CHAPTER I

INTRODUCTION AND DESIGN OF THE STUDY

1.1 INTRODUCTION

Today the market situation in India is highly competitive across all the product

segments. With the continuous evolution in the demographics and psychographics of

the target consumers, the situation is becoming more and more complex. The ever

changing customer preferences, rising consumerism, new entrants in the market, and

continuously evolving technological innovations resulting in product differentiation in

the short run which further resulting in shorter life cycles for durables particularly and

also for other lifestyle products are adding new dimensions to already complex

situation.

The market situation and its outcome are becoming increasingly uncertain. In

the light of this scenario, the organizations are becoming more and more desperate to

hold the customers, to retain the market share and to survive. The scenario in the

home appliances industry is equally challenging. The leading companies like

Samsung, Videocon, Sony, LG and others by introducing brands at various price

points have effectively segmented the market which has resulted in faster market

expansion and penetration. Product differentiation and innovative marketing efforts

have resulted in attracting more and more customers to their brands. In fact the

competition in the rural market has assumed a battle field dimension and struggles for

the survival of the fittest. Therefore in the light of the scenario where the marketing

environment is changing at a very fast pace and the heightened aggression of the

players in the home appliances in India, it is most appropriate to conduct a study on

various dimensions influencing consumer’s purchase decisions regarding home

appliances.

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 Home appliances industry in India is one of the fast growing and competitive

industries of the country. The growth of this industry is really attributed to the most

distinct feature of Indian economy-population explosion. In modern times, life has

become highly mechanical, and the utility of home appliances is inevitable. Though,

the ultimate users of the home appliances are housewives and housemaids, the

purchase decisions and brand preferences are enacted by husbands and wives

together. Unlike in the past, the consumers are more educated and more enlightened

today. The market trends reveal that the consumers are well informed and therefore

they demand greater assured performance from products and companies. This has lead

to a change in the marketing approach of the growth conscious companies. A shift has

taken place from the seller’s market to the buyer’s market. Due to the growing

competition in the industry the companies are under the pressure to win customers

and this has empowered the consumers more. The emphasis traditionally was on

making sales rather than building relationships; on selling and reselling rather than

caring for the customers. But now every company of the home appliances industry

wisely concentrates enough to regularly measure and systematically maintain the

customer satisfied, because the key to customer retention is customer satisfaction. A

highly satisfied customer stays longer, buys more as the company introduces new

products, offers products or service ideas to the company, pays less attention to the

competing brands and is less sensitive to price, and it costs less to serve them than

new customers because transactions are routine. On an average, a satisfied customer

tells three people about a good product experience, but the average dissatisfied

customer bad mouths to 11 people. If each of them tells other people, the number

exposed to bad word of mouth may grow exponentially. If a company wants to adapt

to the empowered consumer, it is a must to recognize the importance of satisfying and

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retaining customers and should design its strategies in such a way that it will

encourage consumers to purchase on regular basis, tell good words about the

company to more people. In addition, the company should motivate the dealers to sell

more through scheming appropriate plans in this regard.

Consumer home appliances consist of televisions, refrigerators, air

conditioners and washing machines. Consumer home appliance products are often

expensive for an average home, and are usually expected to last two to three years.

These goods are often purchased as gifts on a seasonal basis or for special occasions.

This category includes but is not limited to recreational goods, sporting equipment,

toys and hobby goods, jewellery, watches, home-ware and other durable home goods

with long product life. White goods such as washing machines, refrigerators and

coffee machines, as well as brown goods such as DVD players, televisions and stereos

are often grouped in this category. Consumer home appliances include any type of

products purchased by consumers that are manufactured for long-term use.

Another common example of consumer durables in the possession of most

homes is appliances. These items may include ovens, refrigerators, toasters, and gas

or electric water heaters. Consumer durables of this type are intended for use on a

regular basis, and often are sold with some type of warranty or service contract that

helps to ensure the appliance will work for an appreciable period.

Consumer goods like washing machines, TV sets, audio-video systems etc,

which yield services or utility over a period rather than being completely used up at

the moment of consumption can be termed as the consumer durables. Most consumer

goods are durables to some degree. So the term is often used in a more restricted

sense to denote relatively expensive, technologically sophisticated goods.

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 The consumer home appliances can be segregated into consumer electronics

(TVs, VCRs/VCPs and audio systems) and consumer appliances (also known as white

goods) like refrigerators, washing machines, air conditioners (ACs), microwave

ovens, vacuum cleaners and dishwashers. Over the years demand for consumer home

appliances has increased with the rising level of incomes, double income families,

changing lifestyles, availability of credit, increasing consumer awareness and the

introduction of new models by the Indian as well as multinational companies.

