A Study on Brand Extension of Fast Moving Consumer Goods to Customers' Perception with Special Reference to Kanyakumari District

Fast-moving consumer goods (FMCG) or consumer packaged goods have their presence in everyone's day-to-day life. These items are sold quickly and have a short shelf life. These products include non-durables such as soap, shampoo, toiletries, cosmetics, food items, pharmaceuticals, consumer electronics, etc. These products operate at low profit margins. The Indian FMCG sector is a major contributor to the Indian economy. The FMCG sector in India has witnessed tremendous growth over the years. India has a vast untapped rural market (Ali et al., 2012), and increasing literacy, income levels and lifestyle are increasing awareness among rural customers. This is creating ample opportunity for investment in the rural sector. Customers are now becoming more brand-conscious in order to elevate their social status, and they are ready to experiment with new brands. Companies are also launching new products to match the dynamic expectations of customers. In the modern marketing era, FMCG companies are not only selling their products in the market but also adopting a 360-degree strategy to gain customers and market share. They are focusing on the factors that influence customer preferences.

Companies have understood the importance of the factors influencing the preferences of customers. Companies are now offering online grocery stores with home delivery, where customers can order products and gather information about them. Customers associate a brand with the quality of its products; therefore, companies are paying attention to maintaining product quality along with packaging, colour and other attributes.

Fast-moving consumer goods are generally low-profit-margin products and are therefore sold in large quantities in the regional market. Thus, it is very important to understand how to improve brand value for customers, as many brands are available for the same categories of products in the market. The FMCG sector is an indispensable contributor to India's GDP. It constitutes a large part of consumers' budgets in all countries. The FMCG industry is characterised by an established distribution network, intense competition between the organised and unorganised segments, lower penetration levels, lower operating costs and also lower per capita consumption.

The FMCG sector is an important contributor to India's GDP. The most common products in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuffs, household accessories and certain electronic goods. The Indian FMCG sector, which is the fourth-biggest sector in the Indian economy, has a market size of Rs. 2 trillion, with rural India contributing one-third of its revenues.

In the FMCG segment, companies are also applying brand extension strategies because of their inbuilt advantages (Nijssen, 1999; Tauber, 1981). A study done in Kanyakumari District showed that extensions of existing FMCG brands were five times more successful. In India, consumer purchasing power in the FMCG sector gained traction in the first quarter of 2016, and most categories, including household products, registered healthier growth. From this, it can be seen that there is a far better opportunity for growth in India's FMCG sector.

However, the influence of brand extension on consumer consciousness in the FMCG industry has not been tested across India. With the rapid development of the FMCG sector, more and more FMCG brand extensions have appeared in the market. These brand extensions tend to be followed by other companies to keep their positions in market competition. Although extending the brand will enhance and revitalise the image of the parent brand and give customers more choices, at a certain point it can be confusing and frustrating and can even cannibalise the sales of the parent brand (Chen & Chen, 2000; Keller, 2013; Loken & John, 1993; Ries & Trout, 1986). Therefore, marketers should understand how to extend a brand in the proper way (Pitta & Katsanis, 1995).

Good customer perception of branding is very important for winning the competition in the FMCG market, and understanding the determinant factors that have a positive relationship with this perception can lead marketers to achieve this objective. This study focused on investigating these factors and their relationship to customer perception.

The objectives of the study are:

1. To study the perception and purchasing behaviour of consumers in relation to products introduced through brand extension in the FMCG segment.
2. To identify the factors that affect consumers in accepting brand extensions of FMCG products.

In this study, more than 70 scientific articles, books and research reports were referred to. The review of the literature included the following areas:

• Defining the brand and its meaning (Kapferer, 2004).
• Brand retention and consumer perception of brand extension (Grime et al., 2002; Kim & Lavack, 1996; Swaminathan et al., 2001).
• Studies on brand extension in the FMCG segment (Nijssen, 1999; Thamaraiselvan & Raja, 2008).

Some of the reviews are summarised below.

