CONSUMERS’ BUYING BEHAVIOR OF BOTTLED WATER IN SURINAME A study on the relation between demographic & psychological factors and bottled water buying behavior

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CONSUMERS’ BUYING BEHAVIOR OF BOTTLED WATER IN SURINAME

A study on the relation between demographic & psychological factors and bottled water buying behavior

by

MANISHA DURGA

SURINAME 2010

This research proposal was submitted at August 25, 2010

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Thirty years ago ‘bottled water’ barely existed. Nowadays the product forms an essential business by its stable and still growing market – locally and globally. Bottled water can be described as any product, including natural spring or well water, taken from municipal or private utility systems or other water, distilled water or any of the foregoing to which chemicals may be added and which are put into sealed bottles, packages or other containers, to be sold for domestic consumption or culinary use.¹

In 2012 the global bottled water market is forecast to have a value of $94.2 billion, an increase of 41% since 2007. This increasing trend reveals that the product meets the demand of countless consumers. And this, while the study of literature is still lacking in a clear and definite assumption regarding the health and safety theories of bottled water.

Therefore the question arises: what factors are related to the consumers’ buying behavior of bottled water?

This research examines two categories of influencing factors of the consumer buying decision process of Kotler e.a. (2008): demographic (personal) and psychological factors.

More specific, the researcher tests if there is a relationship between the factors ‘gender’,

‘age’, ‘education’, ‘income’, ‘beliefs’ and ‘perception’ and ‘consumers’ buying behavior of bottled water’.

The results of this research have shown that there is a small relationship between the

‘income’ and ‘perception’ of the consumers and their buying behavior of bottled water.

Regarding the income, people with a relatively high income and students/other young people (16-25 years) are the most frequent users of bottled water. Despite their low income, students/other young people are frequent users of bottled water because they are assumed to be more sensitive to advertising and socially accepted and luxury products.

Furthermore, the more positive the perception of consumers of bottled water is, the more they use the product. For more than ten years now, bottled water is being presented as healthy, safe and pure. These (misleading) efforts have resulted in a positive - pschycological- effect. Especially in comparison to tap water, bottled water scores an overall high perception and positive beliefs of consumers. Despite the fact that consumers perceive

1 Department of Health, New York State (2006, February). Bottled water frequently-asked questions. Retrieved January 28, 2010, from http://www.health.state.ny.us/

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Furthermore it is ‘good available’ and ‘convenient’. Logically, enough reasons for consumers to use bottled water.

It can be concluded that both demographic and psychological factors are related to the buying behavior of bottled water to some extent.

Therefore it is recommended that bottled water producers/marketers should focus (more) on these consumer groups, since they seem to be the target groups of the product. However, since only demographic and psychological factors are investigated, further research with other influencing factors is recommended to gain more insights. Finally, all bottlers of water should be controlled by a separate institute to guarantee the quality of the product and prevent misleading advertisement.

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EXECUTIVE SUMMARY ... ii

TABLE OF CONTENTS ... iv

ACKNOWLEDGEMENTS ... v

GLOSSARY ... vii

CHAPTER 1 Introduction ... 1

1.1 Research background ... 1

1.2 Research problem, research questions and objectives ... 4

1.3 Justification for this research ... 7

1.4 Limitation of scope ... 8

1.5 Significance of this research ... 8

1.6 Chapters content ... 9

CHAPTER 2 Literature review ... 10

2.1 Introduction... 10

2.2 Bottled water ... 10

2.2.1 Definitions ... 11

2.2.2 Historical background ... 11

2.2.3 Global bottled water market ... 12

2.2.4 The Surinamese bottled water market ... 13

2.3 Literature of research area ... 16

2.3.1 Bottled water ... 16

2.3.2 Consumer Buying Behavior ... 17

2.4 Contribution to research area ... 19

2.5 Summary ... 20

CHAPTER 3 Research Methodology ... 21

3.1 Introduction ... 21

3.2 Justification of survey methodology ... 22

3.2.1 Research strategy ... 22

3.2.2 Research design ... 22

3.3 Questionnaire design and administration ... 23

3.3.1 Step 1: specifying the data required ... 24

3.3.2 Step 2: specifying the survey method ... 25

3.3.3 Step 3: developing measurement scales ... 25

3.3.4 Step 4: reliability and validity test ... 26

3.3.5 Step 5: preparing draft questionnaire ... 26

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3.4 Sampling strategy ... 27

3.5 Data analysis strategy ... 29

3.6 Summary ... 29

CHAPTER 4 Findings ... 31

4.1 Introduction... 31

4.2 Data preparation... 31

4.3 Data profile ... 31

4.4 Descriptive statistics ... 33

4.5 Inferential statistics ... 36

4.6 Summary ... 38

CHAPTER 5 Analysis ... 39

5.1 Introduction ... 39

5.2 Descriptive analysis ... 39

5.3 Inferential analysis ... 43

5.4 Summary ... 49

CHAPTER 6 Conclusions & recommendations ... 50

BIBLIOGRAPHY ... 53

APPENDICES ... 56

APPENDIX A: Main differences between mineral, spring, well, distilled, purified and tap and other drink water ... 57

APPENDIX B: Questionnaire developed for this research ... 58

APPENDIX C: Reliability tests ... 62

APPENDIX D: Statistics ... 63

APPENDIX E: Descriptives of demographics ... 66

APPENDIX F: Relationships between variables ... 68

APPENDIX G: Multi comparison test and ANOVA of variable ‘income’ ... 71

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This research project has not only been finalized by my own efforts, but certainly also with the support of many people. Deservedly I like to thank those who have made this opportunity possible and have given me the necessary support.

First and foremost a thanks to the Almighty; my endless support throughout my life-journey.

A special thanks to my parents Jack & Mavis for their priceless support and belief in me. My love and gratitude cannot be expressed in words.

Thanks to the FHR Lim A Po Institute for Social Studies for sharing valuable knowledge and experiences through this fruitful study. Keep on doing the good job!

Thanks to my supervisor Dr. Silvio De Bono and the survey participants. Without your time and kind assistance this research could not have been completed.

Last but not least a word of thanks to my boyfriend Tariq. Your understanding and assistance during the last two years are much appreciated.

Thank you all!