Consumer durables were once considered luxury items targeting mainly the

consumption of upper-middle class. With increasing competition, price wars,

branding and promotional strategies, the concept has melted down to the masses and

has become a part of the household necessities even of the lower-middle class and for

the rural population.

With the increase in income levels, easy availability of finance, increase in

consumer awareness, and introduction of new models, the demand for consumer

home appliances has increased significantly. Products like washing machines, air

conditioners, microwave ovens, color televisions (CTVs) are no longer considered

luxury items. However, there are still very few players in categories like vacuum

cleaners, and dishwashers. Consumer durables sector characterizes the emergence of

MNCs, exchange offers, discounts, and intense competition.

Today, television has become an essential and important media for business,

news, entertainment etc., while it was a mere source of education and curiosity when

it came into being. Television has been revolutionized with the application of satellite

technology; variety of channels from different countries can be viewed at our homes

by a mere installation of a dish antenna. Hence, it made true the statement,

“Yesterday’s luxurious are today’s necessaries”. The credit for the revival in TV

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industry largely goes to the satellite and cable television boom. In today’s life,

television has become a necessity rather than a source of entertainment. Television

once called ‘the idiot box’ is now considered as ‘the intelligent box’.

In the post liberalization period global mega brands peeped into Indian

markets expecting a huge market which was just waiting to be tapped. Although the

entry of MNCs did not make an impact initially, aggressive marketing strategies and

innovative consumer friendly schemes have resulted in a sharp rise in their market

share.

At present many international brands like Sony, Samsung, Panasonic, Philips,

LG, and Thomson etc. are competing with Indian brands such as BPL, Videocon,

Onida etc., to capture Indian markets. This study focuses on the consumer preference

of home appliances like television and the impressions of the consumers in regards to

product, price, place and promotion.

An understanding of the economic, psychological and sociological

characteristics of the consumer and their motives, attitudes, cognitions and

personalities can help to discover new market opportunities, to provide a shape

segmentation of the market, and to evolve meaningful strategies based on consumer

response as a major variable. In brief, the understanding of consumer preference and

emotion are important determinants for the success of the marketers. The

understanding of consumer preference influences the decisions relating to the

identification of opportunities, product policy, channel of distribution, pricing,

personal selling and promotional strategies. Thus, the marketing concept is more

consumers oriented and understanding consumer preference plays a vital role in it.

Hence, the study of brand preference of consumers towards home appliances becomes

the basis to all marketing activities.

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 In olden days, people engaged the services of washer-man to wash their

clothes. But technological advancement has introduced new means. The introduction

of washing machine has simplified the task of washing clothes. Usually, washing their

clothes themselves helps in better maintenance of the clothes. But people have no

time to wash them in the modern world. Now-a-days people are busy working round

the clock. So they prefer a machine to wash in order to be able to spend that time

either to rest or to earn. It also has turned out to be a safer way of washing. The

manufacturers of different brands of washing machine project varying features of

their products. The consumers are not in a position to identify a good brand. They are

finding it very difficult to select the right brand. So many consumers are ready to buy

any brand recommended by other consumers.

Today, with the technological advancement man can do many things which

were impossible before. Refrigerator, which keeps food and drinks fresh, has changed

to our convenience the schedule of cooking and purchasing food stuff in the busy

industrial society, and we can do it flexibly to match with our work schedule. When

refrigerator was first introduced in Bangladesh, it was an expensive and fashionable

item. Now its price has gone down considerably and more people can afford it. At

present there are several marketers who are offering their product in the refrigerator

market. Among them Samsung, Whirlpool, Kelvinator, Shacklock, Toshiba, Sharp,

Rangs, Butterfly, are the most widely known brands. Siemens is one of the leading

electrical and electronics manufacturing companies in the world with its global

presence. Siemens refrigerators are basically an European brand with an international

image. In Bangladesh it targets the niche market for their home appliance products as

their marketing strategy commence with their high quality and expensive products.

They do not do their marketing for the masses, they do it only for a particular group of

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people who has the ability to buy their product. Since the standard of living of people

in our country is going up, everybody is aware of the brands of the products and

wants to buy a quality product which can serve them for a longer period of time.

Thus, consumer perception and brand awareness for refrigerators have now become a

vital aspect in purchasing a refrigerator.

Since the real life business situation is always very complex and competitive,

every business has to face the intense competition and those who can successfully

operate within this critical situation can only become the blue-chip. To stay and

increase the pace in the business track, promoting better perception and brand

awareness among customers is very important.

