ABSTRACT
The study examined the influence of product innovation on customers purchase intention for beverage products in Abia State, Nigeria. A study of Friesland Peak Choco and Cadbury hot Choco 3 in 1 products. Specifically, the study examined how package rebranding affects consumers’ willingness to buy; examined how modifications in nutritional benefits affect consumers’ trial purchase; examine how product taste improvement affect consumers’ preference; and examine how product quantity adjustment affect consumers’ purchase intention. Casual and survey research design were used for the study. The total population of study was 1,495,186 consumers above 18 years of age. With a known population, Yamane (1967) formula was adopted to select 384 sample size. Multi-stage and convenience sampling techniques were adopted for the selection of respondents. Questionnaire was the major instrument for data collection. The data were subjected to Cronbach Alpha reliability test and 0.709 value was realized which showed that the instrument was highly reliable. The data were analyzed with descriptive statistics such as mean, frequency and percentage distribution. The hypotheses were tested with simple regression analysis model. The descriptive results revealed that, 47.9% of the consumers’ strongly agreed that, the pictures and instructions on the products impelled them to buy the product. The empirical result revealed that package rebranding has significant effect on consumers’ willingness to buy. Modifications in nutritional benefits have significant effect on consumers’ trial purchase. Product taste modification has significant effect on consumers’ preference of the studied products. And product quantity adjustment has significant effect on consumers’ purchase intention. It is therefore, concluded that product innovation is one of the fundamental instruments of growth strategies to enter new markets, to increase the existing market share and to provide the company with a competitive edge. We recommended that, incorporation of nutritional value label on the package would enhance the demand and preference for the products and it would be an appropriate strategic task for the efficient innovation. Thereby, producers of Peak Choco 3 in 1 sachet and Cadbury Hot Choco 3 in 1 sachet could compete with the other products with nutritional value labels and also it would be an ideal strategy in penetrating new markets where the nutritional values are requirement.
TABLE OF CONTENTS
Title
Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements
v
Table
of Contents vi
List of
Tables ix
List of
Figure x
Abstract
xi
CHAPTER 1: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 4
1.3 Objectives of the Study 7
1.4 Research Questions 7
1.5 Research Hypotheses 8
1.6 Significance of the Study 8
1.7 Scope of the Study 9
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Review 10
2.1.1 Conceptual framework 10
2.1.2 Product innovation 11
2.1.3 Types of innovation 14
2.1.4 Contributions of innovations to
organizational growth 15
2.1.5 Effect of innovation on firms’ performance 17
2.1.5.1 Areas product innovation may be introduced by
firms 18
2.1.5.2 Product innovation stages 20
2.1.6 Consumer innovativeness 22
2.1.7 Product package innovation 24
2.1.8 Purchase intention 29
2.1.9 Importance of purchase intention 32
2.1.9.1 Drivers for purchase intention 33
2.1.10 Consumers purchase intention approach 34
2.2 Theoretical Review 36
2.2.1 Theory of business growth by Gibrat (1931) 37
2.2.2 Innovation theory (IT) by Joseph A.
Schumpeter 37
2.2.3 The dynamic capability innovation theory 38
2.2.4 The prospect innovation theory 39
2.2.5 Theory of reasoned action (TRA), Fishbein
and Ajzen (1975) 40
2.2.6 Learning or pavlovian model 41
2.3 Review of Empirical Studies 42
2.4 Gap and Summary of the Study 47
CHAPTER 3: METHODOLOGY
3.1 Research Design 48
3.2 Area of the Study 48
3.3 Population of the Study 49
3.4 Sample Size Determination 49
3.5 Sampling Techniques 50
3.6 Method of Data Collection 50
3.6.1 Description of research instrument 50
3.7 Validation of the Instrument 51
3.8 Reliability of the Instrument 51
3.9 Methods of Data Analysis 51
3.10 Model Specification 52
CHAPTER 4: RESULTS AND DISCUSSIONS
4.1 Questionnaire Administration 54
4.2 Socioeconomic Background of the
Respondents 55
4.3 Data Presentation 58
4.4 Test of Hypotheses 64
4.5 Discussion of Results 70
CHAPTER 5: SUMMARY
OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings 73
5.2 Conclusion 73
5.3 Recommendations 74
5.4 Areas for Further Studies 75
5.5 Limitation to the Study 75
5.6 Contributions to Knowledge 77
REFERENCES 78
Appendix
1: Questionnaire 82
Appendix
2 (Results) 85
LIST OF TABLES
4.1 Questionnaire administration 54
4.2 Distribution of respondents according to
gender 55
4.3 Distribution of respondents according to
age 55
4.4 Distribution of respondents according to
marital status 56
4.5 Distribution of respondents based on
educational qualification 57
4.6 Dispersal
of firms based on registration with duration of consumption 57
4.7 Package rebranding and consumers’
willingness to buy 58
4.8 Modifications in nutritional benefits on
consumers’ trial purchase 60
4.9 Product taste improvement and consumers’
preference 61
4.10 Effect
of product quantity adjustment on consumers’ purchase intention 62
4.11 Consumers’ purchase intention 63
4.12 Simple
regression analysis result on effect of package rebranding on
willingness
to buy 64
4.13 Simple regression
analysis result of modifications in nutritional
benefits
on consumers’ trial purchase 66
4.14 Simple
regression analysis of effect of product taste modifications
on consumers’ preference 68
4.15 Simple
regression analysis result of product quantity adjustment on
consumers’
purchase intention 69
LIST OF FIGURE
2.1 The operational and conceptual framework
of the study 10
CHAPTER
1
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
The
concept of innovation in the business world is not new, as it can be traced
back to German economist Joseph Schumpeter who popularized the concept in 1949
and linked it to creativity, research and development (R&D), new processes,
new products or services and advance in technologies (Rosli and Sidek, 2013).
