DETERMINANTS OF PURCHASE DECISIONS OF CONSUMERS OF THE

PRODUCTS OF NESTLE GHANA LTD

By:

Michael Owusu Amankwah,

A thesis submitted to Department of Marketing and Corporate Strategy

Kwame Nkrumah University of Science and Technology, School of Business

in partial fulfilment of the requirements

for the degree of

MASTER OF BUSINESS ADMINISTRATION

(STRATEGIC MANAGEMENT - OPTION)

School of Business, KNUST

College of Humanities and Social sciences

August, 2016
 DECLARATION

I hereby declare that this thesis is my own work towards the award Master of

Business Administration in Strategic Management and that to the best of my

knowledge it contains no material previously published by another person or

material which has been accepted for the award of any other degree in any

university except where due acknowledgement has been made in the text

Michael Owusu Amankwah …………………… …………………..……

Index: PG 2136114 Signature Date
(Student)

Confirmed by:
Dr. Wilberforce Owusu-Ansah …………………… …………………..……
(Supervisor) Signature Date

Certified by:
Dr. Wilberforce Owusu-Ansah …………………… …………………..……
(Head of Department) Signature Date

ii
 DEDICATION

This thesis is dedicated to my mother, Mrs. Patricia Attah-Poku who never gave up

on me and pushed me to attain this height. I will be forever indebted to her.

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 ACKNOWLEDGEMENT

I am most grateful to the Almighty God for his protection and guidance.

I will also acknowledge my supervisor Dr. Wilberforce Owusu-Ansah whose

expertise, understanding, generous guidance and support made it possible for me to

work on a topic that was of great interest to me .It was a pleasure working with him.

To Miss Abigail Nkansah and Mr. Gerald Woode thank you so much for your

assistance in data gathering for this thesis and your guidance during the data

analysis. I would like to express my gratitude to all lecturers of KSB who urged me

to do better.

Finally to my dearest mother, Mrs. Patricia Attah-Poku and the entire family, I‟m

grateful for your prayers and support.

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 ABSTRACT

This study titled “The determinants of purchase decisions of consumers of the

products of Nestle Ghana Ltd.” enables Nestle Ghana ltd to understand how

consumer‟s purchase decision differs from person to person and the major

determinant that affects consumer‟s purchases of Nestle products. The purpose of

the current study is to identify the determinants of purchase decisions of consumers

of the products of Nestle Ghana ltd. The study is based on responses of 250

respondents from consumers of Nestle products that were collected through a

questionnaire. Descriptive analysis was carried out to analyze the result. The study

found out that consumers of Nestle product ranked “perceived quality”, “brand

name”, “price”, “trust”, “advertising”, “loyalty” and “brand satisfaction” as the

major factors that influence their purchasing decision. Perceived quality was rated

as the most important factor. A good brand name creates an identity that resounds

with your consumers which reinforces the emotional relationship between the

company and consumer. As per the findings of this study, Quality is a major

determinant of purchasing decision of consumers of Nestle Ghana products, it is

therefore imperative that Nestle Ghana maintains the high quality level as perceived

by its customers and also work on how to reduce cost in other to have a good Return

on Investment (ROI) which would be the ultimate indicator to remain competitive.

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 TABLE OF CONTENTS

DECLARATION...................................................................................................... ii
DEDICATION......................................................................................................... iii
ACKNOWLEDGEMENT ...................................................................................... iv
ABSTRACT ...............................................................................................................v
TABLE OF CONTENTS ....................................................................................... vi
LIST OF TABLES .................................................................................................. ix
LIST OF FIGURES ..................................................................................................x

CHAPTER ONE .......................................................................................................1

GENERAL INTRODUCTION ................................................................................1
1.1 Introduction and Background to the Study ...........................................................1
1.2 Problem Statement ................................................................................................4
1.3 Objective of the study ...........................................................................................5
1.4 Research Questions ...............................................................................................6
1.5 Justification of the Study ......................................................................................6
1.6 Scope of the study .................................................................................................7
1.7 Overview of Methodology ....................................................................................8
1.8 Limitations of the Study........................................................................................8
1.9 Organization of the Study .....................................................................................8

CHAPTER TWO ....................................................................................................10

LITERATURE REVIEW ......................................................................................10
2.1 Definition of the Term Purchase Decision..........................................................10
2.2 The Concept of Purchase Decision .....................................................................12
2.3 Arguments for and Against Purchase Decisions .................................................13
2.4 Product Package and Purchase Decisions ...........................................................14
2.5 Determinants of Purchase Decision ....................................................................15
2.5.1 Customers Past Experiences as a Determinant of Purchase Decision .............15
2.5.2 Product Knowledge as Determinant of Purchase Decisions ............................17
2.5.3 Celebrities Endorsement as a Determinant of Purchase Decisions .................18
2.5.4 The Influence of Perceived Quality on Purchase Decisions ............................20
2.5.5 The Influence of Advertising on Purchase Decision .......................................22

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2.5.6 Sales Promotion and Purchase Decisions ........................................................22
2.5.7 Public Relation and Purchase Decisions ..........................................................23
2.5.8 Personal Selling and Purchase Decisions ........................................................23
2.5.9 Direct Selling and Purchase Decision ..............................................................24
2.5.10 Customer Relationship Management and Purchase Decision .......................24
2.5.11 Visual Merchandising as a Determinant of Purchase Decisions ...................26
2.5.12 Brand Satisfaction as a Determinant of Purchase Decisions .........................28
2.5.13 Brand Trust as a determinant of Purchase Decisions.....................................29
2.5.14 Brand Loyalty as a Determinant of Purchase Decision .................................30
2.6 Determinants of Purchase Decision in the FMCG Sector. .................................32
2.7 Summary of Review on Determinants of Purchase Decisions ...........................33

CHAPTER THREE ................................................................................................34

RESEARCH METHODOLOGY ..........................................................................34
3.1 Introduction .........................................................................................................34
3.2 Research Design..................................................................................................34
3.3 Population of the Study.......................................................................................34
3.4 Sample and Sampling Technique........................................................................35
3.5 The Survey Instrument and What it Measures ....................................................35
3.6 Research Data Sources ........................................................................................36
3.6.1 Primary Research Data ....................................................................................37
3.6.2 Secondary Research Data .................................................................................37
3.7 Data Analysis ......................................................................................................38
3.8 Profile of Nestle Ghana ltd .................................................................................38

CHAPTER FOUR ...................................................................................................40

PRESENTATION OF FINDINGS AND DISCUSSION OF RESULTS ...........40
4.1 Introduction .........................................................................................................40
4.2 Response Rate .....................................................................................................40
4.3 Background of Respondents ...............................................................................41
4.4 Gender Distribution of Respondents ...................................................................41
4.5 Educational Qualification of Respondents..........................................................43
4.6 Knowledge on Nestle Products ...........................................................................44
4.7 Determinants of Consumer Purchases ................................................................45

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4.8 Purchase Decision ...............................................................................................52
CHAPTER FIVE ....................................................................................................54
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS .....................54
5.1 Introduction .........................................................................................................54
5.2 Summary .............................................................................................................54
5.2.1 Identification of purchase decisions of consumers in Ghana ...........................54
5.2.2 Evaluation of the relative impact the determinants have on the purchasing
decisions of consumers of Nestle products in Ghana .....................................55
5.2.3 Exploration of the perception of staff on the purchasing decision factors of
consumers. ......................................................................................................55
5.3 Conclusion ..........................................................................................................55
5.4 Recommendation ................................................................................................56

REFERENCES ........................................................................................................58
APPENDIX ..............................................................................................................67

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 LIST OF TABLES

Table 2.1 Proposed Determinants of Purchase Decisions ........................................ 33

Table 4.1: Gender Distribution of Respondents ....................................................... 41
Table 4.2: Age Group ............................................................................................... 42
Table 4.3: Educational Qualification of Respondents .............................................. 44
Table 4.4: Determinants of Consumer Purchases ..................................................... 46
Table 4.5: Purchase Decision .................................................................................... 49

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 LIST OF FIGURES

Figure 4.1: Marital Status of Respondents ................................................................ 43

Figure 4.2: Knowledge on Nestle Products .............................................................. 45

x
 CHAPTER ONE

GENERAL INTRODUCTION

1.1 Introduction and Background to the Study

In this era of competition every organization wants to increase or at least maintain

their products sale in the market. Every organization wants to know how the purchase

decision of Customers can be evaluated. Purchase decision can be defined as

individual‟s decision to buy a specific brand; or individuals who want to buy a

specific brand which they have chosen for themselves after certain evaluation. There

are variables by which one can measure purchase decisions. For instance considering

the brand that influence the purchasing and the future purchases (Laroche et. al, 1996;

Laroche and Sadokierski, 1994; MacKenzie et. al., 1986). Purchase decision for a

specific brand requires assessment of all brands available in market (Teng, Laroche

and Huihuang, 2007).

It is shown that approaches toward a specific brand have great effect on brand

purchase decision (Brown and Stayman, 1992; Homer, 1990; MacKenzie, 1986), and

brand attitude has positive relation with purchase decision. It is also found that a

consumer‟s decision is settled by attitude toward the same and other brands which are

present in his consideration set (Larocheand Sadokierski, 1994; Laroche et. al. 1996).

Purchase decision is composed of consumer‟s feelings, thoughts, experience and

external factors that he considered before making any purchase. Purchase decision of

the consumers depicts and expresses their behavior and the way they making

decisions about their buying process (Fishbein & Ajzen, 1975).

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Purchase decisions describe and determine the consumer response to purchase the

offering. The higher the decision leads to elevated purchase of that offering.

Consumers purchase decision can be determine through their responses, feedback and

their involvement. Highly involved consumers shows high rate of purchase (Dodds,

Monroe and Grewal, 1991; Schiffman and Kanuk, 2000).

Growing consumer consciousness has made consumers choose to purchase their

familiar and favorable brand. Therefore, if businesses want to defeat their

competitors, they have to make consumers love to buy their products and brands.

Macdonald and Sharp (2000) mention that even though consumers familiarize and are

willing to purchase a product, brand awareness is still an important factor to influence

purchase decision. When consumers want to buy a product, and a brand name can

come to their minds at once, it reflects that product has higher brand awareness.

Consumers‟ purchase decision can be influenced if a product has higher brand

awareness (Dodds, Monroe, and Grewal, 1991; Grewal, Monroe and Krishnan, 1998).

This explains why a product with higher brand awareness will have higher market

share and better quality evaluation. In addition, while consumers select a product,

they care about perceived quality and brand awareness. Perceived quality can help

consumers to have a subjective judgment on overall product quality that make a

product hold a salient differentiation and become a selective brand in consumers‟

minds (Aaker, 1991). Besides, businesses have to build up brand loyalty. Some

studies suggest that the cost to attract a new customer is more than five times of

maintaining a loyalty customer (Reichheld and Sasser, 1990; Barsky, 1994). That is,

the higher the brand loyalty, the less cost businesses to pay.

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Again, now, brands are known for their corporate social responsibility and not merely

on the basis of product only. Researchers have noted that it is imperative to take a

closer look at how consumers develop relationship or interaction with brands and be

able to form communities of brand in their own personal lives (Esch, Langner,

Schmitt and Geus, 2006). For the purchase decisions a consumer may consider

environmental issues. So the question arises how to achieve acceptance of the

consumer on brand through environmental issues? Follows and Jobber (2000) has

addressed this issue of environmental impact upon brand in context of public and

corporate policy.

