Consumer Behaviour - Report Example

CONSUMER BEHAVIOUR of the of the Introduction The present report deals with the automobile market in Malaysia and the various factors that have an effect on the consumer psyche and how decision regarding making a purchase is made in the target market. The product selected for the report is a high involvement product namely automobiles and the target market is Malaysia. In analyzing the factors that affects the consumer decision making in the country, several factors such as social, psychological and other factors are analyzed. Based on the different factors that affect consumer decision making appropriate recommendation for the marketing strategy that should be followed is made. The company chosen for the essay is Toyota. Toyota is company that was originated in Japan. It is recognized worldwide and enjoys good brand loyalty all over the world. The co0mpany is one of the global leaders in automobile sector. By analyzing the market of Malaysia it is tried to find out what are the factors that the company can do by which it can increase its market share in Malaysia. Discussion Situation Analysis of the Company The situation analysis of the firm in the Malaysian market is performed on the basis of Porter’s 5 forces and SWOT analysis. Applying Porter’s 5 forces on Toyota we notice the following things Rivalry within the Industry The automobile industry in Malaysia is an industry that is supported by the government of the country. The domestic car companies are set up and protected by the government to lead the market. Under the policy of protectionism the domestic car companies increased their market share of the automobile market rapidly. The price of the domestically manufactured cars were set at a level that was 20-30% lower than the other car manufacturers who were involved in assembling. As a result of this policy the share of the national car company Proton increased to 70%. However after liberalization and with the entry of foreign car manufacturers the share of the national car manufacturers decreased at a steady rate. Overall it can be said that the rivalry within the industry is low. Threat of new entrants Threat of new entrants in the Malaysian automobile market has been perennially low. The government has long followed protectionist policy to shield the national car manufacturers. However with the starting of liberalization many new entrants have started entering the market. This has in turn increased the thread of new entrants in the market in recent years. Threat of substitution The threat of substitution is pretty low in the industry as there are very few people who use public transport such as bus and train and do not own or use automobile. Bargaining power of buyers As the government followed protectionist policies under which the prices of the domestic cars were reduced, and the prices of foreign cars were increased the consumers had no other choice but to purchase the lower quality domestic cars. However the scenario has changed post liberalization. Bargaining power of supplier The bargaining power of the suppliers in the Malaysian market is low. The two national companies that are Proton and Perodua capture 50% of the automobile market (Sawasnatee, &, Tai, 2010). The automobile parts manufacturers supply the parts to either of these two companies. SWOT of the market Strength Toyota has an innovative culture The company enjoys brand reputation and its brand is valued at $30 billion. The company has a strong brand portfolio. The company is leader in green cars development and production and sales. Weakness Presence in emerging market is weak and the company witnessed large no. of recalls. Opportunity The company has an opportunity to increase its presence in the emerging market The company can strive to increase the market share in sales of green vehicles. Threat The threat exists in terms of entrants of new players with the start of liberalized economy. There is presence of intense competition in the market. Target Market Description The largest indigenous people living in south East Asia are the Malays. Malays are the dominating ethnic group people that inhabit Malaysia. The other two ethnic groups that reside in the region are the Indian s and the Chinese. Malays are closely related to the religion of Islam. Islam acts as a key element in the ethnic identity of the Malay people. There the impact of Islam on the development of Malay people is critical; and important. The concepts of religiosity and ethnicity are not exclusive amongst the Malay people. It is rather multidimensional. Malay is born simultaneously into a culture and religion. Thus the person who rejects Islam is not legally considered Malay. Malay ethnicity is thus very much interlinked with the religious sentiment and it is thus very difficult to separate the two. The studies on the people of Malay go on to prove the fact that cultural values plays an important role in the decision making process of the people of Malaysia. The cultural social and physiological values of the people of Malaysia have a strong connection with the buying behavior of the people of Malaysia. Target Market Decision Making Process In Malaysia it is noted that the religiosity and ethnicity are the major factors that drive the purchase behavior of consumers in Malaysia. Ethnicity perhaps exerts the most powerful influence on the consumer buying behavior. The whole ideology of consumption in respect of Malaysia is inclined towards pragmatism and consciousness of quality. The type of consumption places primary importance on the values such as quality, best value for money and high utility. The consumers in Malaysia are conscious towards quality. The Malays display much interest in acquiring technologically produced products and the products that are of high quality. The consumers are not materialistic and in fact materialism is seen as a bad virtue in the Asian countries. The consumers are at the same time pragmatic in nature. This means adoption of many aspects marketing experience is compatible with the religious practices and ethnic values are a challenging task for the marketers of the products. The research also indicates that they, which are the Malay consumers, are incompetent in handling product and market related information. In order to develop the young consumer base proper formal education should be provided to the colleges (Bae, Pyun, and Lee, 2010). Consumer education should focus on facilitating the development of effective consumption practice so as to influence the economic rational aspects of the decision making process. Social Influences on Buying Behavior