Meanwhile, the concept has changed the business world, making it more complex than simple, dynamic rather than steady
and aggressive in nature, providing not only improved production and
marketing strategies, service delivery, improved management practices but the
right type and quantity of goods and services as well as correct mix of
products to final consumers (Olughor, 2015).
Innovation
which is derived from the Latin word “innovation” means the creation of
something new (Johannessen, 2001), while some define innovation as the art and
science of either making new products, offering new services, or adding new
value to existing ones (Cassey and Guing, 2007). It is based on the result of
new technology development, new combination of existing technology or the
utilization of other knowledge acquired by the company (Rajinish, 2008). Klasus
(2004) defined innovation as the degree to which value is created for customers
through enterprise that transform new knowledge and technologies into
profitable products and services for national and global markets. It covers a
wide range of activities to improve firm performance, including the
implementation of new or significantly improved product, service, distribution
process, manufacturing process, marketing or organizational method.
Innovativeness
is one of the fundamental instruments of growth strategies to enter new market,
to increase the existing market share and to provide the company with a
competitive edge. Motivated by the increasing competition in global markets,
companies have started to grasp the importance of innovation, since swiftly
changing technologies and severe global competition rapidly erode the value
added of existing products and services. Thus, innovation constitutes an
indispensable component of the corporate strategies for several reasons such
as; to apply more productive manufacturing processes, to perform better in the
market, to seek positive reputation in customers' perception and to gain
sustainable competitive advantage. Particularly over the last two decades,
innovativeness has turned into an attractive area of study for those
researchers who tried to define, categorize and investigate its performance
impact, especially due to its practical relevance. Innovation provides firms
strategic orientation to overcome the problems they encounter while striving to
achieve sustainable competitive advantage (e.g. Drucker, 1985; Hitt et al, 2001;
Kuratko et al, 2005).
According
to Schumpeter (2010), there are five areas in which companies can introduce
innovation in terms of: generation of new or improved products; introduction of
new production process; development of new sales market; development of new
supply market, reorganization and/or restructuring of the company. Schumpeter (2010)
has clearly distinguished innovation from minor changes in the makeup and/or
delivering of products in form of extension of product lines, adding service
components or product differentiation. Innovation is not related to production
field only, but there are other fields and activities which can be innovated.
Product innovation is the adoption of new or significantly improved production
methods. These methods may involve changes in equipment or production organization
or both. The method may be intended to produce new or improved products which
cannot be produced using conventional plant or production method or essentially
to increase the production efficiency of existing products (Engineering and
Mathematics (STEM) Enterprise; 2009).
A
marketing innovation is the implementation of a new marketing method involving
significant changes in product design or packaging, product placement, product
promotion or pricing (Organization for Economic Cooperation and Development (OECD)
Oslo Manual, 2005). Marketing innovations target at addressing customer needs
better, opening up new markets, or newly positioning a firm’s product on the
market with the intention of increasing firm’s sales. Marketing innovations are
strongly related to pricing strategies, product package design properties,
product placement and promotion activities along the lines of four P’s of
marketing (Kotler, 2014).
Purchase
intention is the preference of consumer to buy the product or service. In
another words, purchase intention has another aspect that the consumer will
purchase a product after evaluation. Many factors affect the consumer’s
intention while selecting the product and the ultimate decision depends on
consumers’ intention with large external factors (Keller, 2001). The purchasing
process to buy a particular brand or product is affected by various factors
such as price of the product, design, packaging, knowledge about product,
quality, celebrity endorsement, fashion and sometimes family relation as well
(Shafiq et al, 2011). In developed countries of the world, the retail
market is mature (Berner et al, 2001). But in developing countries
markets like Nigeria, the people are sensitive about product or brand and have
some questions in their minds such as what the brand offers? and how the brand
fulfils their needs? (Anholt, 2000). Madahi and Sukati (2012) opined that the
purchase intention has become complicated and significant in recent era.
