CHAPTER 2 BACKGROUND OF THE PROJECT 2.

0 Introduction This chapter is an overview of the relevant marketing literature on consumer buying behaviour and decision making process. Passenger cars are normally categorised under shopping goods due to their characteristics. By reviewing the various writers in this research area, the researcher is able to put in context the theoretical framework for analysis and application. 2.1 General Statements about Theoretical Framework Consumer behaviour can be explained as the study of consumers as they exchange something of value for a product or service. The buyer and the seller exchange goods that satisfy their needs which are mutually beneficial for both (Wells and Prensky, 1996). According to Schiffman and Kanuk (2004), consumer behaviour can be defined as the actions of consumers in seeking for; buying, applying, evaluating and disposing of products and services that they expect to fulfil their needs. In simple terms, consumer behaviour clarifies the motive and logic that underlie purchasing decisions and consumption patterns as well as the processes through which consumers make decisions (Peter and Olson, 2005).

There are several recognized models that explain consumer behaviour. These models basically deal with a range of marketing stimuli, influential factors, purchase decision making process and outcomes. In Figure 2.1, Kotler (2000) proposed one model which is a very general. Figure 2.1 Model of Buyer Behaviour

Source: Kotler (2000, pp.161)

Kotler (2000) described the marketing mix and stimuli first come into consumers thoughts, followed by the consumer making certain decisions process which are directly influenced by their individual characteristics. In order to meet the objectives of this research, the researcher adapted another consumer behaviour model which include more details and focus on specific issues as illustrated in Figure 2.2 proposed by Engel et al (1995) and Hawkins et al (2001).

Figure 2.2 Consumer Behaviour Model

Source: Hawkins, Best, and Coney (2001)

Hawkins (2001) indicated that lifestyle plays the central role in consumer behaviour. Through interaction in various exchange processes, consumers gain more experience via the internal, external and other influences. A lifestyle is the living pattern of individuals in the world as expressed actions, interest and attitude (Hansen, 1998). Therefore, lifestyle can affect the rational thinking and logic of consumers in purchasing and consuming products and services. It is also significant to note that situational influences such as emotions and consumption can affect the consumer at any point.

Figure 2.3 Consumer Decision Making Model

Source: Kotler (1997), Schiffman and Kanuk (1997), and Solomon (1996)

Consumer decision making may be defined as a process of gathering and processing information, evaluating it and selecting the best possible option so as to solve a problem or make a buying choice. (Kotler and Keller, 2009) The consumer decision making process consists of a sequence of five stages as shown in figure 2.3. Problem recognition is the first step of consumer decision making process and the process begins when an individual realizes the differences between the actual state and a desired state. (Solomon, 2007) In other words, it is a state of need recognition that initiates the buying decision process through the interaction of consumer and environment influences. When consumers find out problems or needs, they will try to solve the problems or fulfil the needs. Problem recognition requires both willingness and ability to fulfil the emerging needs. (Engel et al, 1995)

Figure 2.4 Framework of Information Search

Source: Bloch, Sherrell, and Ridgway (1986)

Once needs recognition has occurred, the individual may engage in a search for potential need satisfiers. (Kotler, 2000) The second step in consumer decision making process is information search where the individual learns more about several brands that available in the market with the features and characteristics of products or services. The primary drive of prepurchase and on-going information search is the desire to make better consumption choices. (Bettman et al, 1998) Alternatives evaluation is the third step of consumer decision making model which can be defined as the process where choices available are evaluated and selected to meet purchaser needs. (Dodds, 1991) Consumers will look for products with certain set of attributes and different levels of benefits to satisfy their needs. Consumers will then develop a set of preferences toward all the alternatives based on personal judgment on importance of benefits and attributes which are relevant in satisfying their needs.

Figure 2.5 Purchase Decision

Source: Kotler and Keller (2009)

Once an alternative is chosen, the consumers move to next phase which is decision implementation where consumers put thoughts into action. To actually implement the purchase decision, consumers need to execute a purchasing action such as what to buy, where to buy, and when to buy. (Kotler, 2000) Basically, consumer will go through 3 fundamental sequences when making a purchase decision. The first sequence is when buyer selects an outlet first then followed by a brand. The second sequence is the opposite of the latter and third sequence deals with a simultaneously selection of both sequences. (Solomon, 1996) The last step of consumer decision making process is post-purchase evaluation which consumers evaluate the products or services after purchases. Generally, an assessment is made by consumers to figure out whether right decision has actually been made and the consequences after consumption. (Sweeney and Hausknecht, 2000) The result may be either satisfying or dissatisfying which affects the repurchased of products or services significantly. This research study shall be based upon the theoretical framework adapted from Kotler and Keller (2009) in Figure 2.5.

2.2 Specific Statements of Theoretical Framework Figure 2.6 Marketing Considerations for Consumer Products

Source: Kotler (2000)

Mullins and Walker (2010) defined product as something that satisfies wants or needs through usage, consumption, or acquirement. A product may include objects (cars and mobile phones), services (tourism and education), places (raw lands and apartments), as well as ideas (proposals and designs).

Figure 2.7 illustrated how Kotler (2000) categorized consumer products into marketing consideration consist of convenience, shopping, specialty and unsought goods. In this research, researcher indentified hybrid cars as shopping good which considered as a higher end product irregularly bought by consumers that included more planning and comparison of appropriateness, value, cost and features. Consumers will spend more time and efforts before they select any shopping goods. Figure 2.7 Price List of Hybrid Cars Toyota Prius (RM) Selling Price Instalment Engine 136,128 RM1,298/mth 1798cc Nissan Serena (RM) 132,832 RM1,267/mth 1998 cc

Source: lifelivedrive.com (2013)

Figure 2.8 Distribution or Outlets Brand Location Sales and Service Centre Toyota Petaling Jaya 17 Nissan Petaling Jaya 4

Source: UMW Toyota (2011), and Nissan Malaysia (2013)

Figure 2.9 Promotion or Advertisement

Source: Toyota (2011), and Nissan Malaysia (2013)

Figure 2.8 shows the price list of two Japanese brands of cars in Malaysia which require at least RM 132,832 to purchase a hybrid car. The amount considered as high range of price to any consumer in Malaysia. Both of the brands have only selective distribution in fewer outlets as shown in Figure 2.9 where consumer only able to access to limited sales and service centres. The promotional and advertising effort is both created by producer in Japan and seller in Malaysia. Thus, the researcher verified that hybrid cars are categorized as shopping good as all the characteristics of hybrid car matched the model of consumer product mentioned by Kotler (2000).