KARTIBAN 1061103507 Chapter 1 Introduction 1.

1 Background of Research

Purchasing decision on proton cars

The research is align regarding with Purchasing Decisions on Proton Cars. This study is dealing with Malaysian automobile industry. All Islamic countries hold its pride of producing automobiles by Malaysia. The first car was the Proton Saga which made Malaysia to obtain recognition worldwide for its impressive performance. This national project has progressed even further with the acquisition of the United Kingdoms prominent automaker (Lotus International) in 1996 and the recent introduction of a new engine, the Campro (Rosli, 2006).

National Car Project by PROTON was the second phase of the development in the automotive industry. This took place in the year of 1984. The development of intellectual property of the industry and increment of technology level was the milestone of this project. The PROTON project, which was a joint-venture programme with Mitsubishi Motors Corporation of Japan, began its production with the PROTON Saga model in 1985 (Arshad).

Follow up of this success, Perusahaan Otomobil Kedua Sdn Bhd.(PERODUA) was established in the year of 1992. It was the result of an agreement between UMW Corporation Sdn. Bhd., Daihatsu Motor Co. Ltd of Japan, Med-Bumikar Mara Sdn. Bhd., PNB Equity Resources Corporation Sdn. Bhd., Mitsui & Co. Ltd of Japan and Daihatsu (Malaysia) Sdn. Bhd (Arshad).

1.2 Problem Statement

Although Proton had gone through numerous achievements in the recent years, there are few talking points where it highlights the problems that Proton for the past decade. The problem with Proton Holdings Bhd is that it feels that Malaysia owes it a living. It wants to continue to make profits at the expense of Malaysians. It does not realize that 25 years is too old for it to be babied (P.Gunasegaram, 2010). Government charges heavy duty taxes to the foreign company vehicles in order to baby sit the Proton plantation. By this, the people will consider purchasing cheaper rate cars and their option would be Proton.

Proton wants to joint venture with Perusahaan Otomobil Kedua or known also as Perodua. In these recent years they have surpassed Proton in sales and turn out to be the market leader. But Perodua is a reluctant bride and its top management has openly, and understandably, expressed opposition against the merger because it gives no benefit to Perodua while being potentially rather harmful (P.Gunasegaram, 2010). This had lead Proton to find a technological merger with a high reputation and large manufacturer.

Proton Holdings Bhd and Mitsubishi Motors Corp have agreed on a product collaboration that would see Proton source a vehicle from Japan to replace the Waja and Mitsubishi take the Persona and Protons upcoming MPV (multi purpose vehicle) to be marketed as Mitsubishis in certain markets (Sidhu & Yap, 2008). The Waja replacement is the introduction of Proton Inspira.

One of the main reasons this research was conducted is to look how peoples purchasing decision on Proton cars. It is also to find out whether the pricing of Proton car matches the standard of its quality. We also look into Protons customer service quality and delivery of its services throughout the whole Malaysia. Apart of that, we had look onto the performance and quality of the Proton products that have been manufactured and automated in Malaysia. Lastly, we look

how far customers acceptance of the rebranding of Proton Inspira and its success rate after launching the new car in Malaysian market.

1.3 Objectives of Research

The objective of this research is to monitor the purchasing decision on Proton cars. It also contains the overall view of the Proton automobile industry. It also discusses the weaknesses of Protons quality in service providing department. This reflects on the proton branding is tarnishing. This can be justified by an issue that pulled Protons quality reflection down. Proton Holdings Bhd had recall their 15,911 of Gen.2 and Satria Neo models made between 2004 and 2008 due to a clock spring malfunction is likely to cost the company an estimated RM5mil (Mahalingam & Eugene, 2010). This had raised several questions in the service quality of proton on the security issues of the car. The rebranding concepts should actually rise up the quality or the interior and exterior elements, but it didnt happen in this case.

Proton Waja has been in the market for almost 10 years consistently. In order to stay competitive in the automotive sector, Proton opted to use Mitsubishi Lancer as the Waja replacement model, which is designed to fill in the gap for the need of a product in its segment without having to invest heavily. Protons current plan is to develop the Persona replacement model, so they decided to put more money and attention into it. The replacement model of Waja would be Proton Inspira (Admin, 2010).

