Exploratory factor analysis: The exploratory factor analysis was used in order to identify the
various influencing factors of purchasing the car
Objectives
To determine the major factor that affects the purchasing behavior of a customer.
Research Methodology structured questionnaire.
Research Design
The research is exploratory in nature. The study is done to. understand the purchase behavior of
consumers . For this purpose, structured Questionnaire is used and results are interpreted.
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .754
Approx. Chi-Square 304.717
Bartlett's Test of Sphericity df 78
Sig. .000
Since KMO value is greater than 0.5, thus the sample is adequate and we can run the factor analysis.
Total Variance Explained
Component Initial Eigenvalues Extraction Sums of Squared Loadings Rotation S
Total % of Variance Cumulative Total % of Variance Cumulative % Total
%
1 4.552 35.015 35.015 4.552 35.015 35.015 3.
2 2.080 15.997 51.012 2.080 15.997 51.012 3.
3 1.347 10.360 61.373 1.347 10.360 61.373 1.
4 1.100 8.460 69.833 1.100 8.460 69.833 1.
5 .957 7.359 77.191
6 .707 5.437 82.629
7 .543 4.177 86.806
8 .427 3.285 90.091
9 .401 3.088 93.179
10 .331 2.547 95.726
11 .231 1.774 97.500
12 .228 1.751 99.251
13 .097 .749 100.000
Extraction Method: Principal Component Analysis.
Interpretation : From the above table, our 13 variables seem to measure 3 underlying factors. This is
because only our first 4 components have an Eigen value of at least 1. The other components having
low values are not assumed to represent real traits underlying our 13 questions.
Component Matrix
Component
1 2 3 4
What would you look for in .833 .097 .290 -.107
your car.1-least, 5-highest
[Space]
What would you look for in .754 .039 .071 .113
your car.1-least, 5-highest
[Size and shape]
What would you look for in .776 .380 -.090 .016
your car.1-least, 5-highest
[Technology]
What would you look for in .492 -.251 -.700 .098
your car.1-least, 5-highest
[Brand image]
What would you look for in .734 .274 .013 .153
your car.1-least, 5-highest
[Power]
What would you look for in .200 .594 -.037 -.067
your car.1-least, 5-highest
[Fuel efficiency]
What would you look for in .748 .234 -.244 -.119
your car.1-least, 5-highest
[InteriorComfort]
Rate according to your car .183 -.593 .127 .329
engine preference 1-least, 5-
highest [Petrol]
Rate according to your car -.008 .081 -.036 .929
engine preference 1-least, 5-
highest [Diesel]
Rate according to your car .283 .811 .102 .156
engine preference 1-least, 5-
highest [LPG]
Rate according to your car .224 .895 .085 .034
engine preference 1-least, 5-
highest [CNG]
Rate according to your car .197 .750 -.067 .217
engine preference 1-least, 5-
highest [Electric vehicle]
If yes what is your level of .237 -.148 .812 .029
switching?
In component 1, question 1,2,3,5,7 have values greater then 0.5 so they will forming the
component 1 ,it is accepted and others are rejected
In component 2 ,question 6,8,10,11,12 have values greater than 0.5 so they will forming the
component 2 it is accepted and others are rejected having values less then 0.5
In component 3 ,question 4,13 have values greater than 0.5 so they will forming the
component 3 it is accepted and others are rejected having values less then 0.5
Component 4 formed by only 1 question 9 have values greater than 0.5 .
Factors Drawn from Factor Analysis
1 2 3 4
V1 V6 V4 V9
V2 V8 V13
V3 V10
V5 V11
V7 V12
CUTOMER CHARACTERIZATION
(BASED ON FACTOR ANALYSIS)
The resultant empirical factor structure indicated that the quality & technology conscious
buyers items form a first factor while some other factors performance conscious buyers ,
customer loyalty formed the second & third respectively.
1. QUALITY CONSIOUS BUYERS
The first factor, quality & technology conscious buyers, accounted for the largest proportion,
that is, 35.015% of the total explained variance. This factor was defined by three items and
was primarily related to the space ,shape and size, technology, power and interior component
2. PERFORMANCE CONSIOUS BUYERS
The second factor, performance conscious buyers, explained 15.997 % of the variance and was
constructed by 5 items, which were primarily associated with the concept of performance i.e.
fuel efficiency ,petrol engine performance, LPG engine performance ,CNG engine performance
& Electric vehicle engine performance of the car
3. CUSTOMER LOYALTY
The third factor, customer loyalty, explained 10.360% of the variance and was constructed by
2 items , which primarily associated with the brand image and level of switching .
