BUYER BEHAVIOUR TOWARDS GOLD ORNAMENTS A STUDY WITH REFERENCE TO MADURAI DISTRICT, TAMILNADU SYNOPSIS

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1 BUYER BEHAVIOUR TOWARDS GOLD ORNAMENTS A STUDY WITH REFERENCE TO MADURAI DISTRICT, TAMILNADU INTRODUCTION SYNOPSIS Gold is next to God is a saying which brings out the importance of gold in society. Gold s presence is as ubiquitous and pervasive as the almighty himself. The yellow metal has gained a prominent place in our everyday lives in our rich history and culture. According to ancient scriptures and research material, gold is the oldest metal mined. Gold is the deciding factor of economic status in many cases. Throughout the world, possession of gold confers prestige. Investment in gold is an investment forever. The most common form of investment in gold is ornaments. For ages Indians are fond of gold because of its beauty, purity and its medicinal value. People prefer wearing gold ornaments because of the medicinal value to the body if the human skin comes in touch with gold. Offering gold ornaments to Gods and Goddesses as a symbol of devotion, for worshipping and adoring them is widely practised in our country irrespective of the religion. It has been primarily used in India as a form of saving by housewives. It is said to have appreciated in value many times and in the recent past, the appreciations is very rapid. Gold can be called a hedge against

2 2 inflation or a reservoir for future use or substitute for currency as a means of exchange. Gold is regarded as a store of financial value. In a country like ours, with no social security, gold is not a dead asset. Gold loan is very popular in our country especially with low income households who use it both for consumption expenditure and for sustaining investments on farms. Marketing is the process of defining and anticipating customer needs and wants and organising all the resources of the company to satisfy them. Peter F. Drucker, world renowned professor and perhaps the most influential writer among business executives, said that there is one valid definition of business purpose to create a customer. One of the most important component of the market is the buyer and it is the behaviour of the buyers that is the centre to an understanding of the market. The buyers are influenced by environmental or individual factors. Environmental influences include economy, culture, society and family. The individual influences include learning and attitude, motivation, needs and perception. Buyer behaviour includes all psychological, social and physical behaviour of potential customers as they become aware of, evaluate, purchase, consume and tell others about the product and services. It is defined as activities people undertake when obtaining, consuming and disposing of products and services.

3 3 Buyer behaviour includes the acts of individuals directly involved in obtaining and using economic goods and services including sequence of decision processes that precede and determine these acts. The actual purchase is only a part of the decision process. In buyer behaviour, the buyer considers not only why, how and what people buy but other factors such as where, how often, and under what conditions, the purchase is made. An understanding of buyer behaviour is essential in marketing planning and programmes. Today buyer behaviour studies help to understand how human beings act in their buying roles. The objective of studying buyer behaviour is to understand, explain and predict actions taken by individuals or small groups, such as family, in their consumption of goods and services. Gold is one of the speciality goods which the consumer buys with maximum efforts. Jewellery is one of the consumer products in their life, irrespective of economic status, caste, religion, age, gender and so on. Speciality goods are in the luxury price class. Consumers may take considerable time to initiate the special search. IMPORTANCE OF THE STUDY In modern life, though changes are taking place, in all walks of life, the craze of Indian women for gold ornaments is unshaken irrespective of age, education, locality and socio-economic status. Nowadays, there are changes only

4 4 in the type of ornaments, their pattern and design. Moreover, possessing and wearing gold ornaments is regarded as a symbol of social status and gives a secured feeling. Buyer behaviour has gained considerable respectability and has even been called a science. The most important reason for studying buyer behaviour is the significant role it plays in our lives. The consumer spends time in the market place shopping and a large amount of additional time is spent in thinking about them. The study of buyer behaviour facilitates the understanding of how the buyer is influenced by his environment. Understanding the customer s need, wants and buying behaviour is the foundation of delivering a successful product to the marketplace. The study of buyer behaviour blends elements from various disciplines like Psychology, Sociology, Socio-psychology, Anthropology and Economics. It studies the characteristics of individual buyers such as demographics, psychographics and behavioural variables in an attempt to understand the wants of the people. There are several socio-economic variables like age, education, income and family and market variables such as price, guarantee, quality which influence the buyers. The present study helps to identify the socio-economic and cultural factors responsible for the buying decision. It also attempts to identify the preference

5 5 of the buyers, their purchase details, the role of influencers, the retailers and their services and the level of satisfaction of the customers. The findings and suggestions of the present study would be of great help to the retailers in evolving new marketing strategies in general and in adopting new promotional methods and policies to widen their market base in the study area in particular. STATEMENT OF THE PROBLEM In India, the habit of saving is inseparable from people. People belonging to all economic classes save in times of plenty which would be useful in times of need. Converting the household savings into gold ornaments is the practice in India from time immemorial. Our country is fast developing from the economic point of view and also from the infrastructural point of view, and so the standard of living of people has improved a lot. In spite of people s knowledge of different forms of investment, their confidence in gold has not lost its importance. Indians are more astute in gold purchase. With more women employed, the family income increases. The gradual shift of women in social order has a direct bearing on their household affairs and expenditure pattern and they do not hesitate to invest a portion of their earnings in gold ornaments as gold is considered a woman s own property and proves to be a friend in distress.

