Consumer Automobile Purchase in the UK

Outline

This study has been undertaken to study the present consumer behaviour in automobile purchase in UK.
At the beginning the decision making process and buying instinct of potential buyers are seen and analysed. Next the criteria for purchase, taking illustrations of both first hand, and second hand cars have been made.
Next, the comparison of these criteria with other respondents are made.
Finally, the matching of the respondents with existing data has been matched and analysed.
The study concludes on a note that while many factors determine consumer behaviour there are certain major and time tested facts that need to be considered.

Introduction

Consumer buying decision is influenced by cultural, social, psychological, and personal or situational factors. Socio cultural influence on buying includes influence from personal, reference groups, family, social class, culture, sub culture, sub groups etc. These social and cultural factors are playing a major role in buying behaviour of the customers as it usually affects the needs and size of the potential market.Psychological influence which makes purchasing decision involves motivation, personality, perception, learning, beliefs, attitudes and lifestyles. Situational influences of buying decision are social or physical surrounding, purchase task etc. “Consumers actively want to associate themselves with certain brands and this makes a large influence on their buying behaviour. The impulse customers may not care about brands as much unless influenced by other variable.” (Satchu 2008).

Marketing mix variables such as product, price, promotion and place is also playing an important role in shaping purchasing decision. “The current financial climate is having a big impact on car buying behaviour. The motoring industry is hugely affected by fluctuating fuel prices, economic uncertainty and lack of consumer confidence.” (Huggins 2008).

Company always has to face the changing mood or conditions of the buying behaviour of consumers. As a result of the changing behaviour the evolution of marketing concept has got many orientations like exchange oriented marketing, product oriented marketing, sales oriented marketing or selling concept, marketing oriented approach, customer oriented marketing and socially oriented marketing. Customer oriented approach is related to the needs of the buyer and only such products are brought forward which can satisfy the wants and tastes of the consumers. Customer oriented thinking requires the company to define customer needs from the customer point of view, not from its own point of view. “Automotive sites that accommodate consumers’ diverse research styles and needs will capture buyers’ attention and succeed in influencing purchase decisions.” (Weeks, 2004). Decision making process:

Consumers go through a decision making process and it involves series of steps. Understanding these steps is helpful in making appropriate change in the marketing mix of the company’s product.

“There is more to making a purchase than just making the purchase itself. All consumers go through several decision steps when making any kind of purchase, whether large or small.” (Kenney, 2007).

Decision making steps are as follows:

• Problem or need recognition: Buying process starts with the recognition of need or problems. It may be because of several external and internal factor influences. Problem recognition will occur due to changes in the changes in states of mind or physical states of situation.
• Information search: Consumers will search for information regarding solutions to the needs or problem. Consumers will search information for buying a new car or when they need solution for the problems with their old cars. Consumers will collect information from various sources such as family, friends, neighbours, and other printed and online/internet sources will also be taken into consideration. Perception is the most important element which influences the way consumers receive the information.
• Evaluation of Alternatives: Evaluation of different purchase options is made and each of the product benefits and features will be evaluated. Usually consumers will have some preferences and tastes for particular brand, dealers, etc. Historical data and comparison study will also be made by some customers before choosing a company’s product. Consumers will not evaluate all the brands available in the market instead they will set few of their selected brands before making purchase decision.” Having collected the information, the consumer clarifies and evaluates the alternatives. There is, unfortunately no simple and single evaluation process used by all consumers or even by one consumer in all buying situations.” (Stages of Buying Process: Evaluation Behavior. 2007).

Purchase decision

After the evaluation process purchase decision will be made and is the final decision regarding which brand needs to be purchased. It is the final process of making a purchase action and involves decision such as when to buy, from where to buy, etc.

