Assignment 1 - Consumer decision making process of purchasing vehicle PDF

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Consumer decision making process of purchasing vehicle...

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Executive Summary This report is aim to discuss the 5 stages of the Consumer Decision Making Process (CDMP), identify the target customers of the selected product- Perodua Aruz SUV and analyzetheir psychological profile and the marketing strategies based on the different consumer behavior theories that the brand can adapted to facilitate the targeted customers to purchase and become more satisfied with The Aruz SUV. Perusahaan Otomobi Kedua Sendirian Berhad (PERODUA) as the second national vehicle project is turn up as a primary national automobile manufacturer and is capable competing globally the market. There are five decision making stages would be taken by a middle- income consumer when they are considering the purchase of a new car. These 5 stages are including, consumers identify their needs, searching for information, evaluating alternatives, make a purchase and their post- purchase behavior which they satisfied with the outcome or not. Customers nowadays are looking for brand loyalty, a higher quality products, good after-sale service and facilities. Hence, understanding why and how consumers behave in a particular way in making a purchase decision allows organizations enhance their marketing strategies. The knowledge of purchasing behavior make a clear explain on the psychology of consumers’ action in terms of how they argument, feel, believe and choose among the possible options such as brand and product and how the consumers’ environment for example, people around them, culture, media influence them. Also, how their motivation and decision strategies distinct between each product.

Table of Content Executive Summary.......................................................................................................... 2 List of Figures................................................................................................................... 3 List of Tables..................................................................................................................... 3 1.0

Introduction............................................................................................................ 3

2.0

Need Recognition.................................................................................................... 5

3.0

Pre-purchase information search...........................................................................7

4.0

Evaluation of purchase alternatives.......................................................................8

5.0

Purchase decision.................................................................................................13

6.0

Post- purchase evaluation..................................................................................... 14

7.0

Recommendations.................................................................................................16

List of References............................................................................................................ 17

List of Figure Figure 1: 2019 Perodua Aruz SUV 1.5 Advance (AV)- Amazon Green................................................4 Figure 2: Maslow's Hierarchy of Needs................................................................................................ 6 Figure 3: Brand in initial awareness set................................................................................................. 9 Figure 4: Top 5 attributes sought by car buyers who intended to buy a SUV, a Sedan or Hatchback. 11 Figure 5: Perceptual map of automobiles............................................................................................ 13

List of Tables YTable

1:

Evaluation

table

brands…………………………...13

based

on

attributes

of

4

different

car

1.0

Introduction

Figure 1: 2019 Perodua Aruz SUV 1.5 Advance (AV)- Amazon Green

Perusahaan Otomobil Kedua Sdn. Bhd. (Perodua) is Malaysia’s leading automobile manufacturer which closely followed by Proton. It is a joint venture organization between Japanese and Malaysian, was established in 1993 and introduced their first vehicle, The Perodua Kancil in August 1994 (Perodua, 2019). Currently, the company exported its automobiles to 7 countries, namely, Singapore, Indonesia, Brunei, Fiji, Mauritius, Sri Lanka and Nepal (Perodua, 2019). According to Carsome (2019), Perodua has introduced The Perodua Aruz SUV, a 7 seater SUV will be available in two alternatives for consumers to choose from, which are 1.5X and 1.5Advance (AV) presenting great value for consumer who looking to purchase a seven-seater for a sub-RM80,000.00 prices. According to Tan (2019), The Perodua Aruz SUV 1.5AV has been certified with a 5-star ASEAN NCAP and is priced at RM77,900.00 on-the-road without insurance in Peninsular Malaysia. The company targets for family or individuals who aged between 25 to 54 years- old of middle- income from a family size of four or more, who looking

for a quality vehicle at a premium due to the prices set up by Perodua are affordable and reasonable. This report recognizes how Perodua applies the CDMP process in its marketing strategy. Also, the analysis on the consumer characteristics and decision process when purchasing a vehicle. For instance, consumer behavior can be defined as the processes involved an individual or groups choose, purchase, dispose and the use of products, experiences or ideas to satisfy desires and needs (Galalae & Voicu 2013, p. 278). All the marketing decisions are built on the knowledge and assumptions of consumer behavior (Stankevich 2017, p. 7). In this automobile industry, consumer behavior has repeatedly shifted because of the accelerated changes in the industry generated by the ongoing evolution of technology. Hence, a study on consumer behavior is a must to satisfy their needs in order to have a successful relationship with the consumer which can provide a high level of customer satisfaction and retention and superior customer value.

