Effect of quality on consumer behavior

MBA3Year section (B)

12/31/2011

Research Report
TOPIC Consumer Behavior on Quality SUBMITED TO: Sir Zeeshan Zafar SUBMITED BY: NAMES Muhammad Usman Islam Muhammad Kamran Abbas Amir Zahid Hamza Noor Elahi S.M. Sohaib Kazmi Rahat Amanat REGISTRATION NUMBERS MBA3Y02103-079 MBA3Y02103-149 MBA3Y02103-115 MBA3Y02103-076 MBA3Y02103-081 MBA3Y02103-114
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Table of contact Introduction --------------------------------------------------------------------------- 4 Importance of study----------------------------------------------------------------- 5 Review of literature ----------------------------------------------------------------- 7 Objectives of the study---------------------------------------------------------------9 Research methodology ------------------------------------------------------------10 Hypothesis-----------------------------------------------------------------------------11 Research review----------------------------------------------------------------------12 Research finding---------------------------------------------------------------------14 Key finding----------------------------------------------------------------------------16 Conclusion-----------------------------------------------------------------------------17 References-----------------------------------------------------------------------------18

Introduction:
Quality is the thing that hits the black box of the consumer before and after consumption of service or good and mostly quality influences on the consumer behavior. We measure the quality in the different scales and characteristics. Mostly we apply the concept of the quality on the services and product because the customer plays the very important role in building the image of the product by word of mouth. So the quality may increase or decrease the consumption of the product. Quality has been defined by the different writers in the different concepts which are given as follow:

Feigenbaums Definition of Quality:

The total composite product and service characteristics of marketing, engineering, manufacturing, and maintenance through which the product and service in use will meet the expectations of the customer

Jurans Definition of Quality:

An essential requirement of products is that they meet the needs of those members of society who will actually use them. This concept of fitness for use is universalThe popular term for fitness for use is quality, and our basic definition becomes quality means fitness for use. The concept of the quality of product in the mind of the consumer comes from the following some certain aspects:

Good design:
If the company wants to build the high quality image they make the well looking design of the product and their packing style because the first thing which influences on the consumer mind is their packing by which they determine the quality of the product.

Good functionality:
When the consumer purchase the product then the functions which are available in their product meet with their need or not. After this judgment the consumer make the perception that the product is high quality or not.

Reliable:
In which the consumer match their need or consumption pattern whether the product is trust full or not.

Consistency:
The product must be performed well and work according to the specifications which are given on the label of product. If they are not continuously performs then it not make the high quality image on the mind of the customer.

Good after sales service:

The consumer makes the perception about the product after purchase service if they provide the guarantee and they do not follow their agreement or provide the service then the quality of product reduced.

Value for money:

Mostly consumers first check the price of the product and imagine that the quality is low or high. Some customers are price conscience or some are brand. There are basically two types of quality: 1) Quality of design(final product) 2) Quality of process. This report is completely about quality of final product. The quality of design will continuously improve the quality of design then we continuously improve the quality of process. If the quality of process faces the many difficulties then they do not provide the high quality product.

Importance of study:
Now the business styles and the consumptions are changes as the development of the world. So todays the quality play the vital role in changing the consumer behavior if the product is high quality then the people may be pay the some extra money to purchase. Todays mostly organizations give the importance to the quality instead producing the produces in the bulks. The high quality plays the success for the organization. We can check this in these ways:

Customer loyalty:
we study the consumer behavior on quality because today there are large numbers of people which focus on the quality rather than the price. So if we provide the high quality products then the customer will be more loyal with the product and they never switch off to the other product.

Tough competition:
Nature of the businesses is now changing the well reputed organization focus on the quality of product to gain the maximum share of the market. So for the competition they continuously analyze the behavior of the customer. We use this study to improve the quality of the product and understand the consumer behavior in the better way if the companies do not use the quality analysis than they will be faces the following problems:

Higher rejection:
If the companies do not understand the behavior of the consumer with respect to the quality then most of customers reject them because they are not fulfilling their need.

Higher Rework:
Sometimes companies give the guarantee with the products and free service after sale in this case the cost of the product increase due to the repair of products and customer faces the trouble which creates the bad image of the product.

Higher Number of customer complaints:

Due to the bad quality many defects comes in to the production in this case the customer complains rate increases and the image of the product will be highly damaged due to this mostly customers do not purchase the product.

Less production:
The production will automatically decrease if the demand of the product is not in the market because the other company products capture the market share. The purpose of the study is to help to understand the behavior of the consumer because the behavior changes from region to region or culture to culture. If the organizations use the
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quality research then they will be better understand the need, demand and want of the customer. After the research the company makes the innovations remove the back draws of the product and put the new features which capture the market and make the image of product in the mind of the consumer.