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vii Definitions

Belief A descriptive thought that someone holds about something.

Bottled water Any product, including natural spring or well water, taken from municipal or private utility systems or other water, distilled water or any of the foregoing to which chemicals may be added, which are put into sealed bottles, packages or other containers, to be sold for domestic consumption or culinary use.

Consumer buying The buying behavior of final consumers- individuals and households behavior who buy goods and services for personal consumption.

P-value The probability that a correlation is one just by chance.

Pearson Correlation A measure which indicates the strength and direction of a linear Coefficient relationship between two variables.

Perception The process by which people select, organize and interpret information to form a meaningful picture of the world.

Abbreviations

ABWI Australian Bottled Water Institute

ANOVA Analysis of Variances

CAGR Compound Average Growth Rate

USD United States Dollar

NRDC National Resource Defense Council USA United States of America

$ Sign for United States Dollar

SPSS Statistical Package for Social Science

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CHAPTER 1 Introduction

1.1 Research background

Research and studies regarding consumer attitude and behavior are generally a common approach in post-war marketing contexts in order to establish or acquire insight knowledge to guide marketing activities regarding the buying behaviors of individuals. Complicated it is, but understanding buyer behavior is central to marketing management. Just as marketing ends with consumption, so marketing management must begin with understanding customers. ²

Due to Bottled water industry under pressure but drinks growth to be robust of Ferre (2009), bottled water consumption has been growing exponentially since the past decade. This growth takes place globally, but particularly in North America and Europe. The bottled water industry has literally created its own water culture. For example, when one enters a supermarket or a restaurant in any country of the world, one is bound to find at least a few different brands of bottled water.

Bottled water can be defined as any product, including natural spring or well water, taken from municipal or private utility systems or other water, distilled water or any of the foregoing to which chemicals may be added, which are put into sealed bottles, packages or other containers, to be sold for domestic consumption or culinary use. ³

Just like any other consumer product, bottled water requires thorough research regarding consumer buying behavior to guide present and future marketing activities. This is especially so, given the circumstances that the bottled water market is considered as one of the fastest growing markets in the beverage category.

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FHR Lim A Po Institute for Social Studies – MBA 5 - 2010

2 Kotler, P., Armstrong, G., Wong, V., Saunders, J. (2008). Principles of Marketing (5^th ed.).

Harlow, England: Pearson Education Limited.

3 Department of Health, New York State (2006, February). Bottled water frequently-asked questions. Retrieved January 28, 2010, from http://www.health.state.ny.us/

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More specifically, the market was the second largest commercial beverage category in the United States in 2008, surpassing fruit juices and sport drinks and only behind carbonated soft drinks.⁴

The global increasing trend in bottled water consumption is continuing for almost ten successive years now.⁵ Figure 1.1 below shows this trend during a five-year former period.

0,00 20.000,00 40.000,00 60.000,00 80.000,00 100.000,00 120.000,00 140.000,00 160.000,00

Million liters

98 99 00 01 02

Year

Total Global Consumption of bottled water (1998-2002)

Figure 1.1 Total Global Consumption of Bottled Water, 1998-2002

Source: Gleick, P.H. (2004). The myth and reality of bottled water. Retrieved from http://www.pacinst.org/

From this figure it can be concluded that the Compound Average Growth Rate (CAGR) from this period is 10.6% and the global consumption increased with nearly 50% in 2002, compared with 1998.

More recently, in 2008 the global bottled water consumption grew 4.5% to 218 billion liters, according to a new report from drinks consultancy Zenith International.⁶

4 Wikipedia (2010, January). Bottled water. Retrieved from http://en.wikipedia.org/

5 Rodwan, J. (2009, May). Confronting Challenges; U.S. and International Bottled Water Developments and Statistics for 2008. Retrieved from

http://www.bottledwater.org/public/2008%20Market%20Report%20Findings%20reported%20 in%20April%202009.pdf

6Palmer, D. (2009). Bottled water industry gets boost from developing economies. Retrieved from http://www.ausfoodnews.com.au/2009/09/03/global-bottled-water-industry-gets-boost-from-

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FHR Lim A Po Institute for Social Studies – MBA 5 - 2010 developing-economies.html

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Figure 1.2 shows the global bottled water volume share in 2008 by region. North America was the largest market for more than five successive years in both volume and value.

However, throughout the last years some other countries are showing to overtake this position (see section 2.2.3). Although many are probably assuming that bottled water is a luxury product, the increasing trend of the business is also seen in developing countries.

Global bottled w ater volum e share by region (2008)

North America

31%

Europe 30%

Asia 26%

All others 13%

Figure 1.2 Global bottled water volume share by region (2008)

Source: Palmer, D. (2009, September). Bottled water industry gets boost from developing economies.

More specifically, the trend is also part of the bottled water industry in Suriname. The local bottled water market increased with an CAGR of 11% and increased nearly 62% in 2009, compared with 2005. In 2009 the market had an estimated value of USD 7 million. Figure 1.3 shows the Surinamese total bottled water market during these last years.

0 2.000.000 4.000.000 6.000.000 8.000.000 10.000.000 12.000.000

Liters

2005 2006 2007 2008 2009 Year

Total bottled water market in Suriname (2005-2009)

Figure 1.3 Total bottled water market Suriname (2005-2009)

Source: Ministry of Trade and Industry (2010, February). Data monitor: Bottled Water Industry Statistics 2005- 2009.

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In brief, both the global and local bottled water market are becoming an essential part of the beverage market. This remarkable increase raises several questions and is therefore one of the drivers of this research.

Although there is a general understanding by consumers of bottled water that the product is better in some or all aspects, there are studies (Ferrier, 2001; NRDC, 2008) which concluded that this is not always the case. This raised several questions, mainly focusing on why do customers prefer to choose an often more expensive and less comfortable product.

Studies stress several factors which determine the choice for bottled water. However, due to another study (Doria, 2006) surveys usually come up with two main reasons: dissatisfaction with tap water (especially taste) and health/risk concerns. But to what extent are these factors applicable to the Surinamese market? And which (other) factors determine the buying behavior of consumers toward bottled water in Suriname?

1.2 Research problem, research questions and objectives

Kotler, Armstrong, Wong and Saunders (2008) argue that consumer purchases are influenced strongly by cultural, social, personal and psychological factors. Consumers’

perception and buying behavior of bottled water in Suriname is not fully understood.