Moosa and Jagadeesan (2020) evaluated the influence of social media on customer purchasing behaviour for fast-moving consumer items. In the fast-moving consumer products industry, the study emphasised the relevance of product acquisition behaviour, information-seeking behaviour and selection-seeking behaviour. Product acquisition and information seeking are examples of consumer behaviour that occur in response to environmental stimuli. Marketing has been shown to have a major influence on customer purchasing behaviour. According to the findings, consumers gather information before purchasing any product in order to make educated purchasing decisions; hence, marketing is widely employed to gain an understanding of FMCG items. According to the study, various factors influence consumer purchasing behaviour, with social and individual factors being the most significant.

A further study aimed to examine customer purchasing habits for fast-moving consumer goods. The study sought to elucidate the influence of several factors on customer purchase behaviour for personal care items. Consumers feel that television advertising, quality and brand loyalty, in that order, are important aspects that have a stronger influence on consumer purchase behaviour, regardless of income level. Furthermore, educated and younger customers are more likely to use personal care goods. According to the findings, consumers are also interested in employing print media and incentive systems to reach out to end customers with branded items. It was found that marketers must constantly watch their customers and use electronic media to increase brand awareness among high-quality product buyers.

Shamshuddin et al. (2020) investigated customer purchasing behaviour and preferences for FMCG items in Andhra Pradesh. Gender, income level, education, family size and family type were found to be associated with the media sources through which consumers learnt about FMCG items. According to the findings, the majority of buyers preferred promotional offers such as “buy two, get one free” over other offers such as price reductions, bundled offers with another product and free gifts. It is possible to conclude that organised retail methods such as “buy one, get one free” have risen in popularity. According to the study's findings, consumer understanding of FMCG items has increased, and consumers are better able to make decisions about which brand to buy and what types of promotions are available in various product categories.

Another study researched customer preferences for the sales marketing strategies of fast-moving consumer goods. The study emphasised that, due to intense competition, consumer preferences are crucial to the success of any manufacturing organisation. It was shown that people are willing to purchase fashionable items for personal use. As a result, fast-moving consumer goods companies get sufficient accreditation and requirements to market their items. The study's findings demonstrated that businesses' sales marketing strategies, such as bargain offers, cash discounts, free gifts and extra quantities, help to determine customer preferences. In conclusion, customers are satisfied with the promotional strategies used by fast-moving consumer goods enterprises.

In a competitive world, there are many problems in the marketing of goods. Some problems can be solved, but many problems may not be solved. Manufacturing industries face many problems in marketing their products in rural areas because most rural consumers have low levels of literacy and low levels of brand awareness. Consumers face various problems in selecting their fast-moving consumer goods. It is identified that there is a need for research work in the field of brand perception in FMCG. The study is carried out in Kanyakumari District of Tamil Nadu.

India, which is one of the largest emerging economies with a billion inhabitants, is also one of the world's largest economies in terms of purchasing power, with a middle-class population of over 500 million.

• Worldwide, the middle class was expected to expand dramatically by 2020. Over 1 billion new customers were expected to drive consumption patterns worldwide.
• The FMCG sector has strong growth momentum in India and worldwide. In order to meet the growing market demand for new products, FMCG companies are relying on their mother brands to bring new products or variants to market.
• The literature survey shows that very few studies have been conducted on the FMCG sector and on how consumers perceive brand extensions in this sector.
• No comprehensive study has been carried out on the result of brand extension in the FMCG sector in the Indian market, in particular in Kanyakumari District.

This study is based on both primary and secondary data. Primary data were collected from 150 customers of FMCG products in Kanyakumari District. The convenience random sampling method was adopted to select the 150 respondents. Secondary data were collected from various websites, journals and newspaper articles.

The demographics and the technical analysis of the survey have given the necessary inputs to understand the perception and evaluation of brand extension strategies in the FMCG segment by consumers. The primary aim of the research is to examine the perception and purchasing behaviour patterns of consumers in terms of product launches through brand extensions in the FMCG segment. Exploratory research provided valuable insights into consumer attitudes towards brand extension.

On the basis of the literature study (Aaker & Keller, 1990; Boush & Loken, 1991; Hem et al., 2003; Park et al., 1991; Thamaraiselvan & Raja, 2008; Völckner & Sattler, 2006), the following hypotheses were established:

H1: Similarity and fit between the parent brand and the extended brand are important for consumers' evaluation of brand extensions in the FMCG segment.

