A STUDY OF CONSUMER BUYING BEHAVIOUR …icmrr.org/global/pdffiles/IJMRR/m201606011.pdf · A STUDY...

A STUDY OF CONSUMER BUYING BEHAVIOUR TOWARDS PRE-

OWNEDCARS IN COIMBATORE DISTRICT, TAMILNADU

1 2

1

2 Director, Department of Management, Hindustan Arts and Science College, Coimbatore.

ABSTRACT

The study of consumer behaviour is essential in the changing scenario of the Indian consumer market.

The study focuses on pre-purchase information search behaviour of pre-owned car owners in

Coimbatore district, Tami Nadu. This study is significant as the pre-owned car consumers are

potential new car buyers and their experience with a pre-owned car will have a definitive influence on

future car purchase decisions. The study has been undertaken with two objectives; to assess the socio-

economic and demographic profile of pre-owned car owners in Coimbatore district and to study the

brand preference of pre-owned car customers. Primary and secondary data have been used. The

primary data have been collected throughstructured questionnaire. Judgement sampling method was

adopted to select 120 used car owners. Descriptive statistics and Garrett‟s ranking technique wereused

for analysis. The pre-owned car market in the study area is dominated by individuals. Pre-owned car

was bought due to lower price after brand evaluationbut with apprehension on mind. The pre-owned

car market can be made organized by proper registration of dealers.

Keywords: Car, Pre-owned/used car, Information Search, Consumer Behaviour.

INTRODUCTION

Life without vehicle is just beyond these days. It is not only an indicator of national economy,

but an individual‟s progress graph can be measured on the grounds of the automobile vehicle used

by him for day to day work and also for pleasures and treasures largest in the world and one of the

fastest growing globally. It is also viewed as the most lucrative industry. India‟s passenger car and

commercial vehicle manufacturing industry is the sixth largest in the world, with an annual

production of more than 4 million units in 2015. At present time, Indian automobile industry is

making a major contribution in increasing the country‟s GDP by 7.1% in every year. In January

2015, total automobile sales in the domestic market reached 1114157 units, the figures shows an

increment of 44.9% compared to the sales units of 7, 68,698 of same period last year. Annually,

the Indian automobile industry is growing at an average rate of 30% and making itself as one of

the fastest industries in India. According to the reports of society of Indian Automobile

manufactures (SIAM), Annual car sales are estimated to reach 5 million vehicles by 2016 and

more than 9 million by 2020. To believe New York Times reports, several automobile companies

like Hyundai Motors, Nissan, Toyota Volkswagen and Suzuki have expand their manufacturing

facilities owing to India‟s strong engineering base and expertise in the manufacturing of low-cost,

fuel-efficient cars.

INTERCONTINENTAL JOURNAL OF MARKETING RESEARCH REVIEWISSN:2321-0346 - ONLINE ISSN:2347-1670 - PRINT -IMPACT FACTOR :1.590VOLUME 4, ISSUE 6, JUNE 2016

www.icmrr.org 85 [email protected]

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Research Scholar, DJ Academy For Managerial Excellence, Coimbatore

D.DILIP Dr.D.M.NAVARASU

PRE-OWNED CAR MARKET: PRESENTSCENARIO

Unlike in the past (the pre-liberalization era), the urge to replace one‟s car more often and

upgrade to a four-wheeler from a two-wheeler are factors that driven the growth of the pre-owned car

market. A „Pre-owned car‟ is a vehicle that has previously had one or more owners. The pre-owned

car market continues to be fragmented and unorganized. Despite the rapid growth of the organized

pre-owned car dealer and manufacturer-owned pre-owned car market continues to be dominated by

organized players (muralidhar 2006). The pre-owned market sales in India touched a figure of one

million in 2007, out of which the pre-owned car market accounts for over 70% of all pre-owned car

sales within the country. Themajor players in the pre-owned car business are Maruti, Hyundai, Honda,

ford and Mahindra and Mahindra. The unorganized market constitutes sales of pre-owned cars

through relatives or friends,car bazaars. The organized market includes manufactures, company

owned outlets, pre-owned cars dealers and brokers. Pre-owned car market is set to grow at a

Compound Annual Growth Rate(SAGR) of 18-20% till 2015.

