A STUDY ON FACTORS EFFECTIING PURCHASE DECISIONS OF CUSTOMERS

TOWARDS V-GUARD WIRES AT V-GUARD KOCHI

Objectives of the Study

 To study the purchase decision of customers towards V-Guard wires.

 To analyse V-Guard brand image in comparison to rival firms.
 To explore the criteria the consumers use for purchasing V-Guard wires.

REVIEW OF LITERATURE
Earlier studies

The topic of consumer behavior is one of the massively studied topics by the researchers
and marketers in the past and still being studied. One of the common views is that
understanding consumer behavior has become a factor that has a direct impact on the overall
performance of the businesses (Kotler and Keller, 2012). It is worth noting that consumer
buying behavior is studied as a part of the marketing and its main objective it to learn the way
how the individuals, groups or organizations choose, buy use and dispose the goods and the
factors such as their previous experience, taste, price and branding on which the consumers
base their purchasing decisions (Kotler and Keller, 2012).

One of such studies of consumer buying behavior has been conducted by Acebron et al
(2000). The aim of the study was to analyze the impact of previous experience on buying
behavior of fresh foods, particularly mussels. In their studies the authors used structural
equation model in order to identify the relationship between the habits and previous experience
on the consumer buying decision. Their findings show that personal habits and previous
experience of the consumers have a direct impact on the consumer’s purchase decision in the
example of purchasing fresh mussels. They also found that the image of the product has a
crucial impact on the purchasing decision of the consumer and further recommended that the
product image should continuously be improved in order to encourage the consumers towards
purchasing.

Five Stages Model of consumer decision making process has also been studied by a
number of other researchers. Although different researchers offer various tendencies towards
the definitions of five stages, all of them have common views as they describe the stages in
similar ways. One of the common models of consumer decision making process has been
offered by Blackwell et al (2006). According to him, the five stages of consumer decision
making process are followings: problem/need recognition, information search, evaluation of
alternatives, purchase decision made and post-purchase evaluation.

Each stage is then defined by a number of researchers varying slightly but leading to a
common view about what each stage involves. For example, according to Bruner (1993) first
stage, need recognition occurs when an individual recognizes the difference between what they
have and what they want/need to have. This view is also supported by Neal and Questel (2006)
stating that need recognition occurs due to several factors and circumstances such as personal,
professional and lifestyle which in turn lead to formation of idea of purchasing.

In the next stage, consumer searches information related to desired product or service
(Schiffman and Kanuk, 2007). Information search process can be internal and external. While
internal search refers to the process where consumers rely on their personal experiences and
believes, external search involves wide search of information which includes addressing the
media and advertising or feedbacks from other people (Rose and Samouel, 2009).

Once the relevant information about the product or service is obtained the next stage
involves analyzing the alternatives. Kotler and Keller (2005) consider this stage as one of the
important stages as the consumer considers all the types and alternatives taking into account
the factors such as size, quality and also price.

Backhaus et al (2007) suggested that purchase decision is one of the important stages
as this stage refers to occurrence of transaction. In other words, once the consumer recognized
the need, searched for relevant information and considered the alternatives he/she makes
decision whether or not to make the decision. Purchasing decision can further be divided into
planned purchase, partially purchase or impulse purchase as stated by Kacen (2002) which will
be discussed further in detail in the next chapters.

Finally, post-purchase decision involves experience of the consumer about their

purchase. Although the importance of this stage is not highlighted by many authors Neal et al
(2004) argues that this is perhaps one of the most important stages in the consumer decision
making process as it directly affects the consumers’ purchases of the same product or service
from the same supplier in the future.

