TOPIC- A Study on Consumer Behaviour in Automobile Industry

SUBBMITTED BY –
DIVYANSHI GUPTA
Reshma Mohan-
Priya Mangal
Jatin Sharma

SUBMITTED TO –
SCHOOL OF MANAGEMENT
Dr. Neetu Ahmed
Abstract
The automobile industry today is the most lucrative industry. Due to increase in disposable
income in both rural and urban sector and availability of easy finance are the main drivers of
high-volume car segments. Further competition is heating up with host of new players
coming in and global brands like Porsche, Bentley, and Ferrari all set to venture in Indian
market. This research will be helpful for the existing and new entrant car manufacturing
companies in India to find out the customer expectations and their market offerings. Indian
Automobile car business is influenced by the presence of many national and multinational
manufacturers.
This paper presents analysis of research in the area of Consumer Behaviour of Automobile
Car Customer. Proper understanding of consumer buying behaviour will help the marketer to
succeed in the market. All segments in Indian Car industry were studied and found that buyer
has different priority of behaviours in each segment, whereas main driver for car purchase is
disposable income.
Value for money, safety and driving comforts top the rank in terms of customer requirement;
whereas perceived quality by customers mainly depends on brand image.
For this research, methodology adopted was to study the research papers in the area of
Passenger Car segment, study the purchase decision process and its interaction with
behaviour parameters across all the segments of car such as small & Hatch Back segment,
Sedan class segment, SUV & MUV segment and Luxury Car segment. The objective of this
study is the identification of factors influencing customer’s preferences for particular segment
of cars. This paper also attempts to consolidate findings & suggestions to overcome present
scenario of stagnancy in sales and cultivate future demand for automobile car market.
I. INTRODUCTION
India being the second most populated country in the world and the growth rate of Indian
economy is also high as compared to developed countries, which attracts the presence of
huge demand in the Automobile Small Car Industry. Individuals’ choices change
continuously. As time goes on, the automobile industry reaches a new level of the era of
development. The automobile industry is also considered as a lucrative and prominent
industry. With the help of the increased disposable income, the amount of savings of people
has also increased. Thus, the individual’s income is also increasing day by day. As a result of
the increase of the individuals’ usable income and savings, the amount of the purchasing
power for the car has increased. That is why the amount or the trend of the sales of
automobiles’ is increasing day by day. The increased number of sales of cars helps to
increase the industry size. Moreover, the competition among the firms in the same industry is
also increasing.
The competition among car manufacturers is boosting with the presence of car companies
such as BMW and Audi. Although the automobile industry falls into the oligopoly nature,
brand popularity helps as a strong power to compete with rivals. In the case of the oligopoly
nature of the market, there are very few companies present in the market. With the help of
marketing, a car company can influence the choice, behaviour and opinion of customers
(Mohan, Raghu & Katta 2018, 389-399). Moreover, marketing can turn a loyal customer of a
company to another. That is why publicity also has a positive impact on the choice of the
automobile. It also helps the consumer to pick a brand, which matches with her/his desired
qualification. Furthermore, it is topmost important to pick the appropriate strategy for the car
companies so that they can attract a quality base of the customers.
As a result of the essence of the oligopoly industry car manufacturers always try to mimic the
innovation of others. Thus, the first-mover advantage does not last long in this extreme field
of competitiveness. That is why in order to nourish a leading position in the car industry,
manufacturers depend solely on continuous transformation. Selecting a customer base and
planning the best marketing strategy can be fruitful for initiating the brand image in the
customers' minds. This can impact the shape of the customers’ decision-making. Although
transformation assists to nourish a better position in the industry, transformation and effective
promotional tools together are providing the best optimal results in the case of the car
industry.
The aim of the thesis is to increase the understanding of consumer buying behaviour in the
automobile industry in Bangladesh. As vehicles do not follow the traits of the daily
necessities thus consumers are 2 willing to spend a large span of time to get familiar with the
material issues related to the cars. Moreover, an individual’s buying decision depends on
several demographic, psychographic and behavioural issues which can persuade them to
think and make their decision differently. In order to obtain the best product, consumers are
trying to acquire relevant information to furnish their purchasing behaviour and perception.
In order to accomplish the aim of the thesis, three research questions were set: What are the
issues influencing the buying behaviour and purchase decision-making of consumers of the
Bangladeshi automobile industry? What are the elementary challenges faced by individuals
while purchasing a car?