Researches and studies regarding the Surinamese setting in this area can namely not be found. Therefore, the Surinamese market will be sampled as a relevant and accessible segment to investigate the following research problem for this research:

Are demographic factors as well as psychological factors related to the buying behavior of bottled water?

Essentially, this study argues that both demographic and psychological factors are related to the buying behavior of bottled water.

To answer this research problem, the two following questions are being researched:

1. To what extent is there a relationship between demographic factors and bottled water buying behavior?

2. To what extent is there a relationship between psychological factors and bottled water buying behavior?

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The objectives of this research are therefore:

To identify if demographic factors are directly related to the buying behavior of bottled water; demographic factors are considered by this research to be directly related to the consumer buying behavior. Factors as age and income may strongly influence the buying behavior toward bottled water. For instance, it is assumed that young people with middle and higher incomes are the best target group for bottled water because of their potency and lifestyle.

To identify if psychological factors are directly related to the buying behavior of bottled water; this research also considers psychological factors as one of the most important type of factors which influences the buying behavior. The beliefs someone has about something, determines his/her attitude toward and perception of it. One is inclined to use something which he/she perceives to be good and is not inclined to use something which he/she perceives not to be good.

To test these research questions in a field survey, hypotheses are developed for the research questions/objectives. The next table shows a summary and list of these hypotheses with the corresponding research question:

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Research questions Hypotheses

RQ1: How do demographic factors affect bottled water buying behavior?

H 1.1: There is a relationship between gender and buying behavior.

H0 1.1: There is no relationship between gender and buying behavior.

H 1.2: There is a relationship between age and buying behavior.

H0 1.2: There is no relationship between age and buying behavior.

H 1.3: There is a relationship between education and buying behavior.

H0 1.3: There is no relationship between education and buying behavior.

H 1.4: There is a relationship between income and buying behavior.

H0 1.4: There is no relationship between income and buying behavior.

RQ2: How do psychological factors affect bottled water buying behavior?

H 2.1: There is a relationship between beliefs and buying behavior.

H0 2.1: There is no relationship between beliefs and buying behavior.

H 2.2: There is a relationship between perception and buying behavior.

H0 2.2: There is no relationship between perception and buying behavior.

Table 1.1: Summary of research questions and hypotheses Source: developed for this research

Figure 1.4 illustrates the conceptual model developed for this research.

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FHR Lim A Po Institute for Social Studies – MBA 5 - 2010 Gender

Age

Education

Income

Demographic factors Independent variables

Psychological factors Independent variables

Buying behavior Dependent variable Beliefs about bottled

water (+) Beliefs

Perceived that bottled water differs positively from tap water and other drinks (+)

Perception

Figure 2.3: Conceptual model of this research Source: developed for this research

1.3 Justification for this research

This research is justified on the following grounds:

1. Rapid growth of both global and local bottled water market and consumer adoption rate; this justification is partly explained in section 1.1 (Research background). The worldwide growth of the bottled water market creates numerous commercial opportunities for bottlers, retailers and brand owners. Moreover, it is combined with growing health awareness of the general public.

2. Gaps in research; this justification emphasizes the lack of research in this area.

Even though information regarding buying behavior may be helpful to bottled water marketers, research about this issue in Surinamese context is sparse.

3. Anticipated benefits to provide guidance for bottled water marketing activities;

the results of this research may provide potential benefits to bottled water marketers, bottlers or retailers. Marketing campaigns may be aimed more towards the (potential)

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customer by having the right information about the consumer. For example, building the product image of health, pureness or taste depends on findings of consumers’

perception and buying behavior of bottled water.

1.4 Limitation of scope

The major limitation for this research is that it is confined to the city of Suriname, Paramaribo. This geographical limitation is not only chosen because of time and access restrictions, but also because of the fact that the major part of the Surinamese population is concentrated in Paramaribo. The city is therefore considered as a good representation of the whole population.

Furthermore this research is only researching the consumer buying behavior of bottled water, since the consumption pattern from other products may differ. Consumers show an unique buying behavior to every single product. For instance, the buying behavior toward milk or alcoholic drinks differs from bottled water.

This research also limits itself to the Surinamese consumer, since it is considered that consumers of different parts of the world behave differently because of cultural factors.

Although the bottled water market is global, generalization of the findings of this research beyond Suriname is therefore not recommended.

Finally, only some demographic and psychological factors are selected for this research.

Although there are more types of factors which influence the consumer buying behavior, only two types are investigated by this research. This as a result of time and administration restrictions. Hence, not all possible results are explored by this study.

1.5 Significance of this research

The significance of this research expresses itself by being a helpful tool for marketers, bottlers and retailers of bottled water to direct marketing campaigns in the right way.

Moreover, there is no

grounded research about the Surinamese bottled water market and the consumers buying behavior toward the product.

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1.6 Chapters content

The content of this research consists of six chapters. Chapter 1 (Introduction) indicates the research problem and introduces the subject area. This is followed by the literature review (chapter 2), which analyses the existing literature about the subject field to develop a new concept to be tested by this research. Thereafter Chapter 3 (Research Methodology) describes the execution of this research to achieve the research objectives. Chapter 4 (Findings) describes the results of the research by giving facts. These results are analyzed and tested on the research model in Chapter 5 (Analysis). Finally the author describes the conclusions drawn from the findings and gives relevant recommendations on the basis of the conclusions. This is presented in Chapter 6 (Conclusions & Recommendations).

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CHAPTER 2 Literature review

2.1 Introduction

For a seemingly basic food product, the demand for bottled water has increased worldwide and has generated an impressive market share. Due to the report Asia boosts global bottled water market of Drake (2010), the bottled water market -again- had a likely increase of 4%

in 2009, compared to 2008. If this increasing trend continues, the global market is forecast to have a value of $86,421.2 million in 2011, an increase of nearly 42% since 2006.⁷

This chapter analyses the existing literature on the bottled water market and consumer buying behavior. Hence, on the basis of the existing literature, this chapter develops a theoretical framework which will be tested by this research. First an introduction of this chapter is given in section 2.1, before describing bottled water and its market generally in section 2.2. Section 2.3 analyses the existing literature of key writers. This is followed by a contribution of the researcher to the research field in section 2.4. Finally a summary of the chapter is given in section 2.5.

