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INTRODUCTION
The purpose of this study is to gain a better understanding of factors that influence consumer buying
behavior in cars. Specifically, we considered a number of internal factors that influence consumer
behavior including perception, motivation and learning. How a consumer's attitude, which is a lasting
evaluation of a person, object, or issue, can affect what they buy also examined.
Reviewed other factors that influence consumer purchasing decisions and buying behavior including
personal, social, and situational issues. The personal influences on consumers are important
determinants of their needs and wants. Such factors as age, income, family status, and chosen
lifestyle are strongly related to the types of products people buy and the specific brands they select.
Examined the stages of the consumer decision-making process for buying a car: problem
recognition, information search, evaluation of alternatives between different brands of cars, product
choice and post purchase evaluation with respect to after sales service, customer relationship, and
resale value of the car.
Consumers have to make different kinds of decisions everyday according to their different needs.
Some of the decisions are playing critical roles in consumers' daily life, for example, purchasing a
new home or purchasing a car, whereas some times the decisions are made on a virtually automatic
basis. There are not a lot published research articles available on the decision-framing process.
Puto, C. proposed a conceptual model of the buying decision framing process.
This model focuses on the information search phase which includes two reference points: an initial
which is internal to the company-expectations and buying objectives, and a final one that takes into
account the sales message and justification/reward of the offer.
These two stages lead to the final choice. Burt and Babin developed a model, see Figure...This
model is in line with previous one but gives an emphasis on an evaluation phase in the process.
This model includes five stages: problem recognition, information search, evaluation of alternatives,
purchase decisions, and outcomes.
Locational Marketing mix is used to reinforce the advantages of the car carefully reflecting its core
values and positioning. It confirms how and why it will be of interest to various segments of the carbuying public.
Product
Price
Promotion
Place
Psychological
Influences
Motivation
Personality
Perception
Learning
Values, beliefs
Lifestyle.
Occupation or Profession
Economic Situation
Lifestyle
4. Describe how consumers' relationships with other people and sources influence their
decision-making processes.
Primary Objective:
To study the buying process and associated behaviors in entry level cars and the perception Indian
brands versus Global brands in the minds of the Indian class conscious consumers.
Secondary Objective:
1. Evaluate the passenger car segment and assess visible changes that have taken place over
the years.
2. Buying behavior with respect to the passenger car segment.
CHAPTER 2
LITERATURE REVIEW
Understanding the automotive purchase process is crucial for automotive manufacturers and
dealers. Huge amount of information available to consumers require manufacturers and dealers to
understand consumer decision-making and the modes of influence which can affect consumer new
car purchasing.
Kotler et al. describes the customer buying behaviour as the buying behaviour of the final customers
who purchase goods and services for personal consumption. A company get great advantages by
understanding how customers respond to marketing stimuli that include the four P's: product, price,
place and promotion.
Other stimuli in the customer's environment such as economic, technological, political and cultural
also affect all customers' buying decision. All these stimuli enter the buyer's black box where they,
through the buyer decision process, are turned into a set of buyer responses.
A consumer behavior model, Wheel of Consumer Analysis, was created by J. Paul Peter and Jerry
C. Olson (1994) as a basis for explaining car buying behavior.
According to the American Marketing Association, consumer behavior is defined as the dynamic
interaction of affect and cognition, behavior, and environmental events by which human beings
conduct the exchange aspects of their lives.
Marketers can analyse consumer behavior situation according to the three elements using the
Wheel of Consumer Analysis the environment, behavior, and affect/cognition . However, because
these three factors interact and influence each other, no one factor can be isolated from the other.
Parenthood changes the area of responsibility whereby parents are expected to use their power in
the interests of their infant, not themselves .
The children are used in literature and films to symbolise a lessening in materialistic tendencies of
parents, and the authors proceed to show that there are differences between the materialism levels
of parents (lower) and non-parents (higher).
Many researches have been done on the consumer buying process and associated behaviour but
the study done by Valerie S. Folkes (from The University of Southern California) actually helped to
discover the new meaning of the buying behaviour.