CONSUMER BUYING BEHAVIOUR:

The overall economic development of a country is determined by the development in the

manufacturing sector. Similarly, the quality of life to a great extent depends upon the growth and

development in Consumer luxury goods segment. Though the entry of quality luxury goods in India is

late, to be precise only after liberalization, still India is competing with top nations in terms of range

and quality of such goods. Urbanization and metropolitan culture have necessitated the need of Fast

Foods, Designer Clothes, Luxury Cars, Modern Flats and the like. And besides, the change in the

family and in the earning pattern, especially the emergence of Double Income Group Families, has

resulted in significant changes in thebuying behaviour of individuals.

The availability of better disposable income and easy finance options have made the purchase

decisions of automobiles, once considered as non-essential, High Luxury Product, a common

phenomenon. The favourable shift in the buying potential, identified by Multi National Concerns

(MNCs) have greatly enthused them to make hurried entry into Indian markets. As a result the Indian

consumer is presented with the wide range of brands and models of passenger cars. Deciding upon the

right car for the family in an overcrowded market has become a complex problem for them. On the

other hand, the marketers are also left with operating in the market of huge promise, but with slow

response. The colossal investments made by the car manufacturers and very long break even periods

have made them to seriously think about the Indian passenger car market and the buying behaviourof

consumers in order to reconsider and redeploy their marketing efforts to consolidate their positions in

a volatile, yet potential market. In this context, knowledge on consumer decision making process with

regard to the passenger cars and the factors influencing the purchase decisions assume greater

importance. The study of buying decisions process and the influencing sources, especially the group

influence will help the marketers of passenger cars in segmenting markets,targeting the right

audience, positioning their products and designing suitable promotional strategies.

The term consumer is often used to describe two different kinds of Consuming entities: the

personal or final consumer and the organizational Consumer. The final consumer buys goods and

services for his/her personal use. The second category of consumer, the organizational consumer,

encompasses for profit and non-profit entities, companies (private or public) making their purchases



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for profit or government agencies (Local. State, and National) and institutions (e.g. schools, hospitals,

prisons) all of which must buy products, equipment and services to run their organisations. This

project will focus on the individual final consumer, who purchases for his / her own personal use or

for household use. End use consumption is perhaps the most pervasive of all types of consumer

behaviours, for it involves every individual, of every age background, in the role of either buyer, or

user or both.

REVIEW OF LITERATURE

Furse, et al., (1984) were the first to show the involvement of others in the information search

activity and identified distinct external information search patterns namely, low search group,

moderate search group, high search group, retail shopper group and purchase-pal assisted search

group, while studying the individual search strategies among purchasers of new automobiles.

Sanal Kumar, V., (1998) found that the rural consumer used multiple sources of information

with television as an important source. The actual purchase in rural markets was by the male member

of the household, though the decision-maker depends on the type of product. The brand choice among

rural buyer was influenced by social groups.

Alberto Montanari, (2004) mentioned that affordable entry level cars, the proliferation of

second hand cars and easy financing have stimulated the demand for cars. To improve the share of

passenger cars in the market, the attributes such as comfort, fulfilment of aspiration and value for

money will need to be favourably registered in the minds of the customer.

Gill, A.S., and Sudhir K. Jain, (2005) opined that the ever increasing market offerings and

inducing purchase interest in brands motivate the consumers to upgrade. Consumers purchase a car

depends on their disposable income. Important aspects that affect purchase of second-hand vehicles

are non-availability of established channels, which offers full service to consumers for buying,

servicing and reconditioning.

Shivi Gupta, (2008) viewed that the used car market in India is not developed and

fragmented. Used cars are mainly sold through independent brokers orindividuals without coming to

the market. The used car market is promising and dealers must take it seriously to improve

profitability.

Liu Dongyan and BaiXuan, (2008) investigated car purchasing behaviour in Beijing and

found that the car purchasing decision was an important one for the majority of the Chinese

consumers. Dealer sales staff and internet were the widely used information sources.

Nagaraja (2012) Customer satisfaction in automobile industry online booking and online

purchase are the current wave in India car industry. Internet is gradually hitting the core of every

industry including the car industry. It creates a greater awareness of the vehicle and influences the

buyer o purchase. Internet is believed to have a greater impact on the sales process and will definitely

give higher level of sales satisfaction. Generalizing, we suggest that internet based car manufactures

can effectively maximize level of satisfaction of the existing and prospective customers by adopting

the suggested model.

Florien zettelelmeger (2013) Autobytel.com in combination with transaction data from J.D

powers and associates (JDPA) the answer is yes conditional on the car, consumers that submitted a

purchase request pay on average two percent less than offline customer of these savings, one quarter



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(0.5%) stem from the fact the autobytel.com steers consumers to low-price dealerships conditioning

on the car, online consumers pay another 1.5% less than offline consumer.

