International Journal of Management Research and Technology Volume 5 Number 1 January-June 2011: 35-43 I J M R T Serials Publications FACTORS INFLUENCING PURCHASE DECISION OF TWO-WHEELERS Rajini G. * & A. Poornima ** Abstract: India is the second largest producer of two wheelers in the world, as they are the most popular and highly sought out medium of transport. Today one has a huge choice in the two-wheeler category, as there are products available from all over the globe and across all segments right from entry level to premium segment. This research paper aims to identify the attributes and analyze the factors involved in the purchase decision of two-wheelers. An empirical study was conducted with the reference to a very successful brand of two wheelers with 184 respondents in Vellore district, India. Factor analysis was applied to extract the commonality in the items. Four factors emerged which were named as affordability, comfort, customer care and external influence. Affordability and comfort greatly contributed to the purchase decision. Marketing orientation of the Two-Wheeler manufacturer is discussed. Keywords: Marketing orientation, Two-wheeler Purchase decision. PREAMBLE Traditionally, Government of India has considered the automobile industry as a luxury segment. But realizing the growing importance of two wheelers with increasing necessity of personal transportation for the middle class in eighties, priority was given to the sector by favourable foreign policy (India info line). In the last few years, the Indian two-wheeler industry has seen spectacular growth India is the second largest producer of two-wheeler in the world. The country stands next to China and Japan in terms of production & sales respectively (AutoIndia Mart). The two-wheeler industry in India has been in existence since 1955. In the time-period 1991-1999 reform process was deepened. These reforms encompassed several areas like finance, trade, tax, industrial policy etc. The two-wheeler industry in the nineties was characterized by (a) an increase in the number of brands available in the market which caused firms to compete on the basis of product features and (b) increase in sales volumes in the motorcycle segment vis-à-vis the scooter segment reversing the traditional trend.(george, Jha and Nagarajan 2002.) As a result of this today one has a huge choice in the motorcycle category as there are products available across all segments right from the entry level to the premium segment. Motor cycles on the other hand, have been traditionally positioned as vehicles of power and style, which are rugged and more durable. Scooters are perceived to be family vehicle, which offer more functional value such as broader seat, bigger storage space and easier rider nevertheless, the past few years have witnessed a shift in preference towards gearless scooters that are popular among women. Besides a change in demographic profile, technology and reduction in the price difference between motorcycles and scooters, another factor that has weighed in favour of motorcycles is * Head, ** Faculty, Department of Management Studies, D.K.M. College for Women (Autonomous), Vellore-1, Tamilnadu, India.
36 International Journal of Management Research and Technology the high resale value they offer (FADA, 2005). Buyer needs wants and desire keeps changing day by day. Factors such as technological innovation, competition, change in customers taste and preference create a demand for continuous research in this area. Hence the purchase decisions are mere complicated which needs a though analyses in the two wheeler sector in India. INFLUENCE OF VARIOUS FACTORS Consumer s buying behavior is influenced by cultural factor (Culture, Subculture and social class) social factor (reference groups, family and social roles and statuses), personal factor (buyer s age and stage in the lifecycle, occupation, economic circumstance, lifestyle, personality and self-concept, and psychological factors (learning, motivation, perception, attitude, personality) (Kotler, 2003). Even advertisements play a significant role in influencing buyer behavior to choose their bike in addition to factors such as Price, Mileage, Quality, Resale value, Status symbol. It was seen that in Hero Honda bikes the mileage and the Status symbol influences the decision criteria of the most of the customers. In Bajaj bikes customers get more influenced by the Price and Quality of the bike and also they think that it adds value to their prestige. While in case of TVS bike the economic price of the bikes influence the buying behavior of the customers. In rating different features of various bikes people go in the order of look and the shape, pick up, mileage, maintenance, price and brand image (Dixit and Singh, 2007). In order to gain better understanding of the factors that influence electric bike use. A study was conducted in which they identified that Electric bike users are generally more educated and earn more than bicycle users. User attitudes also affect why people choose electric bikes. Users primarily cite speed, effort, safety and crowded transit as factors that swing their electric bike choice. User attitudes, demographic attributes and vehicle performance significantly influence the electric bike choice. The higher the travel time difference the higher the likelihood of choosing an electric bike. (Cherry and Cervero, 2007). Among factors viz. Price, Mileage, Quality, Resale value, Status symbol, quality is the most important factor that influenced customers purchase decision. In addition, the respondents rated highest preference for the factor Performance when compared to Price, Mileage, Pick up, Maintenance, Look/Shape, Brand image, Style, Performance and Comfort. (Rizwan Aziz, 2009). Reliability and Responsiveness, Assurance and Empathy, Convenience factor, Tangibles and Financial factors were identified in which providing conveniently reliable services was the most important criteria identified in two wheeler services to capture Indian market (Bagodi and Mahanty, 2008). OBJECTIVES OF THE STUDY To study the demographic attributes of Two-wheeler customers. To identify the important factors involved in purchase decision of Two-wheelers. METHODOLOGY Two wheeler users was the universe in this study. Time was randomized for sampling respondents to collect primary data through survey instrument Questionnaires, which was developed, based
