An important factors for living
An important factors for living
Automobile plays a very important role in the daily life of the people in Bangkok, or it can be called as the 5th important factors for living as it is convenient to travel from places and also indicates the social status. The public transportation in Bangkok still not sufficient and doesn't not cover all the small areas, even though now it's much easier to travel through sky train or subway, but it is just mainly in the center of the city and not all around, therefore the demand of personal automobile has increased each year in which result in the rapid increase of sales and production of the automobile industry in Bangkok.
In the year 1961, pickup truck took around 50% of the automobile market as it's usually the first choice of car for a family to buy because of its low price. However, when the budget car, price starting with 400,000 baht, was released to the market, a group of pickup truck users have turned to this and the numbers of the customers in this segment have been increasing each year, especially in Bangkok and big cities.
However, apart from the budget cars that are popular among people in Bangkok, luxury automobile is another segment that grows along with the entire industry, as the demands of the imported cars or in the other words luxury cars increased.
To explore new and developing the new trends for the retailers as of consumer buying behavior, Capgemini automotive study has extend the scope and depth of their research each year. The detailed analysis is being done to learn the consumer need, trends and customer loyalty for several years in the past and in the year 07/08, Cars Online has included the environmental issues into the scope of findings, together with fuel-efficient and alternative-fuel vehicles. The consumers also start using online research as a way to obtain information before making the purchase (Cars online, 07/08). As consumers buying behavior are being influenced by several factors and keep changing, it is better to get closer to the consumer in order to respond quickly to consumer demand.
Automobile industry in Thailand
Over hundred years ago, the first automobile that has enter Thailand was an extraordinary thing on the road and nobody ever think that it would become an important type of transportation and eventually become one of the five important factors needed in life. As time goes by, the vehicles becoming more and more popular and it was the point where foreigners started to import the cars from Europe and North America in to Thailand for sale. (http://www.chuansin.com/doctorcar/auto-history-1.html)
In the present, the automobile industry is the third largest industry in Thailand. Thailand economic crisis in the year 1997 has been healed and recover by the automobile industry that has been "one of the big driving forces" in the recovery. Thailand has become the world's second largest pick-up truck market and the largest automobile market and assemblers in ASEAN. Car producers from all over the world have invested in assembly plant in Thailand and eventually it becomes the main production base for auto exports in South East Asia (Danish Trade Council, 2006). However, the automotive that has been produced in Thailand are mostly low cost or budget vehicles and therefore, the high class or luxury vehicles are still in demand and it is where the business of importing cars have begun.
The automotive industry in Thailand is growing and even the world economic crisis couldn't resist the growth of the industry. According from the 30th Bangkok Motor Show which is held in Thailand in 2009, this event has achieved the sales of more than 15,000 vehicles which is close to the sales made last year even though the world is still undergoes the economic crisis and so do Thailand still going through the political problems. Government has announced just before the event that the exercise tax for cars will not be reduce and therefore the customer did not hesitate as they did not have to wait for the tax reduction, and at the same time, the dealers have introduced several campaign and promotion to stimulate the sales as the automotive market was very flat in the beginning of the year. (http://www.thaiautoshop.com/car-news/271.html)
However, to get the campaign or promotion that fits the needs of the customer and make the sales moving all along, it's not just the money that's matter but a lot of factors are also required in order to stimulate the sales. Business need to develop several marketing strategies and understand these factors in order to make the right approach to the customers. Marketing research then becomes an important way to find out and act as a tool to help the business.
Types of imported automobile dealer in Thailand
- Authorized dealer
- Grey market dealer
The head company of the automobile has authorized this type of dealer to distribute its vehicles in Thailand and each of these dealers can only distribute the certain brand and model that they have been authorized. Most of the vehicles distribute by the authorized dealer would be standardized; the additional option would be need to be fitted in later after the purchase with the costs to follow with.
This type of dealer imports vehicles independently. The dealer imports vehicles of any brands and models that customers want. Many times, these vehicles would be made to order with specific options according to the order that either the seller forecast that would be able to sell or the order get from the customer directly.