Some customers do not change their behaviour and also their brand

preference. These kinds of consumers with brand loyalty are ready to wait for their

favoured brand, if it is not available in the market. In such critical situation, some

manufacturers are producing washing machines with technological advancement.

They are giving a wider publicity to their product and are trying to withstand the

competition. The exact logic for the purchase of a particular washing machine is

highly an uncertain factor.

This work is a study on consumers’ brand preference for household appliances

in Tirunelveli District. Any study on consumers’ brand preferences is essentially a

study concerned with the behavior of the consumer. Consumer ‘refers to buying by an

ultimate consumer, who buy products for personal or household uses, and not for

business purpose. The efficiency, with which a business concern functions, depends

on the extent of understanding on consumer and consumer preferences. It is also

relevant in case of consumer durables such as household appliances.

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1.2 STATEMENT OF THE PROBLEM

Home appliances are gaining popularity in the present modern world. Many

brands and different varieties of home appliances are available in the market. To the

consumer, products of different brands seems similar because products of different

brands are available at the same rate, same colour, same design and with the same

performance. Most of the consumers from the study area do not have sufficient

knowledge to compare the brands.

Some consumers are influenced by the advertisement while some others are

influenced by friends, neighbours, colleagues, brand image and so on. In this context

the researcher has chosen this topic to analyse the brand preference of consumers

towards home appliances. Consumers face a number of serious problems while

making their purchase decision on brand of home appliances. Some of them are unfair

warranties, misbranding, high pricing, poor quality products etc.

In the home appliances market, the consumer is confused with the existence of

similar products with different brand names, and also there is a stiff competition. The

demand for home appliances will naturally increase from the working women. It

reduces the work load of home maintenance for working women. The conventional

grinding is no longer found in most of the middle class family. Mixie, Grinder,

Refrigerator, Washing Machines, Televisions are the five items selected for the

present study. As for Television there is a stiff competition among Samsung, Philips,

Sony, Sanyo, LG, Onida, Akai, Videocon, and BPL companies. Regarding Grinders

popular brands compete with local brands in the market to gain a market share. With

regard to Refrigerators there is a stiff competition among Godrej, Samsung, BPL,

Whirlpool, Kelvinator, LG, Videocon, Voltas etc. The same also holds good, in case

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of washing machines. This study is an attempt to understand the preferences and the

reasons for such preferences by the consumer.

In regard to the chosen appliances such as Mixie, Grinder, Washing Machine,

Refrigerator, and Television, the aspects such as consumer preference to brand, the

factor influencing their preference, the consumer’s feedback on after sales service,

preference of product, and the preferred method of purchase have been taken up in the

analysis.

1.3 SIGNIFICANCE OF THE STUDY

Home appliances have been a part and parcel of our day-to-day life. In fact, a

differentiated product is one that is viewed as different from others by majority of the

buyers. In a competitive market consumer must be very careful in choosing a product.

Consumer preference of a product should be based on sales service, reputation of the

company durability of the product etc. In the market for home appliances almost

every day, advertisements are given in different media asking the consumer to return

or throw away the old home appliances.

Appliances and equipments that are used in the home or house in order to ease

the work are identified as home appliances. They include Mixes, Grinders,

Refrigerators, Washing Machines, and Televisions etc. The main advantage in home

appliances is economy, for example with the help of the refrigerators; we may store

vegetables, fruits, dairy products, ice creams etc. Other than this Grinder, Washing

Machine, Mixie, Television etc., which were considered as luxuries a decade ago,

have almost become necessaries of our life. In fact everyone feels the need for owning

these appliances.

Knowledge of consumer behavior in relation to home appliances renders

immense help for marketing home appliances. Consumer orientation in marketing

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home appliances is absolutely essential for a marketer as the market for home

appliances is highly competitive. By gaining understanding of the factors that affect

the behaviour of the buyer of home appliances, marketers will be in a better position

to understand how consumers will respond to give situation.

1.4 SCOPE OF THE STUDY

This study enables to have a clear insight into the brand preference. This study

focuses only the problems of the present day housewives and how the advent of home

appliances has satisfied the needs of the public. As home appliances occupies an

important position in the modern life, an attempt is made to find out the brand, which

emerges popular among the existing brands. This study also helps to understand the

factors, which influence the consumers to purchase the home appliances.

The study has been undertaken from the consumers point of view. This study

focuses on the analysis of purchase decisions and the level of satisfaction of

consumers from home appliances. Further this study covers various factors

influencing consumers towards different brands of home appliances in Tirunelveli

district.

The study area is confined to the sample population in Tirunelveli district.

