Factors Affecting Consumer Preference while Purchasing
Hyundai Vehicles
Sameer Bidari
Masters of Business Administration
Kings International College
April 17, 2021
Table of Contents
Chapter I: Introduction
1
1.1 Problem Statement
2
1.2 Objectives of the Project
3
1.3 Research Hypothesis
3
1.4 Limitation of the Project
4
1.5 Organization of the Project
4
Chapter II: Literature review
2.1.
5
2.2.
6
2.2.1.
6
2.2.2.
7
2.2.3.
7
2.2.4.
8
2.2.5 After-Sale Service
Chapter III: Methodology
3.1.
10
3.2.
10
3.3.
10
3.4.
11
3.5.
11
5
8
10
Conclusion
12
References
13
Chapter I: Introduction
This research aims to find out how consumer preference is affected while selecting a
specific automobile brand. Though the Automobile industry was dominated by Maruti
Suzuki till the late nineties, things have changed over the two decades. Nowadays, wellestablished automobile brands aim to enhance their productivity and maximize profit.
Automobile brands consider product quality and standards the most vital aspect during
the manufacturing process (Balon, Sharma, & Barua, 2016). Nepal’s automobile
industry has expanded its scope where different brands around the world compete to
acquire a significant amount of market share. As of now, various automobile brands
compete in the market. It is estimated that more than 20 automobile dealers operate in
Nepal, which is a small proportion when compared to other countries (Poudel, 2019).
Nepal has invited brands that were previously not introduced or sold. This provides an
opportunity for the consumers to choose among various alternatives and differentiate
among various automobile brands.
Today, vehicles are classified in various categories namely: The sedan, the hatchback,
the SUV, the MUV, the Jeep, and various others which are now seen on the roads of
Nepal. This has resulted in increasing competition to achieve higher revenue and profit
than its competitors. Now, consumers have the freedom to choose from various
automobile brands that meet their needs. This research aims to find out how consumers
prefer and select their automobile brands. The possibility of a consumer engaging in an
active conclusion while choosing an alternative has an expected default option (Dinner,
Johnson, Goldstein, & Liu, 2010). Various labels can be seen when purchasing an
alternative. These labels may be price, brand, product features, durability and resale,
and after-sales service are the few out of many indicators that attract a consumer to
purchase a product or a service. These factors may determine the level of enthusiasm
shown while purchasing a specific automobile brand.
Nepal’s automobile industry felt some offset between 2015-2021, mainly due to the
earthquake, nationwide blockade, and the COVID-19 pandemic. During this period, the
sales of the automobile industry were significantly low, this, in turn, affected the
industry and it saw some adverse ramifications (Dhungana, 2016). However, people are
more into purchasing a private automobile (Scooter, Bike, car) than commuting in
public transport because of the COVID-19 pandemic. This is a positive indication that
1
the automobile industry is picking up pace and making sales to sustain its operations
(Prasain, 2020). By the end of 2021, there will be approximately 1.2 million
motorcycles and scooters, and almost 250 thousand private cars in Kathmandu alone.
This indicates positive growth in the automobile industry.
Hyundai is seen as one of the major automobile brands in Nepal along with Maruti
Suzuki. These two brands have dominated the industry for decades and still can meet
the demands of their consumers. The introduction of electric vehicles and hybrids has
revolutionized the automobile industry of Nepal, and consumers are aware of the
positive impact of such vehicles. However, some consumers still prefer traditional
vehicles like Mahindra and Tata. This research aims to find out how the consumer
preference is differentiated while selecting a Hyundai as their automobile brand
1.1 Problem Statement
It is a difficult task to determine how consumer prefers an automobile when various
automobile brands are competing in the market. The buying behavior of the consumers
varies widely for products like toothbrushes, cell phones, bank and financial services,
and a vehicle. The more complicated a purchase decision will involve the consumer
with a high degree of involvement and deliberation (Kotler & Armstrong, 2013). The
introduction of a new product will fluctuate the sale of other products in a similar
industry. The same applies to automobile brands. Whenever automobile manufacture,
for example, Hyundai, launches its product in the market, the sale of Maruti Suzuki
fluctuates. As there is a huge competition among different industries in the market,
several of the consumers practice diversified differed-choice alternatives including
attempting to get more knowledge on existing choices and future preferences (Corbin,
1980).
The main aim of this research is to identify the factors that determine how consumers
choose while selecting or purchasing a Hyundai Vehicle in Nepal. It analyses how
different alternatives that are presented to the consumers affect their purchase decisions.