• Post purchase decision: When customers are dissatisfied with the purchases it is going to affect their future buying pattern and their word of mouth will be taken seriously by other prospective customers. After the purchase, the consumers may feel either satisfied or dissatisfied. They will be satisfied when they feel that it is worth for the money spends. And also get dissatisfied when it is not worth for what they spend. “Overcome the purchaser’s regret by offering warranties, after purchase follow-up calls, and extended trial periods. Too many companies forget the customer after the sale. Establish a habit of calling all customers after they have purchased and used product or service.” (Zahorsky, 2008).

Consumer makes purchasing decision after finding their needs. Next stage is the information collection and evaluation of alternatives. Finally buying decision is made by influence of product, price, brand, dealers etc. Consumer future purchase is influenced by post purchase satisfaction.

Basic model of consumer decision-making process

Valarie Zeithaml and Mary Bitner have adopted the four basic model of consumer decision-making process and includes following steps:

• Information search.
• Evaluation of alternatives.
• Purchase and consumption.
• Post purchase evaluation.

“Almost two thirds of motorists have decided to delay changing their car because of the credit crunch according to a new poll by Motorpoint, the UK’s leading car supermarket.” (Credit Crunches Causes Change in Car Buying Behavior. 2008).

There are generally four types of buying behaviour, they are:

• Complex buying behaviour: Purchasing decision of a car exhibits complex buying behaviour. Buyer usually is unaware of making decision by self and they seek information from various sources and also product cost will be higher. “Complex buying behaviour is where the individual purchases a high value brand and seeks a lot of information before the purchase is made.” (Types of Buying Behavior).
• Habitual buying behaviour: Consumer will not make any information gathering for buying when the product price is very low and needs to purchase frequently. Example is grocery articles.
• Variety seeking buying behaviour: There is a practice in buyer to switch brands just for sake of change than dissatisfaction. Lower prices of substitutes, free offers etc will force consumers to try for new product.
• Dissonance reducing buying behaviour: Purchasing may be quickly and does not involve much search for information gathering before purchases. Later may find some anxiety after purchasing the product. Example is purchasing of carpets.

Customer behaviour analysis is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer.” (Customer Behavior Analysis. 2006).

In order to understand the aspect of car purchase, it is necessary to conduct surveys among consumers in order to know the criteria that determine the choice of vehicles. One of the respondents, a practicing engineer by profession, purchased a first hand BMW car from a car dealer, and the second, a business man, purchased a second hand Ford vehicle from a used car dealer. The criteria that determined them were as follows:

• Financial resources available for investment in automobile.
• Official or personal use.
• Owner’s Income levels.
• Usage – high or low.
• Fuel savings.
• Resale value.
• Depreciation, maintenance and write offs.
• Status value and owner’s personality- big or small car.
• Environmentally friendly car- fuel efficiency.
• Safer features.

Criteria for purchase of First Hand car

The Ranking of the criteria for the person who has purchased the first hand car could be seen as follows:

1. Safety features.
2. Owner’s personality.
3. Resale value.
4. Fuel saving and economy.
5. Depreciation, maintenance costs and write offs.
6. Environmentally friendly car.
7. Degree of usage.
8. Financial resources available for investment in automobile.
9. Owner’s Income levels.

Criteria for purchase of Second Hand car

1. Owner’s Income levels.
2. Fuel saving and economy of car’s operation.
3. Depreciation, maintenance costs and write offs.
4. Financial resources available for investments in automobile.
5. Resale value.
6. Safety features.
7. Environmentally friendly car.
8. Degree of usage.
9. Owner’s personality.

The first hand purchaser had purchased a BMW 7 series 735 i (short wheel base).

(AA Car Test: BMW 7 Series. 2003). The main criteria for the owner was the security purpose and this has been ensured in this 3600cc, V8 –cylinder, luxury saloon which is centrally lockable, remote enabled and keyless opening and closing system.

The second hand dealer had purchased a Ford Granada Scorpio as pictured below:

(Used Car Survey: Ford, Granada/ Scorpio. 1998). According to the owner this car provided very good service, has excellent fuel economy (time of soaring fuel prices) and can be used as a multipurpose utility car also, including equipments and can store bulky hardware items.

