Online Final Examination Spring 2021

Student I.D: 15475 ALISHA ABBAS Date: 26/May/2021

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Course Title: Consumer Behavior Course Code:

Program: MBA/ BBA(2Y)- IV Teacher Name: Jahanzaib Khan

Semester: Spring 2021 Marks: 40

Instructions:
- Read all questions carefully.
- All questions are compulsory.
- Show all necessary calculations.
- Student MUST submit the Online Final Assessment in the LMS by the above-
mentioned DUE DATE.
- Late submission of Online Final Assessment WILL NOT be graded.
- Online Final Assessment WILL ONLY be submitted in the KASBIT LMS.
-
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Section 1
Auto industry growing as government policies promote competition
At a time when economic activities have slowdown in the country, the motor industry has grown and
evolved with an influx of new vehicles.

The government had granted functioning licenses to six new entrants in order to create competition
in the automobile sector under the Automotive Development Policy (ADP 2016-21). Market sources
informed The Nation that volume of the auto industry is expected to increase in ongoing fiscal year,
which would be mainly led by the new entrants, car companies that have come under ADP 2016-21.
They said that production as well as sale of the cars is showing increase from last several months.

Sale and production declined in last year mainly due to the spread of Covid-19. However, auto
industry is now on a path of recovery as it will launch the largest number of new cars in a year in
2021. With low interest rates and revival in economic activities, sales of locally assembled cars in
first seven months (July to January) of the ongoing financial year rose to 81,569 from 69,189 units in
the same period a year ago. “We expect further demand for cars to grow stronger owing to low
interest rates environment and pickup in economic activity,” said a new entrant, who asked not to
be named.
M/s Kia Lucky Motors Pvt Ltd, M/s United Motors (Pvt) Ltd, M/s Regal Automobile Industries Ltd,
M/s Foton JW Auto Park (PVT) Ltd, M/s Master Motors Ltd and M/s Hyundai Nishat Motor (Pvt) Ltd
were the new entrants under the Auto Policy. The new entrants as well as old auto companies will
launch the largest number of new cars in a year in 2021, which showed that auto industry is
recovering in the current year. United Motors unveiled Alpha, Toyota introduced Corolla X, Changan
started taking orders for Alsvin and Proton presented X70. In addition, new models were launched in
February as well which included ZS by Morris Garages (MG), Sorento by Kia Lucky and Saga by
Proton.

Demand for cars to grow stronger owing to low interest rates environment, pickup in economic
activity.

The industry, which is normally dominated by three Japanese brands, is now facing competition from
some new entrants mainly from Korea and China. New entrants have introduced their brands in the
Pakistani market under the new entrant’s policy given in Auto Industry Development Policy
(program) 2016-21. One of the new entrants— M/s Kia Lucky Motors Pvt Ltd—had recently claimed
to sell more cars than Honda in consecutive months: December 2020 and January 2021. “For two
consecutive months, we have sold more cars than Honda. In December and January, our estimates
were higher,” said Muhammad Faisal, COO of Kia Lucky Motors. According to the reports, Suzuki
sold the largest number of vehicles. Honda sold 1,764 vehicles, including the Civic, Area, and BR-V, in
December 2020 and 1,916 in January 2021. This means that KIA’s Sportage and hatchback Picanto
crossover SUV numbers are more than that, as according to the KIA’s claim.

Meanwhile, officials in Ministry of Industries and Production informed The Nation that government
had recently announced new Electric Vehicle (EV) Policy, which would create competition among
auto sector players besides pollution-free environment. They said that government would be
introducing a public-friendly transport system under the EV policy. A memorandum of
understanding (MoU) was signed among Daewoo Express Pakistan, Skywell from China and Hitachi
ABB Power Grids from Sweden for introducing electric buses in Pakistan. The MoU was signed for
setting up a value chain for electric vehicles and charging infrastructure in Pakistan. Under this MoU,
Skywell Automobiles China and Daewoo Express Pakistan will collaborate to introduce electric buses
and other electric vehicles in Pakistan and create a technical support base in the country with robust
charging infrastructure through ABB Hitachi Power Grids. Skywell Automobiles will provide its state
of the art electric buses for the Pakistan market in Phase-1, and in Phase-2, shall set up a
manufacturing plant for producing electric vehicles in Pakistan.