This makes the market more competitive and the automobile and the brands have a
tough time making a sale when innovations are introduced in short periods. The
difference in brand equity, price range, product features, durability and resale value,
and the after-sale service doesn’t stop the consumers from procuring a vehicle that
meets their demand. To see through all the factors and come to a decision indicates that
2
the consumers spent an ample amount of time differentiating among various
alternatives. There are more new and innovative automobiles entering the market every
year. The consumer now has lots of variations to choose from when purchasing a
vehicle. Those variables should be explained and found out if are necessary or not while
purchasing a Toyota vehicle.
1.2 Objectives of the Project
The main objective of the research can be classified as “Factor affecting Consumer
Preference while purchasing Toyota Vehicles”.
The basic research question of the project can be classified as:
● To identify the relationship between brand name and buying behavior of
Hyundai vehicles.
● To examine how price affects the preference of the consumers while procuring
the Hyundai vehicle.
● To determine the effect of product features and specifications during the
selection of the Hyundai vehicle.
● To understand the relationship of the vehicle durability and resale value while
selecting the Hyundai vehicle.
● To understand the impact of after-sale service while selecting a Hyundai
Vehicle
1.3 Research Hypothesis
This research has identified and set five alternative hypotheses. The alternative
hypothesis is as follows.
● H1: There is a significant relationship between brand and consumer preference
while purchasing a Hyundai Vehicle.
● H1: There is a significant relationship between price and consumer preference
while purchasing a Hyundai Vehicle.
● H1: There is a significant relationship between product features and consumer
preference while purchasing a Hyundai Vehicle.
● H1: There is a significant relationship between durability and resale, and
consumer preference while purchasing a Hyundai Vehicle.
● H1: There is a significant relationship between the introduction of after-sale
service and consumer preference while purchasing a Hyundai Vehicle.
3
1.4 Limitation of the Project
● The study is about a particular industry, which may not create other
associations.
● The utilization of surveys may restrict the capacity to make determinations
about the client's insight and their genuine encounters.
● The study directed during a specific time frame won't bring about elements that
have long-haul impacts.
● Non-respondents during the study were a snag, which has confined the
examination work somewhat
1.5 Organization of the Project
This proposal is divided into 3 sections:
Chapter 1: This chapter includes a brief introduction of the topic, problem statement,
and the objectives or questions of the project.
Chapter 2: This chapter includes the literature review which incorporates the
fundamentals of conducting the research, explains the constructs of the subject, and
how previous researches were done.
Chapter 3: This chapter shows the methods used to address the issue and the
hypothetical structures around which relationships between the issues and the subject
were presumed.
4
Chapter II: Literature review
The automobile sector is a vast area of the topic which has been researched several
times in the past. It is often considered that the factors affecting consumer preference
are never constant. In this competitive market, the market share can fluctuate every
hour of the day. This results in the diverse alternative that consumers can exploit which
determines their purchase and preference pattern. Various studies have been conducted
to identify the elements of consumer preference.
2.1.
Consumer Preference
The market demand and the way it reacts to the various elements of consumer
preference can be linked to the theory of consumer behaviour. Every individual is a
consumer and every consumer has their own needs and preferences which is off-topic
to the Principle of Economics. Preferences of an individual can vary according to their
culture, education, taste, attitude, and so on (Univertsity of Southern Indiana, 2006).
This unique pattern of taste and preference is often the outcome of their perception of
products or services. The consumer often symbolized a brand or a product and they
usually prefer those products that symbolize their needs. When a brand presents itself
with a symbolic meaning it should be constant with its status quo. (Sirgy, 1982).
In past, researchers often focused on the decision-making literature, engaging
researchers in analysing the consumer when provided with diverse alternatives, which
they assumed were important variables. This referred to an idea that the consumer
preference decision can make it difficult to make a decision when they were provided
with the various option, which initiated a decisive advantage (Dhar, 1997). To adapt to
a competitive market an organization must meet the needs of its consumers. The
consumer would prefer those products which should be available the way they prefer
the product, the availability when required, and without any hassle (Hyken, 2011). The
preference and attitude of a consumer on any given product or service can shift and is
always unpredictable.
The demand and supply of any given product depend upon the preference towards it.
The demand curve represents the preference of product or services, which is constant,
where only the change in price and quantity are mentioned and noted. The increase in
the demand curve occurs when there are positive alterations in the preference of the
consumers. If the supply curve remains constant, the price and quantity would go up.
5
2.2.
Basis of Consumer Preference for Automobile
Consumers would buy those products or services that represent their inner self when
many factors are considered (Britt, 1966). Likewise, a decision of the consumers
whether to make a purchase or not preferring to shop at a specific place is often the
outcome that does not meet their needs and perception of themselves (Hupp, 1968).