Only five items of home appliances: Mixie, Grinder, Refrigerators, Washing

Machines and Television are taken into consideration for this study.

1.5 OBJECTIVES OF THE STUDY

The study is conducted with the following objectives:

(i) To study consumers’ preferences for the different brands of home appliances.

(ii) To study the factors influencing the consumers to purchase home appliances.

(iii) To understand the buying decisions of the consumers of different brands of

home appliances.

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 (iv) To analyze the buying behavior of different classes of consumers based on

their personal characteristics.

(v) To study the level of satisfaction of home appliances among consumers of

different socio economic conditions.

(vi) To offer suggestions based on the findings of the study.

1.6 PERIOD OF THE STUDY

The present study covers a period of two years (2011-13).

1.7 GEOGRAPHICAL COVERAGE

The study covers the brand preference of consumers towards home appliances

in Tirunelveli District. Tirunelveli District is located on the southern part of

Tamilnadu. Tirunelveli is the headquarters of the district. A unique feature of this

district is that it consists of all five geographical traditions of Tamil Literature.

Kurunji (mountains), Mullai (forest), Marudham (paddy fields), Neithal (coastal) and

Palai (desert).

The district is surrounded by Virudhunagar District in the North, Western

Ghats in the West, Kanniyakumari District in the South and Thoothukudi District in

the East. The district covers an area of 6,823 sq.km. It lies between 8.05˚ and 9.30˚

of the Northern latitude and 77. 05˚ and 78.25˚ of Eastern longitude. It has a

perennial river Tamirabarani and various other small seasonal rivers. This district is

blessed with beautiful waterfalls and cascades. Its diverse features include sandy soil

and fertile alluvium, a variety of flora, fauna and protected wild life. To add to its

beauty it has inland and mountainous forests. The Map 1.1 shows the geographical

location of Tirunelveli district1.

1
Http://Www.Tn.Nic.In

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 Map 1.1
Tirunelveli District

1.8 OPERATIONAL DEFINITION

1.8.1 Home Appliances

Home appliance is a machine that is used to execute some sort of domestic

chore. Home appliances taken into consideration for this present study includes

Television set, Refrigerator, Washing machine, Mixie and Grinder.

1.9 METHODOLOGY

Primary and secondary data were collected from different sources and were

used for analysis. Secondary data required for the study have been collected from

various publications and reports. Primary data were collected through questionnaire

structured by the researcher in consultation with the experts in the field. The finalized

questionnaire was pre-tested. The pilot study was conducted with 50 respondents

selected at random from Tirunelveli district. The practical difficulties experienced by

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the respondents in answering the questions were set right and the questionnaire was

finalized. The finalized structured questionnaire was used for collecting information

from the respondents.

1.10 SAMPLING METHOD

The sample size is determined at 500 consumers. A sample comprises of 250

consumers from rural and urban areas. A sample of 50 consumers each is selected

from each of the five Municipalities in the four regions and a total sample of 250

consumers are thus selected from Urban area. Lastly, 10 Panchayats are selected again

on simple random sampling technique from the four regions and 25 consumers from

each Panchayat are selected for the study. Thus, a total of 250 consumers are selected

from the rural area. Thus in all, a total of 500 consumers are selected by applying

purposive sampling technique for the study.

1.11 DATA COLLECTION

Primary data were collected directly from the respondents with the help of

questionnaire. After getting the questionnaire filled, the data collected were analysed

and interpreted using appropriate tools. The researcher collected the necessary

secondary data pertaining to the study from various books, journals, reports and

websites. The present study is of analytical and exploratory nature. Accordingly, the

present study has been made of primary as well as secondary data.

A questionnaire was designed and used as tool for the collection of data from

the consumers. The questionnaire was administrated to the head of the family

available at the time of collection. It was a detailed Questionnaire enlisting questions

on issues such as brand preference, the reasons and their performance of the product,

after sales service, method of purchase etc.,

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1.12 HYPOTHESES

1.12.1 There is no significant difference in brand preference towards home

appliances among consumers of different gender groups in Tirunelveli district.

1.12.2 There is no significant difference in brand preference towards home

appliances among consumers of different age groups in Tirunelveli district.

1.12.3 There is no significant difference in brand preference towards home

appliances among consumers of different marital status in Tirunelveli district.

1.12.4 There is no significant difference in brand preference towards home

appliances among consumers of different educational qualifications in

Tirunelveli district.

1.12.5 There is no significant difference in brand preference towards home

appliances among consumers of different occupations in Tirunelveli district.

1.12.6 There is no significant difference in brand preference towards home

appliances among consumers of different family types in Radhapuram

taluk.

