A STUDY ON FACTORS INFLUENCING THE CONSUMER

BUYING BEHAIOUR OF NYKAA

Project Report

Submitted By

Under the guidance of

DR. SHWETA PANDIT

 MEDICAPS UNIVERSITY, INDORE

DEPARTMENT OF COMMERCE

CERTIFICATE

This is to certify that the Project Report entitled “A STUDY ON FACTORS

INFLUENCING THE CONSUMER BUYING BEHAVIOUR OF NYKAA
submitted by _______________________________, towards partial fulfilment of
the requirement for the award of Master of Commerce and Management is a record
of bona-fide carried out during the academic year 2023-24.

Supervising Guide Head of the Department:

Dr. Shweta Pandit

Department of Commerce
INTRODUCTION
Nykaa is an Indian e-commerce company headquartered in Mumbai. It
sells beauty, wellness and fashion products through its website, mobile app, and over 100 physical
stores. In 2020, it became the first Indian unicorn startup headed by a woman. Nykaa sells products
which are manufactured in India as well as internationally.

Company type Public

Traded as  NSE: NYKAA

 BSE: 543384

Industry  E-commerce Cosmetics Retail

Founded April 2012; 11 years ago

Founder Falguni Nayar

Headquarters Mumbai, Maharashtra,

India
Area served India
Key people  Falguni Nayar (CEO)
 Anchit Nayar (CEO — E-
commerce & Beauty)
 Adwaita Nayar (CEO —
Fashion)[1]

Revenue ₹5,144
crore (US$640 million)
(FY23)[2]
Net income ₹19 crore (US$2.4 million)
(FY23)[2]

Owner Nayar family (53.5%)[3]

Number of 2,000+ (2021)
employees

Parent FSN E-Commerce Ventures Ltd

Website www.nykaa.com
HISTORY
In April 2012, Falguni Nayar a former managing director at Kotak Mahindra Capital Company ,
founded Nykaa as an E-commerce portal curating a range of beauty and wellness products. The
brand name Nykaa is derived from the Sanskrit word nayaka, meaning actress or “one in the
spotlight”. The website was first launched around Diwali 2012, and was available commercially
in 2013.

In 2015, the company expanded from online – only to an omnichannel model and began selling
fashion products.

In 2018, Nykaa launched Nykaa PRO. It is a premium membership program that provided users
special access to professional beauty products and offers on the Nykaa app. In 2018, the company
also launched an online beauty forum called Nykaa Network.

IN March 2020, Nykaa raised ₹100 crore (US$13 million) from Stead view Capital at a valuation
of US$1.2 billion, making it a unicorn startup. This was followed by another tranche of ₹67
crore (US$8.4 million) funding by Stead view in May 2020.

In Ocotber 2020, the company launched Nykaa Man, India’s first multi-brand E-commerce store
for men’s grooming. The company expanded into fashion by launching Nykaa Design Studio,
which was renamed to Nykaa Fashion.

In November 2020, global asset management firm Fidelity invested in the company through a
secondary sale of shares from an existing equity investor.

In December 2020, Nykaa Fashion launched its first store in Delhi, making the fashion business
omnichannel.

Nykaa opened its Initial public offering (IPO) on 28 October 2021. The IPO raised ₹5,352
crore (US$670 million) at a valuation of US$7.4 billion. Nykaa was publicly listed on
the NSE and BSE on 10 November 2021, and its price rose by 89.2% on opening day, valuing the
company at nearly US$13 billion.

Founder Falguni Nayar, who owned a 53.5% stake in the company, became India's wealthiest self-
made female billionaire on the listing day.
LITERATURE REVIEW

Priya, Raghubir (2005) ran two lab tests to find out how consumers reacted to goods that were
given away for free with the purchase of another good. According to the findings of the first study,
consumers are prepared to pay less for a product that is supplied "for free" when it is presented as
a joint package instead of a "Buy one, get one free" deal. The second study found that consumers
are less eager to pay for a product when it is given away "for free," particularly when the original
promotional offer does not include the cost of the gift.

Alvarez, Begofia, Rodolfo, Va`zquez, Casielles (2005) research on how brand choosing
behaviour is affected by sales promotion. The data required for the study was gathered via a local
consumer panel. According to the writers, marketing is a tool that can assist retailers and/or
manufacturers in achieving their objectives (try a brand, help decide which brand to buy, etc.).
Most influenced technique on brand selection process is instant price reduction. It is possible that
a consumer perceives a promotion, such as coupons or rebates, but does not change their behaviour.
In this case, manufacturers 1 and/or retailers will invest their resources in promotions that have no
effect on consumers. Additionally, price-based promotions are most effective.

Lewis, Michel (2004) devised a method to assess the effects of both conventional shortterm
promotions and dynamic loyalty programmes at the same time. They contend that thoroughly
studied loyalty initiatives successfully alter behaviour and boost retention rates. Shipping costs,
general pricing ranges, and email coupons all have a big impact on what customers decide to buy.