Purchase decision refers to a plan to purchase an exacting good or service in the

future (Business Dictionary.com 2010). In any such decision to purchase product and

services, manufacturers or dealers must first find out some way to transmit product

information to the latent customers. Fitzsimons and Morwitz (1996) confirmed that

measuring decisions influence which brands customer purchase. Purchase decision

may be classified as one of the mechanism of customer cognitive behavior on how

particular consumer intends to purchase a particular product. Laroche Zhou (1996)

argues that variables such as consumer deliberation in purchasing a brand and hope to

purchase a product may be used to determine customer purchase decision. These

deliberation factors can consist of the customer‟s involved, information and

assessment as a part of the whole procedure in influential purchase intent. The present

study thinks that purchase decision does not only come about as a result of monetary

deliberations but also the interaction among buyers‟ behavioral variables on brand.

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1.2 Problem Statement

There are limited scientific views on what influence the decisions of consumers to

purchase products in Ghana. In the year 2015, the growth of the value share of some

of the products of Nestle Ghana ltd. declined. The situation was not different for

Uniliver Ghana Ltd (Micah and Mormor, 2016). This draws attention to the factors

that influence the decision of the consumers of the products of these leading

companies to buy or not to buy. Further probing shows that the companies have

limited view as to what influence the decisions of consumers to purchase their

products. On a larger scale, as to what influence the decision of consumers to

purchase consumer products in Ghana is in doubt. Some studies conducted in other

countries concluded that price was the major factor that influences the decision of

consumers to purchase (Ajzen and Driver, 1992; Pierre et al., 2005; Schlosser et al.,

2006). Other studies also concluded that the ability of the consumer to purchase is the

main factor that determines the decision to purchase (Schlosser et al., 2006). In some

previous studies undertaken by (Kuang Chi, et al, 2009; Fatima and Sherazi, 2012;

Rizwan et al, 2014), they were of the view that the interaction among buyers‟

behavioral variables on brand determine purchase decision.

In the following studies (Grewal, Krishnan, Baker and Borin 1998; Monore, 1990;

Dodds, Monroe and Grewal, 1991; Wall, Liefeld and Heslop, 1991; Lo, 2002; Lin,

2006; Kuang Chi, et al 2009; and Oliver 1999), they concluded that brand awareness,

perceived quality and brand loyalty have a significant relationship with consumer

purchase decisions. In a separate study by Fatima and Sherazi (2012), they were of the

view that the impact of brand image, brand attitude and brand attachment determines

consumer purchase decisions. This result was consistent with (Shwu-lng and Chen-

4
Lien, 2009). In a subsequent study conducted by Rizwan et al (2014), the outcome of

the study indicated that low price, past experience; brand attachment, product

awareness and brand trust have a positive effective on their purchase decision. These

findings were in line with (Dodge et al., 1996; Albers_Miller, 1999, Prendergast et al.,

2002; Harvey and Walls, 2003). Currently, it is very difficult to tell whether the above

findings will hold in Ghana or it will not hold because there is no such study

conducted in Ghana.

There are a number of a variable that have been established in earlier studies that have

significant impact on consumer purchase decision in other countries, but as to whether

these same variables will have significant impact on the purchase decisions of

consumers in Ghana is uncertain. This study seeks to fill this gap.

1.3 Objective of the study

The main objective of the study is to establish the determinants of consumer purchase

decisions of the products of Nestle Ghana Ltd. The specific objectives are:

1. To identify the determinants of purchase decisions of consumers in Ghana.

2. To evaluate relative of the impact the determinants have on the purchase

decisions of consumers of the products of Nestle Ghana Ltd.

3. To explore the perception of staff on the purchasing decision factors of

consumers.

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1.4 Research Questions

With reference to the specific objectives stated above, the study seeks to find answers

to the following questions:

1. What determines the purchase decisions of consumers of Nestle Ghana Ltd?

2. What is the relative impact of the determinants on the purchase decisions of

consumers of the products of Nestle Ghana Ltd?

3. What are the perceptions of staff on the purchasing decision factors of

consumers?

1.5 Justification of the Study

Increasing consumer awareness has made consumers choose to purchase their familiar

and favorable brand. Therefore, if businesses want to defeat their competitors, they

have to make consumers love to buy their products and brands. There is therefore the

need to provide a superior understanding of how purchase decisions affect several

variables to enable businesses to make consumers love to buy their products and

brands. By so doing businesses in Ghana who stick to this study will be able to

Increase their market share. In the attempt by businesses to ensure that consumers

love and buy their products and brands, consumers will be better served.

This study will as well serve as the basis for sales men and marketing managers to do

effective sales forecasting to prevent excess stock and thereby avoiding high cost of

capital as a result of excessive cost of holding inventory.

In addition, because the purchasing decisions of the consumers will be known at the

end of this study, it will Influence the direction of how marketing communications

such as, advertising, personal selling etc must go. Not only that, the application of the

6
study has the potential of creating and sustaining competitive advantage of businesses

in Ghana. In this era of competition every organization in Ghana wants to increase or

at least maintain their products sale in the market. Every organization wants to know

how the purchase decision of customers can be evaluated. Customer knowledge also

effects the purchase decision the more the customers will know about the product the

more they will be confident about their purchase decision.

Besides, organizations are spending lot of money on consumer purchase decisions and

designing the package of their product. This study will reveal whether it is worth

spending this much amount on these two decisions. Purchase decisions describe and

determine the consumer response to purchase the offering. The higher the decision

leads to elevated purchase of that offering. Consumers purchase Decision can be

determine through their responses, feedback and their involvement. Highly Involved

consumers shows high rate of purchase (Dodds, Monroe and Grewal, 1991;

Schiffman and Kanuk, 2000). The researcher believes this study will serve as a basis

to further develop the existing literature in this area.

1.6 Scope of the study

The study will be conducted in Ashanti region which is one of the regions of Ghana

using a questionnaire. The work will be centered on behavioral marketing in the

context of consumer decision making. The main objective of the study is to establish

the impact of variables relating to brand on the purchase decisions of consumers of

Nestle Ghana Ltd. some examples of the variables are brand awareness, perceived

quality, brand loyalty brand image, brand attitude and brand attachment. Others

include product image and unforeseen effects of low price, past experience, brand

attachment and product awareness.

7
1.7 Overview of Methodology

Questionnaire will be administered on a sample size of 250 consumers of Nestle

Ghana in Ashanti region with an expected response rate of 80%. The study will be a

cross-sectional study. The mixed method will be used and that data collected will be

analysed using multiple regression analysis.

1.8 Limitations of the Study

This is a perceptual study but not objective study that is based on organizational

records. So the possibility of perceptual bias cannot be ruled out. Thus there is the

possibility for some respondents to lie. It is also important to identify other factors

likely to influence consumer purchase decisions. Thus, the measurement items used in

this study are not absolute as there are other items worth considering when it comes to

brands and its impact on consumer purchase decisions.

1.9 Organization of the Study

The research is divided into five main chapters. The First Chapter deals with the

introduction which comprises the background of the study, followed by problem

statement, research questions, objectives of the research, justification of the study,

scope of the study as well as how the research is organized. Chapter Two deals with

the review of literature of this study. This chapter looks at what other authors of

brands and consumer purchase decisions have written about the subject. Chapter

Three of this study will deal with the method of data collection, the population

sampling, data analysis procedures, instruments used for the study and also the

administration of the instrument are discussed. Presentation of the analysis of the data

collected from the field is found in Chapter Four. Chapter Five deals with the

8
summary of findings, recommendations based on the findings and ends with

conclusions and further research directions.

9
 CHAPTER TWO

LITERATURE REVIEW

2.1 Definition of the Term Purchase Decision

The term “Purchase Decision” has been used widely in business circles and has been

defined by various authors. Prominent among the definitions put forth are those

discussed in the following section.

Firstly, Engel, Blackwell and Miniard (1995) present the most recognized model of

consumer purchase decision-making. This model divides the consumer purchase

decision process into five stages: (1) problem recognition, (2) information search, (3)

alternative evaluation, (4) purchase decision, and (5) post-purchase behavior. Also,

Mowen and Minor (2001) maintain that consumer decision making are a series of

processing results from perceiving problems, searching for solutions, evaluating

alternatives, and making decisions.

Earlier, Engel, Blackwell and Miniard (1995) contended that purchase decision can be

divided into unplanned buying, partially planned buying and fully planned buying.

Unplanned buying means that consumers make all decisions to buy a product category

and a brand in a store. It can be regarded as an impulse buying behavior. Partially

planned buying means that consumers only decide a product category and the

specification before buying a product, and brands and types will decide in the shop

later. Fully planned buying means that consumers decide which product and brand to

buy before entering the shop. Kotler (2003) proposes that individual attitudes and

unpredictable situations will influence purchase decision. Individual attitudes include

personal preferences to others and obedience to others‟ expectation and unpredictable

10
situations signify that consumers change purchase decision because a situation is

appearing, for example, when the price is higher than expected price (Dodds, Monroe

and Grewal, 1991).

Consumer purchase decision is considered as a subjective inclination toward a

product and can be an important index to predict consumer behavior (Fishbein and

Ajzen, 1975). Zeithaml (1988) uses possible to buy intended to buy and considered to

buy as measurement items to measure purchase decision.

Predicting consumer behaviour is one of the most deadly tasks for any business as it

keeps on altering under the influences of unknown and doubtful factors; therefore

leading to a purchase decision which is difficult to measure under diverse conditions

(Rizwan, and Qayyum, (2014). Purchase decision in literature is defined as the

situation in which a customer is agreeable to make a transaction with the retailer

(Schiffman and Kanuk, 2000). According to Dodds, Monroe and Grewal (1991)

purchase decision comes into deliberation when a customer is most likely attempting

to purchase some product or service. For marketers purchase decision is of vast

meaning as their forecasted consumer behaviour is highly dependent on this purchase

decision of the customers. The focus is on the buyer‟s intent not behavior. Intent has

mostly implications and will often influence individual action (Ajzen and Driver,

1992; Schlosser, White, and Lloyd, 2006).

Several studies claimed that purchase decision is a function of monetary deliberations

too, and not only of behavior. Furthermore, apparent affordability is an economic

variable that can influence behavioral decision (perceived economic control). Hence,

11
the purchase of that goods is prompted by the professed ability to afford a product, no

matter whether the buyer becomes attentive of the product as pricey or low-priced

(Zeithaml, 1988; Yang, 2009; Rizwan and Qayyum, 2014). This study is interested in

the consequences self-assessment of information about the product by the buyer and

how it affects buyer‟s purchase decision.

2.2 The Concept of Purchase Decision

Researchers have proved many a times that celebrity endorsement, customer

knowledge and Product packaging/ design increases purchase decision of customers

towards an organizations product. Recently some researchers have proved that

celebrity endorsement, customer knowledge and product packaging helps customers

in evaluation of the product which is also called perceived value. After evaluation of

the product or identifying the perceived value of the product customers generate

purchase decisions towards the product.

Product knowledge or customer knowledge helps in better evaluations of the product

by the Customers and purchase decision is more objective by them rather than

subjective. Kempf and Smith (1998) conducted a research on consumer‟s knowledge

about the product on product evaluations. The results indicated that consumers having

more knowledge about a product are able to solve their problem with lesser efforts

compared to less knowledgeable consumers. Also consumers with higher knowledge

are not biased in making their decisions related to product purchase. Product

knowledge plays a significant role in purchase decisions when the product is new or is

manufactured in other countries and is distributed in rest of the countries (Bamber,

Jiang, and Wang, 2010).