Question # 1 (8 Marks)
In the given scenario of Pakistan’s Automobile Industry, how is the consumer behavior changing with
the introduction of so many new automobile companies? What are the implications of this changing
behavior for the three (3) automobile giants of Pakistan, namely Toyota, Suzuki and Honda?

Question # 2 (6 Marks)
Will this increased competition benefit the customer? If yes, in what ways will the customer benefit?
Question # 3 (6 Marks)
The government had recently announced new Electric Vehicle (EV) Policy, which would create
competition among auto sector players besides pollution-free environment. In your opinion, why has
the government taken this move? Talk with respect to the consumer and the international global
warming concerns.

Section 2
Question # 4 (6 Marks)
Identify two (2) products in which the emotional motives are higher for a consumer than the
rational motives. How would you influence the decisions of consumers for such products?

Question # 5 (7 Marks)
Brands are known to offer a variety of products to their customers. In what ways does this influence
the perception of customers towards a brand? Name at least three (3) local brands from different
industries that are offering a variety of products to customers. And how is this variety offering
perceived by the customers?

Question # 6 (7 Marks)
Your company is a known name in the consumer electronics market, offering high-quality products.
Lately, customers have been facing issues with the after-sales services (warranty service, repairs,
etc.).

In your opinion, how will this impact the customers and their behavior towards your company?
What measures can you take to improve the situation?

STUDENT NAME: ALISHA ABBAS

ID # 15475

DATE: 26 May 2021

COURSE CONSUMER BEHAVIOR

 SECTION 1

ANSWER Q 1

It is for the first time in the history of Pakistan that more than 15 new cars
are being launched across the country in a single year,

Listing the new cars launched in January 2021, the research house stated that United
Motors unveiled Alpha, Toyota introduced Corolla X, Changan started taking orders
for Alsvin and Proton presented X70.
In addition, new models were launched in February as well which included ZS by
Morris Garages (MG), Sorento by Kia Lucky and Saga by Proton, it said.
According to the research house, new cars expected to be unveiled in March are
Corolla Cross by Toyota, Elentra by Hyundai Nishat and X25 by BAIC. “April may see
the unveiling of Swift by Pak Suzuki and electric vehicle ZS by MG,” it said.
Although the number of new cars expected to be introduced in the local market this
year was around 20, uncertainty loomed over the launch of a few models.

CONCEPTUAL FRMEWORK

There is a conceptual framework of this case study

1. Brand awareness affects a consumer’s purchase intention.
2. Brand association affects consumer’s purchase intention.
3. Perceived quality effect consumer’s purchase intention.
4. Brand loyalty affect consumer’s purchase intention
From different age groups and gender revealed more or less similar behavior
towards said factors and data collected from respondents reflects that all mentioned
factors influence consumer purchase intention.This study explores the relationship
between Consumer Purchase Intention which is taken as the dependent variable and
Brand Awareness, Brand Association, perceived quality, and brand loyalty are taken
as independent variables. The purpose of this study is to look at factors that affect
the purchase intention of the consumer

The prices set by the automakers have a huge impact on the purchase decisions of
the consumers. Automobiles are considered high involvement products which means
they require a considerable amount of thinking and investment from consumers
when they are in the market to buy one

Consumer behavior has started changing. Toyota, Suzuki and Honda were enjoying
monopoly and have raised prices of their own decision. When it goes for purchasing
automobile price and quality are two major elements that a consumer keep in mind.
The new entrants like KIA, MG MOTORS and GLOLRY are offering better
specifications of car with good price
Honda Suzuki and Toyota are facing competition from new entrants it has affected
their sales COVID-19 has already affected automobile industry and with new entrants
these giant crocodiles are facing decline in sales and the most important thing they
have lost brand loyalty due to higher prices and average quality while on the other
hand consumer has better quality more or less with the same price

ANSWER Q2

Customers have numerous advantages of market competition

UPGRADATION:
Company tend to regularly upgrade their product as well as innovate so that they
stay ahead of competition. If there was no competition, Toyota would not have been
what it was. Because Toyota wanted to get ahead of competition like any
international company and others, they innovated. So up gradation is a natural
advantage of having market competition.