A consumer has the freedom to choose from many sellers. A consumer can choose a
property instead of buying an automobile. In this modern world, the purchase of an
automobile is considered the secondary expensive alternative. When first-time buyers
will make a purchase decision, they will be affirmative with the brand image which
would be advantageous and sustainable and it will motivate an individual to make a
repeated purchase (Shende, 2014). The purchase decision of an automobile has many
factors to be considered.
2.2.1. Brand
A unique name. design, symbol; term, or any characteristics that inform the consumer
about the product or guide us to identify a product or service conveniently can be termed
as a brand (Marion, 2015). Consumers tend to act and perceive in a different manner
trying to grasp the meaning of the brand. Making a buying decision regarding an
automobile can a luxurious and is often a secondary choice to real estate. The brand is
a factor that influences the preference of the consumer. A brand often results in
forecasting and generating demands to optimize productivity and profit. The brand is
an element that protects the market share from its competitors allowing organizations.
to invest more with a high level of confidence (Loken, Ahluwalia, & Houston, 2010).
When referred to the automobile buyers, their perception of their vehicle is usually
congruous with their perception of themselves and the perception towards a specific
automobile brand is different among the consumers (Ross, 1971). People who purchase
an automobile often consider the goodwill of the brand. Hyundai as being made in
South Korea has been considered one of the top automobile brands to prevail in Nepal’s
Automobile Market. Consumers trust Hyundai as an international brand that has settled
itself well in the market and automobile industry of Nepal. A brand for any organization
is an essential aspect as it represents the company’s value in the market. Brand name
influences the consumer’s estimation and regulates the image of the product which
affects their purchasing decision.
6
2.2.2. Price
Any amount that has been presented to a manufacturer of a service provider for a
product or service, identified by research, understanding, calculation and the risk-taking
trait is usually considered as price (Times, 2017). Consumers often categories price
level to status. Price is often categorized into low, medium, high, and luxurious. This is
an indication to an organization to formulate a pricing strategy that meets the need of
its consumers. In the context of Nepal, the price of an Automobile is significantly high.
So, it is quite a common practice for consumers to resort to used cars and two-wheelers
which are relatively cheaper. Broadly speaking, consumers often rank a brand with a
relationship to their price level (Hasan, 2008). A consumer will always consider price
as an important factor while purchasing an automobile. Budget always plays an
influencing role when consumers are willing and able to purchase an automobile.
Interest rate also determines whether an automobile brand can make a sale of a vehicle
concerning the price of that vehicle. The price and interest rates are two sides of the
coin and it often entails whether the price of an automobile will be low or luxurious.
The fluctuations in the interest rate are directly proportional to the sale of an automobile
(Awasthi, 2014). In Nepal, the constant fluctuations and alterations in the policy of
interest rates and down payments have created difficulties for automobile brands. When
the interest rates are low people can purchase an expensive vehicle, but when the
interest rates are high people will have difficulties buying even medium and/or lowpriced vehicles (Palermo, 2013). People are very careful about the interest rates while
the selection of the vehicle so that they can pay their EMI and clear their loans properly
as the price of the product is in direct proportion to it.
2.2.3. Product Features
Product feature can be defined as anything that enhances a product. In Automobile, a
product feature can represent can be from the smallest of element like headlight,
bodywork, accessories, and so on. Every automobile manufacturer wants to capture a
significant market share. Especially in this competitive environment, the pressure
surpasses the operations. So, automobile brand wants to come up with new innovative
features to keep their competitors at bay. Marketers often do not want to make major
changes regarding the feature of their existing product, they usually get engaged in
marketing campaigns to maximize profit (Hanssens, Parsons, & Schultz, 2001).
7
Consumers do not prefer a product that has a boring design with mainstream features.
The features that are represented to the consumer influence their preference towards a
brand. The feature attracts the consumers to dispose of their income to buy a product
like an automobile. Product features can be best defined when considered Rolls Royce
as an automobile brand. It offers its customers an option of 44,000 custom bodywork
options. Once, a customer of Rolls Royce crushed a bag of diamonds that were crushed
and blended into the Rolls Royce to add a spark (Symes, 2020). This is one of the
reasons why Rolls Royce is one of the most expensive Automobile brands in the world.
This is all because they provide custom product features to their customers.
The price often fluctuates depending upon the features it encompasses in any model of
an automobile manufacturer. Higher the specification, the price grows exponentially.
Product Feature often showcases the information of a product regarding its sizes,
equipment, and accessories of an automobile. These attributes become a factor that
diverts the influence of the preference that would satisfy the needs of the consumers
(Armstrong, 2010). The consumer looks through various options features and
specifications before they select an alternative. They will go through different varieties
of them and learn about them and choose carefully over them.