Factors Influencing Purchase Decision of Two-Wheelers 37 on review of literature. The survey instrument consisted of 48 items designed to collect the demographic detail, two-wheeler model possessed and attributes influencing purchase. Likert- Five point rating scale with intensity of strongly Agree, Agree, Partially agree, Disagree, strongly disagree was used to measure their cognition regarding performance, perception, beliefs, values, sales, service of the two-wheelers. People using TVS Brand two wheelers were the sample frame. Sample size was 184. TVS brand was chosen because of the forthcoming reasons. TVS motor company is the third largest two wheeler manufacturer in India and ranks among the top ten globally. India s first two-seater moped ushered in an era of affordable personal transportation. For the Indian Automobile sector, it was a breakthrough to be etched in history. TVS motor company is the first two-wheeler manufacturer in the world to be honoured with Hallmark of Japanese quality, the Deeming prize for the Total Quality Management. First time in the history of the automotive industry in the world, TVS has launched 7 new bike in a single day. The Taylor Nelson Sofres study showed that in the premium bikes segment, the TVS Apache came on top scoring over rivals Bajaj Pulsar 150 & 180 by a large margin in the customer satisfaction parameters (FADA, 2005). FINDINGS The Cronbach alpha was 0.922 for all the items which gives an indication of internal consistency and stability of the instrument used for the study.kmo and Bartlett s Test results showed that Kaiser-Meyer-Olkin Measure of Sampling Adequacy value was 0.848. Values between 0.8 & 0.9 are great & Factor analysis is appropriate for the data. Therefore factor analysis applied yields distinct & reliable factors. In Bartlett s Test of Sphericity, the p-value is 0.000 < 0.001 which again assures that factor analysis is appropriate. Demographic Attributes According to the reports from FADA (2005) over the past 10-15 years the demographic profile of the typical two-wheeler customer has also changed. Hence an attempt was made to collect demographic details of the respondents. Maximum numbers of respondents in the study are in the age group of 21-30 years, Male, from urban location, possessing U.G degree, with monthly income Rs.5001-10,000 and salaried personnel. This is in tune with FADA (2005) report that the demographic profile is unique and the customer is likely to be salaried and young (Table 1). Purchase Decision Factors To find out commonalities, the 45 items were factor analyzed by applying principal component analysis using Varimax with Kaiser Normalization because the objective of the research is explanatory. Four factors were extracted (Table 2). The first factor explains 27.369 % of variation with Eigen value 12.316. The total variance explained by all the factors accounted for 41.478%.The rotated component matrix (Table 3) depicted that 8 items loaded on factor 1. The maximum correlated item was The TVS-Motor bike is suitable to my budget. and with a minimum correlation of 0.532 for the item TVS motor bike make my job easy to earn money. With the value of 0.718.In the first factor the items that loaded highly are TVS Motor
38 International Journal of Management Research and Technology Table 1 The Demographic Attributes of Respondents Demographic attributes Percentage Age 21-30 Years 47.8% 31-40 Years 31.8% 41-50 Years 13.2% > 51 Years 7.1% Gender Male 79.7% Female 33.9% Location Rural 33.9% Urban 66.1% Education Below SSLC 2.7% SSLC 12.0% HSC 18.6% U.G Degree 48.6% P.G Degree 18.0% Monthly Income Less than Rs.5000 15.8% Rs. 5001-10,000 36.4% Rs. 10,001-20,000 23.0% Rs. 20,001-30,000 10.3% > Rs. 31,000 7.3% No income 7.3% Occupation Self-Employed 14.4% Salaried 32.0% Farmer 5.5% Businessmen 17.1% Student 20.4% House wife 3.9% Professional 5.5% Others 1.1% bikes suitable to one s budget, manageable weight, affordable cost of spares, affordable cost of service, motor bikes having long life due to suspension & shock absorbers suitable to our road conditions, TVS motor bikes serves as a means to save the expenditure on auto-fare & to earn money. All these items seem to relate to common themes such as reasonable price, inexpensiveness & within the means of purchasers. Therefore Factor 1 was named as Affordability. Factor 2 is loaded with maximum correlation of 0.669 describing The colour is very fascinating and with a minimum correlation of 0.514 for the item I fulfill the need of my family members by taking them on a ride. In the second factor the items that loaded highly are the colour of the bike, comfortable seat, happiness due to provision of self-start, contented maintenance, easy availability of service centers, ease in managing personal & official work by TVS motor bike, ease in fulfilling the need of family members by TVS motor bike. All these statements are seems to relate to common themes such as ease, contention, comfort & happiness. Therefore Factor 2 was named as Comfort.