Consumers search for the products/brands that will bring them utmost
satisfaction based on different unique qualities of the product.
1.2
STATEMENT OF THE PROBLEM
Firms
are realizing the importance of innovation to gain competitive advantage.
Accordingly, business firms are engaging themselves in various innovative
activities, ranging from product development, product improvement and brand
building initiatives to customer satisfaction. Today, business environment has
become very dynamic with more demanding customers and intense market
competition. To meet this tensed situation, firms are creating new products,
solutions and services that provide a radically better experience for the
customers. Consumer market grows rapidly every year and the number of
competitors among different types of products and goods increases steadily. To
standout against competitors, every company tries to invent something new and
to get the competitive advantage for providing specious product to the end
user. One of the marketing tools that have become popular and important is
product innovation which allows companies to be different from others and to
have more priorities among competitors. This has become a reason why there is a
big variety of product packaging, uniqueness, quality, quantity amongst similar
products in the same product line in the market. Consumer preferences and
consumer buying behaviour are the major issues that should be taken into
account when designing a new package. In spite of factors such as new
technology or material development, consumers choices and desires are the
important elements that drive the marketing process. Consumers are the key
actors in planning and implementing product innovation.
However,
the key issue for product innovation is to understand the consumer (Stewart
2004). Shammot (2011) observed that more value than cost can be achieved from
successfully repackaged designs. Mohammad et al. (2012), identified that
cost reduction, improved profits, improved sales can be achieved due to
repackaging of products. Customer loyalty can be assured with sound packaging
and repackaging of products. It has been observed that one of the reasons for
product innovation is when a product has reached its saturation or maturity
stage in its life cycle. Several products in the beverage industry have reached
their maturity stage and are heading towards decline stage which may lead to
decline in level of contributions to company market share (falling market
share). This is a period during which new users of the product cannot be added
and consumers are no longer interested about the product. Lately there have
been a lot of quality control scandals accounting for lack of confidence on
many essential commodities. Therefore, consumers are crying out for safe
products that will not affect their health adversely or that of their families.
There are problems of high cost of some beverages, unattractive package which
have made pertinent the role of repackaging towards making products in small
packs and, sachets that are affordable to meet the requirements of different
classes of consumers. The desire of consumers to buy a product that can meet
their needs at a lesser price led companies like Cadbury to innovate the 3 in 1
hot Choco product and Friesland followed suit with their Peak 3 in 1 Choco.
More so, there are some basic factors
that basically hinder effective product innovation projects in most
organizations, like the use of incompetent personnel in handling the innovation
activities without the consent of the product users; not moving with the
current market trend and not considering the critical values that will attract
consumer purchase intentions. The odds however weight heavily against success
in most cases, because some companies embark on product innovation process
without a clear research on its target market, consumers’ preference, market
trend and competitors and finally develop products that may not be acceptable
by the customers. However, in reality innovation can be very expensive and
risky, because a new product faces tough odds, as some of the improved and
modified products and new brands may achieve competitive advantage at
introductory stage and fails when compared with other product especially in the
case of beverages. Although, effective and efficient product innovation is one
of the factors that attract customers to a particular product but some
manufacturers and marketers still find it difficult to select innovative
attributes like name, size, colour, shapes, design and these may have serious
negative effects on the consumer purchase intentions.
Furthermore, rapid changes in social,
economic, political, organizational, marketing and technological environment
have also triggered uncertain consumption patterns among consumers such that,
acceptable product today may be rejected in nearer future due to the
aforementioned changes in the business environment. Some organizations
sometimes venture into innovation without analyzing the position or stage of
the product life-cycle of the product. This may negatively affect consumer
patronage due to inconsistent quality; and competitors may modify the innovated
product and come out with a more valuable and prolific product that may divert
the interest of consumers. In addition, misinterpretation of market situation
is also a factor that hinders successful product innovation. The new product
may be excellent in terms of technical specifications yet, no customer may be
willing to pay for them since their costs may be higher than their benefits.
Many organizations risk complacency once their current product offering is
experiencing success, due to the fear of pulling investment, resources or
consumer attention from existing offering to a relatively new area.
It
worth noting that, in spite of the increasing studies on product innovation by
researchers and business organizations, there is still limited literature about
the implication of product innovation on customers’ perception and purchase
intention in developing countries. It is a known fact that, much research have
been carried out on the importance of innovation in the developed world, but
studies associated with product innovation for beverages in developing countries
are rarely found in developing country like Nigeria. This research contributed
in curtailing this breach in literature and thereby institute the foundation to
comprehension of some aspects of product innovation and customer purchase
intention of selected beverage products; with reference to Friesland Peak Choco
and Cadbury hot Choco 3 in 1 products in focus.