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However, Park and Kim (2009) study indicated that consumers who are experts were

affected by the cognitive fit of the message and their probability of purchasing the

product increases whereas novice customers look at the number of reviews and make

purchase decisions in online purchases. Bian and Moutinho (2008) study indicated

that customer knowledge does not affect purchase decisions directly rather it has an

effect on perception towards product‟s perceived value and the final decision of

purchase is based upon these perceptions.

2.3 Arguments for and Against Purchase Decisions

Some more dimensions have also been studied in different researches that effect

purchase decision such as enjoyment value, character competency value, and visual

Authority value, monetary value (Chou and Kimsuwan, 2013).

Many researchers have proved that perceived value dimensions such as social value,

emotional Value and functional value etc. effect purchase decisions of products (Kuo,

Wu and Deng, 2009). In case of online purchase limited time promotional offers

emotional value leads to higher purchase decisions (Lifang and Shuyi, 2013), whereas

in case of food products impact of social value, perceived quality, perceived price is

higher and no effect of emotional value was found on purchase decision (Ar, and

Kara, 2012).

Also, Shafiq, Raza, and Zia-ur-Rehman (2011) indicated that there is a significant

effect of customer knowledge, product packaging/design and celebrity endorsement

on purchase decision of a product. Perceived value was taken as the mediating

variable in the study therefore the model having customer knowledge, product

13
packaging / design and celebrity endorsement as independent variable along with

mediating variable perceived value and purchase decision as dependent variable was

again checked and it was found that perceived value does not change the effect of

independent variables on dependent variable of the study. Only celebrity appeal

doesn‟t increases the purchase decisions towards products organizations should also

consider other factors such as product packaging, customer knowledge in turn to gain

more customers for their brands (Agarwal, Kumar, and Kumar, 2013).

2.4 Product Package and Purchase Decisions

A study by Immonen (2010) on the impact of package cues on the perception of

premium quality of premium private label products, which indicated that visuals on

the package and the information provided on the package influence the quality

judgment of coffee products. The indicators of higher quality of a product are the

small package size, package attractiveness, Soft packaging as well as the uniqueness

of the package. Package design not only increases the visibility of the product it also

helps in easy recognition of the product. Also improvements in product packaging

revitalize brands leading to increase in sales (Leong, 1998). Package designs effects

consumer belief about the products and consumption beliefs leading to higher

purchase decision (Horsky and Honea, 2009). Polyakova (2013) studied the effect of

package design on purchase decision. The results of the study indicated that graphics

on the package, color and the information of the product are the key factors in

purchase decision (Bryson, 2012, Bishnoi and Dhillon 2013). Marumbwaa and

Mutsikiwa (2013) examined the effect of package colors, instructions, material and

typography on purchase decisions of dairy products. The results indicated that all

14
elements of package design don‟t affect the purchase decisions. But appealing

package design can trigger purchase decisions.

Size shape and package material helps customers in evaluating the ease of use of the

product or package convenience (Polyakova, 2013). Raghavan (2010) studied the

impact of shape of the products packaging. Two experiments were conducted, in the

first experiment on advertisement having product packages in golden ratio was shown

and in second experiment physical product was shown and in both cases significant

impact of shape of the product packages was found on both preferences and purchase

decision.

From a study in China, Wang, (2013) studied the effect of consumer attitudes toward

visual food packaging on perceived product quality, product value, and brand

preference. The results indicated that visuals on the product package helps customers

in developing perceptions towards the quality of the product and perceived value of

the product that in turn coverts into brand preference.

2.5 Determinants of Purchase Decision

An individual or consumer‟s decision to purchase a particular product or otherwise

has been found to be influenced by a number of determinants. These determinants,

also referred to independent variables are discussed in the sections following.

2.5.1 Customers Past Experiences as a Determinant of Purchase Decision

The focus on customer experience appears to be somewhat rooted from the study on

consumer behaviors (Berry, et al, 2002; 2006). As Peter and Olson (2005) state the

15
study on consumer behaviors refers to dynamic interaction of affection, cognition, and

the surrounding environment in which people exchange various aspects of their lives.

Hence, such thoughts and feelings may bring about both positive and negative

experiences during their consumption periods. In addition, consumer behaviors also

attempt to map-out buyers‟ decision making processes (Nawangwulan, Anantadjaya,

Widayatmoko, and Seancho, 2012) by noting the individual characteristics. Such

characteristics may be demographics, psychographics, and any behavioral factors.

Also, potential influences from family, friends, reference groups, and society may

become interesting factors toward any purchase decisions.

Based on the supposition that consumer behavior is the outcome of learning (Bentlar

and Speckart, 1979), there is an argument among the researchers that consumer‟s

previous behavior can offer better predictions of behavioral decisions. Delgado-

Ballester and Munuera-Aleman (2005) are of the conviction that believe developed

through past experience becomes a crucial part of existing purchase in future. A lot of

researchers have argued that contemplation of customer previous behaviours can

provide good predictions of behavioral decision (Conner and Armitage, 1998).

Consumer‟s earlier period experience with immature products could be decisive in

forming the product-exact perception that would influence potential purchase

decision. This earlier period experiences by the consumer manipulate their purchases

or use of products. Recently, Swami, Taylor, and Carvalho (2009) in a survey of 287

men and women in London found that earlier experience was significant and certainly

predicted enthusiasm to purchase products. In their study on decision to buy fake

versus genuine things found that consumer preferred original items over fake apart

from their products experience.

16
2.5.2 Product Knowledge as Determinant of Purchase Decisions

Customers product information have familiar like feature that influence all phase in

the conclusion progression (Bettman and Park, 1980). Customers with different levels

of contrived goods in sequence differ in their perception of products. Customers with

greater level of product information have good developed and more multifaceted

schema with well formulated conclusion criterion (Marks and Olson, 1981).While

they procedure knowledge, less cognitive effort is mandatory and applicable

information structure can be activate by design, and they are capable to procedure

more information. Previous study argue that, given superior- suburban and more

composite schema customers with better levels of product knowledge have better

cognitive capacity to evaluate comparative alternatives.

This idea agree with Kempf and Smith (1998), who advise, that customers with big

levels of product knowledge are more suggestive and knowledge able than those who

have small levels of product information. Therefore, the big the level of product

information a customer‟s possess the less possibility he/she will produce estimate bias

with the result that knowledge able consumers are likely to value that CBPs are low

grade BPs. Self-perceived knowledge operates as a direct positive influencer of

purchase decisions for unusual branded long-lasting products (Berger, Ratchford, and

Haines, 1994). In the background consumers with higher level of product information

are able to assess branded product more accurately and become low favorable and

agreeable to BPs. Thus, they should give less support and to the grade of branded

product and show low preference for branded products nature apparent information

operate as a straight optimistic influence of purchase decision for inventive branded

sturdy products (Berger, Ratchford, and Haines, 1994).

17
2.5.3 Celebrities Endorsement as a Determinant of Purchase Decisions

Advertising pay millions of dollars to celebrities, hoping that the stars will bring their

magic to the products and services they endorse and make them more appealing and

successful. In 1995, U.S. companies paid more than one billion dollars to 2000

athletes for endorsement deals (Lane, 1996). This means that approximately ten

percent of the expenditure on corporate sponsorships is spent on this specific

promotion strategy. The combination of basketball superstar Michael "Air" Jordan

and Nike has become the sports business euphemism for "a perfect fit" (Amis, Pant

and Slack, 1997). By early 1993, one in three pairs of athletic shoes sold in the United

States were made by Nike, with "Air Jordan" shoes and apparel contributing more

than US$ 200 million a year in sales to the Nike empire (Katz, 1994).

According to Veltri and Long (1998), athletes will usually pursue two types of

endorsements: "sport specific products" and "non-sport specific products". Sport

specific products are defined as articles necessary for the athlete to play his or her

sport (shoes, racquets, clothing, etc.). Non-sport specific products include all other

products or services not related to the sport itself (cars, cosmetics, etc.). According to

O'Mahony and Meenaghan (1997/98), consumers' response to endorsement messages

is linked to relatedness, which means that the more the athlete is related with the

product, the more effective the endorsement is. This largely emphasises the

importance of elite-level athletes as endorsers for athletic shoe companies (producing

sport specific products), which are unquestionably the largest.

Organizations are spending huge money in hiring a celebrity endorser in their

products advertisements for increasing sales of their products. Customers follow their

18
favorite celebrities in product purchase decisions. Specifically in teenagers it has been

identified that purchase decision towards celebrity endorsed products is higher Chang

(2011). Ahmed, Mir, and Farooq (2012) revealed that advertisements having

Celebrities were more affective compared to non-celebrity advertisements. Some

organization use animated spokesperson in their advertisement rather celebrities and

researches have proved that purchase decision towards celebrity endorsed product is

higher compared to animated spokespersons (Bhakar, Bhakar, and Dubey (2015).

In a study on celebrity endorsements, Zafar and Rafique (2012) took three factors of

celebrity endorsement in the research which was credibility, physical attractiveness

and celebrity congruence with the product. The authors proposed that if the celebrity

is attractive, customers can trust him/her and there is a match between the product and

celebrity then product features take a secondary place and celebrity endorsement leads

to purchase decisions of the product. Matchup between the product and celebrity is

more important than the physical attractiveness of the celebrity (Ahmed, Mir, and

Farooq, 2012). In case of a mismatch between the celebrity and the product effect of

celebrities endorsing few brands on purchase Decision was found to be higher than

the celebrities endorsing multiple brands (Pradhan and Roy, 2012).

A model with factors of celebrity endorsement such as trustworthiness, expertise and

attractiveness as independent variables and purchase decision as dependent variable

was developed by Khan (2013). The results indicated that there is a significant effect

of trustworthiness, expertise and attractiveness of celebrity on purchase decision

(Pradhan and Roy, 2012).

19
Pradhan and Roy (2012) contradicts the results of previous studies that have proved

that celebrity attractiveness increase purchase decision. Organizations using celebrity

appeal should evaluate the popularity of the celebrity they are using in their product

advertisements. Only celebrity appeal doesn‟t increases the purchase decisions

towards products organizations should also consider other factors such as product

packaging, customer knowledge in turn to gain more customers for their brands

(Agarwal, Kumar, and Kumar, 2013). According to Yeung and Yi (2012) celebrity

endorser doesn‟t influence the customers to pay Premium prices for the product.

The relationship between Perceived value and purchase decision having celebrity

endorser as the moderating variable was studied by Chi, Yeh, and Tsai (2011). The

results indicated a significant relationship between perceived value and celebrity

Endorsement as well as perceived value and purchase decisions whereas it was found

that the Interaction between perceived value and celebrity endorser does not have a

significant impact on purchase decision.

2.5.4 The Influence of Perceived Quality on Purchase Decisions

Perceived quality is a result of consumers‟ subjective judgment on a product

(Zeithaml, 1988; Dodds, Monroe and Grewal, 1991; Aaker, 1991). Bhuian (1997) also

consider perceived quality is a judgment on the consistency of product specification

or an evaluation on added value of a product. Garvin (1983) proposes that perceived

quality is defined on the basis of users‟ recognition while objective quality is defined

on the basis of product or manufacturing orientation. The differences between

objective quality and perceived quality lie in that objective quality has a pre-design

standard to a product, and perceived quality is influenced by internal and external

20
product attributes which is an evaluation basis for consumers (Olshavsky, 1985;

Zeithaml, 1988). Kan (2002) points out that objective quality is that consumers will

use their experience and knowledge to evaluate overall product benefit, function,

durability, technology and reliability when consumers purchase a product. Perceived

quality is a consumer judgment on the accumulative product benefits and a subjective

feeling on product quality (Zeithaml, 1988; Dodds, Monroe and Grewal, 1991). Aaker

(1991) argues that perceived quality can show the salient differentiation of a product

or a service and becomes a selective brand in consumers‟ mind. The reason why

perceived quality is different to real quality is because (a) a previous bad image of a

product will influence consumers‟ judgment on product quality in the future.