Factors Influencing Purchase Decision of Two-Wheelers 39 Factor 3 is loaded with maximum correlation of 0.622 for the item The informations regarding the schemes are so fascinating and with minimum correlation of 0.540 for the item Resale arrangements of the TVS-Motor bike is good. In the third factor the items that loaded highly are fascinating advertisement regarding schemes, support & help from salesman, manageable interest charged for credit schemes, provision of credit schemes, attractive exchange offers, good resale value. All these statements seem to relate to common themes such as being considerate, caring, and helpful to the customers. Therefore Factor 3 was named as Customer care. Factor 4 is loaded with maximum correlation of 0.603 for the item My friends have TVS- Motor bike, so I too purchased one for mine and with minimum correlation of 0.528 for the item My neighbour has the same model, so I wanted to buy it. In the fourth factor the items that loaded highly are influence of friends to purchase TVS motor bike, getting the bike as a gift, influence of neighbours to purchase TVS motor bike. All these statements seem to relate to common theme influence from others. Therefore Factor 4 was named as External Influence. Table 2 Total Variance Explained by Factor Analysis for the Influence of Purchase Decision of Two-wheelers Initial Eigen values Extraction sums of Rotation Sums of Squared squared loadings Loadings Components Total % of Cumula- Total % of Cumula- Total % of Cumula- (Factors) variance tive % variance tive % variance tive % 1 12.316 27.369 27.369 12.316 27.369 27.369 5.903 13.117 13.117 2 2.509 5.576 32.945 2.509 5.576 32.945 5.636 12.524 25.641 3 2.076 4.613 37.558 2.076 4.613 37.558 4.987 11.081 36.722 4 1.886 4.190 41.748 1.886 4.190 41.748 2.262 5.026 41.478 5 1.770 3.933 45.681 6 1.619 3.597 49.278 7 1.445 3.210 52.489 8 1.332 2.960 55.448 9 1.260 2.801 58.249 10 1.200 2.666 60.915 11 1.060 2.357 63.272 12.999 2.221 65.492 13.992 2.204 67.696 14.947 2.104 69.800 15.887 1.972 71.773 16.842 1.872 73.645 17.791 1.758 75.403 18.769 1.708 77.112 19.707 1.571 78.682 20.692 1.537 80.219 21.645 1.434 81.653 22.607 1.350 83.003 23.573 1.274 84.277 24.523 1.161 85.438 25.511 1.135 86.572 Contd...
40 International Journal of Management Research and Technology Initial Eigen values Extraction sums of Rotation Sums of Squared squared loadings Loadings Components Total % of Cumula- Total % of Cumula- Total % of Cumula- (Factors) variance tive % variance tive % variance tive % 26.504 1.120 87.693 27.489 1.087 88.780 28.485 1.077 89.857 29.430.955 90.812 30.399.886 91.698 31.386.857 92.555 32.363.808 93.363 33.321.713 94.076 34.317.705 94.781 35.295.655 95.436 36.293.651 96.087 37.277.617 96.703 38.254.564 97.267 39.237.527 97.795 40.227.505 98.300 41.202.450 98.750 42.170.378 99.127 43.153.341 99.468 44.146.323 99.792 45.094.208 100.000 Extraction method: Principal component analysis Figure 1 Scree Plot of Factor Analysis for the Influence of Purchase Decision of Two-wheelers
Factors Influencing Purchase Decision of Two-Wheelers 41 Table 3 Rotated Component Matrix of Factor Analysis for the Influence of Purchase Decision of Two-wheelers Components (Factors) Statements 1 2 3 4 Affordability Comfort Customer External care influence The TVS-Motor bike is suitable to my budget..718.219.129 -.196 The weight of the TVS-Motor bike is manageable..704.131.102 -.260 Cost of the spares is affordable..681.237.132 -.143 Cost of the service is affordable..639.265.312.129 The suspension and the shock absorbers are suitable to our road.635.067.387 -.050 conditions and has long life The engine efficiency is optimum..618.267.237 -.028 I manage to reach office in time only because of my TVS-Motor.560.225.186 -.007 bike & save auto-fare. Having a TVS-Motor bike makes my job easy to earn money..532.406.027 -.065 The colouris very fascinating..120.669.219.021 The seat is comfortable..349.634.152.027 I am happy with the provision of self start..195.605.171.057 The fuel tank capacity is good..145.598.212 -.064 Maintenance cost is contented..272.566.245 -.143 I am able to manage my official and personal work by my.300.547.123 -.112 TVS-Motor bike. Service centers are available everywhere..202.536.272 -.214 I fulfill the need of my family members by taking them on a ride..469.514.115.081 The information regarding the schemes are so fascinating. -.065.240.622 -.010 The salesman convinced me to buy this TVS-Motor bike..158.135.611.219 The interest charged for the credit scheme is manageable..175.111.586.046 We get credit schemes