Consumer Behavior and Marketing Psychology in FMCG Industry: A Case Study of Danone

This research paper analyzes the organizational processes of Danone in the light of contemporary consumer trends and expectations. It critically analyzes the marketing strategy and marketing mix of the company and provides strategic recommendations to add value to their organization.

CONSUMER BEHAVIOR AND MARKETING PSYCHOLOGY

Table of Contents
Introduction................................................................................................................................3
Product Overview.......................................................................................................................3
Critical Analysis.........................................................................................................................3
Marketing Strategy.................................................................................................................4
Marketing Mix.......................................................................................................................5
Strategic Recommendations.......................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8
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Executive Summary
FMCG products are essentially Fast Moving Consumer goods, which can be readily
consumed without any extra effort and can be manufactured and processed at a faster pace.
The need for FMCG arose from the advent of globalization that led to a huge industrial boom
and economic development. The economic and technological development in the business
market led to a number of factors that had a strong impact on trends of consumption and
consumer behaviour. Danone is one such multinational Company based on providing dairy
products, plant-based products and packaged drinking water.
The main aim of this research is to thoroughly investigate the various organizational
processes of Danone and critically analyze them in the light of contemporary consumer
trends and expectations. Danone has been facing stiff challenges regarding customer-loyalty
as more customers now prefer alternative products, due to various internal and external
attributes of the Danone brand. The research also concludes with a set of strategic
recommendations that might prove useful in adding value to their organization.
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Introduction
Consumer behavior is one of the most essential attributes that need to be considered while
aiming towards a constructive and sustainable development of a business organization. The
various business approaches and marketing strategies depend heavily on the changing needs
and expectations of the specific customers (Smith 2015). With changes in the behavioral
patterns of the consumers, the producer organizations need to make relevant changes in their
organizational processes that would best suit with the existing demands and requirements.
Consumer behavior depends extensively on a wide range of factors including economical,
social, technological and cultural aspects.
With the advent of globalization and technological revolution, the economic and social
statuses of most of the consumers have improved to an extent that identified a gradual shift
from quantity to quality (Grew 2018). Consumers today are much more aware regarding the
products they consume and the age of internet has made it easier for them to retrieve more
information regarding the Company, available products, their organizational ethics and
quality of products. Therefore, analyzing consumer behavior is one of the most important
elements in the process of identifying appropriate marketing strategies.
Product Overview
Danone is one of the largest manufacturers and suppliers of FMCG products, based in Paris.
It is a multi-national Company spread all over the world that essentially deals with FMCG
products like dairy products, plant-based products and mineral water bottles. FMCG refers to
the Fast Moving Consumer Goods that include packaged goods, which can be sold relatively
faster and at a lower price (Dosé and Åström 2017). Danone is one of the largest suppliers of
dairy food products and packaged drinking water, with ‘health’ and ‘well-being’ as their main
motto. The Company strives to emphasize on the inter-relationship of consumer health with
the health of the environment and therefore, focuses on a sustainable business approach (Jose
2017).
Critical Analysis
In order to deal with the current challenges faced by the Company, a thorough analysis of its
business procedure needs to be conducted, in order to identify and understand the various
areas the various areas that fail to adapt with changing consumer behavior (Krzyżanowska
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and Tkaczyk 2015). Since the Company has been facing challenges in customer loyalty, the
particular consumer discontent with the organization needs to be analyzed and rectified in
order to bring about effective changes. The marketing strategy and the marketing mix of the
Company have been critically analyzed below, in the light of the conducted consumer survey.
This analysis will be further used to prescribe appropriate strategies for the Company that
would control the existing issues in concern.
Marketing Strategy
Danone’s marketing strategy revolves around the sustainability and health of consumers as
well as the environment. The Company firmly believes that the health of the consumers is
directly related to the health of the environment. The main objective of the organization is to
bring about healthier and more nutritional choices, when it comes to eating and drinking
habits. It encourages a kind of revolution in the food industry that constantly focuses on
health and sustainability of both, the consumers as well as the planet.
In order to adapt to the recurring changes in consumer behavior, Danone has adopted policies
and activities that essentially cater to their changing expectations (Vinayagamoorthy and
Kannan 2015). With considerable advancements in economy and technology, consumers are
now more health conscious than ever, with free access to unlimited data and information
from the internet. With increasing jobs and responsibilities, consumers now depend more on
fast food products that are easily available and easily disposable. Therefore, Danone offers a
wide variety of dairy products that are rich in nutrients and minerals and packaged water
bottles. However, the survey conducted on the consumers of the industry indicate that the
products have other alternatives in the market, which are equal or better in quality and pose a
stiff competition for Danone’s goods. In order to effectively implement their unique strategy,
the Company needs to revise the quality of the products so as to provide better quality health
supplements than the ones available in the market.
The socio-economic changes in current consumers hint towards a more sensitized
understanding of consumption and the resources of nature (Wong and Candolin 2015).
Danone takes up this need for a healthier and more sustainable food practices that would not