Despite its slum success, there are few set backs that criticizes the introduction of Proton Inspira. Recently debated in the Parliament, one of the Member of Parliament criticised the move by Proton as taking a step backward. Comparing the rebadged Inspira to the Saga which was also rebadged version of the 3rdgeneration Lancer (the Inspira follows the 9th generation Lancer), the backward move suggested the lack of capability of Proton as a full fledge car manufacturer (Lim, 2010).

This leads us to primary objectives of this study, which is: 1) To determine peoples purchasing decision on Protons car based on basic car buyers criteria. Next, the supporting objectives of this study: 2) The weaknesses of Protons quality in service providing department, which reflects the tarnishing of protons branding. And Finally, and another objective of this research would be: 3) The success and failure rates among the buyers and respondents of this Proton product.

1.4 Research Questions The following questions that are asked in this research are derived from the research objectives: General buying criterias that influences the purchasing decision 1) What determine peoples purchasing decision on Protons car based on basic car buyers criteria? The main problem that Proton is facing currently in their automotive industry 2) What are the weaknesses of Protons quality in service providing department? The Protons brand image 3) What reflects the tarnishing of protons branding? 4) What are the success and failure rates among the buyers and respondents of this product.

1.5 Significance of Study Automotive Industry 1) This study will provide an insight to the factors that affect the customers perception in automotive industry through its customers purchase decision. By manipulating the identified buying criteria that affects purchasing decision, marketers are better able to increase the sales of their product. 2) This research is able to assist marketers in the automotive industry on promoting their products to the relevant parties that is found to have the most influence over the purchasing decision of others. 3) In the past, automotive industries have always targeted their products to the baby boomers generation. This study will look into the perspective of the upcoming generation Y and anticipate the changes needed to attract them to purchase the Proton products.

1.6 Scope of Study The age of generation Y ranges from 15 years to 32 years old as of in year 2009. This translates to those whom were born between the years of 1977 to 1994. In addition, this study was conducted for adolescent whom are living in Melaka, Kuala Lumpur and Selangor area. This was done based on convenience sampling.

1.7 Definition of Terms Generation Y consists of individuals born from 1977 to 1994 (Paul, 2001). Reference Group: A group that influences the attitudes of those individuals who use it as a reference point for evaluating their own situation (Hyman, 1942). Proton car: National car project that is corporate by Proton Holdings Bhd (Proton Holdings, 2011). 1.8 Organization of Research Project Chapter 1: provides a clear statement of the topic/ problem under investigation and provides the general context for the research sometimes giving details of the methodology and the theoretical background and usually outlining applications of the research. If forcefully justifies the need for this research, and states the aims. It usually concludes with a chapter-bychapter outline of the content of the dissertation.

Chapter 2: Literature Review presents a critical review of relevant previous studies in the research field. This chapter shows how knowledge has been built up in the research field and, by clearly demonstrating the achievements but also the limitations of the previous research, it presents a well-argued justification for the research to be undertaken. Generally, the intention of this chapter is to analyze critically a segment of a published body of knowledge through summary, classification, and comparison of prior research studies, reviews of literature, and theoretical articles.

Chapter 3: defines what the activity of research is, how to proceed, how to measure progress, and what constitutes success. It focuses primarily on providing help with the tools and techniques used in the research process.

Chapter 4: reports and discusses the findings; and deal with the body of the thesis. This chapter also tells the readers the results and correlation that emerged from the findings of this study. Besides that, the finding will also either support or reject the hypotheses of this research.

Chapter 5:

presents the major conclusions, which can be drawn from the findings of the

research. This chapter also makes recommendation for further research.

1.9 Summary of Chapter The purpose of this study is to determine the influence of the reference group which consists of cost of a car, customer service center, gas mileage, performance quality, and safety of the car on customer purchasing decision of Proton cars. This research also seeks to answer the research questions as stated in the text above. Furthermore, this study explores the gaps in the current research papers in regards to the influence exerted by reference group on the purchasing decision label apparel. This study also contributes to various parties such as automotive industry, society and future researches. The scope of study for this research is focused on the customers both male and female, ranging from age 18 to 32 years old that purchase Proton cars in Malaysia.