2.2 Bottled water

Water. A natural resource we can hardly live without. A great part of us has access to it against minimal costs. But at the same time many people still do not have access to safe drinking water because of limited or polluted resources.

Over the past decade there has been a remarkable increase in the bottled water market. It can be stated that a phenomenon occurred within the water industry: bottled water.

There are several types of bottled water. Appendix A shows the main differences between mineral, spring, well, distilled, purified, tap and other drink water.

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7 Wikipedia (2010). Bottled water. Retrieved from http://en.wikipedia.org/wiki/Bottled_water

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2.2.1 Definitions

During the years ‘bottled water’ has been described in a number of different ways. For this research the following definition is used on the basis of relative simplicity and clarity:

Bottled water is any product, including mineral, spring or well water taken from municipal or private utility systems, distilled or other water, to which chemicals may be added and which are put into sealed bottles, packages or other containers to be sold for domestic consumption or culinary use. (Department of Health, New York State, 2006).

Furthermore the concept ‘global market’ was adopted as follows due to the relevant information sources for this research:

The global market is divided into and refers to Asia, Europe, North America and All others.⁸

With regard to this research, these parts of the world all consist of their official countries.

2.2.2 Historical background

The bottled water market started in Europe and Russia by the early 1900’s and extended years later to the US and China. Throughout history, water was to survive. Starting with a very small market, the main reason to use bottled water was health concerns (possible medicinal properties).

It was in the early 19^th century when the market showed a noticeable change in Europe and captured a great part of the beverage market share. The real boost of bottled water commenced in 1968 when the French company ‘Vittel’ revolutionarily launched the first plastic bottled water- aimed for general public consumption. With France and Germany on top with their highest sales in volume, Europe became an established and leading market.⁹ Bottlers marketed the product to consumers as safer, healthier, refreshing, more reliable and above all, better than other soft drinks. Moreover, consumers had become more health

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8 Beverage Marketing Corporation (2009). The Global Bottled Water Market. Retrieved February 13, 2010,

from http://www.beveragemarketing.com/

9 Finlayson, D. (2005). Market development of bottled waters. In D. Senior and N. Dege (2nd ed.), Technology of bottled water (p.6). UK: Blackwell Publishing.

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conscious and in some parts of the world tap water was unavailable or unsafe. These drivers were the beginning of a booming global bottled water market.

2.2.3 Global bottled water market

Thirty years ago, bottled water barely existed as a business. Nowadays we drink globally millions of bottles a week. And this, while water is a product which can often be obtained for minimal costs from taps in our homes. Moreover, we are grown up on tap water since many of us have access to it. The next paragraphs briefly describe the growth and value of the global market.

2.2.3.1 Market growth

After several leading years, the European and North American market deteriorated somewhat over the last years. Drake (2010) argues in his report Asia boosts global bottled water market that these markets showed a decrease in growth in 2008 and 2009 because of two main reasons. Firstly because of the global recession (consumers are switching to less expensive options such as tap water), and secondly because of concerns about the impact of bottled water on the environment. It can be concluded that bottled water is an “extra”

commodity for many consumers in these countries since financial concerns play a crucial role.

Thanks to the developing Asian market the global market maintains stable. It is China who boosted the regional and indeed the global market. The rapidly growing economy of China can be seen as the main driver of this growth. The global market increased by approximately 2% in 2009. This is a slowdown in comparison to previous years, but it also expresses that the bottled water category can maintain growth in even the most challenging times of trading environments.

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2.2.3.2 Market value

The value of the global bottled water market increased obviously parallel to the consumption.

In 2012 the global bottled water market is forecast to have a value of $94.2 billion, an increase of 41% since 2007. Despite the decline in growth last year, consultants expect every region of the market to post growth in 2010.¹⁰

Global Bottled Water Market Value 2005-2009

0,00 20.000.000 40.000.000 60.000.000 80.000.000 100.000.000

Year

$

56.900.000 60.900.000 66.700.000 74.700.000 81.700.000

2005 2006 2007 2008 2009

Figure 2.1: The Global Bottled Water Market Value 2005-2009

Source: Datamonitor (2009). Bottled Water: Global Industry Guide. Retrieved from http://www.researchandmarkets.com/

2.2.4 The Surinamese bottled water market

The market of bottled water in Suriname has been growing consistently and has captured a remarkable share in the beverage market for the last five years.¹¹ From 2005 on, the market -with mainly local bottlers and brands- has become an almost indispensable category to consumers. Strong competitive prices, aggressive promotion to achieve brand awareness and brand loyalty, and a good availability, are some of the aspects which set the basis for a stable and strong competitive market. The market currently consists of the following bottled water brands:

10 Drake, I. (2010, January). Asia boosts global bottled water market. Retrieved from http://www.ausfoodnews.com.au/

11 Ministry of Trade and Industry. (2010, February). Datamonitor: Bottled Water Industry Statistics

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FHR Lim A Po Institute for Social Studies – MBA 5 - 2010 2005-2009, 17-22. Retrieved from HIinfo2010 Database.

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• Aqua Para

• Basic One

• Dasani

• Desha

• Diamond Blue

• Parasprings

• Spa

• Whahaha

Except for Spa Water, all other brands are locally produced. Figure 2.2 provides an overview of all brands with their corresponding bottlers and year of launch to the market.

Brand Bottler Year of launch

Aqua Para

Basic One

Dasani

Prestigious Brands N.V. (Suriname)

Future Beverages N.V. (Suriname)

Fernandes Bottling Company N.V. (Suriname)

2008

2007

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Désha

Diamond Blue

Para Springs

Spa

Whahaha

Para Bron N.V. (Suriname)

Rudisa Juices & Beverages N.V. (Suriname)

Caribbean Beverages N.V. (Suriname)

Spadel Group (Belgium)

Amer Asian Production Company N.V. (Suriname)

2006

2002

1998

2008

Figure 2.2: Water brands in Suriname (2010) Source: developed for this research

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2.3 Literature of research area

During the last decennia several institutes -such as Pacific Institute and the Australian Bottled Water Institute (ABWI)- and writers have made their opinion about bottled water to be known. Both proponents and opponents expressed themselves as the market turned into a global phenomenon.