only prove beneficial for the consumers but also for the planet as a whole. The organization
has taken up various activities and programs that repeatedly emphasize on the sustainability
of the environment and especially focuses on the management of its particular resources i.e.
milk, water and plastic. The efficient management of these resources would not only ensure
health and well-being of the target consumers of the Company but also the longevity and
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sustenance of the organization itself. However, in spite of taking up healthier measures and
sustainable strategies, the Company faces a loss of customer loyalty based on various aspects
of the product, taste, price, available alternatives and more.
Marketing Mix
Investigating the Marketing Mix of the Company would give us a better view of each
individual marketing factor that plays a strong role in affecting consumers’ behavior patterns
(Bahl and Chandra 2018). The four most important elements of a marketing mix that
dominate consumer behavior and are used by the organization to reach its particular targets
are factors pertaining to the pricing of the product, its quality, its promotion and its
availability to all sections of the society. The four marketing pillars of Danone that readily
affect consumer behavior have been critically analyzed below, in relation to the conducted
survey.
Price- Though the Company has taken effective steps to reduce their cost of production, the
price of the final product is still more than the average price of the available alternatives. The
main derivation from the survey identifies the need to curb the price of Danone products,
which is one of the leading factors for losing customer-base. More than 25% of respondents
claimed it very likely that they would buy the product if it was available at a lower price.
Therefore, one of the major issues marketing mix is the incredibly high price of products that
are not affordable by a majority of the consumers.
Product Quality- The second most important element is the quality of the product offered
and from the responses of consumers it can be identified that though the Company ensures
high nutritional value, it has evidently failed the expectations of the customers for its bland
taste. As per the survey, the maximum number of respondents remained neutral, when asked
about the product quality. More than 15% of the total respondents have claimed it to be of
low quality.
Promotion- The promotion of the Danone products are exclusively centered towards health
and sustenance of the consumers as well as the environment and therefore their respective
promotion strategies revolve around sustainability and adding more value to their product. As
per the results of the survey, the Company has been more or less innovative with their
promotional ideas but failed to attract all sections of the society.
Physical Evidence- This attribute refers to the physical attributes of the products, for
example packaging, availability and accessibility of the product. According to (MITELUȚ et
al. 2015), as manufacturers of drinking water bottles and perishable dairy products, the
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Company needs to invest considerable amount of money and energy on sustainable and
innovative physical evidence that would be appealing for the consumers as well as healthy for
the environment.
Strategic Recommendations
In order to effectively implement the derivations from the conducted research, a relevant
strategy needs to be devised. This marketing strategy would be responsible for reducing all
the unwanted elements in the system by adding more value to the end product (Petrou,
Demerouti and Schaufeli 2018). The various strategic recommendations as derived from the
conducted research are briefly discussed below:
 Price- Since, the high pricing of the product is one of the leading reasons for losing
their customer’s loyalty, respective measures must be adopted to reduce their
production costs. The organization has surprisingly high cost of production as the
goods that they produce are perishable and need to be innovatively packaged for their
longer sustenance (Thakur and Soni 2018). Their obsession on making the health
product rich in nutrients has led it to be a relatively expensive product that cannot be
afforded by a large section of the society.
 Quality- In the process of measuring quality, Company must take into consideration
the reviews of the customers regarding the value of the product and its possible
shortcomings. In order to create more value for the product the Company needs to
improve its taste and make it more attractive for the customers (Haw 2017).
 Target Consumer: In order to effectively fight the issue of losing consumer base, the
Company needs to close down or zoom into their specific customer base in order to
target the ones who share the greatest potential (Gardasu and Babu 2017). For
example, this product should be exclusively targeted for customers, who have a busy
life schedule and essentially requires nutritious fast foods for their survival (Murphy
and Dweck 2016). As an alternative or supplementary to slow foods, the Company
provides alternative fast foods, rich in minerals—and this needs to be elevated even
more.
 Promotion- The Company needs to bring about innovative promotional ideas that
would emphasize and elaborate the Company’s main objectives. Various awareness
and sensitization programs regarding good health and healthy eating habits must be
taken up as organizational ventures in order to encourage consumers towards a
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healthy and sustainable eating and drinking practices (Tibon and Edralin 2016). The
Company needs to focus more on their unique objectives related to environmental and
public health to attract new customers, who now prefer sustainable and healthy
products over cheaper products.
Conclusion
To conclude, the psychology of marketing practices depend greatly on the target consumers
of a Company and their changing behavior. If an organization has consumer-satisfaction as
their main motto, it is important to recognize their particular demands and expectations from
the Company’s products, which need to be incorporated in the finished goods in order to
assure fulfillment or satisfaction. This paper aimed to investigate the various marketing
processes of the organization in order to critically analyze them and compare with the
previously conducted customer-survey.
The particular shortcomings identified by the critical analysis of Denone’s marketing
strategies and marketing mix, compared with the particular consumer expectations derived
from the conducted survey, it can be identified that the most prominent shortcoming of the
organization is its high pricing of products. The price of the products was much more than
their perceived value. Therefore, as a recommended strategy, the Company must strive to
focus on their uniqueness and quality in order to retain their customers’ loyalty, even in the
face of stiff competition. Hence, consumer behavior can be considered one of the vital
elements in the structuring of marketing psychology.
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