Group-3

Analysis of Consumer Behavior in Purchasing of Small Cars

Version 2.1
Authors :1) Shyamal deep sarma
2) Sayondeep Chakraborty
3) Abhijeet Mohanty
4) Tapan Kumar Mahato
5) Anneshan Borthakur
6) Swadhin ranjan sahoo
7)Arvind Kumar Chouhan
* Reviewed By Anneshan Borthakur

INTRODUCTION

In this age of modernization and globalization small segment cars are a necessity
rather than a symbol of status for every individual. There was a time about a decade
ago when having a car was considered to be a person of high status but in todays time
its meaning has changed totally. Now people buy cars for fulfillment of their needs. In
Indian economy the major point of concern before buying a car is the family size. And
the average family size is four which includes husband, wife and two kids due to the
emergence of nuclear family instead of joint. So people usually prefer the small size
cars so that their need could be fulfilled as per their level of income. Small cars are
much more fuel oriented and requires low maintenance as compared to big and heavy
priced cars. Small cars are also beneficial to avoid the problem of traffic jams in
metro cities. That is why lower and middle segment of the society prefer small cars.
Consumer buyer behavior is considered to be an inseparable part of marketing and
(Keller, 2011) state that consumer buying behavior is the study of the ways of buying
and disposing of goods, services, ideas or experiences by the individuals, groups and
organizations in order to satisfy their needs and wants. When the use of a product
gradually increases it creates interest to the marketer, this helps to increase the
consumption level. According to consumer buying behavior, a consumer plays three

roles i.e.: consumer, buyer and the payer. Consumer behavior is the study of human
behavior towards product pre and post purchase. It is helpful in understanding the
dynamic behavior of the consumer on the basis of demography, income, geography,
psychographic and behavioral aspects. Every consumer is having a different
perception regarding purchasing for a similar commodity.
The buying process of consumer is decided by certain steps as1. Problem/Need recognition.
2. Information search.
3. Evaluation of alternatives.
4. Purchase decision.
5. Purchase.
6. Post-purchase behavior.
(Keller P. K., 2014)
Indias automobile industry dates back in the late 1890's, the industry took off its pace
after India got independence in 1947. Hindustan Motors came into limelight with few
other small manufacturers such as Ashok, Tata Motors, Premier automobiles, Bajaj
Auto, and they enjoyed the time period as competitors were few, falling under
oligopoly market until initial economic opening of India in the 1980's. The Indian
politician Sanjay Gandhi realizes the current need of consumer and coined a project
named "people's car"; but the project got a kick start after his death as Maruti udyog a
state owned firm grabs a market share of over 50%, being the market leader. Maruti
800 was launched in the year 1983 by Maruti Suzuki and it has been titled as small
city car. The demand for Maruti 800 was at its peak because at that time, the only car
that can be afforded by lower & middle section of people, then high fuel efficiency,
reliability and the interior features clubbed in as relative to its competition at the time.
It remains the second longest production in India after Hindustan Ambassador.
(Automobiles)
The Indian automobile industry is one of the largest in the world with an annual
growth production of 23.37 million vehicles in FY 2014-2015, following a growth of
8.68% over the last year. (IBEF)
India is also a prominent auto exporter and has strong export growth expectations for
the near future. In FY 2014-2015, automobile exports increased by 15 per cent over
the last year. In addition, several initiatives were taken by the government of India and
the major automobile players. Indian automobile markets are expected to make India,
the leader in the four wheeler market in the world by 2020. (IBEF)
The liberalization which took place in way back 1991 opened the opportunity gates
and strikes competition and growth and it seems to be never ending as new
technologies are doing more value addition to the automobile sector day by day. As
Indian economy was growing, it results in entering of many international car
manufacturing industries to try their luck like Ford, Toyota, Hyundai and others set up
manufacturing plants.

The Indian automobile industry accounts for 7.1 per cent of the countrys GDP.
Automobile market owing to a growing middle class and a young population of India.
Why do we need to do this research?
With the increase of immense competition it has become necessary on the part of
every firms to differentiate themselves from their competitors which necessitates well
acquaintances with the behavior of the consumers, every consumers have some
thoughts or idea, feelings about the product when they are going to purchase, a proper
analysis of a consumer behavior would help the companies to come up with some of
the factors that influences their purchase decisions such as what are the attributes they
look for in the product, how they are going to differentiate from others, there are even
certain products which customers generally favors because it matches with their
lifestyles and values, hence with the help of our research we can come up with some
of the factors that really influences customers in purchasing small cars, as this would
benefit every automobile companies to design their products accordingly to the
customers requirements and can create competitive advantage over its rivals.