Objectives of the Study

The present study based on following objectives:
1. To know about the Automobile Industry in India.
2. To know about the Purchase Decision Process.
3. To study the purchase decision model of Indian consumers.
4. To identify the consumer buying behaviour towards Automobile products and their
satisfaction.
This lead to constant modifications of Car Models and its features in terms of their size,
capacity, styling etc. and today we see a new model coming into the market practically every
quarter. Market has become very competitive and has become very ‘important place’ to study
the behaviour of consumers and also provide useful insights what a consumer requires in a
product in a constant dynamic environment. Consumer behaviour also differs for same Car
under below conditions
1. New Car launch in market
2. Car is in market for 1-2 years
3. Car is in the market for more than 4 years
4. Purchase of second-hand Car
It is only through research that a company will be able to study the buying behaviour of
consumers. With better understanding of customer’s perceptions, companies can determine
the actions required to meet the customer’s need. They can identify their own strengths and
weaknesses, where they stand in comparison to their competitors, chart out the future
progress path and improvement. automotive manufactures to understand the consumer’s
preference on time and take fast actions to reflect market changes quickly.

2. METHODOLOGY
The methodology adopted for this paper (Fig. 1) consisted of first an extensive literature
review of the facts and figures influencing automobile buying behaviour and trends in India.
Then a questionnaire survey was designed to know the current preferences and decision
influencing buying in India. The questionnaire was designed on Google forms and sent to
likely respondents through various modes like social media (WhatsApp, Facebook
distribution of hardcopies.
The responses so received were analysed and the results are discussed in this Fig. 1.
Methodology diagram. The respondents were 50% male and 50% female (Fig.2). Majority of
the respondents (44%) in the survey were aged between 20-22, followed by 22% being aged
between 23-25 and 24% above 30 (Fig 3). Whereas 48% were students, the rest (52%) were
working professionals, employees, housemakers, unemployed.
 Methodology Diagram Fig. 1

3. RESULTS

The respondents were 50% male and 50% female (Fig.2). Majority of the respondents (44%)
in the survey were aged between 20-22, followed by 22% being aged between 23-25 and 24%
above 30 (Fig 3). Whereas 48% were students, the rest (52%) were working professionals,
employees, housemakers, unemployed, . . etc.
1. GENDER (Fig.2)

2. AGE GROUP (Fig.3)

3. INCOME (Fig.4)
Figure 4 illustrates the income group of the respondent’s family income. Most of the
respondents belong to the income group below Rs. 20,000 per month. 20.8% belong to the
income group Rs. 20,000-Rs. 49,000 per month. 10.4% belong to the income group
Rs.50,000- Rs.99,000 per month. 4.2% of the respondents belong to the income group above
Rs. 1,00,000 per month. 27.1% were students.

4. OCCUPATION (Fig.5)

5. PEOPLE WHO OWN AUTOMOBILES (Fig.6)

Yes, registered under my name/myfamily name

Yes, registered under my company’sname
No, I don’t have a automobile currentlySkip to Q9

Around 70% of the people in the survey did not own an automobile (Fig. 6). The percentage
of people owning automobile under company name was 2% and 28% of the respondent’s
own automobile under own name or family name.