6 6 There are many avenues for investing savings; but investment in gold has retained its popularity down the ages. The price of gold is continuously increasing, and the public desire to invest funds in gold remains unshaken. People in all walks of life purchase gold ornaments quite frequently. Hence, the need to analyse the reasons behind the purchase of gold ornaments. In India, investment in gold is regarded as the best form of investment. This is the case with almost all the developing countries. In a country like ours, the habit of holding gold as a real liquidity reserve is followed from time immemorial. The most common form of investment in gold is in ornaments. In an economy like India, crop and income fluctuations are a normal affair. In such circumstances a piece of gold jewellery may help to bridge the gap between life and death. Gold has got such an order of premium. In the past jewels were made mostly by the artisans known to the family. There were a few retail shops also. But now reputed industrial houses have entered the area of making and marketing gold ornaments. Several changes have taken place in the perception of buyers also towards gold jewellery after globalisation. Most of the buyers are quality conscious. The higher price of gold ornaments marketed by private retail outlets is no more a deterrent preventing the buyers from buying them. It is widely believed that

7 7 gold is a highly standardised product. The price of the product is well fixed irrespective of any retail outlet or wholesale outlet. Sale of gold ornaments is made both in organised and unorganised ways. There are small sized, medium sized and large scale jewellery shops doing the business. They make the ornaments and market them. In some cases they act as agents, where the purchase is made from a huge trader and sold in the market. They follow a number of techniques to attract customers. Buyer behaviour is influenced to a great extent by the techniques and strategies followed by the sellers of any product. This study aims at understanding the buyer behaviour of gold jewellery and the strategies followed by the sellers. After leading business houses have entered the field creating a strong competition in the local market, awareness has been created regarding the purity of gold. Traders in gold ornaments not only sell gold ornaments. Buying old and out of fashion ornaments is also a major area of their business. The study area Madurai District in Tamilnadu is the second largest district in the state and is growing in length and breadth on all socio-economic fronts with a vast urban population of 69 per cent. Buyer behaviour decides the demand for any product. Hence the behaviour of the buyer has to be analysed in detail. In this context an attempt has been made in this study to identify the behavioural pattern of the buyers by tracing the socio-economic

8 8 characteristics of the sample respondents and to identify the preference of the buyers and the socio-economic and cultural factors motivating buying decision. An attempt has also been made in the study to examine the role of influencers in the buying decision and to analyse the services provided by the retailers and the level of satisfaction of their customers. SCOPE OF THE STUDY The present study gives an insight into important factors which greatly influence the behaviour of buyers of gold ornaments. It is totally innovative and relevant to the present day problems faced by the buyers and sellers. The study in its purview will give importance to more specific aspects of life like education, employment, income and size of the family of the buyers which shape their behaviour in a certain direction. The study has been restricted to the jewellery shops in Madurai District. It does not include the behaviour of the buyers who directly purchase from friends and relatives. OBJECTIVES OF THE STUDY The specific objectives of the study are: 1. To study the historical perspective on gold

9 9 2. To analyse the socio-economic characteristics and to investigate the preference of the buyers, their purchase details and the problems in the purchase of gold ornaments 3. To examine the role of influencers in the purchase of gold ornaments and the extent of consideration of their suggestion in the purchase decision. 4. To analyse the opinion of the buyers on the factors motivating the purchase of gold ornaments and find the relationship between the motivating factors and the overall buying decision behaviour. 5. To analyse the role of retailers, the services provided and the problems faced by them and the level of satisfaction of their customers. 6. To offer suitable suggestions based on the findings of the study. DESIGN OF THE STUDY This section describes the methodology of the present study which includes sampling design, collection of data, period of study and framework of analysis.

10 10 Sample Design The study is based on the primary data collected by the personal interview method both from buyers and retailers. For this 515 buyers in Madurai district were selected randomly by adopting the Stratified Random Sampling Method. The Multi-Stage Random Sampling Technique has been used taking Madurai district as the universe, the locality as the stratum and the buyers as the ultimate unit. The universe is sub-divided into groups on the basis of urban and rural localities which are mutually exclusive and contain all the items in the universe. A simple random sample is then chosen from each group based on the population details obtained from the records of the District Statistical Office at Madurai. From the statistical records, it was observed that the total population of Madurai District was 11,34,025 and 14,44,176 in rural and urban areas respectively. A sample of 0.02 per cent from each group was chosen for the present study. Thus, 289 buyers from urban areas and 226 buyers from rural areas were selected for the present analysis, based on the simple random technique. For getting the required information from the retailers, 70 retailers were randomly selected from the members of the Madurai Jewellers and Bullion Merchants Association.