Literature Review
Several Researches has been done on the consumer buying behavior on the small car
on Indian Car industry. Sagar& Chandra (Chandra, 2004) on 2004 discussed in their
paper, how Indian Car Industries has move forward technologically with new
technological capabilities and the industry is driven by the factors such as strong
competition, changing consumer preferences, govt. policies, especially rigid rules of
emission standards, and the global strategies of various players. They collect details
about Car Manufacturer in India with better designs & advance technologies which
can be compare with the global cars and they also gather detail about Indian car
exports growing in leaps & bounds.
MandeepKaur & Sandhu(2006) (Sandhu, July December 2006, p.69.)They tried
to find out the key points which are considered by the customer while purchasing a
new car. His study covered all the user of passenger cars living in the major cities of
the Punjab and the union territory of the Chandigarh. The respondents also suggested
that safety and comfort were the most important measures of the passenger car
followed by luxuriousness.
Chidambaram &Alfred (Alfread, September 2007.p.30.)They also talks about the
factors which influence customer to prefer a brand. Their study also find out some
facts that customer give weight age to fuel efficiency is most than any other factor and
respondents are think that brand name can make aware them about product quality,

technology & utility. Customer are also interested to buy the cars which are high fuel
efficient ,good build quality, durability, technology and reasonable price.

According to Manish kumariSrivastava, A.K Tiwari (1), who made a research on

analyzing the behavior of the consumer in purchasing A3 segment car in Jaipur by
selecting 100 respondents on the basis of their occupation, gender and income has
come up with a conclusion by taking into account some customer parameters which
generally affects their behavior such as price, power, comfort, mileage, maximum
speed, safety, brand name. It was come to light that customer generally considers
safety, brand name, seating and driving comfort while making purchase decisions.
(Manish kumar Srivastava)
According to SaminRezvani, GoodarzJavadianDehkordi, Muhammad
SabbirRahman (4), both intrinsic and extrinsic cues influence the buying behavior of
the consumers. And the studies from the research has revealed that the effect of
extrinsic factors has a more influence on the purchase decision. The various extrinsic
cues like the country from where the product comes from and where it has been made,
has an effect on the buying behavior and the customer generally uses this as a measure
for determining the quality aspect. In addition to that, factors like political system,
culture and economic system of the country also have their influence on determining
price sensitivity. (Samin Rezvani, 2012)
According to VikramShende (4), consumer behavior includes the feelings, thoughts
and perceptions of a consumer for any product when they go for purchase, it is
necessary for every marketer to analyze the consumer behavior as it becomes the
basis for them to take marketing decisions. In his research he had classified the
consumer behavior on the basis of various parameters like social ( which includes
road structure, road safety, lifestyle, etc ) economical ( monthly income , disposable
income, loan interest, availability of loan) ,product and technology( fuel efficiency,
exterior looks such as overall look, driving comfort,) demographic(Source of Income ,
Gender , Occupation ), geographic (Region, Population density, Off-Road, On-road )
psychographic (Activities, Interests, Attitudes, values) parameters.
On the basis of the analysis it was revealed that most of the consumers had preferred
the increase in disposable income as the reason for their purchase along with increase
in the family size, status, etc. In addition to that affordability factor had also
influenced the consumers. (Shende, 2014)
According to Mrs. Been john and Dr. S. Pragadeeswaran (Mrs.Beena John, 3-4,
March-April 2013.) Consumer prefers to buy a small car because demographic factors
like age, gender, education, status and income influence of a person to buying a small

cars. Most of the person in between 31 to 40 ages was preferred to buy the small car.
And day per day price fluctuation of fuel is also effected to buying a small car.
Among the female users most of them use small cars because they feel comfort in
comparison with the other modes of transport. Male users prefer diesel cars while
female users prefer petrol cars.

According to Clement Sudhakar and Venkatapathy(2009), (Clement Sudhakar J.,

june,2000) who made a research in Coimbatore District has come out with a
conclusion that the purchase decision of a consumer is also analyzed by the peer
groups who influences their buying behavior in purchasing small and mid-sized cars.

There are two factors that influence the consumer behavior towards purchasing small
cars they are
Intrinsic factors
Extrinsic factor
Intrinsic factor includesAge
Gender
Income
Occupation
Extrinsic factor includesPrice
Culture
Social class
Reference group
Objectives
Our study is concerned with determining the following objectives .
To determine what influences consumer buying behavior more, is it
income or its price?
Is region influences on small car buying behavior more?

Hypothesis testing

1)Null (H0)- Economic parameters ( income) affects consumer buying behavior.

2)Alternate (Ha)- does not affect consumer buying behavior.

1) Null(H0)- Geographical parameter(Region) affects consumer buying behavior.

2) Alternate(Ha)- does not affect consumer buying behavior.