Review of Literature:
The consumer perception about the product changes rapidly due to the awareness of the people about the quality because the people want to purchase the high quality product which fulfills their need & desires. The concept of quality is focused and commonly used in the developed countries because their basic needs are easily available within their purchasing power so they want the best quality and service of the company. In the Pakistan there are main three types of societies exist:

Higher level:
In which the person easily get their basis needs like food, cloth & house etc and they have the much money to purchase the luxury products so their behavior is mostly influences by the quality and they only prefer to purchase the high quality product.

Middle level:
These are the persons who fulfill their basic needs but the influence of quality on their purchasing behavior is less than the elite class. Sometimes they compromise on the quality to fulfill the need when they required more products but do not have purchasing power for high quality product.

Lower level:
They have no enough money even to purchase the basic need so they do not care about the quality and do not understand the concept of quality. They just fulfill their need either it is low quality or high quality. This paper provides the information about the different societies which is living in the Pakistan and their different purchasing behavior. First the company analyze that which type of society they want to target and provide their services and which society give the maximum profit. After the segmentation the company gives the product according to the want, need & desire of the people.

For the better understand of the consumer behavior on quality a book Food quality & consumer behavior is written by the Monika J.A Schroder In this book the writer gives the emphases on the culture influences on the product and says that the some product is acceptable in the one region but do not acceptable in the other region due to the some external factures like education, religion, laws & policies etc. some time people reject the product due to the low quality product. So the behavior of the people change when the product is goes from one region to another. Some people are price conscience but some are quality. Pakistan standards and quality control authority is the institute which is established in 2000 and started their operations. This institute made for the purpose of the quality control. So this institute ensure that the high quality of the product and insist the manufacture to use the high quality of raw material and provide the high quality product for the good image in the international market. This institute also affiliated with the ISO. Although the consumer behavior is very difficult to understand but if companies want to take the competitive advantage then they must understand the behavior of the consumer and give the feedback to their problems. Book ------Managing customer value Author ---Bradley T Gale & Robert Chapman wood In this book the writer gives the overview about the quality that the companies uses the quality as the strategic weapon in the market. Provide the high quality product according to their value. Once the image of the brand is developed in the market then the behavior of the consumer change toward the product and maximum people purchase it. The basic concept of the quality comes from the developed countries because they are not price conscience but they mostly focus on the quality of the product because their basic needs easily fulfill. So the most of quality related blogs, research papers, articles and news are related to the developed countries related. Their countries continuously check the behavior of the consumer by research and make the product according to their need and demand.

Objectives of the study:

These are the main objectives of the study due to these reasons we conduct this research proposal: Define the quality meaning clearly. Effect of quality on the demand and supply of the product or service. How much the quality changes when the quality of the product increases or decreases? Evaluate the thinking of people with respect to the quality in different regions. Effect of quality on the traditional and early adopters consumers. How much consumer behavior changes when the quality of product changes with respect to the primary need or secondary need? To study the segmentation of market this is used to make the quality products for different societies. To study the positive or negative impact on the society. Thinking of ruler and urban people on quality products. Impact of quality on the profitability of the organization. Effect of quality on the production of the product. How we increase the quality by using the research. The role of consumer behavior in the innovation of new product which is better than previous.

Research Methodology:
This study helps to understand the changing behavior of the consumer in Pakistan and especially in the Lahore because we conduct this research in different societies or the areas of the Lahore. If companies understand the behavior of the consumer than the companies provide the best service related to their product & their investment will be maximum secured. We collect the data from the two major sources and use the some major components of states for the study. 1) Primary Data: For the collection of the primary data we first prepare the questionnaire in which wrote the question about the consumer perception about the quality, purchasing power and different categories of the products. For the purpose of filling the questionnaire we divide the society in to the three levels upper, middle and lower class and give the equal amount of forms to the each segment and then collect the data. We also survey the some markets or store and take the interview of the people and know about their perception about the quality.

2) Secondary Data:
Secondary data is also the very important part because it gives the all information about the previous research of data result. So collected the data from different stores, markets and shops in the shape of their sales & their invoices and compare that the same nature of products consumption pattern changes when the manufacturer changes or the quality changes. Analyze the products which consumption rate is high relating to their substitutes. Also uses these resources for the collection of secondary data: 1) Reports of the manufacturing organizations. 2) Reports of Pakistan standards and quality control authority 3) Internet searching 4) Journals of the international writers 5) Previous research papers.