It shows the customer loyalty is not very significant and level of switching is very high. in
automobile passenger car segment after every purchase customer like to switch to some other
brand and some other segment cars.
4. VALUE CONSIOUS BUYERS
The fourth factor, explained 8.460% of the variance and was constructed by 1 item which
primarily associated with diesel engine performance.
Data Analysis and Data Interpretation
The data collected from the questionnaire has been analyzed and interpretations were given
6.1 Consumer Psychology –purpose of use
Q.1 why you bought your first car, please rank from the highest order of preferences?
1. Increase in disposable income
2. Better safety at roads
3. Family needs
4. Increase in family size
5. Suits your lifestyle and personality
Interpretation:
As per the analysis shows, “Family needs” seems to be the most important reason for buying a car.
The family needs like working partners, increasing family size etc. This trend is reflected in that now the
car are no more luxury or just a status symbol but a necessary need of today .The second most
prominent factor is ‘better safety at roads ‘which is also pointing towards the same attitude change and
consequently the growth of the Indian Automobile Industry.
6.2 prominent factors making buying decision
6.2 (a)
6.2(b)
Interpretation:
Indian market is still the hard nut to crack for most of the Automobile manufacturers. Though the
Indian car industry is among the fastest growing car markets of the world still the Indian psyche is
too complex for the manufacturers to understand. The most important reason for buying a car
when it comes to B and C segment cars seems to be value for money. 94.3% of the respondents
suggested that affordable prices are the most important factor while purchasing a car. This is the
reason for sticking to a particular segment till the next substantial rise in the personal disposable
income. This reason is followed by after sale, financing and technical aspects respectively.
From Figure:6.2(b) the biggest feature customer look for in their cars come out the space, brand
and exterior design like size and shape. Interior comfort is also playing major role in consumer
preferences.
6.3 Brand Image
Fig:6.3(a)
Interpretation:
As per the analysis, Maruti is the car mostly owned by respondents same situation is in country as
majority market share is with Maruti as it is most preferred in the market. This is because it known
for its overall image. On the other side TOYOTA & TATA is playing second and third role for because
of reason people consider these brand as reliable and trustworthy which created a good platform
for both the companies.
But these are the normal conditions when customer preferred ‘value for money’ and value
‘complete package’ offered by manufacturer with the money or features offered by other
manufacturers ,but when they have been asked for their dream car their responses are totally
different as shown in below figure
Fig:6.3(b)
When question came for dream car JAGUAR, BMW & LANDROVER brands topped the table
Jaguar ,Cadillac & Bmw is the car whose brand image is most preferred in the market as they have
luxury with performance, after that rolls Royce and lexus are having the most vote for their luxury
but none of them is Indian manufacturer beside Jaguar which later acquired by TATA.
It also tell if luxury if given at affordable prices potential customers definitely go for it
6.4 CUSTOMER LEVEL OF SATISFACTION
Int
erpretation: It
seems logical that satisfied customers will someday become loyal customers. In other words there
is a positive correlation between customer satisfaction scores and customer buying behaviour. If
the customer rates the car very high in satisfying his or her needs, the car manufacturer should
expect more referrals and this is reflected in the analysis that 81.1% customers says that they will
refer their friends even if they move to other segment or other brand.
6.5 CONSUMER BRAND SWITCHING BEHAVIOUR
Fig:6.5(a)
Fig:6.5(b)
From Fig:6.5(a) shows that most of the respondents like to switch to another brand and their level of
switching is also on high side as evident in Fig:6.5(b). but these are the same customers which are ready
to refer the same brand to others. It actually shows that although customers are satisfied very much
than also they were ready to switch as they want to try to new brand and want a fresh look of their
vehicle at every purchase.
This is the striking reality of the Automobile industry that “CUSTOMERS BRAND LOYALTY” IS LOW.
Fig: 6.5(c)
Interpretation:
The analysis shows that most people want same segment & will prefer a different manufacturer,
and the next striking finding is that the customer will prefer both same and different manufacturer.
This behavior is complex to understand as these are the customer who have given whopping
response for recommending their car to their friend.
The reason may be they want different manufacturer because they want fresh looks and feature in
the same segment. As the segment change mostly decision dependent on the needs and condition
like family size, parking facilities an individual possess.
Count of Will you recommend your car to your
Row Labels friends
Na 1
Upper segment, same manufacturer 1
No 9
Same segment, different manufacturer 6
Upper segment, different manufacturer 3
Yes 43
Same segment, different manufacturer 20
Same segment, same manufacturer 10
Upper segment, different manufacturer 9
Upper segment, same manufacturer 4
Grand Total 53
From above table its clear that those who are ready to refer to their friends most of them want to
change its manufacturer
Around 81.13% of the respondent are pretty satisfied with their current brand
Around 67.44% of respondent who are willing to refer to others doesn’t want to buy car from same
manufacturer. This re-enforce our above conclusion about the striking reality of the Automobile
industry that “CUSTOMERS BRAND LOYALTY” IS LOW.