1.3
OBJECTIVES OF THE STUDY
The
main objective of this study was to examine the influence of product innovation
on customers purchase intention for beverage products in Abia State, Nigeria. A study of Friesland Peak Choco and
Cadbury hot Choco 3 in 1 products. The specific objectives were to:
i.
examine how package rebranding
affect consumers’ willingness to buy Peak Choco 3 in 1 sachet and Cadbury Hot
Choco 3 in 1 sachet;
ii.
examine how modifications
in nutritional benefits affect consumers’ trial purchase of Peak Choco 3 in 1
sachet and Cadbury Hot Choco 3 in 1 sachet;
iii.
examine how product taste
improvement affect consumers’ preference of Peak Choco 3 in 1 sachet and
Cadbury Hot Choco 3 in 1 sachet;
iv.
examine how product
quantity adjustment affect consumers’ purchase intention of Peak Choco 3 in 1
sachet and Cadbury Hot Choco 3 in 1 sachet.
1.4 RESEARCH QUESTIONS
The following questions guided the study:
i.
how does package
rebranding affect consumers’ willingness to buy peak Choco 3 in 1 sachet and Cadbury
Hot Choco 3 in 1 sachet?
ii.
how does modifications in
nutritional benefits affect consumers’ trial purchase of Peak Choco 3 in 1
sachet and Cadbury Hot Choco 3 in 1 sachet?
iii.
how does product taste improvement
affect consumers’ preference of Peak Choco 3 in 1 sachet and Cadbury Hot Choco
3 in 1 sachet?
iv.
how does product quantity
adjustment affect consumers’ purchase intention of Peak Choco 3 in 1 sachet and
Cadbury Hot Choco 3 in 1 sachet?
1.5 RESEARCH HYPOTHESES
In line with the statement of the problem,
the research objectives and the research questions, the following hypotheses
were tested:
H01:
Package rebranding has no significant
effect on consumers’ willingness to buy Peak Choco 3 in 1 sachet and Cadbury
Hot Choco 3 in 1 sachet.
Ho2:
Modifications in nutritional benefits have
no significant effect on consumers’ trial purchase of Peak Choco 3 in 1 sachet
and Cadbury Hot Choco 3 in 1 sachet.
H03: Product
taste modification has no significant effect on consumers’ preference of Peak
Choco 3 in 1 sachet and Cadbury Hot Choco 3 in 1 sachet.
H04: Product
quantity adjustment has no significant effect on consumers’ purchase intention
of Peak Choco 3 in 1 sachet and Cadbury Hot Choco 3 in 1 sachet.
1.6 SIGNIFICANCE OF THE STUDY
The outcome of this study would generate
interest and data for various groups of people. These data will be specifically
useful or justifiable to many people such as:
The marketer: it will help the
distributors, wholesalers and retailers know the consumers preference and stock
the products according to the preference of the consumers.
The companies: the companies top
management will find this research valuable, this is because the finding will
enable them know their deficiencies and how to correct them.
Future researchers: Future researchers
will also benefit a lot from the study as this work will serve as a stepping
stone for further research. In addition, this study will be useful to policy
makers, investors, and regulatory agencies such as National Agency for Food,
Drug Administration and Control (NAFDAC), Standard Organization of Nigeria
(SON) in taking informed decisions on quality control issues with respect to
beverages.
1.7 SCOPE OF THE STUDY
The
study examined product innovation and its effect on customers purchase
intention of beverage products in Abia State, Nigeria. conceptually, the study
examined how package rebranding affect consumers’ willingness to buy Peak Choco
3 in 1 sachet and Cadbury Hot Choco 3 in 1 sachet; examine how modifications in
nutritional benefits affect consumers’ trial purchase of Peak Choco 3 in 1
sachet and Cadbury Hot Choco 3 in 1 sachet; examine how product taste
improvement affect consumers’ preference of Peak Choco 3 in 1 sachet and
Cadbury Hot Choco 3 in 1 sachet; and examine how product quantity adjustment
affect consumers’ purchase intention of Peak Choco 3 in 1 sachet and Cadbury
Hot Choco 3 in 1 sachet. The scope of this study was limited to beverage of
Friesland Peak Choco 3 in 1 sachet and Cadbury hot Choco 3 in 1 products. Furthermore,
this study was limited to consumers of these products in Umauhia and Aba
metropolis due to the high population of people living in these areas. The
limitation of this study was based on the fact that studying all the products
produced by these manufacturing companies was cumbersome and covering the
entire Abia State was unrealistic.
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