Foreseeing Consumer Changes
"Researchers viewed consumers as rational people who used extensive decision-making processes in purchasing products. `Consumer Behavior' incorporates more recent findings which illustrate the impact of emotions and feelings, not only for everyday consumers but for industrial consumers as well." ("OSU Professor Probes Consumer Behavior." THE JOURNAL RECORD. Dolan Media Company MN. 1992. HighBeam Research. 18 Oct. 2009 <http://www.highbeam.com>.)
An understanding of consumer behavior is important as it is the only way for the manufacturers or retailers to understand the needs and wants of the customers. Therefore, in this paper the author would gives the findings and analysis of consumer buying behavior of imported cars in Thailand as to have an idea about the trends and forecast the products that importers would import in the future.
According to Kotler & Armstrong (2001), marketing research is a the way that is designed to collect, analyse and report the data on the specific area of research to the organization, and in this research, it's the consumer buying behavior on the imported cars in Bangkok, Thailand.
Solomon (2006) has said that consumer behavior is the studies of the way people make the decision to choose, buy or use the certain product which is being influences by several factors.
Identifying consumer buying behavior of the imported cars in Bangkok, Thailand, would allow the sellers to predict the trends of the business in the automobile industry would be in the future. This research focuses on the luxury cars of the grey market to find out the effects and concern of the customers while making the purchase, and their needs and satisfaction on the services provided.
With the results of the research and prediction, the sellers would be able to adapt themselves to the changes in customers' attitudes and can select the products to import that fit the needs of the customers.
The purpose of this research is to identify the attitude, lifestyle, personality and mobility factors that affect customer's buying decision on imported cars.
Review of related Literature and studies
Related theories of the dependent and independent variables of this study are included in this chapter. The theories and models are then use to develop the conceptual framework of the research, focusing the factors influences consumers buying behavior.
According to Foxall (2007, pp. 3), consumer behavior is an important part of academic marketing as there is no fix rules but application area that depends on the disciplines like economics and psychology that provided with the attitudes, methodologies, theories and techniques.
The final decision process of the household consumers usually involved evaluation, buying, consumption, and they way and price that they would get to get rid of the products in the future.
With the buying of automobile, there are a lot of factors involve in the decision making such as price and additional costs, need which are the basic factors. However, there are also several factors that customer usually take in to consideration before they actually make the purchase, choosing the dealership, car models, methods of payment, designs, options, and so on.
According to this case of purchasing an automobile, the generic model of consumer decision making is can be apply to as it consists of:
- Need recognition
- Information search
- Evaluation of alternatives
- Purchase decision
- Post-purchase behavior.
In the case of imported automobile, it is usually beyond the need as the simple, cheap, made in the country can fits the need, whereas this imported automobile is a luxury product and so it's more of the wants, desire and fashion or trend. People buy an automobile because they need it, but then they choose the brand, model, etc. However, to studying the correctness of the above model does not really interest the researchers but it's the factors that influence on the generic model that would work.
Influences on Decision-making
Group such as culture, family, friends, the referrer
Environmental factors such as time, temperature, etc.
Lifestyle, personality, decision making process, motivation, etc.
Word of mouth
According to East et al. (2008), identification of the people who give advice is the third concern of market researchers as to target this group of people as there is evidence that word of mouth can be a very effective strategy in which a lot of companies offer incentives to encourage the referrals (Buttle, 1998; Danaher and Rust, 1996, cited in East et al., 2008). However, it is not clearly identify if the people received the message would reconsider, knowing that the referrers are incentivized.
Kotler (1997) mentioned that demographic factors influenced customer's buying decision are the internal factors including gender, age, income, education level and family size.
Kotler (2000) commented that the market is divided based on factors like age, gender, income, occupation, education, family size, and religion, race, generation, nationality and social class. These factors are the basic factors to differentiate customer groups as the customer wants, preferences and usage are usually involve demographic factors.
Age is one of the demographic variables that often use to divide the market segment as it helps marketers to understand and keep themselves up to date of the changing life cycle of each generation (Dibb et al., 2006).
According to Flynn (1995), age is a very important demographic factors that influences on the decision making process on the purchase because natural factor, easy to measure and use it a lot of social science theories. Kotler (2000) mentioned that the different needs and wants are different in different age groups. People of different age have different needs and wants and buy different goods and services over their life time.
