FREQUENT PRICE CHANGES:

SHIFTING CONSUMER’S
PREFERENCE OF CARBONATED
BEVERAGE
 Research Topic
Frequent Price Changes: Shifting Consumer’s Preference of Carbonated Beverage
Course Name: Research Methodology
Course Code: 4105

Prepared for
Kanon Kumar Sen
Lecturer
Department of Accounting & Information Systems
Jahangirnagar University

Prepared by
Team Antidote
BBA 9th Batch
Department of Accounting & Information Systems Jahangirnagar University

Date of Submission: September 20, 2023

 Members of Team Antidote:
No. Name Roll
1 Fatema Tuz Zohra (L) 1766
2 Farjana Rahman 1763
3 Mehrubin Parash Moumita 1764
4 Priyonti Roy 1767
5 Shakhawat Hossain 1770
6 Md. Murad Hasan 1777
7 Kajal Mondal 1778
8 MD Shaheed Uz Zaman 2380
Abstract

This research aimed to test whether consumer preferences in the beverage or soft drink industry
were shifting due to the changes in price or the taste of the beverages. To complete the study, the
research began with realizing the consumer needs and behavior towards this particular industry
and how or why the price suddenly became an issue for consumption. The background study has
been reflected in the literature review, and the hypothetical statements were proposed that we
looked to test and declare the state of acceptance. A sample of 100 respondents was developed
from which we extracted descriptive statistics of mean and standard deviation used to run the
multiple regression analysis. The alternate hypothesis depicting the significant relationship
between price and consumer preference was accepted as it showed 0.013 significance level.
Thus, the research was concluded with the accepted hypothesis and suitable recommendations.

Keywords: Consumer preference, Price of beverage, Brand Loyalty, Taste of beverage,

Beverage industry

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Table of Contents
CHAPTER 1: INTRODUCTION .....................................................................................2
1.1 Background of the research topic ..................................................................2
1.2 Research Rationale.........................................................................................2
1.3 Aim of the research ........................................................................................2
CHAPTER-3: RESEARCH METHODOLOGY .................................................................5
3.1 Research Purpose ...........................................................................................5
3.2 Research Method ...........................................................................................5
3.3 Research Instruments .....................................................................................5
3.4 Sampling ........................................................................................................5
3.5 Data Collection and Resources ......................................................................5
CHAPTER 4: FINDINGS FROM THE DATA ...................................................................7
4.1 Samples and Data Collection .........................................................................7
4.2 Study Variables ..............................................................................................7
4.3 Dependent Variable .......................................................................................7
4.4 Conceptual framework ...................................................................................8
4.5 Econometric framework.................................................................................8
CHAPTER 5: DATA INTERPRETATIONS AND DISCUSSION ..........................................9
5.1 Descriptive statistics ......................................................................................9
5.2 Correlation matrix ........................................................................................10
5.3 Multiple Regression Model..........................................................................11
CHAPTER 6: CONCLUSION ......................................................................................13
6.1 Conclusion ...................................................................................................13
6.2 Recommendations ........................................................................................13
APPENDICES: ..........................................................................................................15
REFERENCE: ...........................................................................................................16

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Chapter 1: Introduction

1.1 Background of the research topic

Consumer preference is a business concept that business researchers and companies use to
understand ongoing market trends and consumption patterns for a good or service. This construct
is influenced by pricing strategies, brand image, and customer loyalty because the value of a
good or service for a buyer is different from person to person based on their needs and
perspective. In the case of carbonated drinks, brands like Coca-Cola and Pepsi have always
remained a consistent picture in everyone's mind, and very few variables have successfully
changed this behaviour, resulting in a consistent consumer preference among the majority of the
population.

1.2 Research Rationale

The research topic was considered necessary because a new consumption pattern is expected to
emerge in the beverage industry due to frequent price hikes of carbonated beverages. The
consequence of this trend is an increased preference for new carbonated drink brands, local
brands, or a deviation towards non-carbonated options. Thus, it will eventually impact the sales
of large and smaller market players. The hypothesis will test the consumer's reaction to price
hikes and whether it affects their preference for a brand they usually purchase from. The study
approach will investigate how variables such as beverage prices, brand loyalty, and taste of
beverage impact consumer preferences and if price has a dominating impact out of all the other
variables. By analyzing the effects of beverage prices and brand loyalty on consumer choices,
this research may provide valuable insights that can help local companies understand their
lacking and tailor their offerings to better align with what their target audience desires in the
beverage industry of Bangladesh.