Moreover, even the product quality has been changed, consumers will not trust that

product because of their unpleasant experience in previous (Aaker, 1996), (b)

manufacturers and consumers have different views on the judgment of the quality

dimensions (Morgan, 1985; Aaker, 1996), (c) consumers seldom hold enough

information to evaluate a product objectively. Though consumers have enough

information, they may be insufficient in time and motivation to do a further judgment,

and in the end they can only select little important information and make an

evaluation on quality (Aaker, 1996; Wan, 2006). In addition, perceived quality is a

relative concept which possesses situational, comparative, and individual attributes.

Perceived quality will be affected by factors such as previous experience, education

level, and perceived risk and situational variables such as purchase purpose, purchase

situation, time pressure, and social background from consumers (Holbrook and

Corfman, 1985). In sum, perceived quality is a consumer subjective judgment on

21
product quality, and he or she will evaluate product quality from their previous

experiences and feelings.

2.5.5 The Influence of Advertising on Purchase Decision

It is believed that through advertising, firms could decide on the particular objectives

to be aimed. Available choice include; (1) informative advertising, which may be

opted when firms attempt to provide as much information as possible for public view

with a basic expectation to increase education and/or understanding, (2) persuasive

advertising, which may be selected when firms attempt to offer “arguments” on

particular products and/or services, and (3) reminder advertising, which may be

chosen when firms attempt to remind public on their availability of products and/or

services (Kotler and Armstrong, 2006; Supranto and Limakrisna, 2007; Tjiptono,

2008). In addition, firms could also select mediums of advertisement, such as;

newspapers, televisions, direct mails, radios, magazines, billboards, or internet. This

is mainly done to ensure the appropriateness of media choices with the targeted

population, with the basic consideration toward budget. To start formulating

advertising, it becomes crucial for firms to predict their potential customers within the

chosen market segment, and target marketplaces.

2.5.6 Sales Promotion and Purchase Decisions

Activities on sales promotion are closely related to customer building. Its main

objective is to capture and attract new customers, boosting their decision to buy, and

lure them into making the real purchases on products and/or services (Kotler and

Armstrong, 2006; Supranto and Limakrisna, 2007; Tjiptono, 2008). There are 3 main

22
types of sales promotion tools; (1) promotion tools for retail customers, (2) trade

promotion tools, which aim for the marketing channel (distributor, retailer, and

wholesaler), and (3) business promotion tools, which refer to the business customers.

Hence, firms may have to ensure the appropriateness of tools for each market

segment.

2.5.7 Public Relation and Purchase Decisions

Most of public relation activities may be closely related to any attempts in boosting

image (Kotler and Armstrong, 2006). The term “public” may not always refer to the

general society as a whole within specific territorial boundaries. A close proximity of

local community may also be considered public. In this case, the local community

may be targeted due to its similarity in taste and/or preference, for instance. The

public relation activities may include events, sponsorships, and press releases.

Automotive firms may use events to introduce new products. Sponsorships may be

used during exhibitions, door prizes, or competitions. Press releases may be used

toward customer retention (Hansenmark and Albinson, 2004) while also targeting for

new potential customers.

2.5.8 Personal Selling and Purchase Decisions

It has been opined by Kotler and Armstrong (2006) that personal selling represent one

of the oldest forms of promotional tools. It relies on group of individuals as sales

force to rightfully perform push-strategy, which challenges customers into buying the

product or services, or a pull-strategy, where the role of sales forces may be limited to

a mere support staff on retailers to ensure the after-sales services. Though sales forces

are mostly related to encouraging customers into a buying mode, sales forces play an

23
integral role in CRM process. This is due to their possession of valuable information

and knowledge on customers, such as; addresses, occupation, hobbies, and

preferences.

2.5.9 Direct Selling and Purchase Decision

Direct selling was not merely related to creating a customer transaction (Kotler and

Armstrong, 2006). The companies could use tools in direct selling to inform customer

about the latest news from the company, such as new product, events, and company

development. Since CRM focused on the customer more personal, the direct

communication with their customer is one of first attempt to have a good relationship

with targeted customer.

2.5.10 Customer Relationship Management and Purchase Decision

As mentioned by Kotler and Armstrong (2006) and Tjiptono (2008), customer

relationship management (CRM) is a continuous process performed by firms to

constantly building and maintaining profitable customer relationships, which may be

conducted by delivering customer superior value and satisfaction (Nawangwulan,

Anantadjaya, Widayatmoko, and Seancho, 2012). As the general level of competition

gets tougher across industries, automotive industry is no exception as its products may

have similarities. Firms are constantly exploring ways of getting their competitiveness

via careful considerations on three CRM‟s points of view; operational CRM,

analytical CRM, and/or strategic CRM.

Operational CRM refers to automation of CRM activity using information

technology. Operational CRM is being implemented to customer focused activities on

24
a daily basis. In a multichannel environment, an automotives manufactures implement

on line inventory system throughout dealers to ensure spare parts need from each

dealer. By implement this online system; company could maintain customer

satisfaction (Cacioppo, 2000; Hansenmark and Albinson, 2004) by on time and

accurate services. It takes time to service a car and customers merely want their cars

get fixed as quickly as possible. The more the companies provide fast and excellent

services, the highest the customer satisfaction companies could create.

Analytical CRM refers to CRM activity in which exploit customer data to increase the

value of customer and company. Customer data could be obtained from data bank

which most of company already has. Companies usually create feedback or

suggestions and recommendations forms to know how were the company products

and services quality from customer‟s point of view. Company usually has their

customer data, consist of customers name, address, telephone, occupation, and

income. Through this customers data companies could; make better targeted

marketing campaigns, analyze customers behavior, and make a better customer

retention program (Hansenmark and Albinson, 2004)

Strategic CRM refers to new way of creating competitive advantages. By

implementing strategic CRM, companies could win the customers heart by delivering

superior value and achieve high level of customer satisfaction. Strategic CRM refers

to company attempts in creating customer focused management throughout

organization. The top management announce customer centric as a part of corporate

culture. The next step is socializing this concept to every level of organization. The

role of top management is very crucial in creating customer-centric environment.

25
Through routine meetings and trainings, top management has to explain the reason

and the significance of customer focused culture. The managers also have to conduct

routine evaluation to ensure employees performance (Kotler and Armstrong, 2006;

Tjiptono, 2008). To ensure the smooth processes, customer database is also an

important element in the process of building and maintaining customers (Kotler and

Armstrong, 2006; Tjiptono, 2008). Basically, firms may use such databases to identify

prospects, decide which customers should be targeted on particular offers, increase

customer loyalty, and reactivate customer purchases.

CRM allows firms to get closer with customers, understand their needs and wants,

and deliver superior value toward lasting satisfaction and loyalty (Hansenmark and

Albinson, 2004; Supranto and Limakrisna, 2007; Tjiptono, 2008). CRM is just a mere

process. This means that CRM alone may not turn firms into high profitability and/or

achieving competitiveness, as expected. For this reason, CRM demands internal

involvements to ensure the process to work effectively. Such internal involvements

may start with the indispensable participations from top management, a reward

system, constant concentration on customer lifecycle value (CLV).

2.5.11 Visual Merchandising as a Determinant of Purchase Decisions

Visual merchandising is effective presentation of products that impacts customers

purchase (Walters and White, 1987). It is providing right product to right customer at

right time. It is defined as “the presentation of a store/brand and its merchandise to the

customer through the teamwork of the store‟s advertising, display, special events,

fashion coordination, and merchandising departments in order to sell the goods and

services offered by store” (Mills, et al, 1995). This means everything that customer

26
sees, exterior or interior, creates a positive impact on customer. Retailers are

gradually realizing that only selling the product is not important, but customers‟

satisfaction and convenience is also important for shopping. Stimulus in retailing

includes space related, product related and people related aspects (Quartier, Vanrie

and Van Cleempoel, 2009). These stimuli are mostly collected through eyes. Hence, it

is inexpensive way of marketing (Mattew and Clark, 2004).

Visual merchandising includes both store exterior and interior. The store exterior

includes window display, façade and retail premises. Window display is a medium

which creates first impression in customer‟s mind to enter the store. Physical

attractiveness of the store impresses customers highly for store selection (Darden and

Lusch, 1983). In the same way exterior of the store instigates customers to enter the

store (Jiyeon, 2003). Omar (1999) suggests that there are three types of interior

display: Merchandising display, Point-of-sales display and Architectural display. In-

store cues have always been prominal for practitioners and researchers (McGoldrick,

1990).

Good store interior interests customers and hence, reduces psychological defense and

help purchase (Kotler, 1974; Walters and White, 1987; Bitner, 1992; Omar, 1999;

Davies and Ward, 2002, Jiyeon, 2003). The store interior includes orienting factors

(Davies and Ward, 2002); signage (Bitner, 1992); Layout (Levy and Weitx, 1996;

Berman and Evans, 1995), fixturing (Levy and Weitx, 1996), merchandise (Davies

and Ward, 2002), presentation techniques (Buchanan, Simmons and Bickart, 1999),

props (Dua and Karolia, 2008) and spatial factors and ambient conditions (Davies and

Ward, 2002), which Kotler termed “atmospherics” which is a very important strategy.

27
Consumer expectation regarding in-store design have increased (Buchanan, Simmons

and Bickart, 1999) and there is also a heightened desire for shopping excitement,

which can in part be delivered through innovative design of the physical environment

(Erlick, 1993; Levy and Weitz, 1996).

Visual merchandising is, therefore, concerned with both how the product/ brand are

visually communicated to the customer and also whether this message is aptly

decoded. Visual merchandising includes various aspects of consumer such as sensory

pleasure, affective pleasure and cognitive pleasure (Fiore, Yah and Yoh, 2000).

Consumers under stress will make planned or nondiscretionary purchase and won‟t

spend as much time or money on unplanned purchases (Donovan, Rossiter,

Marcoolyn and Nesdale, 1994). Customers account both monetary and non-monetary

costs of the merchandise (Zeithaml, 1988). Recreational i.e. non-monetary are vital

for shopping (Treblanche, 1999). The longer a shopper remains in the store the more

he or she will buy. And the amount of time the shopper will spend in the store

depends on how comfortable or enjoyable the experience is. So the visual stimulus

and ambience must be soothing and effective so customer remains in store for longer

time. Along with the merchandise, it triggered affective reaction among shoppers

(Baker and Grewal, 1992) which creates store patronage decisions (Baker et al.,

2002). It is evident from the above research studies, that in-store environment is

critical component of store choice and sales behavior.