2.3.1 Bottled water

There have been several studies over the past years to investigate what factors exactly have been driving the buying behavior of consumers toward bottled water. The outcomes of these studies and opinions of researchers vary widely.

Doria (2006) stated in his article Bottled water versus Tap water: understanding Consumers’

Preferences that several studies have shown two main drivers for bottled water consumption. These drivers concern consumers buying behavior in USA, Canada and France. The drivers are: organoleptics (water characteristics that affect the senses of taste, odour and sight) and health and risk concerns (risk concerns may be seen as safety). Doria (2006) argued that many consumers in these developed countries are not satisfied with the tap water quality. Moreover, the consumption of bottled water have often been high in communities that have serious problems with their tap water. Such problems provide new opportunities for bottled water producers and marketers, who present their product as ‘pure’,

‘safe’ and ‘healthy’. He also argued that consumers are sensitive to the marketing of the business. Not only the advertisement, but also the package influences their buying behavior.

As many consumers prefer products which seem to have higher health benefits, a great part perceives bottled water to be reliable and, most of all, healthier than other water.

Rodwan (2009) partly agrees with Doria (2006). Rodwan (2009) agreed in his report Confronting Challenges that the bottled water industry is just taking advantage of the growing health and well-being consciousness of consumers. However, he stated another main reason of consumers in developed countries as the USA and Canada. Consumers in developed countries perceive bottled water as a good alternative to other beverages, such as carbonated soft drinks and juices. It is not only a way to achieve hydration for them, but it is also healthy and thirst-quenching.

It is in the developing countries, Rodwan (2009) argues in contrast with Doria (2006), where bottled water serves as an alternative since these countries often have unsafe water.

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In contrast with both Doria (2006) and Rodwan (2009), Shandling (2008) did not come to a regional conclusion in her report Global bottled water consumption on the rise. She claimed another main global driver: an increased awareness of people of the need for and benefits of hydration for body and mind. Furthermore, bottled water is becoming more accessible in growing economies such as Latin America and Eastern Europe, she argued. The results of this research will also show to what extent this theory is applicable to the Surinamese market.

Phend (2009) took the study of driving factors in bottled water consumption further. She admits that earlier studies indicated the perceived purity, safety and taste as the main drivers for consumers to use bottled water. However, on the basis of a more recent survey conducted in England, she argued that health is not a driving factor in bottled water consumption. It is convenience and taste which drive the use of bottled water. Due to Phend (2009), the municipal water systems are improving the last years and prices of bottled water are very high in comparison to tap water.

Overall, the reasons for bottled water consumption seem to vary; both by author and country. Health/risk concerns and taste seem to be the most frequently mentioned causes.

The main conclusion is that consumers generally value bottled water and are prepared to pay several times more to consume what they perceive to be a “safe”, “healthy”, “tasty” or

“convenient” product.

2.3.2 Consumer Buying Behavior

Understanding consumer behavior and “knowing customers” is not simple. Customers may say one thing but do another. They can get influenced and change their mind the last minute. Or their needs or wants change from time to time. Consumer buying behavior refers to the buying behavior of final consumers- individuals and households who buy goods and services for personal consumption.¹²

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12 Kotler, P., Armstrong, G., Wong,V., Saunders, J. (2008). Principles of Marketing. (5^th ed.). England: Pearson Education Limited.

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2.3.2.1 Consumer decision process

According to Kotler et al. (2008), consumers pass through several stages before purchasing something. They argue that the buying process is one which starts long before the actual purchase and continues long after. The marketer therefore needs to focus on the entire buying process, rather than just the purchase decision. Figure 2.2 shows the consumer decision process with influencing factors.

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Consumer buying decision process Consumer buying decision process Need

recognition

Information search

Evaluation of alternatives

Purchase decision

Post purchase behavior Cultural

Culture

Subculture

Social class

Social

Reference groups

Family

Roles and status

Personal

Age & life-cycle stage

Occupation

Economic situation

Lifestyle

Personality and self -concept

Psychological

Beliefs and attitudes Learning

Perception Motivation

Figure 2.2: Consumer buying decision process with influencing factors

Source: Kotler, P., Armstrong, G., Wong,V., Saunders, J. (2008). Principles of Marketing. (5th ed.).

England: Pearson Education Limited.

The process starts when the buyer recognizes a problem or need. Thereafter the buyer will or will not search for more information related to the need. This information will be used to evaluate alternative brands in the choice set. After evaluation, the buyer actually buys the product. Based on the satisfaction or dissatisfaction of the buyer, he/she will take further actions after the purchase.

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Kotler et al. (2008) agree that the next factors strongly influence the buying behavior of consumers: cultural, social, personal and psychological factors. The consumer’s choice therefore results from the complex interplay of all these factors. Although the marketer cannot influence many of these factors, they can be useful in identifying potential customers to serve their needs better.

2.4 Contribution to research area

The discussion about the quality and other aspects (such as health benefits) of tap and bottled water is still going on. Till today the opinions about bottled water differ and researches show different results. Nevertheless, in most cases consumers do choose for bottled water for one or more of the following reasons:

o Health/risk concerns

Consumers have become more health-conscious during last decade and bottled water has the attraction of no calories and no additives. Besides, it is being presented as purer, healthier and more reliable than tap water.

o Quality

In many countries the public water supply is unsafe or of inferior quality. As a result, many people do prefer bottled water.

o Marketing

From promotion to packaging; effective marketing has increased the demand for bottled water. As a real business, bottled water brands are sharply competing against each other by, amongst others, competitive prices and aggressive promotion.

o Convenience

For many people, bottled water is just a convenient beverage, especially when they are on the go. It is easy to carry and almost everywhere available.

It can be concluded that part of these driving factors are strongly psychologically determined.

Since there are no explicit results yet about the nature of bottled and tap water, it seems to be in the mind of people that bottled water is better than tap water.

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As seen in the previous section, psychological factors is one group of factors which generally influence the consumer buying behavior.

This research focuses on two psychological factors which influence consumers: beliefs and perception. Furthermore, this research looks into the possible relationships between demographic factors (personal factors) and consumers’ buying behavior of bottled water.