1.3 Aim of the research

The research aimed to test the relationship between the factors affecting consumer preferences in
the carbonated beverage industry of Bangladesh. The test results can show how sensitive price is
in the carbonated drinks market compared to other factors like brand loyalty or taste in a
homogenous industry. The study aimed to collect data regarding the performance or impact of
each construct on consumer preference and statistically present the response similarity or
deviation. These patterns could be used by companies as insights to understand their target
market and develop business strategies accordingly.

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Chapter 2: Literature Review & Hypothesis Development
Bangladesh is known as a poverty-based country where most people can barely manage three
meals a day. Yet, the per-day production and sales of companies like Coca-Cola cross billions of
units. It merely demonstrates how much beloved carbonated beverages or soft drinks are to the
natives here. While evaluating the consumption patterns in different households, Talukder and
Quilkey (1991) mentioned that the population here was more attracted to and had a higher intake
of unhealthy and high-calorie choices like sugary carbonated beverages than fundamental food.
The trends were prevalent in urban and rural landscapes when analyzing the population by
Mottaleb, Kruseman, and Erenstein (2018). So, it was understood that the beverage industry had
exponential growth in this highly populated country, and many market players joined. But the
dominance of the international market player, Coca-Cola, was clear. Islam and Habib (2009)
conducted a multivariate study with a sample of 200 consumers, and they found that the usual
factors that lead young consumers to choose brands like Coca-Cola or Mountain Dew were due
to the brand’s coolness in tagline, sweetness, and digestion capability. The quality and
promotional superiority left the local producers out of the majority in market acquisition. Halder,
S. (2019) also experienced similar results when he tried to study brand superiority and its
influence in Bangladesh. He stated that of all the brands in Bangladesh, Coca-Cola had higher
brand loyalty and equity than Pepsi and Mojo. It is mentionable that price so far has had nothing
to do with the difference in brand performance because mostly all carbonated drinks were
competitively priced in the market, meaning they stood at the same price ranges, except for
Mojo, a cheaper local product. Although soft drinks had been generally considered quite
affordable, the smallest unit available within BDT 20/25, Islam & Fatema (2014) mentioned that
Mojo had offered an even lower price. However, people still preferred international brands due
to their branding strategies, brand trust and product quality. Thus, companies like PepsiCo Inc.
had a massive chain of unbroken customer loyalty and attachment Alam & Sarafat (2018).
Lately, in the last three years, after the pandemic hit every business in the world, some changes
were observed in the soft drinks market of Bangladesh. Chowdhury et al. (2020) realized that
every company had to revise its operations and supply chain management to reduce the
production spoilage inventory cost and decrease sales. The procurement and production barriers
have increased for all companies as fuel, gas, and energy prices move upwards while recovering
from the mass economic loss prevailing in the nation. From 2021, the production of soft drinks is
on a decline and export prices began to drop, whereas Bangladesh already had a 63% increase
from 2020, according to IndexBox (2022). From 2022 to 2023, the selling price of soft drinks by
Coca-Cola has changed by at least three times, followed by other brands. The Chief Executive of
Coca-Cola, Quincey, was interviewed by AFP (2023), and he said that the company had to adjust
the local market price according to the inflation rate in hyperinflationary nations, which includes
Pakistan, Bangladesh, and Turkey. The same frequent adjustments were found in the case of
Mountain Dew, Pepsi, and Mojo. Suddenly, the price of a 250 ml carbonated beverage became
BDT 35 from BDT 25 on average, and the change was more significant for larger units like 1
liter and 2.25 liters. The frustration is prominent among the consumers because their income has