for purchase..128 -.017.568 -.058 The exchange offer was so attractive..387 -.039.542.236 Resale arrangements of the TVS-Motor bike are good..359.045.540.054 My friends have TVS-Motor bike, I too purchased one for mine.024.073.100.603 I got the TVS-Motor bike as a gift. -.114 -.039.098.598 My neighbour has the same model, so I wanted to buy it. -.046 -.189.100.528 DISCUSSION Marketing orientation of any firm is based on wants and needs of potential customers. In emerging economy, the customer focus is the way of success and all the strategic decisions arise from it. As one could witness the changing scenario in the customer s tastes and preference, studies regarding the factors influencing purchase decisions play a vital role. This study had opened up new dialogues in customer s preference. The vital factor identified was affordability. The purchasing power of Indian customers is to be borne in mind while fixing up the price, down payment, installment payment etc. Management consultants conclude from their research that, credit would play a very important part in retaining customers
42 International Journal of Management Research and Technology (Balakrishnan, 2003). Affordability is considered not only at the time of purchase but also post purchase of the two-wheeler. Customer retention is also based on post purchase satisfaction (Bayus, 1985). This study has thrown light on criteria such as cost of service and spares, engine efficiency, weight and cost saving by the use of two wheelers. Customers considered all these attributes should be affordable. One attribute needs a special mention here, the replacement of spares such as suspension and shock observer has also gained prevalence. As India has Nine million kilometers of roads, of which only 50% are paved and 20% are in good condition, both rural and urban roads are poorly maintained (ASIRT, 2004), the suspension and shock observers are expected to meet the challenge. Moreover the frequency of public transport like Buses are comparatively less in India (ASIRT, 2004), where the Two-wheelers are the next choice as mode of transport either official or personal. The investment and maintenance of Two-wheelers should be affordable to Indian consumers. Comfort is the second factor identified. Colors play a role here as each emotion has a colour associated with it and vice-versa (Anon, 2004). Certain colors are considered to be auspicious by Indians. So colour provides comfort, whereby the manufacturers understands the colour emotion relation and has launched almost all colour choice in some models of two-wheelers. Colour plays a vital role even in their Advertising strategy. Ergonomically designed seat enhances the comfort level. Obviously self start relieves customers from the pressure of kicking. Increasing fuel tank capacity should be optimum during long drive and peak hours. As family is the basic unit of Indian society, a vehicle that is more comfortable to manage both family commitment and official commitment is perceived to lead comfort. Customer delight is influenced by front-line and sales staff courtesy (Sharma, 2003) which we term as customer care factor. Efficient salesmanship, easy accessibility of service centre, exchange offer, better communication and post-purchase service are grouped as customer care perspectives. Group Think (Fred Luthans, 2005) also contributes to purchase decision which we term as external influence. This factor reminds as about the traditional practice of giving gifts to kith and kin and the influence of friends and neighbors in selecting the two-wheeler. In this cut throat competitive scenario the marketing orientation of analyzing the traits of human behaviour is thus widely recognized as a powerful strategy to have an edge over the competitors. References Anonymous (2004), Colours of Emotion. http://everything2.com. Association for Safe International Travel ASIRT (2004), http://www.gwu.edu/~sita/ forms/ IndiaRoadSafety_Report.pdf. Bagodi, V & Mahanty, B (2008), Micro and Macro Analysis of Service Quality of Two-wheeler Service in India: To Capture Potential Market, International Journal of Services and Operations Management, 4(4), pp. 460-480. Balakrishnan, A (2003), Customer Relationship Management and Corporate Strategy: Strategic Initiatives. In Ed. Venkataraman Somayajulu, Customer Relationship Management, A Key to Corporate Success Excel books, New Delhi. Bayus, B.L (1985), Word of Mouth: The Indirect Effects of Marketing Efforts, Journal of Advertising Research, pp. 31-39.
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