Why do consumers prefer national fmcg brands over small brands?

Abstract

In its investigation of the behavioural and psychological reasons behind consumer preferences for national Fast-Moving Consumer Goods (FMCG) brands and smaller, lesser-known ones in the Indian retail sphere, this Capstone Project shifts between national and home brands like an elegy in changing themes of urbanization, digitalization, and consumer awareness that have helped induce rapid changes in the Indian FMCG sector. For both start-ups and established players, it is imperative to understand the consumer's decision-making process for brand selection. This research uses a qualitative research design through in-depth semi-structured interviews with 30 respondents coming from a large variety of demographics: students, professionals, housewives, and businesspersons. Thematic analysis was employed for its flexibility and richness, as common themes emerged: price sensitivity, brand trust, packaging, ethical values, advertising influence, and perceived risk. Some of the psychological theories applicable to the interpretation of consumer motivation are Risk Perception Theory, Maslow's Hierarchy of Needs, Social Comparison Theory, and the Theory of Planned Behaviour. The findings indicate that price and promotions stimulate purchase interest in small brands, while consumers generally gravitate toward national brands due to their perceived safety, consistency in quality, and social validation. Well-known brands capitalize on brand awareness, advertising reach, and shelf visibility, particularly for highrisk product categories in personal care and food. On the other hand, some consumers will experiment with unknown brands, propelled by curiosity, peer recommendations, or ethical concerns, such as boycotting certain global brands for political reasons. Brand preference is thus proven not to be dependent only on price or availability, but rather a detailed decision-making process influenced by personal values, socio-cultural considerations, and tolerance of risk. The insights from this research could be utilized in a pragmatic way by marketers, enabling them to strengthen the customer acquisition and retention process and create position-building programs in this highly competitive FMCG setting.