1.12.7 There is no significant difference in brand preference towards home

appliances among consumers of varying number of members in the family in

Tirunelveli district.

1.12.8 There is no significant difference in brand preference towards home

appliances among consumers with varying monthly income in Tirunelveli

district.

1.13 DATA PROCESSING

The researcher collected data from 500 consumers of home appliances in

Tirunelveli district through questionnaire. The collected data is codified to facilitate

further analysis through computers. Then by using SPSS through computers the

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required classification tables have been prepared. Those classification tables have

been the base for further analysis.

1.14 STATISTICAL TOOLS

Statistical tools like Percentages, ANOVA, ‘t’ test, Karl Pearson’s correlation

co-efficient and factor analysis have been used for analysis in the study.

1.14.1 ANOVA

ANOVA test is used by the researcher to find the significant differences

existing among the three or more sample groups in relation to a variable. The total

variance in a set of data is divided into variation within groups and variation between

groups.

The ANOVA technique is based on the concept of sum of squared deviations

from a mean. Corresponding to the total variance and its two components, we have

the total sum of squares (SS), between groups sum of squares (SSb), within groups of

squares (SSw) is obtained by combining the sum squares i.e., the squared deviations of

every raw score from its sample mean. The formula used is

SSw = ∑d2 + ∑d2 + ∑d2 + ∑d2 + ∑d2 + ………………… ∑d2

1 2 3 4 5 n

Where d = a deviation of every raw score of a category from its sample mean.
The between groups sum of squares (SSb)is by calculating the difference

between each sample mean and the total mean. The squared difference is multiplied

by the sample size in the concerned category and these quantities. The formula is

SSb = ∑[(x-x1)2 ×n]

Where,
X = any sample mean
X1= the total mean
n = the number of scores in any sample
SSb = the between groups sum of squares

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 The total sum of squares (SS1) is equal to a sum of within and between groups

sum of squares.

SS1 = SSb + SSw

1.14.2 Karl Pearson’s Correlation Co-efficient

Correlation analysis is a statistical tool which helps to identify the direction of

relationship among two variables. When two variables move in the same direction,

their association is termed as positive correlation. If they move in the opposite

direction, their association is termed as negative correlation.

The most common measure of correlation is the Karl Pearson co-efficient of

correlation (r). The formula used is:

r=

Where,
r = the Pearson’s correlation co-efficient

N = total number of pairs of x and y

X = raw score on the x variable

Y = raw score on the y variable.

1.14.3 Factor Analysis

Factor Analysis is called the queen of analytical methods. Factor analysis is

based on the fundamental assumption that some underlying or latent factors which are

smaller in number than the number of observed variables, are responsible for the co-

variation among the observed variables. Thus a certain correspondence exists between

the underlying factors and observed variables. The mathematical properties of the

correspondence are such that one causal system of factors leads to a unique

correlation system of observed variables, but not vice versa. The correlation co-

efficient is used as a measure of interrelationship (association) among the variables

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and those between the subsets. A factor analytical approach is used to address whether

these observed correlations could be explained to the existence of a small number of

hypothetical variables. Simply, it is a method for extracting common factor variances

from sets of measures. Principal component analysis method with vary-max rotation

had been selected since it is an approach to factor analysis that considers the total

variance in the date and also enhances interpretability. Principal component analysis

is recommended when the primary concern is to determine the minimum number of

factors that will account for maximum variance in the data for using subsequent

multivariate analysis. Vary-max procedure is an orthogonal method of factor rotation

that minimizes the number of variables with high loadings on a factor thereby

enhancing the interpretability of the factors.

1.15 LIMITATIONS OF THE STUDY

Limitations of the study are as follows

(i) The study covers only selected household appliances viz., Mixie, Grinder,

Refrigerator, Washing Machine and Television. Other household appliances

have been neglected.

(ii) The size of the sample consumers is limited to 500. Considering the time and

other factors as constrains.

1.16 CHAPTER SCHEME

The report of the study has been divided into five chapters.

The first Chapter titled Introduction and Design of the Study covers statement

of the problem, significance of the study, scope of the study, objectives of the study,

period of the study, geographical coverage, operational definitions, methodology,

sampling method, data collection, limitations of the study and the chapter scheme.

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 The second chapter titled Review of Literature reviews the relevant past

literature.

The third chapter titled Home Appliances - an Overview, views the theoretical

aspects of Home Appliances.

The fourth chapter titled Brand Preference of Consumers Towards Home

Appliances, analyses the data.

The final chapter titled Summary of Findings, Suggestions and Conclusion.

Summarises the findings and offers suggestions.

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