Richard, L. Oliver and Mikhael, Shor (2003) examined the impact of digital discounts on
shoppers' perceptions and behaviours, such as cart abandonment, by asking them to enter a
promotional code. Comparing the outcomes to traditional couponing, the findings revealed that
supplying a code and the corresponding price reduction had a favourable impact on feelings of
fairness and satisfaction.

Kureshi, Sonal and Vyas, Preetha (2002) 2002explored the types of sales promotion activities
that are used in the Indian market for toilet soap and looked into how retailers and customers view
these activities. According to reports, premiums (free gifts) are used more frequently than
discounts in both the popular and premium toilet soap categories. Additionally, discounting is seen
by merchants as a technique with greater influence. Discounts are thought to be the most alluring
marketing strategy for toilet soaps by consumers

Chakravarti, Dipankar et al. (2002) suggested that the attractiveness of the bundle offer may be
impacted by dividing or combining product pricing in a package.

Swait, Joffre and Erden, Tulin (2002) evaluated consumer products (utilities) and options by
focusing on a particular feature of the time consistency of the marketing mix for commonly
purchased consumer packaged goods, the influence of time consistency of in-store promotions, as
well as product shelf availability. Based on empirical findings from fabric softener panel data, it
is possible that future insert and accessibility consistency may statistically significantly boost
systematic usability over and beyond the benefits of option displays and features

Kumar, KM. Krishna (2006) studied consumer perceptions of promotional strategies adopted by
FMCG retailers in Kerala. Some of the concerns discussed included consumer understanding of
various sales promotion techniques, their attraction to consumers, and their success in raising brand
awareness, encouraging brand trial purchases, repeat purchases, and brand loyalty. 300 customers
from various regions of the state provided the data. The Chi-square test, t-test, ANOVA, and
Duncan test were only among the mathematical and statistical techniques employed to analyse the
data. The study's findings indicate that customers from various categories are well aware of the
various sales promotion techniques employed by marketers. In addition, buyers find discounts,
gifts, and accessories to be the most alluring of the different techniques used to increase sales. Also
recommended are gifts and accessories, free samples, discounts, and premium offers for increasing
brand recognition, trial purchases, repeat purchases, and brand loyalty.

Vyas, H. Preeta (2005) attempted to study consumer preferences with respect to sales promotion
in the FMCG category. Sales promotion offerings that stand out and provide an immediate reward,
preferably in the form of a price decrease, have been proven to be more likely to appeal to all
consumer segments.

Laroche, Micheletal. (2005) Chinese fast-food businesses were used to study the impact of
coupons on consumers' brand categorisation and decision-making processes. Based on the
findings, there are both direct and indirect effects, implying that the presence of a coupon for a
focal brand affects customers' views and intentions toward that brand

Anderson, T. Eric, and Simester, I. Duncan (2004) based on three extensive field trials with
consumer durables offered through a direct mail catalogue, explored how the depth of a current
price promotion influences future purchases by new and returning customers. The results show
that the impact differs for new and seasoned clients. Deeper price cuts in the current period
enhanced first-time purchasers' future purchases (a positive longterm effect), but diminished
established customers' future purchases (a negative long-run effect).

Dawes, John (2004) the findings of their investigation into the effects of a hugely effective price
campaign in the consumer goods category. He specifically aimed to ascertain whether this
significant price offer had any long-term effects on brand value, short-term effects on the retailer's
total category volume, long-term effects on competing retailers, and long-term effects on the
retailer hosting the event's category sales. The study's findings demonstrated that, while a very
effective promotion briefly increased the retailer's total category, it had no longer-term (good or
negative) impact on the brand.
Srivastava, Joydeep and Nicholas, Lurie (2001) revealed the findings of research that looked at
price-matching return policies from the viewpoint of consumers. According to the first study,
people view return policies that match prices as indicators of low costs in stores, and the presence
of a refund increases the possibility that price-searches would end. The second and third studies
demonstrate that when search costs are minimal, the number of stores searched increases when a
price-matching return policy is present vs absent. Consumers appear to accept price match signals
at face value and look less for refunds when search costs are high.

Vibhas, Madan and Rajesh, Suri (2001) compared the effects of price reductions and fixed price
offers on how consumers view the products. They looked at the interplay between the positive
financial sacrifice effect brought on by a price drop and the positive quality effect using a consumer
valuation model. According to their research, quick discounts are preferable than set price offers.
A set price offer is preferable to both steep and gentle price reductions, though.

