Analysis of credence good market in India

Abstract

Introduction Credence good is a good whose utility is difficult to ascertain even after consumption i.e. those goods which exhibit credence characteristics. These goods have high pre cost and post cost of quality determination. Two types of credence characteristics are manifest credence characteristics and latent credence characteristics. The characteristics of credence goods are high pre and post cost of presentation, demand is directly proportional to price, prices of credence goods tends to converge and seller credential is very important. Credence customers can be classified by urgency of need and service, nature of credence good and customer needs. Credence characteristics are mainly associated with services while search and experience characteristics are mainly associated with tangible goods. High touch marketing is the dominant form for credence goods although high tech marketing is also present (e.g. Apollo Hospitals). Secondary Research Our main focus during the study was on education and health care sector in India. For this purpose we carried out extensive secondary research through internet, journals, papers and reference books. The education sector has seen rapid growth at the two ends of the spectrum. On the primary education side the growth has mainly come from the government side and the private sector has been actively involved in setting up institutes catering to graduation level and above. Some of these institutes have received global recognition for the quality of education that has been imparted. In the health care sector there have been a deluge of new investments from the big private houses like Fortis, Sahara group, Reliance, Cochlear Ltd, GTI group etc. Medical tourism is expected to grow at a CAGR of 19% till 2012. Similarly the Indian health insurance sector is expected to grow at a CAGR of 25% from 2010 to 2014. At the end of 2012 the health insurance sector in India will be worth USD 3 billion. Primary Research To collect the primary research data one questionnaire was designed for each of the two sectors. The questionnaires were modified from the inputs obtained from the depth interview (of both customers and management) and focus group discussions. The questionnaires were pre tested and relevant feedback was incorporated before launching the survey. Care was taken to avoid double barreled questions. For ease of quantitative analysis the data was pre coded. We obtained around 30 responses each for the two questionnaires. Analysis Discriminant analysis and Cluster analysis were performed on the survey data using SPSS after the data was coded. The detailed analysis was done using a discussion session where the key insights about Credence Goods from FGD, Management interview, In-depth interview of customers and Survey results were compared. Also the literature review findings were related to this analysis and final set of findings were obtained. 2 | P a g e Results and Findings The Educational and Healthcare sectors related findings are summarized. Some of the findings which were used for recommendations are listed below: Education Sector ? Most important factor is Reputation as In higher education people tend to place more importance on brand than on price ? Price is not always an indicator of quality and may become the cause of serious dissatisfaction if quality is compromised while charging a high price ? Accreditation and rakings do not affect the primary choices and may only be looked at to choose from a selected subset ? Promotion tag line is important only if people can understand its meaning and there is connection between the tag line and the actual activities happening on the ground ? Proxy advertisement is much more effective than direct advertisement Healthcare Sector ? Most important factor is Trust and is associated with brand value ? Healthcare insurance influences largely the decisions about choice of hospital ? The most effective form of advertisement is word of mouth publicity and acts as reference for credence goods ? Qualification of doctors is not very important as the hospital is expected to check the credentials of the doctors employed ? Associated services like quality of food, over-night staying facilities etc. are also important while evaluating a particular hospital ? Amount of technology used is often considered an signal of the quality of service that a hospital provides ? There is little advertising used in healthcare sector but there is a trend towards increased focus on advertisement by private hospitals Recommendations Separate set of recommendations for education sector and healthcare sectors were suggested based on the discussion and findings. Recommendations mainly included Brand management, Fee structure, Locational advantages, Accreditation, Infrastructure, Faculty and Alumni Network (Education), Doctors and Nurses (Healthcare), Value added Services. Conclusion The study provides an insight into Credence good market in India. Study tries to relate consumer understanding of the credence services like Education and Healthcare services and how this influences the choice of service. Indian consumer’s changing lifestyle, understanding of products, availability of sources for knowledge and evolving consumer habits indicate the credence goods markets will have a great potential for growth.