3
not increased as much as the prices of the preferred goods have, and it has brought limitations in
their consumption pattern Mavis (2023). The new price results from high production costs
caused by the increasing cost of PET bottles, turnover tax rates, and freight charges, as per the
TBS Report (2022). The new tax rate adjustment is expected to be a national strategy to control
the unhealthy consumption of sugary soft drinks and discourage the younger generation from
uncontrolled access, which Chaloupka, Powell, and Warner, (2019) discussed in their analysis.
In Bangladesh, a study by Bipasha, Raisa, and Goon (2017) revealed that more than 53% of
university students consume such beverages more than two times a week, and it could be one of
the contributors to obesity and rising health issues like type 2 diabetes, heart attacks, and
metabolic disorders.
But the question remains whether the demand for the brands or carbonated beverage itself would
stay the same, and if the consumers need help to afford it, what would they do to satisfy their
needs? It is expected that they may shift their preferences from pricey brands to cheaper
alternatives, as a solution discussed by Ma, Teo, and Wong (2022) regarding consumer attitudes
to new market conditions. These assumptions and questions led to the research topic and the
need to practically identify the gap created by unmet beverage demand and rising selling barriers
like increased prices devoid of adequate supply. As the shift of consumers from international
carbonated drinks to local brands due to price concerns only is yet an assumption from
observation, the proposed null hypothesis is as follows.

H0: Price has no significant relationship with CP

The null hypothesis shall be rejected if the study fails to prove a direct and significant
relationship between price and consumer preference. The alternate hypothesis will be accepted in
return that price is the dominant factor resulting in shifting consumer preference due to their
direct relationship.
H1: Price has some significant relationship with CP

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Chapter-3: Research Methodology

3.1 Research Purpose

The study has been focused on exploring the factors that directly influence consumer preference
in the carbonated beverage industry of Bangladesh. We are following a causal and conclusive
pattern of research approach. The research aims to determine whether a beverage's pricing is
responsible for changes in consumption patterns and how it could affect the business of the
companies involved in the beverage industry. This could reveal whether the beverages' pricing
indicates opportunities for local companies to conquer the shifting consumers. This section
discusses the study's research design and methodology to accomplish this objective.

3.2 Research Method

The research follows a quantitative method for achieving the most suitable and appropriate
results for proving the hypothesis. As this research study consists of multiple variables, the
regression analysis requires numerical data to run the statistical model that can confirm or reject
the null hypothesis. A quantitative method would have provided the study with nominal or non-
measurable data requiring lengthy interpretations, and limited descriptive statistics can be
produced.

3.3 Research Instruments

There was Descriptive analysis, Correlation, Regression, etc., of those data all around. The
descriptive analysis segment features a genuine view of the total impact on the consumer's
consumption pattern of beverages. Correlation defines how two variables are related and
influence each other, with defaulting indicating a significant negative impact over time.
Regression identifies which specific variables affect a particular topic of interest.

3.4 Sampling
Sampling involves selecting a subset of data from a larger population to conclude that
population. This sample represents a smaller and more manageable group that can be studied to
explore the factors affecting consumer preference in the carbonated beverage industry of
Bangladesh. Here, a random sample was taken from 100 consumers of various occupations and
age groups.

3.5 Data Collection and Resources

Both primary and secondary data have been used to conclude the findings of the research. While
the source of primary data is a quantitative survey among 100 participants, the fundamental data
for problem identification, research validation, and logical statement of hypothesis were found in
published research studies and new articles. The main resource for this research was the internet
where different tools like Google Forms, Docs, Excel, and Google Scholar were used. For the

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regression analysis, the PLS software was used. Acquaintances and social groups were used as
reliable resources for circulating the survey and gathering responses.

Table 1.
Demographic profile of
the respondents

Demographic information Respondents (N = 100) Percentage (%)

Gender
Male 54 53.8
Female 46 46.2

Age
25-34 years 71 70.9
35-44 years 24 24.9
45 and Above 5 5.1

Area
Rural 8 7.7
Suburban 36 35.9
Urban 56 56.4

Purchase frequency
Daily 13 12.8
Weekly 43 43.6
Monthly 18 17.9
Rarely 26 25.6

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Chapter 4: Findings from the Data

4.1 Samples and Data Collection

The article evaluates samples of 100 consumers of various occupations and age groups. This
sample represents a smaller and more manageable group that can be studied to explore the
factors affecting consumer preference in the carbonated beverage industry of Bangladesh.
The information was gathered from surveys and observations that give these statistics to several
consumers. To analyze the outcomes, find how the dependent variable has an effect when the
independent variable changes.