Smith, F. Michael and Sinha, Indrajit (2000) examined the relationship between various
promotion types (direct price promotion, non-product or volume promotion, and mixed promotion)
in relation to four supermarket product categories while controlling for the impact of two category
moderating factors, such as product stock characteristics and price level. The findings
demonstrated that most consumers liked mixed promotions; the type of promotion (price and
volume promotions had the greatest influence) determines retailer preference. Price discounts for
more expensive product categories and volume promotions for less expensive categories were
generally chosen by consumers.

Ailawadi, L. Kusum and Nelsin, A Scott (1998) experimentally shows the existence of flexible
consumption rates for packaged goods products, how to model this phenomenon, and the
significance of these findings in assessing the success of sales promotions. According to their
study's findings, sales promotions lead to higher usage rates and stockpiling, which in turn boost
consumption.

Mela, F. Carl. et al. (1997) The long-term impact of promotion and advertising on consumer
brand preference behaviour was examined. They addressed two inquiries: 1. Over a lengthy period
of time, do customers respond to marketing mix elements such price changes? 2. In that case, are
these modifications related to a modification in the manufacturer's advertising and marketing
guidelines? Their findings support the idea that consumers gradually become more price- and
promotion-sensitive as a result of less advertising and more promotion.

Gould, W. Brim (1997) His research focused on the dynamics of consumer shopping and looked
at how coupon price deals affected the intervals between purchases. On the cheese food commodity
that had been officially purchased, he used econometric duration models. According to the
findings, using the coupon shortens the time between purchases of all sorts of cheese products.
Kapil, Bawa et al. (1997) studied how customer response to coupons varies by coupon attributes
and presented a methodology for modelling coupon redemption to assess the relative value of
various coupon programmes. The model's empirical application Master of Commerce and
Management, St. Teresa’s College (Autonomous), Ernakulam A study on factors influencing the
consumer buying behaviour of Nykaa 12 revealed that it is possible to get crucial insights into
consumers' reactions to coupons and that, for about 90% of the sample, consumers' reactions can
be predicted.

Sethuraman, Raj (1996) created a separate-effect model that distinguishes the discount effect
from the overall impact of a high-priced competitive brand on the sales of significant low-cost
companies. A leading national brand can attract customers from rival brands without dropping its
price below that of the competition, according to empirical analysis.

Francis, J. Mulhern, and Daniel, T. Padgett (1995) studied the relationship between regular
pricing and promotional shopping, as well as whether customers drawn to a retailer by a discount
campaign also buy regular items. The study's findings revealed a strong correlation between
regular prices and sale purchases. Three-quarters of customers who cite a promotion as one of their
visits to a store do so frequently. These customers typically spend more money on things with
ordinary prices.

Grover, Rajiv and Srinivasan, V. (1992) explored the numerous effects of retail promotion on
brand switching and brand loyalty. They discovered that brand loyalty and segment switching are
market characteristics; the promotion variable has a significant impact on segment market shares,
with the effect varying across segments; the store's share is significantly correlated with its
advertising attractiveness; the overall promotional attractiveness of a product category has a
significant current and lag effect on category volume; and the lag effects of accelerated consumer
growth.

Manohar, S. et al. (1992) report the findings of a controlled experiment intended to investigate
the effects of brand price promotions' frequency and depth on the cost consumers anticipate paying
for a given brand. The study demonstrates that pricing expectations are significantly influenced by
both the frequency of promotions and the extent of price decreases. Only price changes outside of
a region of relative price insensitivity surrounding the expected price have a major impact on
customer brand preference.

Scott, Davis et al. (1992) analysed the results of past studies showing that brands that are marketed
will be ranked worse and less likely to be purchased again. They disprove Master of Commerce
and Management, St. Teresa’s College (Autonomous), Ernakulam A study on factors influencing
the consumer buying behaviour of Nykaa 13 this idea and discover that consumers' propensity to
repurchase is unaffected by the advertising, and their general opinion of the brands being
advertised is unaltered.
Guptha, Sunil (1988) discusses how sales advertising affects customer decision-making and,
consequently, brand sales. They contend that it is possible to compare the increase in sales during
the sales promotion period to the increase in sales brought on by the quickening of the buying
cycle and stockpiling. The author suggested a mechanism for such a decomposition, where brand
sales are taken into account as the outcome of customer decisions on when, what, and how much
to buy.

Dr S.A. Mohamed Ali and Ramya N in their research study have mentioned that “Consumer
Buying Behaviour refers to selection, purchase and consumption of goods and services for the
satisfaction of their wants.” Consumer buying behaviour involves different processes. There are
many factors that influence an individual in ever purchase decision that he/she makes. And as said
by the authors, a purchase decision is the result of each and every factor that influences a consumer

As mentioned in a study by A.K. Rastogi,2010, “consumers decide whether, what, when, from
whom to buy. They can avail various mediums to buy the products.” As this paper is about the e-
commerce platform, we are going to discuss about the online shopping behaviour. The attitude
towards online shopping is not only affected by ease of use, usefulness and enjoyment, but also
there are factors such as consumer individuality, situational factors, product distinctiveness,
previous shopping experience and most importantly the faith in online shopping.