Culture plays a very important role in shaping the buying behavior of different individuals. Cultural values are generally stored in one generation and carried over from one generation to the next generation (Kamaruddin, & Kamaruddin, 2009). As a result of this the embedded values pass on over time from one generation to the next. The culture does have a definite influence over the way in which people behave and the way in which they take decision on a purchase. However there is a very little available literature that focuses on the effect of culture on high involvement purchases. Research has shown that culture acts as a major inhibiting factor when considered with respect to the purchase of high involvement products. Previously all researches on culture and social influences on consumer behaviors, the major management theories focused on America. However it is important to note that the culture and social aspect of countries of Asia is totally different from the culture and social aspect of the countries of USA. Hofstede did pioneering work in the field and established that United States, Australia, United Kingdom and other western countries are towards individual end of the continuum. The countries of Asia on the other hand are clustered towards the collectivist end of the spectrum. Hofstede states that every country has a national population shares a culture that is unique to the country (Nayeem, 2012). National culture is the culture that is common to the population of a nation and distinguishes the nation from other nations. Personal relationships are very important for the people of Asia and the Asian countries. In Asian countries it is normally found that the decision to purchase a high involvement product is normally taken after consultation with the family members. The Asian people are very family oriented and normally they will prefer to purchase cars in which they will be able to travel comfortably with the family members. Psychological Influences on Buying Behavior The Asian people are characterized by a collectivist culture. The emphasis on self which has risen to an obsession in the west countries is uncommon to be found in the Asian market. In Asia as a mindset of collectivism is found dominant, an excessive concern of the self is unwanted for in this culture. Excessive concern about self is considered to be uncivilized and coarse. In all of the major religions in the Asian countries such as Confucianism, Buddhism, Taoism a man is judged on the basis of consideration for and the service that it offers to others. The man is not judged by his or her individual contribution, by self actualization, or self aggrandizement (Yee, San, & Khoon, 2009). Even when the countries become modern in the outlook due to economic development, self fulfillment is not considered to be an acceptable virtue. Thus is due to the fact that the general mindset of the country that has been shaped by decades of collectivism culture focuses on group achievement rather than individual. It is to be noted that the most important difference in between the west and the people of Asia lies in the fact the need structure of the people of these two different cultures and people is totally different. This means that how people react to the different promotional strategies that are used to promote a particular product should be more focused on the collectivism strategies and should focus values on family consciousness. The promotions in the west that focus more on individual achievements and needs might not have takers in the country. As an alternative the promotions and the advertisement campaigns should focus on showing the group or family benefits of purchasing the product. That is to say that more focus in the advertisements should be to tell that the product or the car can be used for comfortable travel by all members of the family together. Marketing Strategy Recommendations The recommended marketing strategy for the company in this sector would be to focus their marketing efforts towards projecting the car as a family car. The promotional campaigns should be focusing on portraying the company as one which manufactures cars in which all the members of the family can travel together. The customers in the country are very quality conscious so the product that is developed with the best of technology will obviously be adored. The design of the cars should be robust and the promotional and marketing strategies should focus on these aspects of the cars. The ideal strategy should be to develop a car that is robust and promote the same. The promotional strategy should focus on the robustness of the cars, its comfort levels and the ease with travelling in it with the family members. Advertisements that try to focus on promoting the car as an idol one for the individual achievers to drive alone and cars like sedans are not likely to receive favorable response from the consumers of the country. Conclusion The essay in the above pages tries to find the relation of the various aspects of the consumers while purchasing a high involvement product. The interesting fact to be noted over here is that the different countries have different cultures, social and psychological aspects that are characteristics of the particular country. In this particular essay the country chosen for the study is Singapore and the company is Toyota. It is found that being part of the Asian countries the social, cultural and psychological aspects of the people of the country is much different from the countries of the west. It is found that the people in the country exhibit characteristics of groups where the decisions regarding the purchase are made in consultation with the family members. The best marketing strategy by any company would be based on taking these factors into consideration. References Bae, S., Pyun, D. Y. and Lee, S., (2010).Consumer Decision-Making Styles for Singaporean College Consumers. Journal of Research, 5(2), 70-76. Kamaruddin, A. R., & Kamaruddin, K. (2009). Malay culture and consumer decision-making styles: an investigation on religious and ethnic dimensions. Jurnal Kemanusiaan Bil., 14(1), 37-50. Nayeem, T., (2012). Cultural Influences on Consumer Behaviour. International Journal of Business and Management. 7(21), 78-91. Sawasnatee, J., & , Tai, W. P.,(2010). Comparative Case Study of Malaysia and South Korea Automobile Industry Competitiveness Analysis. EAU heritage Journal. 1(1), 19-38. Yee, C. J., San, A.Ng. C., & Khoon, C. H., (2009). A Study on Malaysia Consumer Perception towards Buying an Automobile. Retrieved from http://www.kmice.cms.net.my/ProcKMICe/KMICe2010/Paper/PG290_295.pdf Read More