He concluded, It is the interaction of the situation and the individual that leads to behavior. The
study of consumer behavior is justified as a separate domain of inquiry because when situational
cues lead people to perceive themselves as customers, they then interpret the world differently than
when they do not perceive themselves as customers, and that influences their behavior.
A study conducted by Evan Hirsh, Steve Hedlund & Mark Schweiger in 2001 about the perception of
the brands, which concludes that in the absence of a strong brand, price is the only plausible way to
affect near-term demand. Hence, curtailing incentives in an effort to build brand is not likely an
economically viable option.
Many manufacturers have made brand positioning and development a key item on their marketing
agenda. Yet brands are not the product of manufacturers' marketing efforts. Instead, consumers
base their understanding of an automotive brand's value on their accumulated experience with that
brand's products. If you want to change the Brand, change the products for the better.
The research conducted on the buying behaviour of cars and what role does the brand play in it by
Sankar Radhakrishnan in June 2001 was a great help for conducting survey on the consumer
behaviour for buying cars with relation to the perception of brands.
A thought provoking point thrown up by the survey was the view that advertising does not have any
impact on the choice of a particular brand by the prospective buyer. Buying a new car often set in
motion by emotional need-based factors. The study found that the more rational reasons for buying
a car are frequently sparked off by the psychological benefits that owning a car bring.
Emotions also work throughout the purchase process, right down to the choice of the brand. The
study found that both rational and emotional factors trigger the decision to buy a car and also
operate throughout the purchase process.
The study drives home a point that branding is here to stay. This is especially true of the category
such as cars, where it is often difficult to distinguish between the competing models on purely
technical or functional parameters. The brand thus becomes the most meaningful differentiator and a
safe choice. While the functional parameters do trigger the decision to purchase a car and also
operate through the purchase process.
Many researches have been done on the consumer buying behaviour but the study done by Valerie
S. Folkes (from The University of Southern California) actually helped to discover the new meaning
of the buying behaviour.
He concluded, It is the interaction of the situation and the individual that leads to behavior. The
study of consumer behavior is justified as a separate domain of inquiry because when situational
cues lead people to perceive themselves as customers, they then interpret the world differently than
when they do not perceive themselves as customers, and that influences their behavior.
A study conducted by Evan Hirsh, Steve Hedlund & Mark Schweiger in 2001 about the perception of
the brands, which concludes that in the absence of a strong brand, price is the only plausible way to
affect near-term demand. Hence, curtailing incentives in an effort to build brand is not likely an
economically viable option.
Many manufacturers have made brand positioning and development a key item on their marketing
agenda. Yet brands are not the product of manufacturers' marketing efforts. Instead, consumers
base their understanding of an automotive brand's value on their accumulated experience with that
brand's products. If you want to change the Brand, change the products for the better.
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All these points were found very useful from the marketer's perspective to improve the image of the
brand in the minds of the consumers. Since brand form an important attribute for the decision
making of a high involvement product like a car.
The ethical and non-ethical practices in marketing are under exercise also . Marketing practice is
now busy integrating the potential of information and communication technologies through the
utilization of databases and Internet marketing. Billions of potential consumers can now be reached
this way.
Singhapakdi (1999) showed that marketing managers who perceive an ethical problem in a situation
are more likely to have an ethical intention. Hence, we suggest that marketing professionals engage
in more thought and reflect on their marketing practices on the Internet. This could lead to a greater
consciousness and hence to the development of more ethical intentions and practices.
The question of adopting an ethical marketing behavior does not only boil down to providing a firm's
policy concerning information privacy, it should also be demonstrated in marketing actions.
According to Cherrier (2005) there are two ways to view ethical consumption: Conservative and
liberal. According to the conservative view consumers need to obey a prescriptive set of ethical
norms in order to consume ethically.