Prasad A and Gudimetla S, 2019, in their study of digital shopping behaviour of women with
respect to beauty and personal care products, have said that “online shopping behaviour is a crucial
part of e-commerce which is often given less importance when compared to the other factors like
technology, digital marketing etc.” Online shopping behaviour explains us about a consumer’s
overall perception and evaluation for product during they are buying the product which could result
in bad or good way. There are several variables to measure the behaviour, they are, the preferred
time of purchase, intention of the buyer, demographic and cultural backgrounds of a consumer and
also these could be the factors that influence a consumer.

In a study, the authors, Bhatt S and Bhatt A,2012, mentioned that factors such as time,
availability of products, affordable price, promotions that e-retailers provide and ease in payment
methods encourage the young minds to shop more online. We all know that internet is most used
by the people who lie between age group of 20-35 years. So most of the e-retailers keep this
particular age group in mind before they promote any brand.

Also it was mentioned in another study by Anjana SS, 2018, that before buying a product,
consumers follow a series of steps. They evaluate the product in such a way that the features of
the product meet the consumer’s needs and expectations. These needs consist of good quality with
low or affordable price and Journal of University of Shanghai for Science and Technology ISSN:
1007-6735 Volume 22, Issue 12, December - 2020 Page-867 should deliver the consumer with
value added features. When it comes to the product quality, price, features, packaging etc. the
consumer buying pattern differs. Consumers follow the fashion and changing trends that affect
their buying pattern.

According to McKinsey & Company’s “The State of Fashion: 2019” report, India’s apparel
market is expected to be worth $59.3 billion in 2022, making it the sixth-largest in the world.
Traditional clothing still dominates women’s apparel sales, accounting for 70% of sales in 2017
and projected to maintain a 65% market share by 2023. However, Western styles are expected to
gain popularity as well. McKinsey also predicts that the aggregate income of India’s addressable
population will triple by 2025.

Deloitte’s “Unravelling the Indian Consumer” report highlights India’s youth as highly brand
and fashion-conscious. Rising incomes, globalization, and improved employment and living
standards are driving growth in the apparel, footwear, and accessories market. The e-commerce
marketplace model has seen triple-digit growth through innovation, modern retail concepts, and
technology integration in all parts of the retail sale process.

According to Wazir Advisors Pvt. Ltd.'s report "Apparel Consumption Trends In India" (2018),
middle class consumers in India spend more on apparel purchases than aspirers, but few clothing
brands and retailers have successfully catered to their needs. The middle class values both fashion
and affordability, creating an opportunity for economically feasible fashion brands to capture this
market. The growth of digitally led fashion brands will be driven by the youth, who have access
to gadgets for online purchases and aspire to be fashionable.

Avendus Capital Private Limited's report "Women's Apparel Landscape in India" (2018) states
that design, quality, and fit are the most important factors for consumers when purchasing apparel,
with up to 70% of expenditure going towards clothing. The average size of a woman's wardrobe
has doubled in volume over the past five years due to an increase in social occasions. Impulsive
buying has also increased due to the ease of online shopping and instant gratification. Social media
plays a significant role in influencing fashion purchase decisions, and artificial obsolescence has
led to more frequent clothing purchases. Women now have greater discretionary spending power
and are becoming more aspirational in their fashion consumption.

The given text discusses two studies on people's attitudes towards cosmetics and the factors that
influence a customer's purchasing decision. The first study conducted by GokulNath, R.Vishnu,
and Dr.G.Thanikacchalam in 2023 explores respondents' use of cosmetics, preferred brands, and
perceptions of cosmetics' role in human life. The study suggests that high-quality goods and
services are essential for businesses to survive in the competitive world of cosmetics. The authors
hope that their recommendations will help relevant cosmetic services grow their business.

The second study by CA Priti Sharma, Dr. Rupa Khanna Malhotra, and Mr. Omdeep Gupta
in 2021 reveals that a customer's satisfaction with a product and its value for money significantly
influence their opinion of a brand. The study also notes that Patanjali's products received mostly
positive feedback from users, despite some complaints about poor packaging quality. Patanjali's
distribution strategy is unique as it uses various avenues to reach customers, including franchisees,
organized retail giants, disorganized stores, its own website, and internet shopping.

Overall, both studies emphasize the importance of quality products and effective distribution
strategies for businesses to succeed in the competitive world of cosmetics.

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Anjana, S.S., 2018. A study on factors influencing cosmetic buying behaviour of consumers.
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Jadhav, V. and Khanna, M., 2016. Factors influencing online buying behavior of college
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Sharma, A., Bhola, S., Malyan, S. and Patni, N., 2013. Impact of brand loyalty on buying
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