11 11 Collection of Data After sorting out the invalid questions through the pre-test, a wellstructured schedule was framed to elicit the required information from the sample respondents, which includes 515 buyers and 70 retailers. The Direct Personal Interview Method was adopted to collect the primary data from the buyers regarding the characteristics of the sample respondents, their family profile and preferences, influencers on the purchase decision and the other aspects relating to the overall objectives of the study. Using the same method, the required data have been collected from the retailers regarding their socio-economic characteristics, details of their purchases and buyers, services provided by them to their buyers and the problems faced in their business. The secondary data relating to the study were obtained from the records of the District Statistical Office, Madurai Jewellers and Bullion Merchants Association, Journals and websites. Period of Study The primary data were collected from May 2009 to January Framework of Analysis In the present study, the following tools were used to analyse the data.

12 12 Chi- square Test In order to examine the relation between the influencer, his profile variables and the extent of consideration of the suggestion, the chi-square test of the following formula was applied. Chi-square 70 = 2 2 O E with (r-1) (c-1) Degree of Freedom E with (c-1) (r-1) degrees of freedom. Where O Observed frequency, E expected frequency. The calculated value of the Chi-square is compared with the table value for the given degrees of freedom at the 5 per cent level of significance. If the calculated value is greater than the table value at the stated level, there is association between the two attributes or vice versa. Multiple Regression Analysis In order to find the impact of the various socio economic factors on the quantity of gold ornaments purchased and to identify the relationship between motivating factors in the opinion of the sample respondents and their overall buying decision behaviour the following multiple log linear regression model was used. LogY = log b 0 + b 1 log x 1 + b 2 log x b 6 log x 6 +eu

13 13 Where b 1, b 2... b 6 are the parameters of independent variable to be estimated. b 0 = regression constant eu= error term Garrett s Ranking Technique In order to identify the problems faced by the buyers in the purchase of gold ornaments, the reasons for the exchange of old ornaments by the buyers and the problems faced by the retailers in jewellery business the Garrett Ranking Technique 71 is adopted. For this, the sample respondents were asked to rank the problems and the reasons in the order of their importance. The order thus given by the respondents was converted into ranks by using the following formula: 100 (R ij 0.5) Per cent Position = N j Where, R ij = Rank given for the i th factor by the j th respondent N j = Number of factor ranked by the j th respondent. The per cent position of each rank thus obtained was converted into scores by referring to the table given by Garrett. Then the mean scores for all the factors

14 14 were arranged in descending order, ranks were assigned and the important factors identified. Factor Analysis The technique was used to identify and analyse the opinion of the buyers on the factors influencing them to purchase gold ornaments. Factor analysis is a body of techniques used for the study of interrelationships among variables. The principal factor analysis method is a mathematically unique solution to a factor problem. Its major solution feature is the extraction of the maximum amount of variation as each factor is calculated. In other words, the first extracts the most variance and so on. In the words of Thurstone, it is necessary to rotate factor matrices if one wants to interpret them adequately. In the present study, the principal factor analysis method with Orthogonal Varimax Rotation is used to identify the significant factors that influence the buyers to purchase gold ornaments. Other Tools of Analysis Percentage analysis was done to study the characteristics of the buyers, influencers and retailers. The Weighted ranking method has been used to rank the reasons for the purchase of KDM jewellery. The t -test was used as the test for the equality of group means.

15 15 CHAPTER SCHEME The report of the present study - Buyer Behaviour towards Gold Ornaments in Madurai District- has been organised and presented in six chapters. Chapter I contains the introduction, reasons for the popularity of gold, importance of the study, statement of the problem, review of literature, objectives of the study, operational definitions and methodology. Chapter II deals with the historical perspective on gold and theoretical framework of buyer behaviour. Chapter III analyses the characteristics of the sample respondents, their preferences and purchase details. Chapter IV examines the role of influencers and the extent of consideration of their suggestion and the opinion of the buyers on the factors motivating the buying decision. Chapter V deals with the role of retailers, the services provided by them and the level of satisfaction of their customers. Chapter VI presents the summary of findings, suggestions and conclusion.

16 16 BUYER BEHAVIOUR TOWARDS GOLD ORNAMENTS A STUDY WITH REFERENCE TO MADURAI DISTRICT, TAMILNADU Synopsis submitted to the Madurai Kamaraj University for the Award of the Degree of Doctor of Philosophy in COMMERCE Researcher A.I. AUXILIA FELICITAS Supervisor Dr. C. VIJYAKUMAR DEPARTMENT OF COMMERCE MADURAI KAMARAJ UNIVERSITY MADURAI TAMIL NADU INDIA JUNE 2010