Consumer Buying Behavior in car industries Research Paper

Consumer behavior

Consumer behavior is the critical analysis of how, when, where and why people purchase or not purchase a particular commodity. It brings together the elements of economic, individualism, social status and sociology (Placeholder 5) (Holbrook, 1999). The main aim of consumer behavior is trying to comprehend the purchaser’s decision-making process made by a group or individual.

It involves critical analysis of a particular consumer traits, such as behavioral variables, as well as demographics in the urge to comprehend an individual wants (Sheth, 2008). Moreover, it tries to look at the influence on the consumer of a particular product of other parties, such as the reference groups, family, allies and the society in general (Aron, 2007).

Consumer is influenced by different factors namely internal and external ones. The internal factors are those that the consumer already possesses within himself or herself (Mcneal, 2007). They include the personality, attitude towards a product, consumer life style, e.g. miser or spendthrift, his/her understanding of the product, consumer perception and motivation (Rayne, 2002).

External factors can further be divided into two: the marketing factors and the environment factors. Marketing factors include the commodity the consumer wants to buy himself, the price that commodity commands, the area the commodity can got and the advertisement that the product receives (Otto, 2005).

The environment factors include technological advancement, political stability, economic situation within the country, and cultural factors. The consumer who faces all these factors which are needed to make a decision, thinks that they will satisfy his needs (Mcnel, 2007).

The consumer will make a choice on the product he has to buy. Thus, he/she decides on the brand that he thinks is best for him, the amount he is willing to part with the product he has chosen, the supplier whom he thinks best fits his needs, and the moment or the time when he wants to make the purchase (Hwan, 2003).

With all these in mind, it is the mandate for the marketing companies departments to know how to convince the consumers in order to prefer their products and develop loyalty to them. This can be achieved particularly in the car industry by ensuring that the companies manufacture cars which are of high quality, efficient, effective and the ones, which meets the consumer needs.

Research problem and objective

Lack of adequate information about the factors affecting the consumer buying behavior in car industry in Hong Kong has led to the fact that many companies are not reaping the maximum benefits from the market, which leads to low sales turnover.

Many industries remain stagnant because the Hong Kong consumers cannot purchase the cars they manufacture. This leads to great losses, which can be curbed if these companies understand the consumer buying behaviors. These knowhow can only be realized if more studies are carried out (Yegon, 2007).

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The objectives of this study are

  • To collect data from different car owners in Hong Kong through questionnaires.
  • To identify the factors that affect the consumer buying behavior in car industry in Hong Kong.
  • To identify the correlation of the consumer behavior with the independent variables.

Significance of the study

This research will be very vital to car industries in Hong Kong since it will enlighten them on how to meet their consumer needs. This will help them avoid losses caused by dead stock, as well as increase their sales returns. It will also help them retain their consumer loyalty.

The public will also benefit because their needs will be met to their satisfaction, thus reaping more utility from their money. The government will also benefit from this study since an increment in the profit of car industries will lead to higher taxation, which will lead to economic development in the country.

Literature review

According to research carried out by J. Paul Peter and Jerry C. Olson (1994) as a benchmark to evaluate car buying behavior, they state that there are three major factors that affect consumer buying behavior in car industry. These factors are behavior, cognition/affect and the environment.

Cognition determines the perception that consumers have to have in the external environment and the consumers’ thoughts, which may be for or against a certain product, thus affecting consumer decision making. On the other hand, behavior involves the deeds of the consumer such as window shopping, watching television advertisements or impulse buying (Wagner, 2008).

The last factor is the environment, which can be micro and macro. Macro environment includes broad factors such as the political’ economic demographic factors, and the climatic condition of the area the consumer is residing. The microenvironment involves the influences of the family members and associate groups. Lau et al. (2006) assume that there exist seven attributes that determine the consumer brand loyalty.

These attributes are sale services, quality of the product, lifestyle of the consumer, advertisement of the product, storage environment and the price consumer needs to pay in order to get a product.

The ease in which one is able to access the showroom is the security of the consumer while in the showroom. In the Journal of Economics and Management 2(2): (2008) it is stated that consumer-buying behavior will be influenced by brand loyalty.

Brand loyalty makes the consumer repurchase the brand repeatedly. This is due to trust and effective performance of the commodity (Chaudhuri and Holbrook, 2001). When consumers have loyalty to a certain brand they will go to encourage their friends and family members to buy the same brand. Due to this reason, the car industries need to ensure they have really satisfied their consumer needs.

Bonoma and Johnstone (1978) stated that the relationship factors between the seller and the consumer would determine the consumer behavior. They suggested that there should be a strong relationship between the buyers and the sellers of given products (Huppertz, 2003).

The good rapport between the buyer and the seller has to be encouraged; this is because consumers are the most convincing agents to potential consumers. If there happen to have a strong and friendly relationship the car industries will save a large amount since they do not need to use much money on product promotion.

Research hypothesis

H1. Economic factors positively affect the consumption behavior in Hong Kong

H2.Personal factors positively affect the consumption behavior in Hong Kong

H3. Sociological factors affect the consumption behavior in Hong Kong

H4. Psychological factors positively affect the consumption behavior in Hong Kong

H5. Marketing factors positively affect the consumption behavior in Hong Kong

Research Methodology

Population and Sample size

A population of this study is defined as 1.2 million people who are the target customers of the car industry in Hong Kong. The sample size is taken to be 1200 persons, who comprise the people driving; the old, and young, female and male were selected at random. People with different life style, social status and different financial status were selected as the sample.