Mentioned by Dibb et al. (2006), gender is another common factor that's being used to differentiate the markets, whether is clothes, alcohol, magazines or automobiles. However, there are still several products that are purchased by either men or women only.
Skinner (1994) has mentioned that educated customers tend to find more information on the product they are purchasing and demand better quality products and so education becomes one of the factors that influences the decision making process.
Solomon (2006) stated that the level of education might be related to the income level and occupation as the certain education level will be accepted by a certain social class in which education is also one of the factors that's being use to identify the social class in some area.
According to Dunne and Lusch (1999), the accomplishment in the education field is the most reliable index for the income potential, attitudes and the way of spending of a person. For example, graduate students have different buying behavior comparing to the undergraduate students even though they might stand in the same age group. They are more conscious of the quality, price and services.
In accordance with Kotler and Armstrong (2001), the purchase made for goods and services are affected by a person's occupation. Identifying the occupational groups according to the interest in their products is an important thing for the marketers to do as a company will be able to focus on the target customers or even specialize on a certain products that will fit with the customers' needs.
Hawkins, Best and Coney (2001) mentioned the differences in consuming the products and services among the different occupational classes, whether it would be normal grocery like soap or food or even the electronic products like mobile phone or computer. It's not just the differences in the consumption, but also the media preferences and shopping patterns.
According to Statt (1997), income is one of the variables that is used to identify the status of a person. It is considered to be one of the most important socio-economic status variable as the quantification can be easily done and compel the entry to some markets. Peter and Oslon (1996) have indicate that the different in the income level of people has influences on the value, behaviors and lifestyles.
In agreement with Solomon (1999), the buying power and market potential is also define by income of a person, as people obtain goods and services that they need to show their choices, in which more money will be required to do so.
According to Solomon (2006), culture is a society's character that includes theoretical ideas like values and ethics and physical matters and services like automobile, clothes, food, sports, etc, that are delivered or respect by a society. In the other word, it's a set of belief, norms, values and traditions that share among the members.
Culture is being learned and has a long effect on the behavior of an individual. As an example of cultural influences, consider how the salesperson in a car showroom in England should approach the different couples of customers that visit as in some cultures the husband will be the one making the decision, while in the other it's the wife.
This can be simply defined by set of factors like income, family background and occupation.
"Social class is a much a state of being as it is of having: As Phile saw, class is also a matter of what one does with one's money and how one defines his rold in society". (Solomon 2006)
However, it is mentioned in Solomon (2006) as one wealthy woman observed when she was asked to define social class:
"I would suppose social class means where you went to school and how far. Your intelligence. Where you live... Where you send your children to school. The hobbies you have. Skiing, for example, is higher than the snowmobile... It can't be [just] money, because nobody ever knows that about you for sure."
"Lifestyle is a person's pattern of living as expressed in his or her psychographics. It involves measuring consumer' major AIO dimension activities (work, hobbies, shopping, sports, social events), interest (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products)." (Kotler and Armstrong, 2001, PP. 181)
According to Kotler and Armstrong (2001), lifestyle is not just all about social class or personality, but it involves the entire life of a person. People from the same family, social class, or income level can have totally different lifestyles.
Types of buying decision behavior
According to Kotler and Armstrong (2001), the process of buying differs from each product or service, a bottle of shampoo, a tennis racket, an expensive mobile phone or computer and a new car. The harder the decision, it's usually the more expensive the product is and therefore require mostly more people and time to consider before making the decision.
Purchase decision process
According to East (et. Al., 2008), the purchase decision process is the basic approach to consumer behavior's problems. However, Ehrenberg (1988, cited in East et al., 2008) has identified that there's less eagerness for such models as they are hard to test because the satisfactory measures for the components cannot be easily find.
East (et al., 2008) said it has been accepted that most repeat purchase are done as a habit. "Often, this range of decision-making from rational to automatic is related to the degree of involvement." When the outcomes of the decision are of high-value or the thing is new to them, people are more likely to get involved and often think more. The three models of consumer decision which are used to explain the decision-making in details are:
- Cognitive - taking purchase in such a way that it is the outcome of rational decision-making processes.