H2: The reputation of the parent brand influences consumers to buy the extended brand.

In the present study, cross-tabulation analysis was taken into consideration, since the variables are categorical in nature. A cross-tabulation is a joint frequency distribution of cases based on two or more categorical variables. The representation of a distribution of cases according to their values on two or more variables is referred to as contingency table analysis and is one of the most commonly used analytical methods in the social sciences. The joint frequency can be analysed with the chi-square statistic (χ²) to determine whether the variables are statistically independent or whether they are associated. If a dependency exists between variables, other indicators such as Cramér's V, phi, gamma and so on can be used to describe the degree to which the values of one variable are associated or vary with those of other variables.

To find out the joint frequency, cross-tabulation analyses were carried out between the variables. The joint frequencies were analysed with the chi-square statistic (χ²) to determine whether the variables are statistically independent or whether they are associated. Table 1 gives a summary of the analysis.

From Table 1, it was found that a large proportion of the respondents from Kanyakumari District who are loyal consumers, regularly buy branded products and buy follow-up brands of the mother brands feel that similarity and fit between parent brands and their extended brands are very important. There is a strong association between variables 1, 2 and 3 in Table 1; Cramér's V is calculated as 0.519, 0.526 and 0.318. The calculated Pearson's chi-square values for 1, 2 and 3 are 380.62, 388.18 and 29.77, with a p-value of < 0.001, showing that the result is significant and the variables are not independent of each other. This applies irrespective of age, income, gender and occupation, since in all cases the p-values are < 0.001. Profession/occupation, however, has a close connection with the similarity between parent and extended brands, whereas age, income and gender have a moderate relationship with the similarity factor.

Table 2 shows how the consumers of Kanyakumari District think that the aforementioned FMCG products are similar to their parent brands. In most cases, respondents think that the existence of similarities between parent and extended brand products is important (p-value < 0.001). Therefore, image similarity between the parent brand and the extended brand is very important and proved to be significant (first hypothesis).

A summary of the analysis of cross-tabulations and chi-square tests for the independence of attributes, with Cramér's V to measure the degree of association, is given in Table 3. It was found that in all five cases (1–5) indicated below, the reputation of the parent brand influenced the brand-loyal consumers of Kanyakumari District to buy the mother brand's extended products. The consumers of Kanyakumari District who think that similarity and fit between parent and extended brands are important also buy the extended products because of the reputation of the mother brand. The reputation of the mother brand is important for safety and security and for the purchase of the follow-up brand. None of the variables are independent of each other (p-value < 0.001). The variables are closely related, as observed in the calculated values of Cramér's V. When the 11 FMCG parent brands and their extended brands are cross-tabulated with the parent-brand variable “reputation”, which influences consumers to purchase the follow-up brand, the results are as shown in Table 4.

The reputation of the mother brand has influenced the respondents to buy follow-up brands. Ten of the FMCG products, with the exception of Pond's, as shown in Table 4, show that the reputation of the mother brand makes respondents buy their extended products (p-value < 0.05; except Pond's, p-value < 0.095). This suggests that the reputation of FMCG parent brands influences consumers to buy their extended products. Therefore, it can be concluded that “the call of the mother brand” influences consumers to buy extended products (second hypothesis).

a) The study is confined to Kanyakumari District only. Hence, the perceptions studied are restricted to a limited group of consumers, and the results may vary in other parts of the country.

b) In the survey, only a few FMCG products that have already been extended, and another hypothetical extension, have been considered. There are many FMCG products available in the market.

The consumers of Kanyakumari District are very brand-loyal, and they stick to the brands they like and enjoy the most. Retail offers and displays occasionally cause them to change to new brands, but usually they do not experiment much with new brands. That is why these consumers are low-risk. This phenomenon exists regardless of age, income group and gender. However, they do try out a brand's extended FMCG products. The reputation of the mother brand also has a positive effect on consumers' minds. The stronger the mother brand, the easier it is to extend. Image similarity and category match between the parent brand and the extended brand are very important. Consumers find similarities between parent and extended brands that help them connect with the new products. As observed, Pond's cream (the mother brand) has less similarity with Pond's powder, which was not accepted by the respondents.