6. BUYING AND BRAND CHOICE (Fig.7)

Majority of them (60%) take decision based on the information collected about the brands
and model. 45% of respondent take decision based on budget and test drive. 25% of
respondent visit the dealer to take a decision and other 25% decides when a new automobile
arrives. 35% of respondent make final decision on maker and model. And rest depends on
dealers, price bargain, etc (Fig.7).
 7. FACTORS AFFECTING PURCHASE DECISION (Fig.8)

Safety and performance are two factor which is affecting most of the respondents.
Technology and brand come after. Rice and resale value are also equally affecting factor to
buying decision. Size is least important as per the (Fig.8).

8. AUTOMOBILE PREFERENCE, BASIS OF WHEELS (Fig.9).

Majority of respondents (73.5%) wants to purchase four-wheeler vehicle, 24.5% of
respondents wants to purchase two-wheeler vehicle and rest wants to purchase three-wheeler
vehicle (Fig.9)
9. MODE OF PAYMENT (Fig.10)

35.4% of respondents will purchase in cash. 39.6% in installments and 16.7% in laon. Rest
will apply other payment mode.
10. NEW OR OLD

Majority of respondents (89.8%) wants to purchase new automobile and 10.2% wants to
purchase second hand automobile.
Evolving buying behaviour of the consumers
Human demand is quite difficult to satisfy. It’s floating from the contemporaneous stage to
another stage. The same things do not appeal to different consumers when they are deciding
between products. That is why manufacturers in the car market don’t stick with the same
designs over time. Their modification of the designs will crop up every month or quarter.
Consumer behaviour evolves as the purchasing way or channel alters. Individuals’ purchasing
behaviour will be strained according to the modification of wants, goals and personal beliefs.
With the help of proper information of the ever-floating demand of consumers, car companies
can be able to prepare the ultimate products that match with the demand of the consumers.
That is why it is reasonably cardinal to decipher the market drift and the behaviour of the
consumers. Products in the car markets are depicted with the cardinal decisions of consumers
about their perspective of the brand and the quality of the product (Brand, Cluse & Anable
2017, 121-136). With the help of the oligopoly nature of the market, consumers and
producers hold a strong power in the marketplace. Consumer purchasing behaviour varies
along with the services and circumstances. The wrong encounter in the case of product
purchases leads to a devastating change in the demand of the consumers. The consumer
purchasing decision is an evolving behavioural concept. It can be changed with the slightest
mismatch of the perception of service and encountered service.
Buying behaviour –Wants, Goals and Beliefs
Buying behaviour provides crucial information about the consumer's buying pattern thus, it
assists to lessen the complexities in the car marketing strategy. As a result of the eternal
change of the buyers’ attitude and perception towards the car market, producers need endless
follow-up and modification of the strategy which will be conducted in the case of marketing
the product. The better the cognizance of the buyer belief the higher the satisfaction of the
consumer toward manufacturing companies and its corollary the better brand recognition.
Thus, the cognizance of the buyer expectation works as an ‘Aladdin lamp’ in the eyes of the
manufacturers. To some extent, the execution of buying the desired product from the lot is
not an easy-peasy task. Moreover, it is also an ambiguous conviction. Although individuals
are different in their choice they act in a rational way when their expectations remain
unsatisfied. Moreover, buyers may act in the unconscious mind rather than logically (Yang et.
al 2018, 4056). The subconscious mindset influences the buyers to choose the product which
may be good for them but not the best one and it will not fulfil the optimal level of desire.
Consumer perception
Buyer’s perceptions about the car markets are reorienting as the modes of purchasing varies.
Some people fancy physical shopping through visiting the showroom, while some other
people just cogitate that online order serves the greatest options in case of purchasing.
Moreover, this practice of perception can be analysed in two ways. One is the ‘extreme effort
perception while purchasing’ and another is ‘shallow effort perception while purchasing’. In
the case of extreme effort perception of purchasing, there are several factors entangled such
as longer-term commitment rather than shorter-term commitment. Moreover, the amount of
time entangled in the perception model of the buyer is also considered. Individuals generally
put this extreme effort perception for purchasing the top most important gadgets like cars and
houses. For ‘shallow effort perception’ individuals pay less scrutiny compared to the extreme
effort perception. (Vimala Devi & Dhanapala 2012, 91.) Here, individuals put their insistence
on the short-term benefit and generally entangled in the short-term regular necessities.
Generally, most of the consumer’s perception is about securing the optimal and reasonable
quality of the product by presenting the lowest amount of price. Furthermore, not only the
price of the product but also past circumstances is another furnishing factor to depict the
perception of consumers (Mohan, Raghu & Katta 2018, 389-399). Market research is
assisting in finding out the perception of the consumers. But it entails being done on a
constant basis. Although the past course of action helps to foresee the probable results in the
future, in case of perception it does not work constructively. Moreover, no one is going to
buy a former model of the product, if he or she can afford to buy a new one. Thus,
automobile manufacturer research entails driving a paramount contour which reflects how
consumers now do differently in contrast to previously and what are the initiators of their
reoriented perception. There are many companies that made a move from the old trading style
to e-commerce. This also strikes on the buying habits and the responsiveness of the
consumers. As purchasing a product is not a circadian event, thus consumers take a
considerably longer time to judge their courses of action and feasible risks that could be
encountered in pre-purchase and post-purchase. There are diverse factors that help to
constitute the perception model of consumers