2.0

Need Recognition The key and most crucial stage of the Consumer decision- making process (CDMP) is

need recognition where they can be socioeconomic, personal and psychological. Need recognition is this stage of discovery of a disparity between an actual state and desired state of consumer that is adequate to excite and stimulate the decision process. Both states can be influenced by consumers’ current situation and lifestyle. This stage is depending on the stabilize between the desired state and actual state, which is the consumer’s status quo and the situations that consumer wants at the present time (Punj & Srinivasan 1992, p. 491). In the words of Ingram et.al (2007, p. 67), it is the realization of the gap between buyers’ desired state and their actual state. During this stage, is recognized when consumer discover the differences between the desired state and actual state and that the problem can be addressed by using an item or product. A consumer who purchases The Perodua Aruz 1.5AV would likely go through extensive problem solving due to the unfamiliarity of product class and brand and infrequent purchase, therefore, the level of purchase involvement is high because buying a high- involvement product such as Perodua requires an extensive external and internal information search followed by a complex evaluation of numerous alternatives. Also, the postpurchase evaluation becomes more thorough. Besides, consumer’s needs and motivations became active in this stage, with the Aruz 1.5AV, Perodua launched the most affordable SUV and family- oriented vehicle in Malaysia for potential consumers who takes safety as priority.

Figure 2: Maslow's Hierarchy of Needs

According to Figure 2, the result of an individual’s attempt in achieving 5 fundamental human needs, which are physiological, safety, social, esteem needs and self-actualization is motivation. Maslow stated that those needs can create internal pressures which can influence an individual’s behavior. In fact, the motivation for purchasing The Aruz would constitute to the need for safety as the SUV model is associated with protection and security. According to UdoImeh (2015, p. 64), psychological variables that facilitate consumers’ purchasing behavior is personality, which can be determined by external influences, unconscious drives and cognition. It is a set of comprehend human psychological traits which control consumers’ responses to the external stimuli. Under Freud’s Psychoanalytic Theory, the Freudian theory describes personality in terms of the interplay of the id, the ego and the superego. The id is the irrational needs and demands of an individual which oriented on the immediate satisfaction to achieve gratification in which Perodua Aruz would be able to satisfy the id of consumer’s belief of social acceptance as The Aruz won the most inexpensive 7-seater SUV in Malaysia, topping the likes of Toyota Rush and Honda BR-V. Perodua satisfy the superego of consumer’s quality conscious as the Aruz has achieved the 5-star ASEAN NCAP rating and the buyer would be able to own an affordable performance SUV model of vehicle in Malaysia. Also, the ego that adjudicate between the id and superego. Ego was the main motivator for a new vehicle buyer as they described that driving a new vehicle gave them the feelings of indulgence and success ( Drive, 2019) as the Perodua advertises its product as an elitist brand and through the ego allows consumers believe The Aruz is a high-end product which are comparably economical. Besides, Consumer defines, enhance and maintain their self-concept through the purchase and use of the product (Toth 2014) as The Aruz is furnished with the modern features therefore consumer no need to be worried as it originates from a trustworthy brand name- ‘PERODUA’ within the market.