Data collection method

The researcher uses both primary and secondary data to analyze the factors affecting consumer behavior in car industry in Hong Kong. Primary data was obtained using questionnaires which respondents were requested to fill after being briefed on the aim of the study.

Questionnaires were clear, brief, simple to understand and straightforward, thus easy to be understood by every respondent. Secondary information was found from past studies on the topic as well as the books.

Questionnaire design

Each questionnaire will have 25 clear and easy to understand questions, which will go to assist in the understanding of the factors affecting consumer behavior in car industry in Hong Kong. Pilot Test has to be carried out among 20 car owners to ensure the respondents well understood the way the researcher designed the questionnaire.

Data analysis

The Interviewer Quality Control Scheme (IQCS) will be adhered to make sure that different validation and administrative procedures are in agreement with global standards and to maintain the efficiency of the data collected. Missing data will be considered untrue and will not be used in the analysis. ANOVA, Chi-square as well as the Contingency Tables will be used.

After which Cluster Analysis will then be employed to highlight various segments by the chosen variables. Euclidean distance shall be employed to evaluate the distance. Non –hierarchical method (Hair 1995) will be used since it’s convenient to adjust when dealing with a large sample. The outcome of these will be used to identify factors affecting consumer buying behavior differed across all the dependent variables.

Proposed Research Schedule and Action Plan

Chapter Topic % Words Key activities Weeks/Date

 

n/a

 

n/a n/a n/a Proposal Submission
n/a n/a n/a n/a Research Finding 2 weeks
1 Introduction Background information Research and writing 1 week
2 Literature Review Review and writing 6 weeks
n/a n/a n/a n/a Design Questionnaire 3 weeks
n/a n/a n/a n/a Questionnaire Distribution 1 week ongoing
3 Methodology Studying and writing 4 weeks
n/a n/a n/a n/a Questionnaire collection cutoff (Total: 12 weeks)
4 Data Description writing 2 weeks
5 Data Analysis Analyze and writing 4 weeks
6 Conclusion and recommendation writing 2 weeks
n/a n/a n/a n/a Final check and amendments 1 week

Reliability

Quantitative research has numerous advantages such as; it takes short time to collect data, it is relatively cheaper due to short time taken in collecting data, it is objective i.e. it has specific objectives and the data collected is used to test hypotheses (Ram, 1995).

Quantitative research improves the reliability as it has several set backs being ineffective in terms of validity (Mark, 1997). To enhance reliability and validity, the pilot test had therefore to be carried out to act as a manipulative check.

Generalizability

For generalization, Quantitative Research is preferred to Qualitative research as result of a large sample size used.This analysis is also very vital when sellers develop marketing strategies. Generalization is affected by non –random sampling method since samples do not represent the whole target population (Trenor, 2009).

Limitations

For this research to be successful, an enormous amount of money is required, which is not available. The respondents may give false information, which may lead to inaccurate analysis, and conclusion.

Since Hong Kong is a vast area, simple random sampling is not feasible, thus a sample of 1200 is not conclusive compared to a population of about 1.2 million car drivers. People being dynamic and not static the data collected today together with its conclusions may not hold water in future. Due to personal bias distribution of questionnaire and filling them may not be so representative.

This research requires more time in order for it to be more representative, which is not available for now, thus further research need to be conducted in order to ensure true findings and conclusions are made.

Conclusion

People have different preferences and tastes, thus the motor vehicle industries must strive their level best to meet the needs of each consumer. To achieve this, they have to ensure that there is a good relationship between them and the consumers.

The product promotion must portray true information about the product since a good percentage of consumers purchase their cars after getting information from the media, and if the information turns to be accurate, there will be a consumer satisfaction, which leads to brand loyalty.

Efficiency and safety should be stressed more as many consumers are much concerned about the amount of running the motor vehicle and the safety of their lives.

Recommendations

The Hong Kong car industry needs to invest heavily in research in order to ensure the cars that they manufacture are bought as fast as possible. This is only possible if the industries are able to know the features, which the consumers prioritize when they are making decisions on the type of car they want to buy.

References

Aron, D., 2007, ‘Car choices’. Consumer decision making on cars , 34-35.

Holbrook, M.,1999, Consumer Behaviour. Chicago: Routledge press.

Huppertz, J., 2003, ‘Relationship between sellers and buyers’. Good consumer relationship , 60-62.

Hwan, D., 2003, ‘Customers experience, opinions and attitude satisfaction’. Consumer satisfaction and disatisfaction , 45-47.

Mark, K.,1997, ‘Methodology of education research’. Education research, 14-15.

Mcneal, J., 2007, Consumer Behavior in Hong Kong. Chicago: Rinfo.

Mcnel, J., 2007, ‘Consumer behaviour’. Brand loyalty on cars , 96-99.

Otto, S., 2005, ‘Consumer satisfaction’. Consumer feedback , 94-95.

Ram, J.,1995, ‘Project management’. Best research methods , 65-67.

Rayne, C., 2002, ‘Consumer complaining behavior’. Consumer complaining behavior, 123-126.

Sheth, N., 2008, Research in Consumer behaviour. London: Oxford press.

Trenor, P., 2009, Project management. London: Oxford Press.

Wagner, T., 2008, Methodology of Education. New York: Cengage Learning.

Yegon, L., 2007, Consumer Behavior. New York: Cengage Learning.