MORE OPTIONS FOR CUSTOMER

Customers get many more options when competition is strong in the market
PRODUCTIVITY:

Businesses in general tend to be more productive and efficient when there is

competition in the market. When you know that your competitor is
making strategies regularly, you optimize your own operations and manufacturing.
This means that the customer gets better customer service, optimized product, and
at the same time, a management which is listening to the customer. This is the
biggest advantage of market competition

FOCUS ON SALES AND MARKET:

The best advantage of market competition is that it ensures that the company is
focused on sales and in turn, on its customers.  More customers means more market
share, and more safety for the company. However, once it starts losing market share,
then competitor can have an advantage position. On the other hand, if there was no
competition, then the company would not be worried about sales or market share

ANSWER Q 3

Government Electric Vehicle policy is an appreciated initiative but on the other hand
we are listed in third world country State is unable to provide electricity for domestic
use how they will be able to provide vehicle. In my opinion it will not create
competition in auto mobile sector in fact in countries like G7 i.e. China, USA, France
etc. they have not fully adopted electric vehicle.

With respect to consumer it depends on consumer age, income, gender, education.

It will be a new experience. Speed, comfort torque, picks up and the most important
availability of electricity as a fuel will be higher concerns for consumer.

With respect to global warming concerns it will be a highly appreciated initiative

taken by the State for the preservation of weather and environment.

SECTION 2

ANSWER Q 4
 EMOTIONAL MOTIVES:

Neuroscientists emphasize that emotions play a central role in our decision-making-

progress: Neuroscientist Antonio Damasio conducted a study which found that
people who were unable to generate emotions due to medical conditions had
trouble making decisions.
Criteria which impact emotional purchase decisions are highly personal:
 Love/sentiment
 Envy
 Pride
 Entertainment
 Vanity
For emotional purchase decisions, it can be argued that the need does not
necessarily have to be present in the first place. It is rather created by external
sources, like influencers.
Thus, these purchase decisions are strongly based on impulses as well as
recommendations. There is not a long-term need or an urgent circumstance which
leads to purchasing a product. The customer does not look for information prior to
the purchase and does not evaluate alternatives. The decision is purely based on an
emotional input.
Product categories which are purchased for purely emotional reasons include those
products which we do not really NEED, but are tempted to buy, for example on social
media. These include hair vitamins, detox teas and waist slimmers.
We do know that we do not need a special tea which is supposed to slim us down
within a few days but which actually (probably) only consists of the exact same tea
leaves as regular mint tea sold by supermarkets. Nonetheless, we are influenced in
our purchase decision by TV commercials and influencers and are triggered by
emotional approaches in particular.

RATIONAL PURCHASES:

Rational purchases are those purchases which are mainly based on objective criteria:
 Profit
 Security
 Utility
 Caution
 Health
For these, rational factors outweigh emotional ones. We buy health insurance
because we want to ensure getting the best possible treatment in the first place. Our
emotional mindset towards the provider is secondary.
 These purchases follow the five stages of consumer behavior mentioned before very
strictly:
1. An urgent need is recognized (“My car is broken, I need a new one.”)
2. Extensive research (“Which companies/ brands offer the desired product?”)
3. Evaluation of alternatives (“Which brand offers the most value? Which model
fits my needs? Which company has the lowest prices?”)
4. Purchase decision (“I will buy a Mercedes-Benz C-Class”)
5. Post-purchase evaluation (Dissonance: “This car does not fit my needs.”/
Delight: “This car offers the best value for money.”)
 
