Research_Proposal__Consumer_Buying_Behaviors_on_Cars

Business Research Methodology (BA306) Research Proposal: Analyze the Consumer Car Buying Behaviors Submitted To Dr. Givental Submitted By Tushar Tambe Date: 11/29/11 Contents Introduction 3 Research Questions and Objective 4 Literature review 5 Methodology and Data collection 6 Data Analysis and Expected results 7 Limitation of research 8 Budget 8 Conclusion 9 Bibliography 10 Appendix Introduction Uncertainty and change are among the dominant sentiments characterizing the automotive industry today. Vehicle sales in many markets have fluctuated up and down over the past year, reflecting the unstable economic environment, volatile fuel prices and the residual impact of the earthquake in Japan. Positive signs include an increase in the number of new – compared with used – car buyers in mature markets and an increase in overall satisfaction with the vehicle buying process. On the downside, however, brand and dealer loyalty declined slightly and many consumers indicated they were postponing buying a car until the economy shows more signs of stability. Those consumers who are in the market are interested in innovative technology and ownership models, including online buying, alternative fuel vehicles, Smartphone applications and mobility solutions like vehicle sharing. Understanding these rapidly Understanding these rapidly evolving dynamics is essential to success for automotive companies. The proposal offers insight into how consumers in both mature and developing markets shop for vehicles, factors that influence their buying decisions, the growing role of after sales/servicing and how to maintain their loyalty through the vehicle lifecycle. As the vehicle buying process evolves, it is important to recognize that selling vehicles is as much about the car buyers as it is about the cars themselves. Much attention has been placed on developing markets because they represent a key to current and future growth for the automotive industry. However, significant risk/reward challenges exist in these markets.On the reward side, sales potential is high. On the risk side are logistics, infrastructure and bureaucratic challenges, as well as cultural differences, complex tax structures, and political and regulatory obstacles.While automotive companies are focused on building their business in the developing markets, consumers point to a potential downside of the rapid growth. Research Questions * How the use of the Internet influencing the vehicle buying process and ownership lifecycle continues to expand into new areas. * What are the alternative buying models adopted by the consumers * Growing factor in consumers’ choice of vehicle and can be a key to vehicle sales. Objective The research objectives for the project undertaken can be defined as follows: To determine the customers perception in buying a new car. To find the different source customers prefer to buy or get information about the car. Different parameters customer focus on before buying a car. Literature review The material gathered from websites and magazines like Auto zone indicated a new trend in consumer buying pattern and to study this behavior I took reference of a article published in website of Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, today announced the findings of its 13th annual global automotive study, Cars Online 11/12. This year’s report reveals increased interest in buying cars online, and a growing demand for new vehicles in mature markets (66 percent, up from 61 percent in 2010). At the same time, however, many consumers indicated they were postponing buying a car until the economy shows more signs of stability. New ownership trends such as car-sharing and technology developments like Smartphone apps are also impacting the global automotive industry as the number of channels for researching and buying cars increases, and customers’ expectations and choices continue to rise. The study surveyed over 8,000 consumers in Brazil, China, France, Germany, India, Russia, the UK and US and provides a detailed analysis of consumer vehicle buying behavior around the world including shopping patterns, social media usage, online buying, green vehicles, and customer interaction and after sales and servicing. The role of the Internet during the vehicle buying process is becoming increasingly important, with fewer people visiting showrooms until very close to the point of purchase. Web usage for both purchasing and research has increased, with the number of consumers researching online reaching 94 percent. This is driven in part by increased use in developing markets. Methodology The study is based on primary data collection with a sample size of 75 respondents residing in Oakland, Ca. The questionnaire used for the sample survey is a structured and non-disguised questionnaire and consisted of two major sections. The first section intended to collect the various demographic factors; the second section intended to collect the various opinions containing questions about the various factors affecting the car purchasing decision. A five point Likert scale was used to capture the consumers responses ranging from strongly agree to strongly disagree. The different statements regarding the various factors affecting the car buying behavior of customers were generated based on literature review as well as expert opinion in an iterative manner. It could be therefore said that the itemized scale in this case actually asks the respondents to rank their opinions in a decreasing order of importance. Data analysis was done using SPSS software. The statistical analysis methods employed was factor analysis. To study the impact most frequently indulged in weighted average method was used. Data collection The study entailed data collection with the help of a questionnaire from the residents in Oakland; CA. Data was collected by personally contacting the respondents and explaining in detail about the survey. A total of 120 customers from different areas were contacted and 100 correctly completed questionnaires were obtained from all the customers. Data Analysis and Expected results Web usage for researching vehicles edged upwards this year, reaching 94% overall, driven in part by increased use in developing markets. More importantly, use of the Internet has expanded into areas such as: online buying of vehicles, parts and accessories; growing reliance on social media and user-generated content as a source for vehicle and dealer information; and mobile web growth during the buying cycle and post-sale as consumers look for vehicle-related Smartphone applications. Consumers indicated strong interest in mobile/Smartphone applications for their vehicle, particularly post-sale. Apps considered most useful by consumers include remote support features such as remote locking/unlocking of vehicle doors (named by 68% of respondents) and a parked car locator using GPS (64%); vehicle information such as a vehicle owner’s manual with easy navigation (63%); driving support features like vehicle health information/status of vehicle operations (64%) and diagnostic trouble codes (63%); care information like service reminders (67%) and manufacturer vehicle notifications (63%); and communications such as roadside assistance with an easy-to-navigate single click (67%). Nearly 40% of respondents would consider a vehicle-sharing or ride-share program as an alternative to traditional buying/leasing of a vehicle, and almost half would look at a mobility package . The interest was particularly pronounced among younger consumers and in developing markets. If this trend continues it could represent a significant shift in the way consumers think about car buying and ownership and lead the industry to consider alternative business models. Recognizing the potential impact of this change, some car rental companies and vehicle manufacturers are testing models such as mobility packages. Servicing is taking on a bigger role for many consumers, particularly in developing markets. After sales servicing ranked as the fourth most important factor in selecting a vehicle this year (tied with interior/exterior styling and fuel economy), up from seventh position the prior year. In addition, servicing dealers can influence future buying decisions. More than half of respondents said they were likely to buy their next vehicle from the same dealer they currently use for servicing Limitation of research Time Constraint and geographic constraint in gauging the global opinion on the survey questionnaire. Timing We are expecting to complete our research in 16 weeks. Budget The amount is subject to assumption contained in these proposals and we reserved the rights to make adjustments should any assumption prove to be incorrect. Conclusion Consumers focus on factors such as reliability, safety, and price and fuel economy. At the bottom of the list are cash-back incentives, named by fewer than half of consumers. The importance of incentives as a deciding factor has declined for the past several years, indicating that consumers today seem less interested in gimmicks when it comes to their car purchases. Where consumers are in the buying cycle can make a difference in how they rank the factors that influence their vehicle choice. However, the number declines as consumers get closer to actually buying the car: 55% of respondents who were within three months of purchase said extra warranty coverage was important. This reflects the fact that consumers will narrow down the factors that really matter to them as they get closer to the point of purchase. Demographic factors such as age and gender accounted for some variances.. The youngest respondents were most likely to rate the ability to research information on the Internet as an important factor in their vehicle decision. Women tend to rate most of the factors as more important than do men. The difference was most pronounced for cash-back incentives, low financing, safety, environmental issues, fuel economy and additional warranty coverage. Bibliography http://www.us.capgemini.com/insights-resources/publications/cars-online-1112/'ftcnt=10110 Auto Zone Magazine September 2011 www.wikipedia.com