OBJECTIVES OF THE STUDY

To assess the socio-economic and demographic profile of pre-owned car owners in

Coimbatore district

To study the reason for brand preference of pre-owned car customers

SCOPE OF THE STUDY

Now days, Car has become a necessity and forms a part of life of even to the middle class

people. Therefore, there is a significant scope to examine the customer‟s attitude towards

purchase of pre-owned cars. The study is restricted toCoimbatore district. Which is economically

the richest industry and textile city.Due to their increasing purchasing power, the people have

started to buy car for business or personal use or the prestige and maintenance of social status.

Knowledge of the buying behavior of different market segment and evolve marketing strategies to

increase the sales. Advertisers and marketers have been trying to discover why consumer buys

and what they buy. This study aims to identify the factors influencing the customer‟s attitude

towards purchase of the preference of pre-owned cars. And to analyze the preference of customers

towards the organizes and unorganized market during the purchase of pre-owned car. This study

also highlights the problems faced by the pre-owned car customers and offer suggestions to

increase the overall satisfaction of customers.

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve research problem. Data and information

were gathered from both primary and secondary sources. The primary data have been collected

during the period from March 2015 to January2016 through structured questionnaire. Judgment

sampling method was adopted to select 120 used car owners in Coimbatore districts. The data

were analyzed with the help of SPSS 20.0. Statistical tools and techniques used for data analyses

were Descriptive Statistics and Garrets‟s ranking technique.

LIMITATION OF THE STUDY

This study area covers only selective place of Coimbatore only, hence the result cannot be

applicable for other area.

The present study was confined to the pre-owned owners of cars used for their own

purpose only.

Though many cars are there in the market only few were taken up for the study.

The scope of the study has been limited to certain important demographic factors like age,

sex, literacy level, occupational status and the income of car users



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RESULT AND DISCUSSION

The result of the analysis and related discussion are presented below

Table 1 Socio-Economic and Demographic Profile of the Respondents

S.No Profile Variable Particulars No. Of

Respondents

Percentage

1 Gender Male 72 60.0

Female 48 40.0

Total 120 100.0

2 Age Below 25 years 45 37.5

26-35 years 48 40.0

Above 36 Years 27 22.5

Total 120 100.0

3 Education

qualification

Illiterate 23 19.2

School 22 18.3

College 46 38.3

Professional 29 24.2

Total 120 100.0

4 Occupation Agriculturist 23 19.2

Government Employees 34 28.3

Private Employees 35 29.2

Professional and

Business man 28 23.3

Total 120 100.0

5 Family Income per

annum

Up to Rs30000 44 36.7

Rs 3,00,000-Rs 5,00,000 39 32.5

Rs 5,00,000-Rs 8,00,000 20 16.7

Above Rs 8,00,000 17 14.2

Total 120 100.0

6 Marital Status Married 53 44.2

Unmarried 67 55.8

Total 120 100.0

7 Size of the family Up to 3 members 36 30.0

3-6 members 58 48.3

Above 6 members 26 21.7

Total 120 100.0

8 Nature of family Nuclear 68 56.7

Joint family 52 43.3

Total 120 100.0

9 Area of residence Rural 57 47.5

Urban 63 52.5

Total 120 100.0

10 Purchase outlet Organized dealer 74 61.7

Un-organized dealer 46 38.3

Total 120 100.0



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It is found out from Table 1 that 60 percent respondents were male owners,40 percent of the

respondents belonged to the age group 26-35 years,38.3per cent of the respondents were educated up-

to UG level and Around 29 percent of the respondents were either private or Government

employee.36.7percent of the respondent‟s family had a monthly income of below Rs 3, 00,000 and

55.8 percent of the respondents were unmarried. 48.3 percent of the respondents were size of 3-6

family members. The type of family of the respondents revealed that 56.7 percent of the respondents

lived in a nuclear family and 52.5 percent of the respondent‟s areas of residence were urban. 61.7

percent of the respondents were Purchase a pre-owned car in the organized dealer outlet.