- Reinforcement - taking purchase as the learning and modifying behavior as a reaction to the opportunities, rewards and costs present in the consumer's environment.
- Habit - taking purchase as the learned behavior which being brought out by specific inducement in the consumer's environment.
The buyer decision process
Need recognition ā information search āevaluation of alternatives āpurchase decision ā post purchase behavior
Figure 5.6 buying decision process chapter 5 pp 193, kotler and Armstrong (2001)
According to the automotive study done by Baltimore, Md. in 2005, the reason that consumer decided to purchase a new car is just because they want. The Vertis Customer Focus(R) 2005 has given the factors that influences adults to buy new cars; 8% claiming that their current automobile has problems, 11% need one for work, 4% has a new driving member in the family, 3% want new one as they can afford a better car and 5% are motivated to get a new car because of the lower prices, lower interest/financing or price incentives (Business wire, May 2, 2005).
With the economic crisis all over the world, Thailand automotive market has also been affected in the first half of the year 2009. However, according to the Thai Farmer Bank Research Center, Thai economy seems to be getting back on track together with the other countries. (Smartfund, 2009)
The Bank of Thailand has reduced the interest rate on the loans in which helps to drive the country's economic during the year. At the same time, the reducing in the sales of the cars has affected finance company and therefore these finance companies then starting to be more lenient with the buyers by offering lower interest to courage more sales which can then be identify that interest rate is one of the most important factors that influences the buying behavior of the customer towards the automobile. (Smartfund, 2009)
However, the positive factors is being obstruct by the negative factor like fuel price that's been increasing and which unfortunately effect the decision of the customers in buying the new vehicles, whether or not to buy or reconsider about the model and size of the vehicles they going to buy. (Smartfund, 2009)
The survey results from cars.com in 2005 also reveals that 20% of women consider fuel efficiency as one of the most important factors in the car-buying process. (PRNewswire, November 15, 2005)
Communication research also discloses that the online car sales in U.S. is increasing. Economist Intelligence Unit (cited in NUA, 2000b) mentioned that it is unlikely to use the internet as a channel to sell cars when Mintel (2000b) mentioned that only 5% of adults would buy cars on the internet (Molesworth and Suortti, 2001).
However, people finding internet to be useful for learning about the product in the early stage to learn about the offer and advantage that they would get, but in the later stage, people would want to get back to the traditional way of purchasing and get a test drive during the evaluation stage (Molesworth and Suortti, 2001).
Resale values of the vehicles also become one of the factors that influence people to buy a new vehicle. Bill Drew, president of Drew Auto Center in La Mesa mentioned that he has made 25 sales on the first day that he started offering the trade-in cars. G. "'Cash for Clunkers' revs up car buying." San Diego Business Journal. CBJ, L.P. 2009. HighBeam Research. 13 Nov. 2009 <http://www.highbeam.com>.
According to Edwards (2008), strategic vision's president of automobile, customers are now looking for the quality of the products they are purchasing, which has the long term value with the best price, even with the luxury vehicles. She mentioned that it is important for the manufacturers to focus on improving the product quality when the economic situation is favorable.
The objective of this chapter is to describe the research methodology and the steps taken in this research
The author collects the data for this study from 86 questionnaires that have been distributed to both existing and new customers of company A to learn the factors influences the buying behavior of the customers such as, lifestyle, personality, mobility, budget, etc.
The data collection technique, method, sampling design and sampling size are parts of the research methodology that explains the research design, sampling procedure, and other technique used to collect the data which is followed by data processing and analysis.
The study is based on primary data as the author used the survey method as a mean to collect the data in this research. The survey is a research technique in which information is being collects from a group of people using the questionnaire. The data is collected by communicating with a representative group of the target respondent. (Zixmund, 1997)
The author decided to use this method in this research as it is best fit method in this context. It is fast, cheap and efficient and get the data directly from the target group. The purpose of the questionnaire is design to learn the relationships between variables, which the data collected is use to analyse for the study of this research. The questionnaire is being divided into two major parts, in which the first part collects demographic factors and the second part collect the opinions regarding the different factors that affecting the car buying decision of the customers.