2.2.4. Durability and Resale Value
Resale value and durability are often considered important factors that may influence
the preference of the consumers. Resale value is often considered when a consumer
decided to sell or dispose of their automobile. As many automobile brands operate to
acquire market share, a good resale value is often considered by the consumers (Byun,
2001). In recent times, it is known that maintenance is often cheaper than the traditional
vehicle that operates on fossil fuel. This is the reason why hybrid vehicles are gaining
popularity among automobile consumers. Consumers assess durability with the quality
of the product at hand. Durability often influences the preference of the consumers.
Every consumer wants a product or service that lasts for a long time rather than
preferring a product that is easily dented or damaged (Swan, 1972). Consumers often
prefer a vehicle that is durable and offers them a decent resale value.
2.2.5 After-Sale Service
The business has become more competitive in recent times. Today the relationship with
the customers is not limited to buying and selling products or services. Today,
8
organizations can retain their customers if they provide them with good service aftersales. Organizations lagging on the after-sale service often incur losses and in some
cases go bankrupt. The quality of service that is provided to the consumers often results
in their satisfaction (Kimando & Njogu, 2012) After-sale service can be defined as any
act performance or information that defines or enhances the innovative and major
product of an automobile brand (Capon, 2009). After-sale service is one of the major
elements that add value to the brand image and is often an influencer that directs the
preference from one automobile brand to another automobile (Pride, W.M., & Ferrell,
2010).
Offering a quality after-sale service can be beneficial for an organization as well as is
directly influential to the overall satisfaction of the customer satisfaction (Shanka,
2012). After-sale service can satisfy the customers as well as lead to customer loyalty
towards a brand (Sabir, Ghafoor, Akhtar, Hafeez, & Rehman, 2014). When an
organization wants to attract consumers to purchase its product or service, the quality
of after-sale service should meet the needs and demands of the consumers. To grab
customer’s attention and to seek customer satisfaction the quality of the service should
meet the demands of the people. Service quality determines the status of the
organization so it needs to be satisfactory to the consumers (Dhakal, 2012).
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Chapter III: Methodology
3.1.
Research Overview
This research methodology is designed to find out about the consumer preference
analysis while purchasing the Hyundai vehicle. The four factors which have been
considered are the price while purchasing a vehicle, durability and resale, product
features, the brand of the company, and the after-sale service provided to the
consumers. This research relies on primary data and secondary data which will be
collected from various customers who have purchased and are using Hyundai and
other models of different automobile brands.
3.2.
Conceptual Framework
In this research, there are two dependent and independent variables. The dependent
variable is the selection of the automobiles (Current Automobile Preference and
future Automobile Preference) and the independent variables ( Brand, Price, Product
Feature, Durability and Resale, and After-sale service) are the various factors
affecting it.
Hypothesis
H1: There is a significant relationship between Brand and consumer preference while
purchasing Hyundai vehicles.
H1: There is a significant relationship between Price and consumer preference while
purchasing Hyundai vehicles.
H1: There is a significant relationship between Durability and Resale Value and the
consumer preference while Hyundai vehicles.
H1: There is a significant relationship between Product Specifications and Features
and consumer preference while purchasing Hyundai vehicles.
H1: There is a significant relationship between After-sale service and Features and
consumer preference while purchasing Hyundai vehicles.
3.3.
Data Source
Primary and secondary data will be used to collect data for analyzing the research
topic. Primary data will be acquired through the medium of the questionnaire, while
the secondary data for reference will be taken from various websites and study
materials. The questionnaire will be filled by participants. The questionnaire will be
given out to various Automobile owners.
10
3.4.
Collection Tool
The collection of the data will be majorly done with the help of a questionnaire which
will be distributed to various automobile owners. Laxmi InterContinental Pvt. Ltd.
can give us a good platform to present our questionnaire to various automobile users
who visit there. The main purpose of the information will be based upon independent
variables of the conceptual framework. The questionnaire is made in simple language
so that everyone could understand it easily. The questions are in simple multiresponse questions and scale from 1 to 5, making 1 the Strongly Agree and 5 the
Strongly Disagree. The other data can be taken from various websites to help with the
findings. The questionnaire consists of the question regarding the demographic
information and the variables required to conduct the research.
3.5.
Analysis Tool
After the questionnaires are collected and all information is gathered it will be
analyzed in the SPSS (Statistical Package for the Social Sciences). Various Statistical
tools and methods will be used to find out the stated research objectives. Frequency
distribution and mean methods, descriptive statistics, and regression analysis are
being commonly used for deduction and analyzing purposes.
11
Conclusion
The main purpose of the research is to conduct and find out the factors responsible for
consumer preference while purchasing Hyundai vehicles. The study will be based on
the responses noted from the questionnaire, and all the findings will be analyzed
accordingly. The research will be based on a variable like Price, Brand, Durability and
Resale, Product Features, and after-sale service.
12
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