List of six new motor vehicles that closely match the First hand vehicle purchased are:

• Mercedes Bentz S 350,
• Lexus LS 430,
• BMW 530 (diesel). (AA Car Test: BMW 7 Series. 2003).

Other types of Ford motor vehicles are:

• 2.3 16V model,
• 2.9 12v Ghia Automatic and
• 2.0i 16V Executive saloon. (Select A Car Review. 2008).

It is necessary to discuss, as this stage the factors that motivate consumers to buy cars, which can be regarded as need or utility base. There is need for consumer X to buy a car, and therefore, he may feel it necessary to buy one, whether first or second hand. The basic need for buying a car could be in terms of the following satisfactions:

1. More convenience and mobility in travel.
2. Saves time and enhances travel comfort.
3. Status symbol or pride of ownership of vehicle.
4. Family needs and enhanced comfort and security for family members during travel.
5. Enhances one’s personality and is an object and possession of pride.
6. Sets a price tag to income and financial standards- membership in automobile owners clubs.

Different people have different reasons for purchasing and owning a car. Some people have a passion for automobiles and may have a fleet of cars to be used for personal and official uses. Some ladies match the colours of cars with their dresses and costumes, in display of ostentatious living in high fashion.

Each car owner has a reason for buying and maintaining a car, from the need to economise and effectuate travel efforts and costs, to the need to display their wealth and status in life. However, it needs to be said that cost benefits are always a major decision making tool in car purchase, the price that is being paid for car investments need to be lower than the benefits and perceived advantages of owning one. Again, it also needs to be seen that the means end theory also needs to be implemented in the case of automobile purchase and use.

The potential car owner invests a large amount of funds for the realisation of several benefits and this needs to match the means end fundamentals. The theory believes that investments are made in automobiles to serve some end, or need satisfaction of the consumer. If there were no end in mind, there would be no interest in buying products. Thus the fundamental need for any consumer purchase is to satiate or satisfy needs or comforts. Just as man’s basic appetites for food, water are needed to be satisfied, the need for safe, convenient and speedy travel needs to be met by purchase of automobiles. Thus, it is needed that the end has to be kept in mind while taking a purchase decision.

There are several factors that need to be considered in consumer decision making process. These could be in terms of the fact that in the present age, the automobile industry is going through very competitive phases, especially in the United Kingdom. Add to this are the uncertainties regarding market conditions due to global energy crisis and the recent developments in middle east countries, the spiraling costs of energy and gas has resulted in urgent needs to move energy away from fossil fuels into more unconventional and modern, pollution free methods.

Fossil fuels have been the accepted mode for energising motor vehicles, but the present market conditions have perforce to seek cleaner, greener and healthier alternatives. The impact of fuels on the environment are grave and do not present or augur well for future, and therefore, it has become necessary to seek out and implement better modern and unconventional alternatives for fossil fuels in the very near future, not only to offset heavy demand supply imbalances in energy but also to seek better alternatives., which in the long run could reduce or maintain fuel energy costs.

Thus, it is seen that one of the major factor that a potential automobile owner needs to weigh his decision would be in terms of the following:

1. Alternative fuel costs and miles running of different motor vehicles- whether petrol, diesel or hybrid.
2. Long terms savings and economies in fuel costs, in choosing one alternative over others- depending upon usage, kms run, economy rates, etc.
3. In cases where environmental issues are present in choice of automobiles, it is necessary that choice are exercised in more fuel efficient and more environmentally friendly type of fuel.

Besides the above, the other criteria that need to be met could be seen in terms of the following:

1. Economy of maintenance and servicing costs.
2. Replacement costs.
3. Reliability and control over critical parameters of running vehicles.
4. Government laws and regulations that need to be adhered to.
5. Trouble free and risk free usage, with minimum needs.
6. Type of vehicle whether heavy, medium or light duty vehicle.
7. Incorporates extra safety and security features compared to competing firms.
8. Environmentally safe and no cause for damage to ecology.
9. Versatility and adaptable to different road conditions and weather.
10. How it would contribute to road safety and better driving sense.