4.2 Study Variables

This study considers three factors to assess the consumption pattern of the 100 consumers'
opinions. All the study's elements were chosen based on empirical research that significantly
affects consumer consumption patterns that were reviewed in the literature review part. These
variables were selected to determine if consumers' preferences in these beverage industries are
causally related to the price of beverages, brand loyalty, and taste.

4.3 Dependent Variable

Consumer preference refers to the subjective choices and inclinations of individuals or groups
when selecting different products and brands, which serves as the dependent variable in the
study. According to Ramachandran, Sethuraman & Basariya, s. Rabiyathul (2020), consumer
buying behavior changes depending on the nature of the product. This study uses consumer
preference as a measurable variable, and understanding consumer preferences is crucial for
businesses and marketers as it helps them tailor their offerings to match better what their target
audience desires, ultimately leading to increased customer satisfaction and loyalty.

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4.4 Conceptual framework

The following is an illustration of the conceptual framework which is appropriate for the paper:

Price of
Beverage

Consumer Brand Loyalty

Preference

Taste of
Beverage

Figure 1: Conceptual Framework

Source: Author’s Compilation

4.5 Econometric framework

The determinants of Consumers Preference have been estimated using the following equation:

CP = α + β1POB + β2BL + β4TOB + ε

Here,

CP = Consumer Preference

POB = Price of Beverage

BL = Brand Loyalty

TOB = Taste of Beverage

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Chapter 5: Data Interpretations and Discussion

5.1 Descriptive statistics

Descriptive statistics is an accumulation of the collected data and presentation in a summarized

manner that can be used to draw different conclusions. Using the gained ordinal data from the
sample set, the study has developed a statistics table of mean, and standard deviation of each
variable which is later used for the regression analysis.

Table 2 Descriptive statistics of dependent and independent variables

Variable Observation Mean St. Dev Minimum Maximum

Consumer 100 3.295 1.0733 1.5 4.5

Preference

Price of 100 3.485 0.7297 2.5 4.5

Beverage

Brand 100 3.74 0.8023 2 5

Loyalty

Taste of 100 3.76 0.9141 1.5 5

Beverage

Source: Author’s calculations

The taste of beverage has a substantial degree of variability, with lowest and maximum values of
1.5 and 5, a higher standard deviation of 0.9141 and an average price of beverage rate of 3.76.
The average brand loyalty is reported to be 3.74, with a standard deviation of 0.8023 and a range
of 2 to 5 for brand loyalty. Moreover, during the same observation, the price of beverages is
relatively low, which will take a mean value of 3.485 in the range of 2.5 to 4.5.

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 MEAN
3.8 3.76
3.74
3.75
3.7
3.65
3.6
3.55
3.5 3.485

3.45
3.4
3.35
3.3
Price of Beverage Brand Loyalty Taste of Beverage

Mean

Figure 2: Bar Chart of Mean

Source: Author’s Compilation

5.2 Correlation matrix

The correlation between the independent variables is described in Table 3. The correlation matrix
shows the multi-collinearity issues in the dataset.

Table 3 | The Correlation Matrix

CP POB BOL TOB

Consumer Preference 1

Price of Beverage 0.4313 1

Brand Loyalty 0.4799 0.4849 1

Taste of Beverage 0.7420 0.5737 0.2618 1

Source: Author’s calculations

As shown in Table 2, the link between consumers' preference and price of a beverage, taste of
the beverage and brand loyalty is favourable. That indicates that changes in these three factors

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proportionally influenced the likelihood of having consumer preferences. The effect of consumer
preference will rise if the effect of these factors rises. And if the effect of these factors falls, so
will the effect of consumer preference.

5.3 Multiple Regression Model

Dependent Variable: Consumers Preference (CP)

Table 4 | Results from the Stata Regression Analysis

Coefficients Standard t- Stat ρ -value Lower Upper

Error 95% 95%
Intercept -0.9471 0.3750 -2.53 0.013 -1.6916 -0.2027
Price of -0.2592 0.1187 -2.18 0.031 -0.4949 -0.0235
Beverage
Brand 0.4950 0.0916 5.40 0.000 0.3130 0.6769
Loyalty
Taste of 0.8761 0.0859 10.20 0.000 0.7056 1.0466
Beverage
R2 0.6553
Adjusted R 0.6446
Square
Standard 0.3750512
Error
Observations 100
Refers ρ<0.05

Source: Author’s calculations

As per the regression model, the model for the overall dataset is,

CP = α + β1POB + β2BL + β4TOB + ε

= -0.9471 + (-0.2592) POB + 0.4950 BL + 0.8761 TOB

The table shows the coefficients, intercepts and slopes. Here is a ρ-value for the partial slope.
These will be used to do the individual partial slope t-test. In this table are the confidence
intervals for the partial slopes for coefficients in general and some more kinds of multiple things.