Due to Kotler et al. (2008), a belief is a descriptive thought that someone holds about something. These, in turn, influence the buying behavior. Perception is the process by which people select, organize and interpret information to form a meaningful picture of the world.

The concept of this research argues that there may be a relationship between these factors and the consumers buying behavior of bottled water.

2.5 Summary

Bottled water has become a phenomenon over the last decade. The increasing trend in the consumption and market value explains that consumers are willing to pay a premium for it.

And this, while it is a product which they can get –in most cases- at minimal costs. Moreover, the quality of bottled water is still being disputed by researchers. This indicates that consumers’ beliefs and perception probably play an essential role in their buying behavior toward bottled water. These psychological factors are one of the four groups of factors which influence consumers’ buying behavior: cultural, social, personal and psychological factors.

The personal and psychological factors are subjects of this research. This research investigates to what extent consumers’ beliefs and perception do influence their buying behavior of bottled water. The relationship between the demographic factors of consumers and their buying behavior of bottled water is also being investigated.

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CHAPTER 3 Research Methodology

This chapter details the methodology which is used for this research to collect the data needed. There are several steps to follow in order to gather the right data. Before explaining these steps, the next section will firstly explain why this methodology is chosen. The next figure shows an outline of this chapter with section numbers and inter-relationships.

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Questionnaire design and administration

Data analysis strategy (Section 3.5)

Summary (Section 3.6) Sampling strategy

(Section 3.4)

Justification of survey methodology (Section 3.2)

Introduction (Section 3.1.)

Figure 3.1 Outline of Chapter 3 with section numbers and inter-relationships Source: developed for this research

The chapter begins with an outline of the methodology (Section 3.1) and an explanation for selecting this research design (Section 3.2). The justification is followed by procedures of how the survey is planned, conducted and administered, including the questionnaire design and administration (Section 3.3) and the sampling strategy (Section 3.4). The data analysis strategy will then be explained (Section 3.5), followed by a summary (Section 3.6) of all sections.

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3.2 Justification of survey methodology

This background section first describes the strategy used for this research and then the design to gather data.

3.2.1 Research strategy

The strategy for this research can be classified as positivism because of some main reasons.¹³ First, it deals with reality which is governed by natural laws. This research is focused on the factors which influence consumers buying behavior. This can literally be described as reality, influenced by laws derived from nature- apart from laws established by human authorities. Second, the reality is explored by empirical research and a survey study.

These types of research enable it to collect a relatively high amount of reliable data against relatively low costs. Third, the research consists of hypotheses that can be regarded as facts. As seen in chapter one, this research consists of several hypotheses to be tested by a survey study (quantitative data), to discover relationships among variables. Finally, the researcher is objective and independent from the subject.

Furthermore, this research is being approached in a deductive way. The main characteristic of a deductive approach is that the researcher develops a theory and one or more hypothesis/ hypotheses. The researcher starts from the hypothesis/hypotheses that is/are developed on the basis of general principles.¹⁴ These hypotheses are expressed in operational terms to test them by the collection of quantitative data.

3.2.2 Research design

A research design is a plan which outlines how information is to be gathered for an assessment. It includes identifying the data gathering method(s), the instruments to be

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13 A. Voce (2004). Introduction to research paradigms. Retrieved from

http://familymedicine.ukzn.ac.za/Uploads/131e81cf-f876-4e8d-9016-69ec7d6598b8/Introduction%- 20to%20research%20paradigms.doc

14 Wikipedia (2010). Social Research. Retrieved from http://en.wikipedia.org/

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used/created, how the instruments will be administered, and how the information will be organized and analyzed.¹⁵

This research uses a mixed approach of two research strategies; exploratory and descriptive research. Each of these strategies plays a distinct but complementary role in order to get an answer on the research problem. Exploratory research is conducted into an issue or problem where there are few or no earlier studies to refer to. The focus is on gaining insights and familiarity for later investigation. Descriptive research describes phenomena as they exist.

Here, data is often quantitative and statistics are applied. It is used to identify and obtain information on a particular problem or issue. ¹⁶

Firstly, exploratory research is carried out to gain insights and background information about the phenomenon of bottled water, both globally and locally. By doing this, little academic research and literature is discovered. This helped to identify various variables of consumers’

perception and buying behavior.

Thereafter, descriptive research is used to test and to answer the research hypotheses. This is carried out by a survey design and therefore consists of designing and administrating the questionnaire, constructing the sampling strategy and analyzing the results.

The survey design is being considered as the most appropriate technique for descriptive research since the aim is to obtain primary data. Questionnaires (primary data) enable the researcher more easily to identify and describe the opinion of the respondents. Moreover, it is simple to administrate, provides relatively reliable data and is time limited. Because of the fact that every respondent is asked to answer the same set of structured and predetermined questions, coding, data treatment and interpretation is relatively easy.

3.3 Questionnaire design and administration

Firstly, all questions and formats are standardized so that all respondents face the same questionnaire. Second, the questionnaire is designed comprehensively, in order to motivate respondents to cooperate and accurately complete it.

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15 Wikipedia (2007). Instructional Assessment Resources (IAR): Glossary. Retrieved from http://www.utexas.edu/academic/diia/assessment/iar/glossary.php

16 WikiAnswers (2010). What is exploratory research? Retrieved from http://wiki.answers.com/

Q/What_is_exploratory_research

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The questionnaire used for this research is included in appendix B. Malhotra (1999) provides a set of seven steps of questionnaire design which is used for this research.

3.3.1 Step 1: specifying the data required

The first step in questionnaire design is to accurately determine the required information to achieve the research objectives. Based on the research questions, hypotheses and the exploratory research, the independent and dependent variables are identified as shown in table 2.1.

Research Questions Independent variables Dependent variables

1. How do demographic factors affect bottled water buying behavior?

Gender Age Education

Income Consumer buying behavior

2. How do psychological factors affect bottled water buying behavior?

Beliefs Perception

Table 2.1 Research questions with independent and dependent variables Source: developed for this research

In order to test the hypotheses, the questionnaire used for this research is divided into two parts: one to measure the correlation between demographic factors and buying behavior (Q1-Q4), and one to measure the correlation between psychological factors and buying behavior (Q5-Q25).