2.5.12 Brand Satisfaction as a Determinant of Purchase Decisions

Consumer satisfy and discontent are the customer judgment whereas a firm succeed or

letdown in meet expectation (Oliver, 1980). Met potential outcomes in consumer

28
satisfaction unmet expectation outcomes in consumers frustration. In his other

writings, Oliver (1999) define satisfactory summary of mental state results when the

feeling immediate unconfirmed expectation is attached with prior feeling almost

customer practice. In simple, satisfactions have conceptualize in term of whether the

goods or services meet customer requirements and expectation (Zeithaml and Bitner,

2000). Focusing on the seller industry, satisfaction with brand or brand satisfactions is

definite as a cognitive estimation of whether or not the swap relation with brand is

satisfying (Esch, Langner, Schmitt and Geus, 2006).

2.5.13 Brand Trust as a determinant of Purchase Decisions

In matches brand belief is a well-researched market buildup. Delgado-Ballester,

Munuera-Aleman, and Yague-Guillen (2003) defined brand belief as „the certain

expectation of the brand consistency and intenti in situation entail risk toward

customers (p. 37).Such as brand belief is one reasonable result of brand awareness

and brand like. Therefore worldwide brands familiarities and worldwide brand are

essential precondition for universal brand belief. It seem not likely that worldwide

brand belief would be contract if customer were unknown with or not liked the world

wide brand. Researcher has connected brand belief with brand satisfaction greater

market share and promotes efficiency brand justness.

Recently, Romaniuk and Bogomolova (2005) have calculated worldwide brand

various in term of trust. They sample consumer live in the UK and Australia and

embarrassed for product volume influence in the belief score of one hundred ten local

brands in market. They find small variation in brand belief scores when handling of

market shares. Belief is addition like a sanitation issue in that all brand has accurate

29
level of trust to be aggressive in the markets. These findings make logic give the

markets similarity of the UK and Australia.

2.5.14 Brand Loyalty as a Determinant of Purchase Decision

In the view of Aaker (1996) a loyal consumer base represents a barrier to entry, a

basis for a price premium, time to respond to competitors, and a bulwark against

deleterious price completion, and brand loyalty is a core dimension of brand equity. In

addition, brand loyalty is the final destination of brand management, and if a company

wants to test the weakness or strength of its customers‟ loyalty, it can easily check

whether consumers still favor its product in contrast to competitors. Brand loyalty is

consumer attitudes on a brand preference from previous use and shopping experience

of a product (Deighton, Henderson, and Neslin, 1994; Aaker, 1991), and it can be

measured from repurchase rate on a same brand. Assael (1998) defines that brand

loyalty is that consumers satisfy their past experience in use of the same brand and

incur repurchase behavior. Brand loyalty means brand preferences that consumers

will not consider other brands when they buy a product (Baldinger and Rubinson,

1996; Cavero and Cebollada, 1997).

Brand loyalty represents a repurchase commitment in the future purchase that promise

consumers will not change their brand loyalty in different situations and still buy their

favorable brands (Oliver, 1999). Brand loyalty includes behavior factors and attitude

factors. Behavior loyalty represents repurchase behavior, and loyalty attitude means

psychological commitment to a brand (Aaker, 1991; Assael, 1998; Oliver, 1999; Prus

and Brandt, 1995; Farr and Hollis, 1997). Thus, purchase frequency is not equal to

loyalty. For instance, consumers to repurchase a product do not mean they like it but

30
due to a convenient factor or a variety seeking behavior to purchase a certain specific

product occasionally (Tseng, Liao, and Jan, 2004). A true brand loyalty can be called

when consumers are both inclined to these two factors, otherwise, it can only be

called a spurious brand loyalty if only attitude or behavior factors are found

(Baldinger and Rubinson, 1996).

Loyalty can also be separated from short term loyalty and long term loyalty. Short

term loyalty is not a real brand loyalty because a long term customer will not buy

other brands even if there is a better choice (Jones and Sasser, 1995). In addition,

Bloemer and Kasper (1995) argue that a real brand loyalty should include brand

preferences and repurchase behaviors that present in a long term commitment, brand

commitment and psychological processing (decision making and evaluation) function

while Fornell (1992) proposes that brand loyalty can be measured from customer

repurchase decision and price tolerance. Consumers with a strong commitment to a

particular brand will constantly search for any marketing activity related to the brand

(Brown, 1952; Barwise and Ehrenberg, 1987; Chaudhuri, 1995; Baldinger and

Rubinson, 1996; Bandyopadhyay, Gupta, and Dube, 2005).

Furthermore, brand loyalty can be measured in two dimensions: affective loyalty and

action loyalty. Affective loyalty is a specific brand preference from accumulative

satisfaction to previous using experiences. However, affective loyalty just represents

that a repurchase decision. It does not mean that consumers will take purchase action.

It is very hard to say that consumers hold brand loyalty (Jacoby and Chestnut, 1978;

Oliver, 1999; Kan, 2002). Action loyalty indicates that consumers not only have

preferences to a specific brand but also perform purchase action repetitively, and

31
become action inertia (Jacoby and Chestnut, 1978; Oliver, 1999; Kan, 2002, Lin,

2005).

2.6 Determinants of Purchase Decision in the FMCG Sector.

In marketing, the term FMCG means convenient and low involvement products like,

salt, flours, pens, chocolates, etc. these products are demanded on a rather frequent

level as compared to capital goods. The fast moving consumer goods [FMCG] is one

of the largest sectors in the economy of all nations, particularly, the developing world.

In the last few years in Bangladesh, the FMCG industry has experienced a dramatic

growth; both qualitative and quantitative improvements have taken place in the

consumer durables segment (Ullah and Prince, 2012). The FMCG sector‟s purchase

decision is also influenced by a number of determinants such as sales promotion, time

constraints and a host of others.

From the study of Ullah and Prince (2012), it can be deduced that eight key factors

were observed to be the determinants in the FMCG sector. These factors are sales

promotion, unavailability of brand, time constraint, in-store TVC, variety-seeking

behavior, product features, end of aisle display and product convenience.

However, this study recommends focusing on three important factors, i.e., sales

promotion, time constraints and unavailability of brand to smoothen the progress of

the FMCG industry in Bangladesh.

32
2.7 Summary of Review on Determinants of Purchase Decisions

Following from the reviews of existing journal articles, books and other relevant

literature, some variables including product price, product quality, brand name, visual

mechanization, among other things were found to be determinants of a consumer‟s

purchase decision. A summary of these determinants is captured in Table 2.1 as

following.

Table 2.1 Proposed Determinants of Purchase Decisions

Perceived quality Visual merchandising
Advertising Brand satisfaction
Sales promotion Customers past experiences
Public relation Product knowledge
Personal selling Celebrities endorsement
Direct selling Brand trust
Customer relationship management Brand loyalty
Source: Author‟s Construct, 2016

33
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter throws light on the methods to be used to test the relationships between

the determinants of purchase decisions and the purchase decision itself to establish

whether indeed there is a relationship between them such that the relationship can

determine or influence the decision of consumers to make purchases in Ghana.

3.2 Research Design

In the opinion of Cooper and Schinder, (1998), a research design can be defined as a

plan for selecting sources and type of information used to answer the research

questions. In a study conducted by Saunders et al (2007), they concluded that research

design can be classified into three namely: Exploratory, Descriptive and Explanatory.

This position is not too distant from the positions of (Schindler, 2006; Suvillan, 2001;

Malhotra and Birks, 2007). This study is a descriptive study. This is because in

answering the research questions, this study need to Support or refute an explanation

or prediction concerning what determines purchase decisions in Ghana. The focus of

the research questions is to establish causality between these assumptions.

3.3 Population of the Study

A research population is generally a large collection of individuals or objects that is

the main focus of a scientific query (Salgado, 2002). The producers of consumer

products in Ghana represent population of the study. Nestle Ghana Ltd is the sample

frame. The basic reason of choosing this company is simply due to the fact that Nestle

Ghana Ltd is one of the largest manufacturer and distributor of consumer goods in

34
Ghana. The company has a very wide customer base and consumers. Again Nestle

Ghana operates in all the regions in Ghana and their products have a high household

presence. It appears that the residents in Ghana are very much familiar with Nestle

products. Another justification for the selection of Nestle Ghana Ltd as case study is

that it is a typical case study that has all the attributes in the population selected. It is

therefore a rich case study that can help answer the questions asked in this research.

Polit and Hungler (1999) refers to the population as an aggregate or totality of all the

objects, subjects or members that conforms to a set of specifications. The population

is set of all units that the research covers, or to which it can be generalized (Neuman,

2006). The term “units” is employed because it is not necessarily people who are

being sampled. The researcher may choose to sample from a universe of nations,

regions, schools, etc. (Bryman, 2001).

3.4 Sample and Sampling Technique

Questionnaire will be administered on a sample size of 250 consumers of the products

of Nestle Ghana Ltd. A minimum of 80% of the questionnaire is expected to be

returned. The study utilizes stratified random sampling method. The sample frame

will be divided into strata based on the distributors of the manufacturer (Nestle Ghana

Ltd). Simple random sampling will be used to select customers from each stratum

(distributor). The stratified random sampling will ensure fair representation of the

population by the sample size selected.

3.5 The Survey Instrument and What it Measures

Purchase decision is the dependent variable. As part of the procedures the

questionnaires will be administered on among 250 respondents. Before giving the

35
questionnaire, the purpose of study and questions will be explained to the respondents

so they can easily fill the questionnaire. The researcher will administer the

questionnaire to the consumers himself together with trained assistants.

A questionnaire is a written list of questions, the answers to which are recorded by

respondents (Kumar, 1996). The vital goals of a questionnaire are to collect accurate

data with maximum reliability and validity, and to obtain information relevant to the

objectives of survey. Questionnaires are ubiquitous and employed more frequently

than other methods (Cooper and Schindler, 1998). In the questionnaire, respondents

are required to read questions, interpret what is expected and write down or record

with answers independently (Kumar, 1996). The likert scale will be employed since it

is deemed to be an excellent means of measuring the attitude of respondents towards

an attribute. According to (Myers, 1999), the likert scale is user friendly and reduces

uncertainty, confusion and misunderstanding.

3.6 Research Data Sources

Data is a set of values of qualitative or quantitative variables. An example of

qualitative data would be an anthropologist's handwritten notes about her interviews

with people of an Indigenous tribe. While the concept of data is commonly associated

with scientific research, data is collected by a huge range of organizations and

institutions, ranging from businesses (e.g., sales data, revenue, profits, stock price),

governments (e.g., crime rates, unemployment rates, literacy rates) and non-

governmental organizations (e.g., censuses of the number of homeless people by non-

profit organizations.

36
This research will rely on both primary and secondary sources to achieve its

objectives. The survey method will be used in this study. The essence of deploying

the survey method in this research is to make sure that the findings and results will be

able to be generalized. Data was collected from all relevant sources, secondary

3.6.1 Primary Research Data

The main research data collection tool is the primary data. It will be done through

administering a survey questionnaire to the consumers of Nestle Ghana limited. All

of the questions asked in the study were closed-ended and open ended. Closed-ended

questions were used because it allow answers within a limited set and it was used

essentially to gather factual data such as gender and age, as well as information on

attitudes and opinions and the open ended questions allowed for flexibility on the part

of respondents. This actually enables the researcher to have a high degree of control

over the questionnaire (Kumekpor (2002).

3.6.2 Secondary Research Data

Secondary data refers to data that was collected by someone other than the

user(Stevenson, Irving Grousbeck, and Roberts, 1999). Common sources of

secondary data for social science include censuses, information collected by

government departments, organisational records and data that was originally collected

for other research purposes.(Wennekers and Thurik, 1999) Primary data, by contrast,

are collected by the investigator conducting the research.