69.76% of respondents doesn’t want to change the segments although they are ready to
buy with different manufacturer. as there may not be significant change in lifestyle or family
needs
Row Labels Count of Would you like to switch to another brand with other features?
Maybe 19
Same segment, different manufacturer 10
Same segment, same manufacturer 3
Upper segment, different manufacturer 4
Upper segment, same manufacturer 2
No 8
Same segment, different manufacturer 2
Same segment, same manufacturer 5
Upper segment, same manufacturer 1
Yes 26
Same segment, different manufacturer 14
Same segment, same manufacturer 2
Upper segment, different manufacturer 8
Upper segment, same manufacturer 2
Grand Total 53
45.2% customers those who are willing or thinking to change want to stay with present segment
but change their manufacturer.
6.6 Consumer change Adoption (clean & renewable technologies)
Fig:6.6(a)
From the analysis its evident, although with advent of many new technologies related to car engines but
still the petrol engines is on the prime position when it comes to engine performance .
Interesting fact is that people have sort of aversion from CNG & LPG vehicles and electric vehicle market
still in its nascent stages its also backed by the fact ‘TESLA’(Luxury Electric Car manufacturer) is not liked
by any of respondent when the question of dream car arises , although TESLA is largest car
manufacturer is terms of market capitalization.
Suggestion: TESLA ENTRY INTO INDAIN MARKET BOOST THE CONSUMER SENTIMENT FOR ELECTRIC
VEHICLES
6.7 Preferred car segments
Fig:6.7(a)
From our analysis it is evident that Sedan/hatchback segment is the most preferred one especially with
city passengers and largest in terms of numbers in age group of 20-40 & 40-60 followed by mini car
which is very helpful for mobility in city traffic and small parking areas.
Hatchback section is preferred by 31.25% & 31.6% respondents in age group of 20-40 & 40-60
respectively
SUV segment is also attracting most of the young blood(20-40) by 30.3% as shown in Fig:6.7(b)
Middle age customer(40-60) seems to be divided among the Mini and hatchback
(around 63.16%)section Fig6.7b
SUV & SPORTS Segment dominated by car like BMW, AUDI & MERCEDES.
MARUTI , TATA ,TOYOTA ,HYUNDAI ,HONDA are the major players of mini/hatchback cars
Row Labels Count of which of these types of cars would you consider driving?
<20 1
SUV 1
>60 1
Prestige Car 1
20-40 32
Estate 2
Mini Car 7
Minivan 1
Sedan/ Hatchback 10
Sports/ Cabriolet 2
SUV 9
tractor 1
40-60 19
Mini Car 6
Sedan/ Hatchback 6
Sports/ Cabriolet 3
SUV 4
Grand Total 53
Fig:6.7(b)
6.8 Demographics
Fig:6.8(a)
Employee 18
Estate 1
Mini Car 2
Sedan/ Hatchback 7
Sports/ Cabriolet 2
SUV 6
Government Servant 13
Mini Car 8
Minivan 1
Sedan/ Hatchback 2
SUV 2
Self-employed 11
Estate 1
Mini Car 1
Prestige Car 1
Sedan/ Hatchback 3
Sports/ Cabriolet 2
SUV 2
tractor 1
Student 11
Mini Car 2
Sedan/ Hatchback 4
Sports/ Cabriolet 1
SUV 4
Grand Total 53
Fig:6.8(b)
In students most popular category is of suv and mini car both contributing 54.55%.
In Government servant which is around 5% of population,mini car is the leader by 61.5%
possessing it
In Employees segment, Sedan & Suv are equally preferred around 38% .
In all section whether employee, government servant & self employees sedan /hatchback
section is at top .
6.9 Consumer Pricing Consideration
Fig:6.9(a)
10-25 lakh is most ‘value for money’ category for consumer considering hatchback car
In category 5-10 , 10-25 lakh TATA accounts nearly 42.10% &42.8% of the categories
In higher price segment, suv and sports cars are preferred.
7. CHI- SQUARE TEST
A. Demographic Characteristics Of Consumers
Hypothesis : 1
NULL HPOTHESIS: A significant relationship doesn’t exist between age and car brand choices.
Alternate hypothesis: A significant relationship exist between age and car brand choices.