Q1 till Q4 is a set of close-ended questions. Q5 till Q25 partly exist of statements with a four point scale from ‘strongly agree’ to ‘strongly disagree’ and partly of questions with three or four options to choose from. This is purposely developed to determine the relationship between buying behavior and psychological factors.

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3.3.2 Step 2: specifying the survey method

The next step of the questionnaire design is to specify the survey method. The survey method is the research technique which gathers information from people through the use of surveys or questionnaires.¹⁷ Primary data can be collected in a number of ways. However, every type of survey method has its advantages and disadvantages.

The choice of the most appropriate method depends on both the research objectives and constraints. Factors such as required accuracy level, time and costs are considered, as well as the advantages and disadvantages of the survey methods as summarized in table 2.2.

Hence, the choice of a self-administered survey for this research is based on the research objectives and an assessment of the advantages and disadvantages of survey methods.

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.

A self-administered survey is a survey in which respondents answer questions directly on a questionnaire without an interviewer’s interaction.¹⁸ The respondent completes the survey on his or her own and can choose his or her own pace and time to complete the survey This type of method is considered as the most appropriate method for this research because of several reasons. It can not only be cost-efficient, but it can also improve the reliability of the results since respondents are not rushed to fill it out. However, the possible disadvantages of a self-administered survey are also taken into consideration carefully. For example, it is important that the respondents understand the questions right and answer it in an understandable way. Therefore the questions are formulated as clear as possible for everyone. There is also a chance that respondents will not complete the questionnaire or will not respond in a timely manner. These factors are taken into consideration as ‘errors’ (see section 3.4).

3.3.3 Step 3: developing measurement scales

Closely related to the design of the questionnaire is selecting the format of response for measurement. There are four types of scales: nominal, ordinal, ratio and interval.

The three types of measurement scales in the questionnaire of this research are nominal, ordinal and interval. For example question one (Gender) has a nominal scale, since there is

17 McGraw-Hill (2004). Glencoe Marketing Essentials. Retrieved from www.glencoe.com

18McGraw-Hill. (2004). Glencoe Marketing Essentials. Retrieved from www.glencoe.com

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no magnitude, no equal interval and no absolute zero in the possible answers. Question three (Education) is ordinal because of possible ranking but no magnitude and absolute zero point. The questions five till twenty can be treated as questions with interval scales, as it is communicated and produced in an interval-scaled way.

3.3.4 Step 4: reliability and validity test

Any questionnaire should be reliable and valid in order to use the right results for further actions. Reliability is the consistency of your measurement. It is the degree to which an instrument measures the same way each time it is used under the same condition with the same subjects. In short, it is the repeatability of your measurement. A measure is considered to be reliable if a person's score on the same test given twice is similar.¹⁹

In order to test the reliability of this questionnaire, a pilot test is carried out prior to the field survey within a relatively small sample of 10 respondents to identify and eliminate possible problems.

Validity is concerned with the strength of our conclusions, inferences or propositions. More formally, Cook and Campbell (1979) define it as the "best available approximation to the truth or falsity of a given inference, proposition or conclusion." In short, were we right? How well did we measure what we claim to measure by a specific research method? ²⁰

Regarding this research, the validity is verified by the supervisor of this research, who looks into the appropriateness of questions and the scales of measurement.

3.3.5 Step 5: preparing draft questionnaire

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To design a good questionnaire, principles are applied to the content, wording and structure of the questions. Double-barreled and sensitive questions are avoided. As well for wording, care is taken to ensure that words have only one meaning and there are no biased words, phrases, abbreviations, double negatives and incomplete sentences. In relation to the structure, all questions have a clear structure and the questionnaire is divided into three

19 Reliability and Validity: what’s the difference? (n.d.). Retrieved from http://www.socialresearchmethods.net/tutorial/Colosi/lcolosi2.htm

20 Reliability and Validity: what’s the difference? (n.d.). Retrieved from http://www.socialresearchmethods.net/tutorial/Colosi/lcolosi2.htm

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parts. They are ordered from the most easy ones (personal information) to the more time- consuming and topic-related ones. Furthermore, questions with similar structure are grouped together.

3.3.6 Step 6: testing, revising and distributing the questionnaire

As mentioned in section 3.3.4, the validity and reliability of the questionnaire are assessed in the testing phase. Revision takes place on the basis of the feedback from the respondents.

The distribution of the questionnaires takes place through the network of the researcher and a team of two persons. This team is located at several locations within the centre of Paramaribo to distribute and collect the questionnaires. This team is also responsible, together with the researcher, to ensure that all questionnaires are completely answered and valid for data analysis.

3.3.7 Step 7: questionnaire administration

As required, this questionnaire is designed to encourage responses as much as possible.

Hence, it is designed to appear quick and easy to answer, mostly by the close-ended questions. The average time required to complete the questionnaire is confined to be 5- 8 minutes. Furthermore, a pen is provided to every respondent who completes a questionnaire to stimulate the response rate. Finally, some aspects are taken into consideration and given out with every questionnaire to establish trust and make the respondent feel comfortable.

These aspects are: an introduction with the identity of the researcher, the nature and importance of the research and principles to ensure anonymity.

3.4 Sampling strategy

Another crucial step in conducting the survey is to determine which subjects shall be surveyed to obtain the appropriate information for the research objectives. To decide which type of sampling will be the most appropriate one for this survey, the characteristics of both probability and non-probability sampling are considered.

Probability sampling is one in which every unit in the population has a chance (greater than zero) of being selected in the sample. At Non-probability sampling some elements of the

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population have no chance of selection, or the probability of selection cannot be accurately determined. It involves the selection of elements based on assumptions regarding the population of interest which forms the criteria for selection.²¹

The sampling process of this research comprises several stages:²²

¾ Defining the population of concern;

¾ Specifying a sampling frame, a set of items or events possible to measure;

¾ Specifying a sampling method for selecting items or events from the frame;

¾ Determining the sample size;

¾ Implementing the sampling plan;

¾ Sampling and data collection;

¾ Reviewing the sampling process

In this research, the population of concern consists of all Surinamese people who live in the capital Paramaribo, have at least a foundation education and are sixteen years or older.

The sampling frame is in this case the same as the population of concern. The sample frame is a set of items from which the sample is drawn. Since it is hardly impossible to list all the people with above mentioned characteristics, the sample frame is the same as the population of concern.