The reason for brand preference of pre-owned car customers

Majority of the respondents own the car for personal purpose.Owning a car for personal

purposes is classified into six reasons. The reasons are ranked using Garrett‟s

Ranking technique and presented in Table 2

TABLE 2 : Reason for Brand Preference

S.No

Reason for Brand

Preference 1 2 3 4 5 6

Total Rank Score(X) 77 63 54 46 37 23

1

Status symbol(

F1) 18 28 7 21 43 3

6085 4 XF1 1386 1764 378 966 1591 69

2

Economy

price(F2) 27 14 15 36 22 6

6241 2 XF2 2079 882 810 1656 814 138

3

Fashion and

changes(F3) 6 14 38 24 8 30

4796 6 XF3 462 882 2052 1104 296 690

4

New technology

of car(F4) 38 13 12 20 23 14

6164 3 XF4 2926 819 648 920 851 322

5 Comfort(F5) 29 37 20 11 8 15

6446 1 XF(5) 2233 2331 1080 506 296 345

6

Learning

purpose(F6) 7 31 41 10 8 23

5462 5 XF(6) 539 1953 2214 460 296 529

It is exhibited from table 2 that the foremost reason for owning a pre-owned car for personal purposes

by the respondents was to use it as a Comfort with the highest score of 6446, thus given first rank.

The Second rank was given to the reason for Economy of price with the score of 6241. New

technology of car with score of 6164 has given third rank. The fourth rank was given to the Status

symbol with the score of 6085. Learning purpose with the score of 5462 has been given fifth rank and

Fashion and changes with the score of 4796 was ranked the least by the respondents.

Brand Preference of used cars

Multiple brands of cars available in the pre-owned passenger car market in the study area. This gives

an opportunity to the buyers to own the desired brand of a pre-owned car. Table 3 shows the Brand of

the Pre-owned car owned by the respondents



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Table 3 :Brand Preference

Sl.No Brand Preference No. Of Respondents Percentage

1 Maruti 40 33.3

2 Hyundai 34 28.3

3 Ford 30 25.0

4 Toyota 16 13.3

It is evident from Table 3 that33.3 percent of the respondents owned Maruti brand, followed

by 28.3 percent who owned Hyundai brand. Ford brand of pre-owned cars were owned by 25 percent

of the respondents, followed by 13.3 percent owned Toyota brand.

FINDING OF THE STUDY

The following were the findings of the study:

1. The socio-economic and demographic profile of the respondents revealed that middle-aged,

unmarried, males, educated up to UG level, living in nuclear type of family, employed and

earning less than Rs 3,00,000 per annum, 3-6 members in a urban family and Customer

buying pre-owned cars through organized dealer were the predominant buyers of pre-owned

cars in the study area.

2. Majority of the respondents owned a pre-owned car for personal purposes. The respondents

needed to own a car to use it as a means of family transportsolutions and for comfortable and

convenient travel. The respondents have purchased a pre-owned car due to its lower price.

3. Majority of the respondents have evaluated two or three brands before owning a brand of pre-

owned car. The pre-owned car owners in the study areaevaluated Maruti as the most

considered brand before making the final choice.

4. Maruti brand of pre-owned cars have been preferred by a higher number of respondents and it

is inferred that the Maruti brand of cars has good re-salevalue and has good scope in the pre-

owned car market in the study area.

5. The pre-owned car market in the study area is dominated byorganised dealers than Un-

organized dealers.

SUGGESTIONS

1. The pre-owned car market can be made organized by proper registration of dealers, granting

license and legal status to the pre-owned car dealers. The accountability of pre-owner car

dealers shall remove the anxiousness of rural pre-owned car buyers towards the authenticity

of the car. The pre-owned car dealers can have their own service centers for good after-sales

service.

2. As brand image influences the choice of cars, manufacturers can create brand image for their

products through service networks and frequently conductconsumer surveys with the help of

dealers to create a confident customer base.

3. The companies should ensure availability of complete information about the pre-owned car

online.

4. Friends/colleagues owning a car have been rated as very important source of information.

Marketers need to tap this powerful source of influence byannouncing attractive referral

schemes. This will motivate opinion leaders to give valuable references of potential car

buyers in their area.



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CONCLUSION

The study highlights that the important factors influencing the purchase of pre-owned car

were budget constraints, low cost, upgrading of driving skills, desire to own a car and company image

and easy availability of spare parts. Marketer should offer better prices, keeping in mind the new

small cars available in the market.The study infers that the passenger car sector is flourishing in India.

Car owning potential is high in Coimbatore district. A study of the pre-purchase behavior of pre-

owned car buyers has been felt essential as they are potential buyers of new cars. The pre-owned car

market in Coimbatore district is organized. The Maruti brand dominates the brand preference of the

Pre-owned car owners.

To overcome the challenges in reaching pre-owned car consumers and studying consumer

behavior, the car marketers can formulate effective marketing strategies, besides creating a database

of potential pre-owned car buyers with the help of existing car owners and organised dealers. Also,

families who need to upgrade from two-wheelers to four-wheelers can be targeted for sale.

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