Chi-Square Tests
Value df Asymp. Sig. (2- Monte Carlo Sig. (2-sided)
sided) Sig. 99% Confidence Interval
Lower Bound Upper Bound
a b
Pearson Chi-Square 127.118 96 .018 .229 .218 .240
b
Likelihood Ratio 65.570 96 .993 .006 .004 .008
b
Fisher's Exact Test 189.558 .001 .000 .002
N of Valid Cases 54
a. 124 cells (99.2%) have expected count less than 5. The minimum expected count is .02.
b. Based on 10000 sampled tables with starting seed 745618922.
INTERPRETATION : Since, Fisher’s exact test is lesser then 0.05 , then the null hypothesis is rejected
means age and car brand choices are having significant relationship with each other.
Hypothesis:2
NULL HPOTHESIS: A significant relationship doesn’t exist between age and segment.
Alternate hypothesis: A significant relationship exist between age and segments.
Chi-Square Tests
Value df Asymp. Sig. (2- Monte Carlo Sig. (2-sided)
sided) Sig. 99% Confidence Interval
Lower Bound Upper Bound
Pearson Chi-Square 115.257a 32 .000 .010b .007 .013
b
Likelihood Ratio 28.016 32 .669 .059 .053 .065
b
Fisher's Exact Test 55.250 .112 .104 .120
N of Valid Cases 54
a. 41 cells (91.1%) have expected count less than 5. The minimum expected count is .02.
b. Based on 10000 sampled tables with starting seed 92208573.
INTERPRETATION : Since, Fisher’s exact test is greater than 0.05 , then the null hypothesis is not
rejected which means age and car brand choices doesn’t have any significant relationship with each
other.
B. Societal Characteristics Of Consumer
Hypothesis:3 OCCUPATION VS SEGMENT
NULL HPOTHESIS: A significant relationship doesn’t exist between OCCUPATION VS SEGMENT.
Alternate hypothesis: A significant relationship exist between OCCUPATION VS SEGMENT.
Chi-Square Tests
Value df Asymp. Sig. (2- Monte Carlo Sig. (2-sided)
sided) Sig. 99% Confidence Interval
Lower Bound Upper Bound
a b
Pearson Chi-Square 101.930 40 .000 .009 .006 .011
b
Likelihood Ratio 42.617 40 .359 .200 .190 .211
b
Fisher's Exact Test 47.993 .152 .142 .161
N of Valid Cases 70
a. 52 cells (96.3%) have expected count less than 5. The minimum expected count is .01.
b. Based on 10000 sampled tables with starting seed 508741944.
INTERPRETATION : Since, Fisher’s exact test is greater than 0.05 , then the null hypothesis is not
rejected which means age and car brand choices are doesn’t have any significant relationship with
each other.
Hypothesis:4 Occupation vs brand
NULL HPOTHESIS: A significant relationship doesn’t exist between OCCUPATION VS BRAND.
Alternate hypothesis: A significant relationship exist between OCCUPATION VS BRAND.
Chi-Square Tests
Value df Asymp. Sig. (2- Monte Carlo Sig. (2-sided)
sided) Sig. 99% Confidence Interval
Lower Bound Upper Bound
a b
Pearson Chi-Square 128.818 75 .000 .050 .045 .056
b
Likelihood Ratio 73.454 75 .529 .031 .027 .036
b
Fisher's Exact Test 108.480 .033 .028 .038
N of Valid Cases 70
a. 95 cells (99.0%) have expected count less than 5. The minimum expected count is .01.
b. Based on 10000 sampled tables with starting seed 1314643744.
INTERPRETATION : Since, Fisher’s exact test is lesser then 0.05 , then the null hypothesis is rejected
means age and car brand choices have significant relationship with each other.
C. Economic Characteristics Of Consumers
NULL HPOTHESIS: A significant relationship doesn’t exist between FAMILY INCOME VS BRAND
Alternate hypothesis: A significant relationship exist between FAMILY INCOME VS BRAND
Chi-Square Tests
Value df Asymp. Sig. (2- Monte Carlo Sig. (2-sided)
sided) Sig. 99% Confidence Interval
Lower Bound Upper Bound
a b
Pearson Chi-Square 133.776 75 .000 .037 .032 .042
b
Likelihood Ratio 70.387 75 .629 .018 .014 .021
b
Fisher's Exact Test 110.431 .040 .035 .045
N of Valid Cases 70
a. 95 cells (99.0%) have expected count less than 5. The minimum expected count is .01.
b. Based on 10000 sampled tables with starting seed 112562564.
Interpretation : Since, Fisher’s exact test is lesser then 0.05 , then the null hypothesis is rejected means
family income and car brand preferences have significant relationship with each other.