The author used a five point Likert scale to get the responds from the consumer, ranging from strongly disagree to strongly agree in the second part of the questionnaire (Saunders et al., 2007). The responds are from the different statements considering the different factors affecting luxury cars buying behavior of the customers in Bangkok, Thailand, which were created on the basis of literature review and the opinion from the expert in this area. However, in this research, the scale is rank in such a way that respondants could rank their opinion in an order of importance. The SPSS software is being used to analyse the data collected. The statistical analysis methods used was factor analysis.
Respondents and sampling procedures
The target population for this research is both males and females of different age groups, education level, occupation, income level of the customers that bought the imported cars from the grey market dealer in Bangkok, Thailand.
The questionnaires are distributed by the sales person of the grey market dealer to both existing and new customers in the area of Bangkok. The target population of this research is individuals, so the sampling unit is the same as the population element.
The questionnaires have been distributed to 100 customers of the company A from different areas in Bangkok and 86 questionnaires are correctly completed and can be use in this research.
The process of using a small number of items or parts of a larger population to make conclusion about the whole population is called sampling (Zikmund, 1997). The sampling design is classified in to probability and non-probability sampling design.
Zikmund (1997) also mentioned that non-probability sampling is a sampling technique that selection of units of sample is based on personal judgment or convenience and the probability of particular member being chosen is unknown. This research used a non-probability design by use convenience sampling where the information is obtained from the people who can be easily approach. The author has selected a subgroup of population based on the available information, in which the group of population can be the representative of the whole, in this case is the customers who have bought or interesting to buy the imported cars from the grey market dealer. This method takes less time and reduces the cost.
According to Saunders (et. Al, 2007), the larger the sample's size, the risk of error is lower, and this is the process of probability sampling which is based on statistical probability. However, the imported automobile group of customers is targeted and focuses as this is the high-end market which is not very large.
As the questionnaires are being distributed by the sales person of company A in Bangkok,
The author used questionnaires design to collect the data on consumer buying behavior of the imported cars in Bangkok.
There are several research strategies and the method that's been choose for this research is the survey which can be done by different ways such as personal interviews, telephone interviews, observation and questionnaires.
However, the author chose questionnaire as a method to use in this research. According to Saunders et al. (2008), questionnaire is the data collection techniques where the people would fill in the answer to the set of questions in order.
Dutka (1993) mentioned that questionnaire is a significant process for research. The awareness of customers should be quantifiable in order to measure the behavior; therefore questionnaire is an important part of the research.
The questionnaire used in this research is the self-administered questionnaire where the questionnaires are completed by the respondents. The author has issued the questionnaire to customers and people around by the mean of internet and direct contact with the help of sales person from company A (Saunder et al., 2008).
In accordance with Saunder et al. (2008), there are several variety of factors related to the questions and objectives that influenced the choice of questionnaire. Some of the factors are as the specific group of the respondent from which the research is focusing on in which this research focuses on the people who drive and themselves of their family own at least a car. The questionnaires also being distributed to the people in Bangkok area as the author have picked up this geographic area as the focus of the research.
The other factor is the mean to get to the respondents, and in this case, the author has asked for the help from the sales person of company A to distribute the questionnaires to the customers. The sales person would bring the questionnaires with them to see the customers and ask them to fill in and collect them back immediately. The author also sent out the questionnaire through email to several people knows and own a car.
The questionnaire for this research has been divided into 2 main parts. The first part of the questionnaire will ask and collect information regarding the demographic factors of the customers such as gender, age, status, education level, income level and occupation.
The second part of the questionnaire collects the information from the respondent regarding the factors that influenced them when buying a new car. At the same time, there are also questions regarding the time they take to make the decision and the time they consults and see the products before making the purchase.
Collection of data
The researcher uses both primary and secondary data for the research. The primary data are collected through the survey method by using questionnaires that are distributed to the sample of 100 respondents living in Bangkok and own at least a car in their household, where 86 respondents have correctly completed the questionnaires.
The researcher obtained the secondary data from textbooks, articles, journals, newspaper, previous studies and the data from the Thai Custom Department for the number of the cars imported into Thailand. However, the questionnaire was then selected as it is the best way to get the most current of customer's perspectives. The data from the secondary source will then be use to compare to the outcome of the questionnaire regarding the brand that is most popular among the Thai people.