. The concept of brand image has been very significant to consumer behavior from post
1950’s. As Aaker and Keller confirmed in Hsieh’s study that, “brand image has been
considered a vital part of a firm’s marketing program, not only because it serves as a foundation
for tactical marketing mix issues but also because it plays an integral role in building long term
brand-equity” (1990).
Definition:

Earlier definitions of brand image are presented in broad terms by Dobni (1990) who put
forward the following writers understanding of brand image. Newman stated it as “everything
the people associate with the brand” (1957). Reynolds (1965) confirms that an image was
centered on drawing a few key beliefs from a vast variety of sources, thus creating your own
impression based on the brand. Herzog’s concurs that brand image was “the sum of the total
impressions.” (1973). Indeed, such definitions all concur together; echoed by the words of Levy
who stated that “a brand image is a constellation of pictures and ideas in people’s minds that
sum up their knowledge of the brand and their main attitudes towards it” (1978). A more recent
insight into brand image was added by Woodside who “defined image as the degree of positive
or negative affect associated with psychological object” (Reid, 2001).

Theory behind brand image:

According to Tyler (1957), there are three approaches to brand image: Subjective, Objective
and Literal. The first type, is a subjective image, this is when a potential customer hears or sees
the brand name/logo and feel obliged to purchase the product or service, despite a lack of
understanding as to why this is the case. The case simply relates to how the brand is perceived
as significant to an individual’s self-consciousness.

The second type of brand image is the objective form which is the attempt to generate an
emotional need for the product, leaving you with the feeling that you need to purchase the
product so as to satisfy this need.

The third is literal image, i.e. a logo which represents a company. This implies that upon seeing
this picture/logo, the name of the company does not need to be uttered as the picture tells the
consumer the whole story e.g. Nike with the tick or McDonalds with the golden arches.
Evidently, the approach used to obtain and sustain a brand image will vary upon several factors
as reflected by the analysis presented by Tyler. Oxenfeldt and Swann’s idea was that the brand
image should allow the company to establish its position within its market segment, protecting
it from competition, thus allowing them to build upon this with market share growth (Park et
al, 1986).

Moreover, Park et al (1986) put forward in Bhat’s article that the importance of establishing a
brand image relevant to its market segment in which it is based, is significant so as to ascertain
a strong brand position, help create a barrier to entry for potential competitors: thus raise the
brands performance in the market.

THEORETICAL FRAMEWORK

The term ‘Consumer Behavior’ refers to the study of how individuals make decisions
to spend their available resources on consumption related items. Studying customers provide
clues for developing new products, product features, prices, channels, messages, and other
marketing-mix elements.

DEFINITION: -

“Consumer Behavior is the process and physical activity individuals engage in when
evaluating, acquiring, using, and disposing of goods and services.”: Louden-Dellabitta

Consumer Behavior refers to the behavior that consumers display in searching for,
purchasing, using, evaluating and disposing of products and services that they expect will
satisfy their needs. Study of Consumer Behavior is the study of how individuals make decisions
to spend their available resources like time, money and effort on consumption related items.:
Schiffman and Kanuck.

In order to survive and grow the organization has to delight the customers. Consumers will be
delighted if they get more than what they expect. Study of consumer behavior helps in
knowing their expectations and the sacrifices they are ready to make in order to fulfill those
expectations. Study of consumer behavior assumes that consumers are actors in the market
place.
Consumers play various roles in the market place. Starting from information provider to
consumer, from user to payer and to disposer, consumers play roles in the decision process.
Different people play different roles in different stages of purchase. A purchaser or customer
may not be the same person for example a person who purchases a product for the family
may not be the consumer of the product.

3.3 Factors influencing Consumer Behavior

The consumer decision process explains the internal process as well as individual
behavior for making product or service decisions. The consumption process is influenced by
external factors like cultural, social, personal, and psychological factors.
Influence of Cultural Factors:
Culture, subculture and social class are particularly important in buying behavior.