3.0

Pre-purchase information search This process starts when consumers identify an unfulfilled want or problem because of

the exposure to external or internal stimuli (Galalae & Voicu 2013, p. 279), which is information searching and refining activities, in which consumer observe and read the relevant information of the product on different media to simplify their purchase decisions thus, helps to reduce the perceived risk that involved during the purchase (Amir 2014, p. 43). In this case, The Aruz’s

information can be categorized into two parts, which are internal and external information search. Internal research indicates the mental process of researching the information kept in the memory passively or actively, which can be guide by prior knowledge or personal experiences in which, consumer would likely to recall the previous experience with Perodua Company and through psychological risk associated with, could be reduced as Perodua is a high preference for the leading national automobile brand that everyone familiar given with the test drive and 5-year warranty offered, making consumer feel safe. Also, the doubt of social embarrassment of the consumers which is the social risk generated by friends’ and families’ thought towards the poor store choice would be lower as Perodua Aruz is the nation’s best-selling SUV and there are 25,000 bookings have been made for The Aruz was officially launched in January 2019 (Lee 2019). However, it might lead to an extensive search for information due to a little product knowledge about a certain brand and experience it leads to high risk. External search occurs when the consumer has no previous experience which leads them depend on external information acquired from product advertisements, word-of-mouth, salesperson, friends and family, social networks such as forum and blogs or through experimental. Consumers would likely engage in either limited problem solving or an extensive when seeking for a product information during the pre-purchase information search process. Besides, when consumers have about a specific product previously, limited problem-solving take place for example, when consumer seek information about The Aruz as Perodua is a well-known brand that the consumer familiar with, therefore, they would search for enough information to avoid poor choices. During the process of learning and forming certain attitudes toward the product or services, the chance of functional risk imposed to consumer would be reduced as they should have acquired some knowledge of the features, function and what to be expected from.

4.0

Evaluation of purchase alternatives

Automobile Industry Known brands Evoked set -Acceptable brands 1. Perodua Brands

Inept set (Unacceptab le brands)

1. Proton 2. Toyota 3. Honda Brands

1. Nissan 2. Chevrolet 3. Mitsubitshi

Unknown brands Inert set (Indifferent brands)

Overlooked brands

1. Mini 2. Ford 3. Jeep

1. BMW 2. MercedesBenz 3. Lexus

Figure 3: Brand in initial awareness set

After the identification of possible alternatives, evaluation of purchase alternatives is the third stage of the CDMP process, in which buyers processing information after the mental evaluation towards the existing alternatives and, based on a definite attribute what they are look up, distinguishing brands (MUNTHIU 2009, p. 29). The important attributes that could influence a consumer when purchase a car as compared with other brands would be price, fuel efficiency, brand, safety, stylish, long warranty and others (Clatworthy 2017). Through theprocess, a consumer can form a decision, in which they compare important attributes to least important attributes and trade off within the given decision accordingly. For examples, a consumer may consider Mercedes- Benz and BMW due to the head-turning styling, but they will take into consideration of the dissimilar qualities of each while the image performance and driving feelings that luxury cars can provide may be superior, but the cost-performance of Perodua Aruz 7-seater SUV such as price, safety, user friendly and fuel consumption may comparably high to

lead cost-conscious consumer to choose an affordable local car over the financial risk even the superior driving feelings offered by luxury cars. Moreover, internal situational factors eventually decide how consumers based on their evaluation for examples, consumer attitudes, motivation, perception and personality. According to Jain (2014), there are three major components consists in the tricomponent attitude which are cognitive, affective and conative component. The cognitive attitude is comprised of perception and knowledge which the consumer obtains through experience or information with the attitude object which resulted in whether the consumer believes the object provides different attributes. The consumer may be affected by these perceptions as Perodua is a local car manufacturer. Affection indicates a consumer’s feeling or emotions towards certain brand or product as Perodua is a well- known local brand which consumer can have some emotional attachment as a result of many previous experiences with it and a positive affectionate connection with the brand name- Perodua would be invoked. In the words of Chowdhury & Salam (2015, p. 103), conative component is connected to an individual’s overt action related to the attitude object, which is often treated as an expression of consumer’s intention to buy. Consequently, consumers are willing to buy again or undertaking an impulse purchase with a brand like Perodua but with less evaluation of alternatives as they are having an optimistic attitude with the brand and a purchase experience with Perodua previously. A consumer’s perception of perceived risk would be considered when deciding and could have an influence on their purchase decision due to the fear of adverse consequences. In brief, perceived risk indicates the uncertainty which the consumers have as the consequences of their purchase choices are unpredictable. Consumers would likely to face perceived functional risk in which the product are not performing as expected, however this risk is considered low as Perodua is one of the top two cars in Malaysia. Another perceived risk is time risk which refer to the time consumer spent in information search may be atrophied if the product’s performance is not as expected, however, there is a lot of useful review on the internet make it an ease for consumer to gather information.