As the number of marketing messages increases, the more difficult it is to reach out with the
intended marketing message. The cluttered marketing environment and the continuous exposure of
marketing communication are challenging for marketers. (Rosengren, 2008)
Consumer perception and purchase of fair trade products have been a topic of intrigue for
researchers for a long time, because of the complexities involved in accurately measuring why and
how consumers go for ethical goods. Previous research has attributed the fair trade concept to be of
interest to only a small group of usually ethically minded consumers, and recently to more highly
educated high income women.
Demographics also played a great part in the ethical purchases of consumers, with research from
Littrell and Dickson (1999) that fair-trade buyers were demographically homogeneous and consisted
of highly educated, well-off women in their forties, with a large portion being teachers, health
professionals and social workers.
Forte & Lamont (1998) found out that there is an increase in purchases based on a company's role
in the society, with consumers more likely to purchase from a company that is actively involved in
social activities in their communities than those which are not.
Social responsibility and ethical purchase is not the dominant issue in consumer purchase decision
(Boulstridge & Carrigan, 2000) cited in Pelsmacker et al (2005) as most consumers do not carry out
what they say they will do during answering research questions.
According to Boulstridge and Carrigan, (2000) consumers are expecting that companies have high
ethical behaviour and are willing to pay more for products produced by companies with high ethical
behaviour.
However, products produced from companies that are unethical are still bought, but they are
expected to be cheap. The consumers' way of retribution against unethical companies are through
decreased willingness to pay high prices. Another aspect is how the businees ethics affect business
relationships.
According to Zineldin (2000) long-term relationships are built on ethical and moral understanding
which is crucial for mutal benefits and a rewarding relationship. Furthermore, the importance of
business ethics is determined by consumers interest in a just and good society.
Making the decision regarding an automobile in not at all different .It vibrates on the same platform
and requires similar decisional inputs before the consumer arrives at the final word.
The survey had a sample size of 1 million households, extrapolated to 215.9 million households in
India with at least one earner.
The survey analysis suggests that the potential buyers of cars are households with an annual
income of Rs 200,000 and above that do not own a car.
The analysis considers all households that can afford a small car and do not currently own a single
car. According to the survey, which had a sample size of nearly a million households, over 12.88
million households out of the 19 million households with annual income above Rs 200,000 currently
do not own a car (either new or second hand).
In the case of households with annual income between Rs 1,50,000 and Rs 200,000, there are 10
million households that own a two-wheeler, but do not currently have a car.
The survey shows nearly 55 per cent of the 1.6 million demand is expected from rural India and
smaller towns, with the near-term demand from the six super metros estimated at 0.25 million.
Within this, as many as 0.8 million non-car households, who were planning to buy only a twowheeler may now aspire for a car due to the lower price point for a car like the Nano.
If one were to assume that no household, with annual income above Rs 500,000 would buy a small
car, the near-term demand estimate is still very high at over 1.26 million units.
CHAPTER 3
RESEARCH METHODOLOGY
3.1 Research design and method
Research Method
The study will be divided into three parts:
1. The desk research
3.2 Data
Method of data collection:
CHAPTER 4
DATA ANALYSIS
Car purchasing decision is an important decision for most of India young consumers. More than half
of respondents made their decision from initial decision to buy to placing the order between two
weeks to three months.
People get information from different channels, car sales staff, Internet, family/friend word of mouth,
car shows etc.
From this survey, we find out that with the rapid development of Internet, a lot of consumers start to
use Internet to get car information (Internet has become 2nd most used channel to get information
and is just behind dealer staff in our study).
The Internet is usually the first place for young consumers to go when they want to buy a car; their
next step maybe take place in the showroom, then followed by a test drive.
The fieldwork is undertaken with the structured disguised questionnaire to understand the consumer
perception of global Vs Indian brands. The Sample Profile comprises of dealers and prospective
consumers of car, selected through the simple random sampling. For the dealer it will be stratified
sampling selection technique used fir a sample size of 10. The sample size of consumers comprises
of 50.
Simple random sampling is used for the consumer and stratified sampling for the dealers.