Culture: -
Culture is the fundamental determinant of a person’s wants and behavior. Culture
refers to the traditions, taboos, values and basic attitudes of the whole society within which
an individual life. The growing child acquires a set of values, perceptions, preferences, and
behaviors through his or her family and other key institutions. E.g. A child growing up in
India is exposed to the values like tolerance, Equality, Sacrifice, love for the family¸ respect
for the elders and guru etc. Culture teaches an individual the acceptable norms of behavior
and tells him the right or wrongs. Cultural values affect how the business is conducted.
Culture also affects consumption behavior. Culture influences can be seen in the food habits
and dressing style of people. It also influences communication, attitudes and values that
influence consumption patterns. Culture influences are highly conspicuous in communication
messages. Use of colors, symbols, and language and message sources reflect culture. The
main aim behind it could be to tune their messages according to the cultural specifications of
various regions that they operate in. Culture values are passed on from one generation to the
next.
Subculture: -
Each culture consists of smaller subcultures that provide more specific
identification and socialization for their members. Subcultures include nationalities, religions,
and geographic regions. When subcultures grow large and affluent enough, companies design
specialized marketing programs to serve them. Such programs are known as diversity
marketing. E.g. In diverse country like India, people from different region show distinct
difference in their food habits and clothing styles. Also, the consumption pattern is also affected
by religious diversity.

Social Class: -

Social class refers to the hierarchical arrangements of the society into various divisions,
each of which signifies social status or standing. Social class is an important determinant of
consumer behavior as it affects consumption patterns, lifestyle, media patterns, activities and
interests of the consumers. Social classes not only reflect income, but other indicators such as
occupation, education, area of residence. E.g. two consumers earning the same income may
differ considerably in lifestyle when one has professional qualification at the post of graduate
level and is employed at the senior management cadre of multinational, while the other is self-
employed, with education confined to a few years of schooling. Social classes differ in many
characteristics.

Social classes show distinct product and brand preferences in many areas including
their lifestyles, they differ in media preferences, and there are also language differences among
the social classes. In addition to the cultural and social factors, a consumer’s behavior is also
influenced by factors such as reference groups, family, and social roles and status.

Reference Groups: -

An individual’s attitude, value and behavior are influenced by different groups. These
groups are called reference groups and they have direct or indirect influence on the individual.
Buying behavior of consumers is largely influenced by the reference group to which they
belong or aspire to belong. Reference groups are of two types:

Primary Reference Group:

This group is further divided into four subgroups namely (a) Membership reference
group: This is the group to which a person holds membership and has frequent interactions
with other members of group. He comes in regular and informal contact with the members of
this group and is directly influenced by them. (b) Aspiration reference group: This is the group
to which the individual does not hold any membership bur desires to belong to that group. He
tries to copy the attitudes and behavior, including buying behavior of the members of the group.
(c) Disclaiming reference group:

This is a group to which an individual holds a membership but does not want to belong
to and therefore, all his actions would be opposed to that of the group. He tries not to be
influenced by the attitudes, values and behavior of the members of this group. (d) Avoidance
group: This is the reference group to which an individual does not hold any membership. He
tries to resent the values and beliefs of such a group.
Secondary Reference Group: -
Secondary groups include religious groups professional associations and trade unions
with which the interaction of customer is formal and infrequent. Every reference group has its
own set of opinion leaders. Opinion leaders are perceived as people with special skills,
knowledge, personality etc. Opinion leaders influence actions or attitudes of others informally.
Marketers should identify the opinion leaders of their target group for specific product/s and
then they should target their marketing efforts towards these role models. The marketer can use
the
opinion leader to communicate the message through its promotion and advertising campaigns.

Family: -
A family is defined as two or more persons related by blood, marriage or adoption and
reside together. A family is a small reference group, but it is prominent in influencing consumer
behavior. Families go through various stages of lifecycle; each stage creates different demands
for different products and buying behavior of the members is greatly influenced by
the stage of the family lifecycle. E.g. Consumer demands of a bachelor are different from
those of a newly married couple.
Members of a family exert a strong influence on the buying decision. The husband, the
wife, and the children play different roles while purchasing expensive products and services
and
these roles vary from country to country. E.g. the major buying decisions in Indian family are
taken by the parents. Joint decisions are taken by the husband and wife for purchasing
expensive products and services. Therefore, marketers should be interested in the roles played
by the members and the relative influence each member exerts on the buying decisions.
Marketer tries to adjust their marketing mix to influence the decision of the decision maker in
the family.
Personal Factors: -
There are different personal factors, which affect the buying decision process. These
factors, such as the age, sex, lifecycle stage, occupation, economic conditions, personality, etc.
are unique to everyone.
Age and lifecycle stage: -
Changes in the society have led to the creation of different categories like couples
marrying late in life, childless couples, single parents, etc., besides the traditional lifecycle
stages which included young singles, married couples and lone survivors. Over the lifecycle
stages, people use different products and their demand for goods and services keep changing.
People at different ages will have different tastes on food, clothes, furniture and recreation.
Hence marketers should determine the needs of their target markets and introduce different
products and marketing efforts targeted at different stages.