Secondary data was also used as well. Secondary data is data already collected for

some other purposes. The secondary data sources include but are not limited to

37
published articles, books, reports related to the subject area, as well as internet

sources. These sources were generally used in the literature review chapters to

develop the arguments that serve as the basis for the empirical study.

3.7 Data Analysis

The data collected will be analysed quantitatively using regression analysis and

descriptive statistics. The raw data obtained from a study is useless unless it is

transformed into information for the purpose of decision making (Emery and Couper,

2003). The data analysis involved reducing the raw data into a manageable size,

developing summaries and applying statistical inferences. The SPSS software will be

used for this analysis. With the aid of multiple regression analysis, the assumed

determinants of purchase decision of consumers of Nestle Ghana Ltd will be

regressed against purchased decision to ascertain whether indeed they constitute the

determinants of purchase decisions in Ghana and that they influence the decision

consumers make when purchasing.

3.8 Profile of Nestle Ghana ltd

In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable

to breastfeed. His first success was a premature infant who could not tolerate his

mother's milk or any of the usual substitutes. People quickly recognized the value of

the new product, after Nestlé's new formula saved the child's life. Soon, Farine Lactée

Henri Nestlé was being sold in much of Europe. In 1905 Nestlé merged with the

Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was

operating factories in the United States, Britain, Germany and Spain. World War I

created new demand for dairy products in the form of government contracts.

38
The 1920s saw Nestlé's first expansion into new products, with chocolate the

Company's second most important activity. The end of World War II was the

beginning of a dynamic phase for Nestlé. Growth accelerated and companies were

acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse and

Blackwell followed in 1960, as did Findus (1963), Libby's (1971) and Stouffer's

(1973). Diversification came with a shareholding in L'Oréal in 1974.

Nestle has been in existence for 150 years and can boost of 2000 plus brands with

335,000 employees worldwide, operates in 189 countries with 436 factories in 85

countries. The annual sales generated by Nestle in 2015 were CHF 88.8 Billion.

Nestlé Ghana Limited started business in Ghana in 1957 under the trading name of

Nestlé Products (GH) Limited with the importation of Nestlé products such as milk

and chocolates. In 1968, it was incorporated as Food Specialties (GH) Limited to

manufacture and market locally well-known Nestlé brands. The company became

Nestlé Ghana Limited in 1987.

In 1971 the production of the Ideal Milk and Milo started at the Tema Factory. The

factory has since been further developed and now also produces Carnation, Chocolim,

Chocomilo, Cerelac, Nido, and Nescafé 3 in 1 etc. These products are not only

produced for Ghana but also exported. In 2003, Nestlé Ghana Ltd invested in a new

warehouse, the Central Distribution center, located next to the factory in Tema. The

companies currently have sales offices in all the ten regions of Ghana. The Company

has invested some 130 billion cedis in 2004 and 2005 to increase its production

capacity, particularly in the area of cocoa-based beverages, and to construct modern

and efficient distribution facilities next to the factory in Tema.

39
 CHAPTER FOUR

PRESENTATION OF FINDINGS AND DISCUSSION OF RESULTS

4.1 Introduction

This chapter presents and discusses results of the data from the field in the light of the

objectives stated in chapter one of the study. It is an analysis of the results obtained

from primary and secondary data collected for this study. Data was collected from

both primary and secondary source. According to Kumekpor (2002), secondary data

is information that has been gathered previously for some purpose other than the

current research project. The secondary data for this study was sourced from the

internet, textbooks, news print and articles in journals. The primary data are for a

specific purpose or for a specific research study. The primary data was collected from

respondents from the field of study with the aid of questionnaires. For the purpose of

clarity, the chapter is arranged in accordance with the objectives of the study stated

earlier in chapter one. It begins with the description of the demographic

characteristics of the respondents such as their sex, marital status, age group,

educational level, and the presentation and analysis of the findings as they relate to

the objective.

4.2 Response Rate

The total data collected from questionnaires administered have been tabulated,

presented in pie or bar chart and concise analysis made to match the responses of the

various respondents. A total number of two hundred and fifty (250) questionnaires

were administered to the consumers of the products of Nestle Ghana Ltd. Out of the

two hundred and fifty (250) questionnaires administered; two hundred questionnaires

were received in return. In all the researcher received 80 percent of the questionnaires

from the respondents.

40
4.3 Background of Respondents

The socio-demographic characteristics considered for the study includes that of

gender, marital status, age, educational qualification, level of knowledge on Nestle

products. These characteristics have been found to be indicators of customer‟s attitude

towards purchases in general.

4.4 Gender Distribution of Respondents

The gender distribution of respondents in this study was relevant due to the immense

role that gender stratification plays when it comes to the type of work that both male

and female engage in. It is against this background that respondents were asked about

their sex. The sex of respondents has been described in Table 4.1. The research

further revealed that the administered questionnaires exhibited a ratio of 1:9 with

regard to male and female distribution respectively with the female almost doubling

that of the male. The ratio is an indication of enough evidence that there are more

women who are customers of Nestle Ghana ltd. The findings show that female

respondents were largely sampled.

Table 4.1: Gender Distribution of Respondents

Gender Frequency Percentage
Male 20 10.0
Female 180 90.0
Total 200 100
Source: Field survey, 2016

Age group

To determine the category of age groups of customers, data on the ages of the

research participants were analyzed. These findings would be of enormous assistance.

To this end, respondents were asked to state their ages. The results shows that about

(32%) of respondents fell within the range of up to 40 with the rest 68% above 40.

41
According to Ghana Living Standard Survey (1992), about 76% of the adult

populations are economically active. This gives meaning to this survey„s finding that

the majority of the respondents are within the adult population. It therefore means that

the customers of Nestle Ghana ltd cut across all age groups with the majority been the

older customers after 40 years who had stayed longer as customers of Nestle Ghana

ltd. This age group according to Ghana„s demographic characteristics is the active

working group

Table 4.2: Age Group

Age Group Frequency Percentage
Below 20 10 5.0
21-30 54 27.0
31-40 60 30.0
41-50 42 21.0
Above 50 34 17.0
Total 200 100
Source: Field survey, 2016

Marital status

With regards to marital status, 21% representing 43 out of 200 respondents were

single and 93 representing 47% were married as shown in and Figure 4.1 above. 12%

and 20% representing 24 and 40 out of 200 respondents were divorced and widowed

respectively. This depicts that almost about half of the respondents had other

responsibilities like taking care of their families in addition to their work. They are

more likely to be dragged away on family emergencies more often.

42
Figure 4.1: Marital Status of Respondents

Marital Status
Single Married Divorced Widow

20% 21%
12%

47%

Source: Field survey, 2016

4.5 Educational Qualification of Respondents

The educational qualification of respondents gave insight into the diverse skills of the

respondents and how they could analyze and perceive issues. The respondents consist

of both skilled and unskilled workers. However, it is important for the unskilled

workers to be able to read and write in order to communicate effectively with the

organization. Table 4.3 presents the distribution of level of education attained. It

shows the various educational qualifications of all respondents. Of these, 17% were

first degree holders; 28% were diploma holders; this is followed by those who had

other forms of education with 55% such as BECE, WASSCE, O and A level

certificate. In general, the level of education of respondents was quiet good. It is

probable that this may be due to the urban nature of the metropolis.

Formal education has given rise to shifts in the occupational distribution and ranking

in the country, as well as a change in the stratification arrangements of the wider

society (Assuming, 1999). It has also changed the cognitive structure of many people.

43
It is in the light of this that the study examined the educational background of

respondents. This level of literacy enhanced the research, especially during the data

collection. This was because most of the respondents could understand the issues that

the research was seeking to unravel.

Table 4.3: Educational Qualification of Respondents

Educational Qualification Frequency Percentage
Diploma 56 28.0
1st Degree 34 17.0
2nd Degree 0 0.0
PhD 0 0.0
Any Other 110 55.0
Total 200 100
Source: Field survey, 2016

4.6 Knowledge on Nestle Products

Respondents of the questionnaire were asked to indicate whether they have any

knowledge on Nestle product. 98 percent representing majority of the respondents

asserted that they have an insight on the products of Nestle Ghana with 2 percent

confused with the products of Nestle Ghana and Unilever Ghana. This may be due to

the fact of ignorance among shop owners.

The study also revealed that, all greater percentage of the shop owners had a high

level of knowledge on Nestle product. This asserts that the advertisement of Nestle

products is on its peak. The marketing department of Nestle Ghana is able to create

the awareness of all its products to its customers.

44
Figure 4.2: Knowledge on Nestle Products

Knowledge on Nestle Products

200

150
FREQUENCY

100

50

0
YES NO
FREQUENCY 196 4

Source: Field survey, 2016

Purchased Products of Nestle

These were the response of respondents when they were asked which of the Nestle

products they had purchased before. All respondents representing a total of (100%)

hundred percent indicated that they had purchased Milo, Nescafe, Ideal milk, Cerelac,

Nido and Maggic and are still continuing to purchase them. Shop owners asserted that

there is a high demand for Nestle products in the market especially the products

mentioned above. Shop owners emphasized that product of Nestle Ghana are

perceived by buyers to be of good quality and it influences their decision to purchase

their products.

4.7 Determinants of Consumer Purchases

This part considers the determinants that affect the consumers purchasing decision.

Respondents were asked to indicate the extent to which you agree or disagree to the

accompanying statements. The Kendall's coefficient of concordance was used to

determine the factors that most influence respondent‟s purchases. Majority of the

45
respondents affirm that they do purchase all the products displayed. Just a few

asserted they purchase not all but some.

Table 4.4: Determinants of Consumer Purchases

NO Determinants Mean Rank Rank
2 Country of origin 1.81 21
3 Brand name 4.91 2
4 Quality 3.96 8
5 Price 4.89 3
6 Corporate social responsibility of the 1.41 23
producers.
7 Family members 1.75 22
8 Peer group (my friends) 2.00 20
9 Features 2.83 14
10 My past experience 3.81 10
11 Knowledge of the products 3.80 11
12 Celebrities that endorse the products. 1.01 24
13 Perceived quality 4.92 1
14 Advertising 4.54 5
15 Sales promotions. 3.84 9
16 Public relations 3.01 12
17 Brand satisfaction 4.39 7
18 My trust in the products brands 4.70 4
19 My loyalty to the brands 4.52 6
20 The accessibility of the products 2.21 19
21 Personal selling 2.26 18
22 Visual merchandising 2.55 16
23 Customer Relationship 2.84 13
24 Packaging of the products 2.74 15
25 Direct selling 2.41 17
Test Statistics
N 200
Kendall’s Significant level 0.05
P-value 0.16
Source: Field survey, 2016

46
The result was obtained from the non-parametric test for k-related samples. The level

of agreement between the two hundred (200) respondents in the sampled shop owners

was tested using the Kendall's coefficient of concordance since there are two hundred

(200) respondents.

Perceived quality of the products was ranked as the major determinant that influences

consumers purchase decision. The findings from this study are consistent with the

results from similar studies conducted by Zeithaml (1988); Dodds, Monroe and

Grewal (1991) and Aaker (1991). This points to the fact that consumers of nestle

products will largely continue to consume products from Nestle Ghana Limited only

if the quality of such products is guaranteed.

This implies that there ought to be consistency in the product specification produced

by the company at all times. With the slightest of alterations in specification of the

products, most consumers are likely not to purchase the products in question. Indeed,

Aaker (1991) opined that a variation in the known product specification could

potentially lead to substantial drop in confidence of consumers, and consequently

their decision to purchase.