The age group of the sample profile is depicted in the Diagram1. The diagram reflects the 20-30
years age group comprises 43% of the sample.
The diagram 2 reflects the monthly income of the customers surveyed. It shows most of the
customers earn monthly income less than Rs. 25,000.
By Diag.3 it is found that out 50% of the respondents have more than 2 cars.
From Diag.4 & 5, In Mini-sized car segment, Hundai Santro is owned by maximum respondents
followed by Fiat Palio and Maruti Zen. In Mid-sized segment, Hundai Accent is owned by maximum
respondents followed by Honda City and Maruti Esteem.
Mini-Segment Cars
Mid-segment Cars
Consider the following Parameters for their Purchase of
Cars:
Diagrams 6-13 depict the parameters that people consider to purchase a new car. Out of the total
respondents surveyed, 45% of the people highly agree, BRAND as parameter; 50% as STYLE,
58% as MILAGE, 44% as SPACE, 26% as comfort, 54 % as CREDIT SCHEMES, 54% as COLOUR,
34% as accessories.
Diagram 14 reflects the respondent's need to buy a new car. 48% of the respondents said they
would buy a new car as their family size is increased, 46% to upgrade for a better car, and only 6%
were first time buyers.
Diagrams 15-18 In the mini-segment car companies' maximum customers are highly satisfied with
the good dealer coverage and the facilities in the outlet of Maruti Udyog. Secondly, most of the
customers consider that Hyundai Motors (Korean Company) has emerged to be the No. 1 brand
today and with maximum customers being highly satisfied with its after sales service. Tata Motors
image and brand is deteriorating. Fiat India is doing average in all aspects
CHAPTER 5
FINDINGS
5.1 Implications
As the younger people get of buying age, consumers will spend more time on Internet and purchase
more and more products by Internet, including cars, therefore, car manufacturers and retail dealers
should think about how they should do in the different decision making phases in the e-world and
should try to work closely with automotive Internet companies and increase its budgets on Internet
advertising and marketing.
In the needs recognition phase, car manufacturers may use banner advertising, sponsorships and
interstitials which could expose customers to products and services.
In addition, car manufacturers and dealers may design some online surveys to get to know what
customers really need/want for the cars;
In the information search phase, car manufacturers and dealers may provide some online queries
which could answer consumers' questions and provide useful information for consumers' decision
making;
In the evaluation of alternatives stage, consumers may use community marketing, customer
feedback, message boards, customer reviews and blogs/MSN spaces to help customers though the
evaluation process toward their final purchasing goal. In the purchase phase, car manufacturers
could use gift registries, email marketing and online dialogue functionality to help consumers make
final purchase or even additional purchases.
In the post-purchase phase, auto makers and retailers may regularly check the positive or negative
comments and feedbacks posted on some websites' forums by some users.
It is observed that customer is more willing to buy a new car than going for seconds. So Car
manufacturers may launch exchange schemes and offers to push the new models in the market.
We can also conclude that the internationality of the brands does have an effect on the purchase
decision of the car in the minds of the consumers.
As we had already seen that the foreign brands like Hyundai, Honda, Fiat, are doing really well due
to their excellence in the product quality, technology, features, price etc. All these attributes does
play a very important role in comparison with the local brands like Maruti Suzuki , Tata Motors etc.
whose share in the market is declining day by day.
Car market in ----- is growing consistently and the flood of new models, aggressive advertising,
coupled with competitive pricing and various finance options, customer is very much positive to own
a four-wheeler.
Observing the recommendations, it may be concluded that car manufacturers already moving the
gear to motivate customer with attractive advertising and positioning, and innovations in scheme
designing, tie-ups with various auto loan providers has ignited the growth fuel and the pricing game
has started in the market.
So the customer has more choices at competitive prices. So with more car brands set to enter the
country, and existing players planning to launch new models, the options available to the prospective
buyer are going to increase. However, taking a decision on which model to buy is also going to get
more challenging. For the Indian car buyer it's perhaps time to get more market savvy.