Occupation and financial status: -

Occupation and income level of a person have a major impact on his savings and buying
behavior. E.g. A blue collar worker will indulge more in purchasing clothes, shoes, etc., which
he can wear to work. Similarly, a company’s chairman may buy clothes, accessories, and other
products and services that suit his lifestyle. The financial condition of an individual such as his
disposable his income, savings, his ability to buy costly products and services on installments
and bear the interest rates, etc. will have significant influence on his buying behavior.

Lifestyle: -

An individual’s way of leading his life will determine his lifestyle. Factors such as work
life, interests, social groups, etc. influence the lifestyle of an individual.

Psychological Factors: -
Psychological factors that influence consumer buyer behavior are motivation,
perception,
attitude and learning.
Motivation: -
A motive is a strong urge that drives a person’s activities towards unfulfilled
needs and wants. Consumers are influenced by a motive or a set of motives when they have
unfulfilled needs. Needs are the motivational elements behind the purchasing behavior of the
customers. One of the most widely known theory, hierarchy of needs, was proposed by
Abraham Maslow explains why people are driven by particular needs at a particular times.
According to Maslow needs are classified as shown in the following hierarchy.
(a) Physiological needs
(b) Security needs
(c) Social needs and esteem needs
(d) Self-actualization needs.
 Consumers tend to satisfy their needs on the basis of the intensity or requirement of the
needs. For example, physiological need is the most basic need and hence, an individual
would satisfy it first. Satisfaction of one need leads to emergence of higher level unfulfilled
needs. Needs are general in nature but wants to arise out of the desire to fulfill the needs in a
specific way. For example, food can be classified as a need but eating a particular dish or at a
particular food joint is a want. Wants that are conditioned by certain motives are known as
buying motives. Marketers must work to create these wants in the customers and target/
position their product in such a way as to invoke desire in the customer to fulfill these wants.

Perceptions:
Perception is defined as the process by which an individual select, organizes
and interprets stimuli into meaningful thoughts and pictures. Customers base their perception
on their needs, wants, past experiences and something that they consider to be true. For
example, a subscriber/ reader who read a particular newspaper or journal might perceive it to
give the true picture of the happenings around him. Perceptions of a person are affected by
many factors like reality, sense, risk, etc.
• Customers perceive their environment through the sense of touch, smell, hearing, etc.
• Customer’s buying decisions are also influenced by the risk factor involved. For example,
does the customer perceive the product to be safe, does he find it worth in spending the
time shopping, and does he think that the price is worth the amount paid for? Marketers
can address these problems though appropriate marketing communication strategies.
• Understanding the customer’s perception helps the marketer position their product better
than that of the competitors, it helps them develop the right store image, product quality,
price, distribution channel etc. Hence marketers must make an effort to understand the
perceptions of the customers and adjust their marketing mix accordingly.
Beliefs and Attitude:
A belief is a descriptive image or thought that an individual hold about something.
People acquire beliefs and attitudes through experience as well as learning. The beliefs and
attitudes held by people, in turn, influence their buying behavior.
A person’s attitude is a set of his feelings and the way in which he reacts to a given idea
or thought. Attitudes can be positive, negative or neutral. Customer attitudes are based on their
past experiences with the products and through their interaction and relationship with their
respective reference groups. Customer’s attitude can have a major impact on a firm’s marketing
efforts. For example, a customer with a negative attitude towards a company or its
product, does not only stop purchasing the product but is likely to influence, by appealing, his
reference group to refrain from buying the same.