Statistical treatment of data
The SPSS program is use to analyse the statistical data obtained from the respondents through questionnaires. The required data from the questionnaires are summarized using SPSS. The data from the 150 questionnaires are being code into the symbolic form that is used in SPSS program, which will present the data in an easily interpreted format.
The demographic profile is being described using the descriptive statistic of frequency distribution like percentage, mean and standard deviation.
Methodology: Analysis Techniques: 1. Reliability 2. Factor Analysis 3. One sample t-test 4. Indepentdent sample t-test 5 One way ANOVA 6 Chisquare test of independent
The Pearson Correlation Coefficient is also use to analyse the relationship between two variables, which is being referred to as simple correlation, bivarate correlation or merely the correlation coefficient.
As described by Zikmund (2000), the simple correlation is a statistical measurement which measures the covariance or association between two variables. The following is the formula for calculating the correlation coefficient for two variables X and Y.
The range of the correlation coefficient is range from +1.0 to - 1.0. The relationship between the two variables are stronger, the larger the absolute value of correlation. For example, if r = 1.0, it indicates that the relationship between the two variables are perfect positive while the relationship is perfect negative or perfect inverse if the value of r = -1.0. If r = 0, the correlation between the two variables do not appear. The magnitude and the direction of the relationship are demonstrated by a correlation coefficient.
This chapter is going to focus on the analyses of data which has been collected from 86 questionnaires by using the help of SPSS program. The data analyses will be presented in to two major parts which are the descriptive analysis and tests of hypotheses.
According to Zikmund (2008), the descriptive analysis converted the raw data into real figures that can be understand and interpret easily where the frequency and the percentage distributions are being present.
The descriptive analysis is divided into two main parts, respondent characteristics, and customer buying behavior for product. The first part consists of all the personal information such as gender, age, status, education levels, occupation, and income levels. The second part is the customer buying behavior for the product which involves the information like the number of vehicles customers own, segment of cars customers own, brands that customers own most, the purpose of purchase and the decision making process.
Demographic characteristics of respondents
The data collected from the customers through questionnaires are break up in the descriptive way presented in the figures below.
Descriptive profile of respondents (n=86)
Table .1 Frequency distribution of Gender of respondents
The respondents in this research are divided into 45 or 52.3% of male and 41 or 47.7% of female respondents. This implies that the majority of the respondents responding in this research are female.
Table .2 Frequency distribution of Age of respondents
The respondents of this research include 2 or 2.3% of people whose age is below 20, 15 or 17.4% representing those who's age between 20 - 29 years, and ranges between 30 - 39 years, 40 - 49 years and over 49 years, respectively. These figures then show that respondents whose age ranged between 30 - 39 years are the majority group of respondents.
Table .3 Frequency distribution of Status of respondents
Table .3 highlights that the majority of respondents of the research are married as the table shows the figures of 51 or 59.3%.
Table .4 Frequency distribution of Education level of respondents
The table shows the classification of the respondents by their education with the frequency distribution. The majority of the respondents in this research hold master degree in which the figures shown 40 or 46.5% of the respondents while 35 or 40.7% hold bachelor degree, 9 or 10.5% hold high school - vocational or under and only 2 or 2.3% hold doctoral degree.
Table .5 Frequency distribution of Occupation of respondents
Table .5 highlights the classification of respondents by occupation and its frequency distribution. The majority of the respondents' occupation is Business owner which is 43 or 50% of the respondents. This can be due to the price of the imported vehicles which are quite high and so most of the consumers are business owner who have excess cash.
Table .6 Frequency distribution of Income level (monthly) of respondents
The table shows the classification of the respondents by income level and its frequency distribution. The largest group of respondent which is 23 respondents or 26.7% of the total respondents income range from 300,001 - 400,000 Baht per month, follows by 16 respondents or 18.6% which earned more than 500,000 Baht per month and 400,001 - 500,000 Baht, more than 100,000 Baht, 100,001 - 200,000 Baht, respectively. As mentioned earlier, the prices of the imported vehicles are quite high and therefore, the largest group of customers buying them is earning higher income level.
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