva Presentation
Final hard bound copy
submission

13
8. References
1) Mrugnak V, Thakor and Annem M.L Avack (2003), Effects of Perceived Brand
origin Associations on Consumer Perceptions of Quality, Journal of Product and
Brand Management, 12, 6,394-407
2) Kotler P, Wong V, Sauders, J and Armstrong, G (2005), Principles of Marketing
Essex, Pearson education limited.
3) Schiffman L.G, Kanuk L.L, Kumar S.R. and Wisenblit J (2010), Consumer
behaviour , Perason education Ltd.
4) Keller, K. L. (1993), Conceptualizing, Measuring, and Managing Customer-
Based BrandEquity, Journal of Marketing Research, 29: 1-22
5) Aaker, D. A. (1991), Managing Brand Equity, New York: The Free Press.
6) Keller, K. L. (1993), Conceptualizing, Measuring, and Managing Customer-Based
Brand Equity, Journal of Marketing Research, 29: 1-22.
7) Engel, Blackwell, & Miniard, (1995), Consumer Behavior. The Dryden Pres Harcourt
Brace College Publishers.
8) Olins, W. (1989), Corporate Identity Making Business Strategy Visible Through
Design, London, U.K.: Thames and Hudson
9) Korchia, M. (1994), Recherche dindicateurs statistiques en veille technologique,
Unpublished DEA Dissertation, Laboratoire Conception Produits Nouveaux,
Ecole Nationale Suprieure des Arts et Mtiers, Paris, France
10) Soloman & Stuart. (2000), Consumer Perceptions of Price, Quality and Value: A
Means End Model and Synthesis pf Evidence, Journal of Marketing 52 (3), 2-22
11) Plummer, J.T (2010) How Personality makes a difference, Journal of Advertising
Research p.p 24, 27-31
12) Mikulincer, M (1998), Attachment Working Models and the Sense of Trust:
Exploration of Interaction Goals and Affect Regulation, Journal of Personality
and Social Psychology, 74 (5), 12091224

14
15