As has been proposed by Garvin (1983) perceived quality is defined on the basis of

users‟ recognition while objective quality is defined on the basis of product or

manufacturing orientation. Ranking perceived quality as the major influential factor is

also consistent with Bhuian (1997) who considers it as a judgment on the consistency

of product specification or an evaluation on added value of a product.

47
Brand name was ranked the next influential determinant with a mean of 4.91.

Respondents asserted that branding is an important tool in marketing your products

which intends to create awareness of the product. A good brand influences the

purchasing decision of consumers. Developing a good brand name helps to build

brand trust and brand loyalty which contributes in consumers purchasing decision. A

consumer with brand loyalty indicates they do not only have preferences to a specific

brand but also perform purchase action repetitively, and become action inertia (Lin,

2006).

Price, advertising and Quality were ranked the 3rd, 5th and 8th determinants

respectively with their individual mean ranks as 4.89, 4.54 and 3.96 respectively.

Advertising serves as a factor next to price of the products. Advertisement of Nestle

products creates the awareness and also serves as a way by which consumers are

persuaded when firms attempt to offer arguments on particular products. This is

consistent with the work of Kotler and Armstrong (2006). Quality; the objective

quality of the product influences the purchase design of consumers. Kan (2002) points

out that objective quality is that consumers will use their experience and knowledge to

evaluate overall product benefit, function, durability, technology and reliability when

consumers purchase a product.

Sales promotion was ranked the 9th among the major factors that influences consumer

purchases with a mean of 3.84. Sales promotion is used as a tactical measure to

capture customers. The key objective of sale promotion is to entice new customers

their decision to buy, and convince them into making the real purchases on products

(Supranto and Limakrisna, 2007).

48
Past experience, knowledge of the product and celebrity endorsement were ranked

10th, 11th and 24th respectively with its mean rank as 3.81, 3.80 and 1.01 respectively.

Past experience of using the products influence the product decision of customers.

Researchers are of the opinion that the trust developed through past experience

becomes a decisive part of existing purchase in future (Delgado-Ballester and

Munuera-Aleman, 2005). Consumer‟s earlier period experience with undeveloped

products could be decisive in creating the product insight that would influence

purchase decision.

In the background consumers with higher level of product knowledge are able to

assess branded product more accurately and become low favorable. Kempf and Smith

(1998) argued customers with big levels of product knowledge are more suggestive

and knowledgeable than those who have small levels of product information.

Therefore, the big the level of product knowledge a customer‟s possesses highly

affect the purchase decision.

Ali Ahmed, et al. (2012) revealed that advertisements having Celebrities were more

effective compared to non-celebrity advertisements. The mean rank of celebrity

endorsement suggests that it is a minor determinant that influences consumer

purchases. Contrary to the findings of Veltri and Long (1998), the current study

results reveal that advertisements by celebrity endorsement were not treated as major

determining factor by Nestle product consumers in Ghana. Whereas, Veltri and Long

(1998) and O'Mahony and Meenaghan (1998) are of the view that consumers'

response to endorsement messages is linked to relatedness, which means that the more

the athlete is related with the product, the more effective the endorsement is, it does

49
appear that such celebrity endorsements do not entice Nestle products consumers

sampled for this study. This could be as a result of the product line Nestle produces

which are not linked or related directly to any sporting activity as found by O'Mahony

and Meenaghan (1998).

According to O'Mahony and Meenaghan (1997/98), consumers' response to

endorsement messages is linked to relatedness, which means that the more the athlete

is related with the product, the more effective the endorsement is. This largely

emphasizes the importance of elite-level athletes as endorsers for athletic shoe

companies (producing sport specific products), which are unquestionably the largest.

For Nestle Ghana Limited to be able to attract more customers, its product

endorsements should be coming from key personalities in sports. Taking, milo for

example, which is known to be immune booster and provider of energy for children

within a certain age group, any athlete within the age group of the targeted population

will appeal to the taste and conscience of consumers.

This study result is consistent with Roy (2012) and Yi (2012) they proved that

celebrity attractiveness does not increase purchase decision. Roy asserted that

organizations should evaluate the popularity of the celebrity they are using. This is in

order because some celebrities may not be popular in the field of the product in

question.

One other factor which received a high response was the trust given to product

brands. With a mean of 4.70, trust on brand was ranked 4th as a major determinant.

50
Brand trust serves as an important factor to the purchase decision of consumers. The

lack of trust in a product affects the brands of the product negatively which intends

gives a negative decision to the consumer. Brand loyalty also serves as a major factor

in purchase decision. Ranked as the 6th determinant, loyalty represents a repurchase

commitment in the future purchase that promise consumers will not change their

brand loyalty in different situations and still buy their favorable brands (Oliver, 1999).

Brand satisfaction according to Oliver (1999) define satisfactory summary of mental

state results when the feeling immediate unconfirmed expectation is attached with

prior feeling almost customer practice. Brand satisfaction was rank 7th with the mean

rank of 4.39. Satisfaction gained from the specified Nestle Ghana products are ranked

as satisfactory which affects the purchase decision of respondents.

The improvement in a firm‟s customer relationship management principle has an

influencing on the purchase decision of Nestle product even though respondents

ranked it as the 13th determinant. The strategic improvement and review of Nestle

Ghana customer relationship management principle would have a positive decision on

the purchase of Nestle Ghana products. Given the packaging of products, respondents

ranked it the 15th determinant. Good packaging of product gives an impression of it

quality. Ksenia Polyakova (2013) studied 0the effect of package design on purchase

decision. The results of the study indicated that graphics on the package, color and the

information of the product are the key factors in purchase decision.

Visual merchandising, direct selling and Personal selling were part of the

determinants that were ranked least among the other factors with their respective

51
mean ranks as 2.55, 2.41 and 2.26. The study revealed that visual merchandising does

not play a major role in purchase decision likewise direct selling and Personal selling.

Visual merchandising is effective presentation of products that impacts customers

purchase (Walters and White, 1987) this is inconsistent with what the study revealed.

Direct selling may be used as a tool to have a good relationship with targeted

customer (Kotler and Armstrong, 2006). Personal selling according to respondents are

considered to be the older form of selling. Majority of respondents ranked it a the less

contributing factor that customer would not consider when making their purchase

decision on Nestle Ghana product.

4.8 Purchase Decision

Respondents were asked to indicate the extent to which they agree or disagree with

the statement below in relation to their purchase decision toward Nestle Ghana

products.

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 Table 4.5: Purchase Decision

Factors Strongly Agree Neutral Disagree Strongly Total

Agree Disagree
No. No. No. No. No. No.
% % % % % %
1 I have never regretted buying any of these products 133 40 17 10 0 200
66.5% 20.0% 8.5% 5.0% 0.0% 100.0%
2 I make all the decision to buy any of the above product when I 3 37 86 53 21 200
get to the store 1.5% 18.5% 43.0% 26.5% 10.5% 100.0%
3 I decide buying the product ahead of time but I finally decide 11 91 40 39 19 200
the brands and the types later when I am in the shop 5.5% 45.5% 20.0% 19.5% 9.5% 100.0%
4 I decide which product and brand to buy before entering the 40 107 27 19 7 200
shop 20.0% 53.5% 13.5% 9.5% 3.5% 100.0%
5 I sometimes prefer other brands from other manufacturers than 9 123 8 13 47 200
those displayed above 4.5% 61.5% 4.0% 6.5% 23.5% 100.0%
6 Unpredicted situations sometimes change my decision to 8 64 96 32 0 200
purchase the above displayed products 0.4 32% 48.0% 0.16% 0.0% 100.0%
7 I will always purchase these products in the future 144 32 16 8 0 200
71.0% 16.0% 0.8% 0.04 0.0% 100.0%
8 The information I have about other brands and the brands 103 55 8 18 16 200
displayed above helps me to decide on my purchases 51.5% 27.5% 4.0% 9.0% 8.0% 100.0%
9 I always purchase familiar brands 18 98 60 16 8 200
0.09% 49.0% 30.0% 8.0% 4.0% 100.0%
10 I buy these products no matter the price 11 15 37 121 16 200
5.5% 6.0% 18.5% 60.5% 8.0% 100.0%
Source: Field survey, 2016

49
According to Table 4.5 above, ten factors measured the purchase decision factors and

respondents were asked whether they agreed with the statements therein. Results in

terms of responses were given on the Likert Scale. The first factor was „I have never

regretted buying any of these products‟, the responses indicate that 66.5% of the

respondents strongly agreed with the statement, 20.0% agreed with the statement and

8.5% were neutral, 5.0% disagreed, however, none of the respondents strongly

disagreed. This confirms that majority of the respondent had ever regretted buying

any of these products.

The second factor was that „I make all the decision to buy any of the above products

when I get to the store‟. The highest number of respondents (43.0%) was neutral with

the statement, 26.5% disagreed, 18.5% agreed whiles 10.5% and 1.5% of respondents

strongly disagreed and disagreed. This statistic confirms that customers were

indifferent in making their decision to buy any of the products when they get to the

store.

The third factor was „I decide buying the product ahead of time but I finally decide

the brands and the types later when I am in the shop‟; responses to this factor indicate

that (45.5%) agreed with the statement, 20.0% were neutral, 19.5%% disagreed with

9.5% and 5.5% of the respondents disagreed and strongly agreed respectively.

Findings indicate a high percentage of the number of the respondents who agreed and

those who were neutral in making their decision ahead of time.

The fourth factor was „I decide which product and brand to buy before entering the

shop. According to the findings, most of the respondents (53.5%) agreed with the

50
statement, 20.0% strongly agreed, while 13.5% were neutral, 9.5% disagreed and

3.5% indicated they strongly disagreed. This implied that, the customers of Nestle

Ghana decide which product and brand to buy before entering the shop.

The fifth factor was „I sometimes prefer other brands from other manufacturers than

those displayed above. The highest number of respondents (61.5%) agrees with this

statement while 23.5% strongly disagreed; 4.5% who strongly agreed with the

statement. However, the least number of respondents (4.0%) remained neutral (6.5%)

disagreed. Apparently, the percentage of the respondents who responded in

affirmative was far less than those who responded in negative. This finding shows

that consumers sometimes prefer other brands from other manufacturers than those

produced by Nestle Ghana Limited.

The sixth factor was „Unpredicted situations sometimes change my decision to

purchase the above displayed products‟. Responses indicate that while almost (48.0%)

were neutral; 32% agreed with the statement, 16.0% s disagreed, while 4.0% strongly

agreed and 0.0% indicated they strongly disagreed. The average percentage of the

respondents who agreed (32.0%) confirm customer may face unpredicted situations

sometimes which may change their decision to purchase Nestle Ghana Limited

products.

The seventh factor was „I will always purchase these products in the future‟.

According to the responses, more than half or the respondents (71.0%) strongly

agreed to the statement while 16.0% agreed. However, 8.0% were neutral with 5.0%

disagreed, while 0.0% strongly disagreed. The findings evidently indicate that

51
according to the affirmative response (24.0%), consumers would always purchase

these products in the future.

The eighth factor was „the information I have about other brands and the brands

displayed above helps me to decide on my purchases‟. Most respondents (51.5%)

strongly agreed with the statement while 27.5% agreed. However, 9.0% of the

respondents disagreed with 8.0% and 4.0% of the consumers affirmed they strongly

disagree and are neutral respectively. This further confirms the information available

would help the consumer in making a good decision.