Figure 4: Top 5 attributes sought by car buyers who intended to buy a SUV, a Sedan or Hatchback

Attributes

Price (Peninsular Malaysia) Loan Rate

Perodua Aruz SUV 1.5 Advance (AV) RM77,900.00 without OTP RM1039.13 Down payment: 10% (RM7790)

Brand

- Dominated Malaysia national car accounted for 90% of the vehicle sold annually

Safety

- Advanced Safety Assist (ASA) 2.0 version - 5 Star ASEAN NCAP rating - Vehicle stability

Proton X70 Standard 2WD

Honda BR-V 1.5L V

Toyota Rush 1.5S (AT)

RM99,800.00

RM91,391.00

RM97,000.00

RM1331.26 Down payment: 10% (RM9980)

RM1219.09 Down payment: 10% (RM9139.10)

RM1289.46 Down payment: 10% (RM9700)

- Dominant automobile manufacturer in Malaysia until establishment of Perodua in 1993 - High class in B segment of SUVs - 5 star ASEAN NCAP Rating - Anti Braking System/ Electronic Brak Force - 6 airbags,

- Japanese motor company - Sixth largest automobile in the world - Famous F1 engine manufacturer

- Japanese multinational automotive manufacturer - Sixth largest company in the world in terms of, revenue

- ABS - G-CON - VSA - ISO Fix, Tether reverse camera

- 5- star ASEAN NCAP rating - Pre-collision system - 6 SRS airbags - Panoramic View Monitor

control (VSC) Hill start assist (HAS), 6 airbags - Integrated driving video recorder, front departure alert, alarm with immobilizer - Anti lock braking system

Blind spot monitor - Central locking & Power door locks - 360-degree camera system - Anti theft device and alarm

Looks

- 2 variants - 5 colors to choose from (Glittering silver, Amazon green, Electric blue, Ivory white, Granite grey)

- 4 variants - 2 colors to choose from (Armour silver, Snow white)

- 3 variants - 5 colors to choose from

Warranty

5 years / 50,000Km

5 years Unlimited mileage

Additional features

-Eco Idle system - ‘Smart link’ for Android & HDMI - LED headlights, follow me home function and light guides - Multimedia system with 6 speakers - Navigation - the single zone manual AC system

- Black Fabric seats - 8.0- inch touchscreen head unit - WIFI & Bluetooth connectivity - Voice recognition - Rear view camera

5 years Unlimited mileage - Free labor service - Premium lather seat - Steering Audio switch -Push Start button - Smartphone connectivity (USB & HDMI port or via Bluetooth) - 6.1-inch infotainment screen - Keyless entry

- Front & rear parking sensor - Hill Start Assist (HAS) - Digital recorder

- 2 variants - 5 colors to choose from (White, Silver Metallic, Blue Metallic, Dark Green Metallic, Dark Grey Metallic) 5 years warranty

- DVD-AVX audio system with USBmirroring (for Apple and Android smartphones) - USB charging ports

& smart entry - High ground clearance

Number of seats Fuel consumption

Blind spot assist

7 15.6km/1 Engine: 1496 cc Power: 104 hp Yes

5 14-15L /100km Engine: 1799 cc Power: 181 hp

7 - Eco indicator Engine: 1467 cc Power: 120 hp

7 Engine: 1496 cc Power: 105 hp

Yes

Yes

Yes