The responses taken from the different respondents other than the original two summed up the need for comfort over speed. In the context of customer behaviour it would be difficult, according to them to give clear cut answers. However, during the course of the interview with new respondents the following questions were put forward to them and their answers matched with prevailing industry trends in terms of industry.

Questions on consumer behaviour patterns in choosing cars

• Q1: Do you believe that economy plays a significant part in owning a car? :
  • Ans.1: Yes, very much so.
• Q2: How often do you think it is necessary to change cars?:
  • Every year
  • Every two years
  • every five years
  • Does not know
  • Ans.2: Most respondents answered in favour of (b) every two years.
• Q3: Do you think that there is need for the car to be reliable and free of major maintenance problems?
  • Ans. 3: Most of them agreed to this need satisfaction
• Q.4: Does the car need to be suitable for long, cross country drives?
  • Ans. 4: Most of them agreed that is much necessary for official purposes.
• Q.5: Does the car to be purchased need to be environmentally safe and friendly?
  • Ans.5: Most of them agreed that is much very much needed.
• Q. 6: Does the car to be purchased need to have many safety add-ons, especially for children and very young occupants?
  • Ans.6: Most of them agreed that is a vital factor in car purchase
• Q. 7: Does the car to be purchased need to be large to accommodate more persons, etc?
  • Ans.7: Most of them agreed that this would be influenced by its usage and number of trips, etc.
• Q. 8: Does the car to be purchased need to be smaller and compact to save space?
  • Ans.8: Most of them agreed that this would be decided by number of occupants, duration and number of trips, etc

Analysis of survey

The responses of the respondents matched with that of the trends in UK car markets. Nearly 54% of the respondents in surveys matched the answers given by the respondents in matter of economy of fuel and energy uses. Again, the matching responses to the second question are seen as below:

1. Response (a) – 24% respondents.
2. Response (b) – 43% respondents.
3. Response (c) – 30% respondents.
4. Response (d) – 3% respondents.

With regard to the third question, relating to trouble free and reliability in operations, it is seen that the response matched with 54% of answers provided by survey.

Coming to the fourth question, it is believed that around 35% of the respondents believed that cars need to be specially made to facilitate long, arduous cross country drives, sometimes in inclement weather and road conditions.

Nearly 65% of respondents believed that cars need to be environmentally friendly and pollution free which is the basis for sixth Question.

Regarding the question on safety add-ons, nearly 56% of respondents believed that cars need to be environmentally friendly and pollution free which is premise for Question seven.

There were mixed reactions regarding the choice of smaller or bigger cars. Although most respondents believed that size of car is need based and on usage and utility, 19% of the respondents in the original survey believed in bigger cars and only 4 % in small ones.

Conclusion

As has been deliberated during the course of this paper, the choice of buying cars is highly individualised one, which stands to many reasons and choices exercised by consumers. In tune with consumer behaviour benefit value of purchase is important s is the purpose that is being served by the vehicle over the time of its useful life.

At the same time, cost constraints and safe and pollution free driving is also very important and has been a major line of focus in this study.

While earning and spending capacity are no doubt major influences in buying decisions, ready availability of fuels, road conditions and the regulatory environment governing driving exercised by government and related institutions also play major roles in determining the consumer behaviour in the choice of vehicles and its continued usage, keeping in view the safety, convenience, speed and reliability aspects in use of vehicles.

It is seen especially in the UK context, that the present energy issues are a major constraints forcing many potential car owners and people opting for large, fuel consuming vehicles to rethink about their decisions, and a long term perspective is needed to be taken, failing which it would spell disaster for owners and car manufacturers alike. Market conditions, tailor made cars, and governmental attitudes are all major determinants in car purchase and shall continue to remain so for a long time to come

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