The most appropriate sampling method for this research is quota sampling, a form of non- probability sampling. In quota sampling the population is first segmented into mutually exclusive sub-groups. Then judgment is used to select the subjects or units from each segment based on a specified proportion. This type of sampling is considered as the most appropriate one for this research because of two main reasons. Firstly, it enables the researcher to list relevant control characteristics and secondly it determines the distribution of these characteristics in the targeted population. Demographic data, such as age and sex, can more easily be explored by quota sampling.

Determining the sample size for probability samples involves financial, statistical and objective considerations. Due to the limited time for this research, the sample size of this study is 200. In addition, a sample size of 20 is taken into consideration for errors.

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21 Wikipedia.(2010, February). Sampling (Statistics). Retrieved from http://en.wikipedia.org/wiki/Sampling_(statistics)

22Wikipedia.(2010, February). Sampling (Statistics). Retrieved from http://en.wikipedia.org/wiki/Sampling_(statistics)

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Thereafter the implementation of the sampling plan takes place after all necessary preparations. During two full weeks questionnaires are distributed via several locations within Paramaribo. Sampling and data collection are carried out directly after the distribution, since the questionnaires are collected within two days maximum.

Finally the sampling process is reviewed in order to guarantee reliability, validity and readiness for analysis.

3.5 Data analysis strategy

The data collected from the questionnaires is completely summarized and analyzed by using Statistical Package for Social Science (SPSS) version 17.0. SPSS enables accuracy and makes it relatively easy to interpret data. The following analysis statistics were undertaken in SPSS for further analysis:

Descriptive:

1. Frequencies;

2. Descriptives

Associative:

1. Reliability;

2. T- test;

3. One way Analysis of Variance (ANOVA);

4. Correlations

Firstly, frequencies and descriptive statistics summarize some main data of respondents to get an overview and to provide guidance for conducting further analysis. Secondly, t-test, ANOVA and correlations amongst dependent and independent variables are carried out to identify the possible relationships.

3.6 Summary

The choice of approach for this research is made on the basis of the nature of the research and the advantages and disadvantages of all possibilities. The positivism-deductive

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approach is considered to be the most appropriate method for this research. This approach enables the researcher to gather the data needed in a relatively simple, cost-efficient and yet structured and reliable way. This, by exploratory and descriptive research. The approach consists of three main stages: questionnaire design & administration, sampling strategy and the data analysis. This last stage takes place by using Statistical Package for Social Science (SPSS); a program to easily interpret data.

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CHAPTER 4 Findings

This chapter illustrates the results of the data collected. Section 4.1 is the introduction to the chapter, while section 4.2 describes how the data is prepared for analysis. Section 4.3 illustrates a general profile of the collected data, where after section 4.4 and 4.5 outlines this data profile by respectively descriptive and inferential statistical results. These results are obtained after transfer and edit of the data in SPSS. Section 4.6 summarizes this chapter.

4.2 Data preparation

In order to make all the collected data suitable for the analysis, all questionnaires are screened to be complete. All returned incomplete questionnaires are therefore considered as errors and removed from the survey data. Out of the 220 distributed questionnaires, 18 are incomplete. As mentioned in section 3.4, 20 questionnaires are taken into consideration as errors. Hence, in total 200 of the 202 complete questionnaires are being used for this research.

Each question and possible answer of the questionnaire has a code, since coding of data is necessary for transferring and editing data in SPSS. The questions and possible answers are corresponded in the order of the actual questionnaire.

The answer possibilities are recoded before the analysis. This, to make it possible that a higher score of the respondents corresponds with a higher correlation between the variables.

Since the questions of the actual questionnaire are coded negatively (a high score corresponds with a low correlation), the questions are recoded for the ease of analysis.

4.3 Data profile

The profile of the data gathered through questionnaires is summarized in table 4.1

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No.of

respondents* %

Cumulative

%

1 ^Gender

Male Female

84 116

41.6 57.4

42 100

2 ^Age 16 to 25 26 to 34 35 to 44 45+

58 48 46 48

28.7 23.8 22.8 23.8

29 53 76 100

3 ^Education Primary

Secondary/ High-school Bachelor

Master +

20 113 41 26

10 56.5 20.5 13

10 66.5 87 100

4 Income (in SRD)

< 1000 1000 to 1999 2000 to 3999 4000 +

57 74 49 20

28.5 37 24.5 10

28.5 65.5 90 100

5 Bottled water usage Once a week or more

Less than once a week (till once a month) Less than once a month

Never

140 34 20 6

70 17 10 3

70 87 97 100

6 Main purchase location At supermarkets

At bars/restaurants/cafés

At service stations/other 24 hour open shops

Other

168 10 0 16

86.6 5.2 0 8.2

86.6 91.8

100

7 Main reason to use bottled water Tastes better than other drinks Healthier/safer than other drinks It is thirst-quenching

It is convenient and easy to consume

10 72 45 67

5.2 37.1 23.2 34.5

5.2 42.3 65.5 100

*Note: N=200 (sample size)

Table 4.1: Frequency table of respondents’ profile Source : developed from survey data

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4.4 Descriptive statistics

This section shows the results from the independent variables beliefs and perception of the consumers. The results of the factors which possibly influence the buying behavior, are also part of this section. Question one till ten of the questionnaire are related to the variable beliefs. Table 4.2 shows the results of the respondents’ beliefs about bottled and tap water.

Statement N Minimum

(Strongly disagree)

Maximum (Strongly

agree)

Mean Mode

1. Bottled water has higher quality standards than tap water

2. Bottled water is safer than tap water in Suriname 3. Bottled water is healthier

than tap water in Suriname 4. Bottled water is healthier

than fruit juices

5. Bottled water is healthier than carbonated drinks (soft drinks)

6. The quality of bottled water in Suriname is reliable 7. The quality of tap water in

Suriname is reliable 8. Tap water in Suriname is

safe

9. I am satisfied with the taste of tap water in Suriname 10. There is no considerable

difference between bottled and tap water in Suriname

200

1

4

3.05

2.94

2.77

2.52

3.43

2.87

2.62

2.59

2.85

2.34

3

2

4

3

2

Table 4.2: Descriptive results of respondents’ beliefs of bottled and tap water Source: developed from survey data

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