Factors Affecting to the Purchase Intention of Fresh Milk Products

with Special Reference to the Colombo District

1. Introduction

1.1 Background of the Industry

Dairy industry plays a major role in the economies of many countries. Milk products
unique feature is being prepared in nature as a food. Therefore, dairy and dairy related
products are recognized as popular food universally. Recent medical researchers have
found out that there are positive relationship between fresh milk products consumption
and the reduction of risk for coronary heart diseases and strokes. Fresh milk products
can also provide benefits in weight management. Medical Research Institute
recommends a consumption level of 60-65kg per person per year, the per capita
availability of fresh milk products is only about 36kg per person per year and it has
been confirmed that Sri Lanka has the lowest milk consumption in South Asia at
present.

Sri Lanka dairy sector is dominated by imports, mainly in the form of full cream milk
powder. imported which provides a cheaper product than locally processed fresh milk.
Having such a great potential to be self-sufficient with dairy production, yet the country
produces only 37% of the requirement of the milk and related products. Presently dairy
market key player can be identified as Fonterra, Nestle as multinational companies and
Highland, Maliban, Pelwatte, Lucky are major local players.
In Sri Lankan context, dairy production and demand has increased considerably in the
last decade in Sri Lanka. According to Neilson Report 2016, Year-on-year consumption
continues to grow in dairy industry by 13 percent. As a result of increase demand for
dairy products in 2015, import of dairy products amount increase 21.5% over
corresponding figures of 2014 (Department of Animal Production and Health, Annual
Report, 2015). Still domestic milk production only constitutes about 33 percent of the
milk demand and the rest was imported according to 2016 statistics account for Rs.36
billion yearly (Central Bank Report, 2016).

1.2 Background of the Problem

Fresh milk products have endured high competition from soft drinks and powdered
milk. The range of products in the category of soft drinks, packaging and availability
has widened and their low material costs enable them to be extensively promoted. Also,
there are huge campaigns to promote the consumption of powdered milk in different
brand names and hence there is a significantly higher demand for powdered milk.

Moreover, there is huge increase of foreign competitors on the domestic dairy market.
Therefore, new market approaches such as improved product quality, wider assortment
of the dairy produce, new management on the sales system, an improved marketing
information system, market segmentation, and price differentiation, are required for the
local dairy processors to become a competitive on local and regional markets.

1.3 The Problem Statement

Previously, the market orientation of dairy industry was to produce cheap dairy
commodities with a limited assortment. Nowadays marketing has broadened its
concept, contemporary marketers include the study of transfer behavior as well as
transaction of consumer behavior. Having information on consumers buying behavior,
their preferences, attitudes, needs and demand for dairy products are considered to be
key determinant factors for the efficiency of dairy. However, the dairy industry is lack
information on consumers buying behavior and demand for dairy products level. Thus,
among other significant problems that the dairy sector is facing, lack of information is
an additional disadvantage upon the sales opportunities and the efficiency of fresh milk
products in Sri lanka.
Based on these identified gaps in existing practices, theories and research findings,
the researcher identify following problem statement,

What factors influence the consumer purchase intentions towards fresh milk
products in Colombo District

2. The Significance of the Exploration of the Problem

Customers purchase decision is a complex process. Purchase intention is a key point

for consumers to access and evaluate the specific product. Intentions represent a
persons motivation or behavioral plans that can directly lead to actual behavior.
Generally, with appropriate intention influences of the consumer direct the actual
behavior. But consumers preferences, needs and wants for the dairy produce, makes
the dairy market become more and more segmented as well as more complex.
Therefore, study of consumers buying behaviour, their preferences, attitudes, needs
and wants towards dairy products helps the dairy industry in their plan projections and
development of their marketing strategies. An understanding of the consumers buying
behaviour and identifying the major forces influencing structural changes in their
consumption patterns, helps businesses of this industry to improve and get the most
rational way to meet the consumers needs. An understanding of the consumers buying
behaviour and identifying the major forces influencing structural changes in their
consumption patterns, helps businesses of this industry to improve and get the most
rational way to meet the consumers needs.

3 Objective of the Research

The main objective of this research is as follows;

1. To determine the factors that are influencing the consumer purchase intentions
towards fresh milk in Colombo District.

The specific objectives of this research are as follows;

2. To examine most significant factors effect towards purchase intention towards

fresh milk products.
3. Apply the result to develop marketing strategies for certain brand in the market.