 
Rational purchases are accompanied by extensive research and comparisons of
different products and offers. Pages like Amazon or price-comparison portals
specialize in offering both an extensive range of products and detailed information
on the products.
In general, rational purchases are made for products which require in-depth
research, information and more extensive knowledge. Oftentimes, the products
require higher expenses and a deeper level of dedication.
A car, for example, is not purchased without comparing different models
beforehand, and running shoes have to fit the need of the consumer (beginner or
advanced level?), as these are products which are used over a longer period of time,
require spending a higher amount of money and need to perform well to satisfy the
consumer’s needs. Therefore, these purchases are not at all based on impulses and
cannot be triggered as easily as emotional purchases can be.

ANSWER Q 5

Variety of products means more choices more choices means more satisfaction and
more brand loyalty variety of products of same brand change the perceptive of same
brand user for different product like:

Sunsilk shampoo and Dove both are of Unilever product but customer has different
perceptive for both

Fanta and Dew are the product of Coca Cola but consumer has different perceptive
for both products while they are owned by brand

Brans offer variety of products to the customer as

Pepsi co.
Through new Products goals, it will continue to refine their food and beverage
choices to meet changing consumer needs by reducing added sugars, saturated fat
and salt, and by developing a broader portfolio of product choices, reaching more
underserved communities and consumers.
PRODUCTS:
1. STING
2. LAYS
3. CHEETOS
4. SLICE JUICE etc
Are the one of the most famous products of Pepsi Co
COCA COLA:
The Coca-Cola system is not a single entity from a legal or managerial perspective,
and the Company does not own or control all of our bottling partners.
While many view our Company as simply "Coca-Cola," our system operates through
multiple local channels. Our Company manufactures and sells concentrates,
beverage bases and syrups to bottling operations, owns the brands and is
responsible for consumer brand marketing initiatives. Our bottling partners
manufacture, package, merchandise and distribute the final branded beverages to
our customers and vending partners, who then sell our products to consumers.
1. Fanta
2. Dew
3. Dasani mineral water etc
Are the famous products of coca cola

UNILEVER:

Unilever make some of the best known brands in the world, and those brands are
used by 2 billion people every day

1. Dove
2. Lipton
3. Lux
4. Sunsilk etc

Are the famous products of Unilever

ANSWER Q 6 “DAWLANCE”

The Dawlance is one of the popular electronics manufacturing companies in

Pakistan. The company since built is has good turn over and good customer
satisfaction level. Dawlance Group has been passed through the stages of
continuous improvements and innovation to achieve its position in Pakistan
Market and take lead to its competitors. It its imports its raw material mainly
from China, Germany, Italy, Taiwan and some other countries.

Over the past one year the due the global crisis the country is in economic
crisis resulting the downfall of many manufacturing companies. Dawlance is
also the victim of this economic disease. The company is also facing political
and security problems all over the world affecting its marketing strategies very
badly.

However the brand can’t bring its quality down because of diluted market
problems.

ISSUES:

Issues like low quality delay in after sale service delay in repair or not offering
repair lengthy procedure of warranty claim all these issues will affect the
customer brand loyalty and sales of company. Core element of any business is
customer satisfaction without providing customer satisfaction it will be difficult
to survive in market.

Market is already very saturated and full of competition and with low customer
satisfaction it is not possible for a Dawlance to exist in market.

MEASURES:

PRODUCT STRATEGY:

All the electrical appliances bought with Dawlance brand will be given 5 years
warranty and any product having manufacturing or technical fault will be free
of cost.

The customers will be provided call centre number that will work morning
0900-0500PM. The customer details will be taken and service will be provided.
The entire maintenance centre will be close to city.

PRICE STRATEGY:

Company has decided to lower our prices to attract more customers and bring
the product in competition with other companies marketing within the
country.
Price will be bring down with no compromise with high quality. Prices will get
down 20% less on good discounted rates. Some products like Freezers and
TVs will also be available on interest free instalments in the form of loan. The
price will be bit higher than normal in case of instalments.

PROMOTION STRATEGY:

For all products the Dawlance is selling directly or indirectly they are not
promote able. There will be a lottery ticket within and on draw the consumer
will be awarded free TV or Freezers.

CUSTOMER SERVICE STRATEGY:

The Dawlance is providing customer service that will take all phone calls
regarding complaints, suggestions and advices.