Limitations of Consumer Buying Behaviour

Consumer buying behaviour is a psychological process that is important to businesses and
marketing professionals. Consumer buying behaviour relates to the identification of
consistent stages of decision making used in every purchase situation. The process begins
with need recognition, followed by information gathering, a purchase and finally, post-
purchase evaluation. Marketers rely on an understanding of buyer behaviour to effectively
position products and services. However, consumer buying behaviour does have limitations.
Inconsistency
One of the biggest drawbacks of relying too heavily on consumer buying behaviour is that
consumers rarely apply the same steps in the same way for every product and service
purchase. This makes it more difficult for marketers trying to stimulate a need or to offer
messages that enhance the likelihood of a purchase for their brand. Thus, most companies
have to perform more research into their particular market segments and how they approach
their brand.
Limited Buyer Interest
Another primary limitation for marketers using the consumer buying behaviour model is that
consumers sometimes are much less involved in a purchase decision. For instance, someone
buying laundry detergent is generally less involved in the purchase than someone buying a
car or washer and dryer. Thus, the ability of marketers to affect consumers by analysing
buyer behaviour is limited. Consumers that are less involved spend less time seeking or
viewing information about the purchase.
Social and Cultural Influences
Marketers spend significant time trying to interpret consumer buying behaviour related to
their products, but they must also understand how each given customer is influenced
externally by social relationships and culture. Selling barbecue to Americans for the Fourth of
July is fairly predictable. However, knowing how a given customer is influenced by family,
friends and their community for purchases of appliances, food and household items is
significantly more complex.
Applying Stimuli
In its "Buyer Behavior" overview, MMC Learning points out that marketing tries to respond
to consumer buying behaviour by communicating with stimuli expected to elicit the desired
consumer response. For instance, a fast-food restaurant may promote its late-night drive
through window to inspire a desire from the market for a late-night meal. Unfortunately,
MMC Learning notes that buying behaviour involves a number of complicated psychological
variables related to consumer perception, motivation, learning, memory, attitude and
personality. Accurately predicting response to a given message often demands significant
marketing research and focus group studies.
CONCLUSION
It can be concluded that the buying behaviour of automobile is influenced by type and brand
image of the automobiles and manufacturers. So, it is imperative for them to maintain their
brand images. Technically the engine type and efficiency whereas good advertising with
detailed features are the dominant factors that influence the potential automobile customers.
The manufacturers must keep these things in planning the manufacturing and marketing of
their automobiles.

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