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The table shows the result of r square, which has a high value of 0.6553. It means that precisely
65.53% of the variability of the dependent variable, which is consumer preference, can be
explained by the entire set of independent variables: the price of the beverage, brand loyalty, and
taste. R square is 65.53%, which is the most significant result. According to Guerard (2012), A
high r square suggests the multiple regression model has some predictive potential. Adjusted R
squares are relatively comparable except for changing the r square for the sample size and the
number of independent features utilized in independent variables. So, increasing the sample size
can give a better result in this case. So, the adjusted R Square is always smaller than the r square.

Observation for the research is 100, which means 100 different consumers’ data has been taken
to conduct the study.

The following hypothesis:

H0: Price has no significant relationship with CP

H1: Price has some significant relationship with CP

The ρ-value indicates the result is statistically significant if it is less than the significance
threshold (0.05). Otherwise, it will be considered that the results are statistically insignificant.
The table shows that the ρ-value is 0.013, less than the significance level of 0.05. It can be
concluded that if we were to test different sets of samples from the population, there is a meagre
chance the result would deviate from this, and there are errors in the test.

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Chapter 6: Conclusion

6.1 Conclusion
The research aimed to explore the factors affecting consumer preferences in the carbonated
beverage industry of Bangladesh, with a focus on the impact of beverage prices, brand loyalty,
and taste. The research followed a quantitative approach, collecting data from 100 consumers
through surveys and observations.

Key findings from the data:

o Consumer preference, on average, was 3.295 on a scale of 1.5 to 4.5.
o The average price of beverages was 3.485, with a range of 2.5 to 5.
o Brand loyalty averaged 3.74, ranging from 2 to 5.
o The taste of beverages had an average score of 3.76, ranging from 1.5 to 5.

The correlation matrix revealed that consumer preference had a positive relationship with price,
brand loyalty, and taste of beverages, indicating that changes in these factors influenced
consumer preferences proportionally. A multiple regression analysis showed that all three factors
- beverage price, brand loyalty, and beverage taste - significantly influenced consumer
preference. Specifically, an increase in the price of beverages and brand loyalty positively
affected consumer preference, while an increase in the taste of drinks had a negative impact.
The adjusted R-squared value of 0.6446 suggests that the selected independent variables can
explain roughly 64.46% of the variability in consumer preference.

In conclusion, this research provides valuable insights into the factors affecting consumer
preferences in the carbonated beverage industry of Bangladesh. It demonstrates that price and
brand loyalty play significant roles in shaping consumer preferences, while the taste of beverages
has a somewhat negative impact. These findings can guide businesses in this industry to tailor
their strategies and offerings to align with consumer preferences, ultimately leading to increased
customer satisfaction and loyalty.

6.2 Recommendations

From our study on factors that affect consumer preference, it’s difficult to measure consumer
preference. We have some recommendations to improve the condition of consumer preference in
the beverage industry.

1. Pricing flexibility: In general, reducing price will increase consumer preference, we

recommend focusing on this factor. Now reducing the price of beverages is a challenge
for the beverage industry. Any production company should want to control their fixed

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 expenses if they want to gain a cost advantage even when the variable expenses are rising
and non-negotiable.

2. Branding strategies: The only reason Coca-Cola still makes billions of sales every day,
despite having strong competition and declining consumption is due to its brand image. It
is proved that how a brand is perceived heavily influences consumption and loyalty.
Brand image can be strengthened through active promotion that consumers can relate to,
by improving product quality and packaging design, or developing supply-chain
strategies to meet the demand found anywhere.

3. Product taste: The taste of beverages should be managed and set with much more
caution because it has an impact on consumer preference. Increasing the taste of
beverages like balancing the sugar levels, fizziness, ingredients, etc. will increase
consumer preference. But it requires investment in attention to detail, side effects, and
consistent research and development.

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Appendices:

Stata Software Output Results:

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