The ninth factor was „I always purchase familiar brands‟, and responses to this factor

indicate that 49.0% agree with the statement, 30.0% were neutral, 9.0% strongly agree

whiles 8.0% and 4.0% disagrees and strongly disagree respectively. Given the

percentage of the respondents who agreed and neutral with the statement, it then

confirms that the consumers would always purchase familiar brands.

The tenth factor was „I buy these products no matter the price‟. Responses indicate

that while almost (60.5%) disagreed with the statement, while 18.5% were neutral,

8.0% disagreed strongly, 6.0% agreed and 5.5% indicated they strongly agreed. The

percentage of the respondents who disagreed confirms consumers are not willing to

buy these at a higher price.

According to Arens Weigold and Arens (2008) success of the marketing strategies

pass through not only changing the behaviour of the consumers but also affect and

cognition. Although a person likes a product she/he may not buy it. All consumers are

52
exposed to social pressure, family, personal influence, culture, situation effects

(Armstrong and Kotler, 2007)

Consumers should be analyzed by looking into all the three objects; their behaviour,

affect and cognition and environment and their relations between each other. Every

single element can affect the other elements or it can be a reason to realize. So while

determining the marketing strategy, all elements should be considered (Keller, 2009).

According to Akhter (2009), cultural factors denotes the deepest and widest impact on

behaviour of consumers. It denotes beliefs and, in several customers learns to act by

observing or inter-acting with other society members. Kacea and Lee (2002)

described that cultural factors consist of values and culture, social class and

subculture represents a wide impact over the decision making of consumer. Similarly

Alba and Hutchinson (2000), explained that cultural factors also consist of thought

process and behavioral patterns in a distinct way

53
 CHAPTER FIVE

DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter being the final chapter of the study contains the findings obtained from

the study. Its purpose is therefore to outline and highlight the inferences that could be

drawn from these findings. Also, since the study was necessitated by the researcher‟s

quest to delve into consumer‟s purchase decisions on Nestle products, it is imperative

that the outcome and its implications be given prominence as integral part of the study

in order to help improve upon the status quo in the company. As a result, the

composition of this chapter is based on the relevant issues to be dealt with, which are

the summary of findings, conclusion and recommendations.

5.2 Summary

The results of this study revealed certain important issues in relation to the research

objectives and research questions. The following findings were made and the outcome

of this research indicated that all respondents representing had purchased Milo,

Nescafe, Ideal milk, Cerelac, Nido and Maggi and are still continuing to purchase

them. Shop owners emphasized that product of Nestle Ghana are perceived by buyers

to be of good quality and it influences their decision to purchase their products.

5.2.1 Identification of purchase decisions of consumers in Ghana

One major factors that influence the purchase decisions of consumers of Nestle

products, using the Kendall's coefficient of concordance, respondent identified seven

major factors that influences the purchase decision of consumer. Consumers of Nestle

product stated “perceived quality”, “brand name”, “price”, “trust”, “advertising”,

54
“loyalty” and “brand satisfaction” as the major factors that influence consumer

purchasing decision. Perceived quality was rated as the most important factor.

5.2.2 Evaluation of the relative impact the determinants have on the purchasing

decisions of consumers of Nestle products in Ghana

On the basis of effects the determinants have on the purchase decisions of consumers

of the products, Berger, Ratchford, and Haines (1994) in their study of how product

knowledge affect purchase decision revealed that self-perceived knowledge operates

as a direct positive influencer of purchase decisions for unusual branded long-lasting

products. A good brand name creates an identity that resounds with your consumers

which reinforces the emotional relationship between the company and consumer.

Trust and loyalty rated as a major determinant of influence, has a positive influence

on the consumers purchase.

5.2.3 Exploration of the perception of staff on the purchasing decision factors of

consumers.

From the study, Formal education has given rise to shifts in the occupational

distribution and ranking in the country, as well as a change in the stratification

arrangements of the wider society (Assuming, 1999). The big the level of product

education customer possesses the less possibility he/she will produce estimate bias.

The study revealed that knowledge of the product is the most important factor that is

being perceived by staff of Nestle Ghana in making their purchase decision

5.3 Conclusion

This study titled “The determinants of consumer purchase decisions in Ghana”

enables the Nestle Ghana ltd to understand how consumer‟s purchases decision differs

55
from person to person. The major determinant that factors that affects consumer‟s

purchases of Nestle products.

The response of consumer‟s purchases decision on Nestle products has been very

positive and within a span on time, the product‟s market scenario has seen a

perceptible change in terms of improved brand name”, “price”, “trust”, “advertising”,

“loyalty” and “brand satisfaction” benchmarks and introduction of innovative and

tailors made products. The new products that have been introduced by the companies

have certain innovative features in terms of better customer services and also wider

covers. This has given customer ample choice to select products. The results indicated

that consumers having more knowledge about a product are able to solve their

problem with lesser efforts compared to less knowledgeable consumers. Also

consumers with higher knowledge are not biased in making their decisions related to

product purchase. Product knowledge plays a significant role in purchase decisions

when the product is new or is manufactured in other countries and is distributed in

rest of the countries

5.4 Recommendation

With regard to Nestle products, consumers respond at different rates, depending on

the consumer‟s decision. Hence Nestle Ghana ltd should try to bring their new

product to the attention of potential early adopters.

1. Due to increasing stiffer competition within the FMCG companies, Nestle

Ghana ltd would have to adopt better strategies through gathering market

intelligence reports in other to increase their market share.

56
2. As per the findings of this study, Quality is a major determinant of purchasing

decision of consumers of Nestle Ghana products, it is therefore imperative that

Nestle Ghana maintains the high quality level as perceived by its customers

and also work on how to reduce cost in other to have a good Return on

Investment (ROI) which would be the ultimate indicator to remain

competitive.

3. Nestle products are consumed mainly by middle and higher income groups.

Hence Nestle may be regarded as mainly targeting the working class. Nestle

should increase their portfolio for products that are inexpensive and meet the

demands of low income groups which would invariably help increase their

market share.

4. Nestle Ghana ltd should conduct periodic research to understand the changing

needs of their consumers in other to plan effective promotional and branding

strategies to increase the awareness level among the consumers and also boost

sales.

5. Nestle Ghana ltd should organize more consumer forums in other to gather

feedback on the satisfaction level of their products; this will help them

manufacture products that meet the requirements of their consumers. “The

well-satisfied customer will bring the repeated sale that counts” (James Cash

Penney).

57
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 APPENDIX

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

QUESTIONNAIRE
The purpose of this study is to gather data on determinants of consumer purchase
decisions in Ghana: A case study of consumers of Nestle Ghana ltd. This is an
academic exercise and the confidentiality of the data provided by respondents would
be strictly observed.

PART A: Background of Respondents. Please tick [√] the correct answers from the options

provided below.

1. Sex: (a) Male [ ]

(b) Female [ ]

2. Marital status: (a) Single [ ]

(b) Married [ ]
(c) Divorced [ ]
(d) Widow [ ]
3. Age group: (a) Below 20 [ ]
(b) 21-30 [ ]
(c) 31-40 [ ]
(d) 41-50 [ ]
(e) 50 and above [ ]
4. Educational Qualifications: (a) SSCE [ ]
(b) Diploma [ ]
st
(c) 1 Degree [ ]
nd
(d) 2 Degree [ ]
(e) PhD [ ]
(f) Others [ ]
7. Do you know the products of Nestle Ghana Ltd? (a) Yes [ ] (b) No [ ]

8. What is your Level of Knowledge on products of Nestle? (a) Low [ ] (b) Average

[ ] (c) High [ ]

9. Which of the products of Nestle ltd. have you purchased before?

(a) Milo [ ] (d) Cerelac [ ]

(b) Ideal milk [ ] (e) Nido [ ]

(c) Nescafe [ ] (f ) Maggi [ ]

67
 PART B: Determinants Of Consumer Purchases
Please, study the products displayed below and indicate the extent to which you agree or disagree to the
accompanying statements by ticking the appropriate boxes beside them.
Strongl Agree Neutral Disagre Strongly
y Agree e Disagre
e
5 4 3 2 1
1 Do you purchase any of the products displayed
above?
2 Country of origin of the products displayed
above influence my decision to purchase them.
3 Brand name of the products displayed above
influence my decision to purchase them.
4 Quality of the products displayed above influence
my decision to purchase them.
5 Price of the products displayed above influence
my decision to purchase them.
6 Corporate social responsibility of the
producers of the products displayed above
influence my decision to purchase them.
7 Family members influence my decision to
purchase the products displayed above.
8 Peer group (my friends) influence my decision
to purchase the products displayed above.
9 Features of the products displayed above
influence my decision to purchase them.
10 My past experience of using the products
displayed above influence my decision to
purchase them.
11 My knowledge of the products displayed above
influence my decision to purchase them.
12 I like the celebrities that endorse the products
and that are what influence my decision to
purchase the products displayed above.
13 Perceived quality of the products displayed
above influence my decision to purchase them.
14 Advertising of the products displayed above
influence my decision to purchase them.
15 Sales promotions by the company whose
products are displayed above influence my
decision to purchase them.
16 Public relations by Nestle Ltd influence my
decision to purchase the products displayed
above.

68
 PART B: Determinants Of Consumer Purchases cont.
Please, study the products displayed below and indicate the extent to which you agree or disagree
to the accompanying statements by ticking the appropriate boxes beside them.
Strongly Agree Neutral Disagree Strongly
Agree Disagree
5 4 3 2 1

17 Personal selling of the products displayed

above influence my decision to purchase
them.
18 Direct selling of the products displayed above
influence my decision to purchase them.
19 Customer relationship of Nestle Ltd influence
my decision to purchase the products
displayed above.
20 Visual merchandising of the products
displayed above influence my decision to
purchase them.
21 Brand satisfaction of the products displayed
above influence my decision to purchase
them.
22 My trust in the products brands displayed
above influence my decision to purchase
them.
23 My loyalty to the brands of the products
displayed above influence my decision to
purchase them.
24 Brand satisfaction of the products displayed
above influence my decision to purchase them
25 The freshness of the products displayed above
influence my decision to purchase them.
26 How the products are merchandised at their
point of sale such as the neighborhood shops
and the super markets influence my decision
to purchase them
27 The availability of the products at their point
of sale such as the neighborhood shops and
the super markets influence my decision to
purchase them
28 The visibility of the products at their point of
sale such as the neighborhood shops and the
super markets influence my decision to
purchase them
29 The accessibility of the products at their point
of sale such as the neighborhood shops and
the super markets influence my decision to
purchase them
30 The performance of the products displayed
above influence my decision to purchase
them.

69
31 The name of the producers of the products
displayed above influence my decision to
purchase them.
32 The retailer of the products displayed above
influence my decision to purchase them.
33 The packaging of the products displayed
above influence my decision to purchase them
PART C: Purchase Decision
Please, indicate the extent to which you agree or disagree to the statements below by ticking
the appropriate boxes beside them.
Strongly Agree Neutral Disagree Strongly
Agree Disagree
5 4 3 2 1

1 I have never regretted buying any of these

products
2 I make all the decision to buy any of the
above product when I get to the store
3 I decide buying the product ahead of time but
I finally decide the brands and the types later
when I am in the shop
4 I decide which product and brand to buy
before entering the shop
5 I sometimes prefer other brands from other
manufacturers than those displayed above
6 Unpredicted situations sometimes change my
decision to purchase the above displayed
products
7 I will always purchase these products in the
future
8 The information I have about other brands
and the brands displayed above helps me to
decide on my purchases
9 I always purchase familiar brands
10 I buy these products no matter the price

70