3) Statistical Tools and Techniques:

The data which is collected by the primary and secondary sources will be classified in the tabulated forms and makes their graphs for the better understand of their consumption pattern. According to the products apply
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the tools of state and for the further research we apply the averages, correlation and regressions line tools to find the end result. By the averages we find out the consumption rate of different products and apply the correlation to find out the strength of the relation between quality and consumption of product with related to the income & purchasing power of peoples. Regression line is use to find out the impact of one product to the other product.

Hypothesis:
1) There is the strong correlation relation between the quality of the product and the demand of the product in the high class society but it wills changes in the other societies. 2) The quality of the product directly propionate to the demand of the product in developed countries but in the lower and middle countries figures are changes. 3) When the income of the consumer increases than they demand the high quality products. 4) The goodwill and success of the brand in the market is directly related to the quality of the product. 5) In the Pakistan the consumer behavior is very complex because three types of societies exist in the economy.

CHAPTER SCHEME
The researcher has planned to divide the present study in following chapters:1. Introduction 2. Importance of Research 3. Review of Literature 4. Need of Research 5. Research Methodology 6. Data Interpretation 7. Conclusion 8. Bibliography 9. References

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RESEARCH REVIEW
To completely understand the effect of quality on consumer behavior we select a company Pak Elektron Limited better known as PEL. PEL is major producer of power division in PAKISTAN but it is also producing the home appliance product since 3 decades. To be more accurate and clear in our research we decided to limit our search only up to 3 product of the PEL. This decision has helped us a lot. The three products that we select are.

1) Refrigerators 2) Air Conditioners 3) Micro Waves Ovens

When we conduct the survey we find that the most of the market shares are captured by the Dawlance. To make it easy to understand we has shown facts and figures of each product separately.

Refrigerators:Clearly its shown the Dominancy of Dawlance on PEL And rest of the brands. same result Has been observed in other Products. Dawlance shares = 46% Pel shares = 29%

Market Share 2009-10

Haier 7%
Waves 9%

Orient Others 6% 3%

PEL 29%

Dawlance 46%

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Air Conditioners :Again dominancy of dawlance Over Pel is observed Dawlance shares = 14% Pel shares = 11% Others 9% Waves 6% Gree 9%

Market Share 2009-10

Haier 20% Dawlance 14%

LG 13% PEL 11% Orient 12%

Samsung 6%

Micro Waves Ovens:Again result was same

Dawlance shares=41% Pel shares =13%

Kenwood Haier 3% 10% Samsung 3% LG 4%

Others 6%

Sales

Dawlance 41%

Oreint 13%
Waves 7%

PEL 13%

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Finding of the research

Both companies start the home appliance business at the same decade but Dawlance is well over the PEL and rest of the companies. At that time the question arise in our mind was that

why???????????????????
Why Dawlance holds such distinct identity in the market? In the seek of this answer we study the history, visit the market and interviews the some professionals of PEL as it was in our access. Well Dawlance started manufacturing refrigerator in 1980 as shown in the below diagram of the over view of Dawlance .

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Some facts that we read about the Dawlance are as follow Dawlance is the 7th most Favorite brand in Pakistan (out of 3500 brands) Highest market share in 3 (out of 5 categories) Among Top 2 Top of mind (TOM) Brands in all product categories Research revealed that Dawlance is in Every 2nd house hold in Pakistan (out of those house holds which have appliances) Dawlance is considered to be the most Reliable & Innovative brand among all home appliance brands in Pakistan

The word reliability is the key word and feature which has blessed this position to Dawlance. Since the launched of the dawlance product it has became the most reliable brand in the market due to its match less quality product. It has been analyzed that what ever consumer conclude he/she shared it to the others. In case of Dawlance this conclusion has been very positive and world of month (wom). Whether in case of PEL wom was not as effective As it was for Dawlance. Another considerable point is that the process of growth is been very tremendous in case of Dawlance than Pel. The effect of the quality is very effective for any organization. The good effect always provide its feed back by increase in sale of that product.

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Dawlance growth

The main achievement is the certificate of ISO-9001 and ISO-14000 in year 1999 & 2001 respectively. These certificates are the proof of quality product by the dawlance.

KEY FINDING
1. Product quality create brand image in the consumer mind 2. Its difficult to switch consumer from his/her satisfied brand to other brand 3. Consumer positive WOM also effect brand tremendously 4. Every consumer wants better quality keeping the price constant 5. Reliability is also a feature of quality product 6. Easy to use feature enhance the quality of the product. 7. The promise of guarantee has also increased the image of products in consumer mind.

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CONCLUSION
Consumers rely on signals, both extrinsic and intrinsic attributes, to solve their asymmetric information problem regarding product quality. But when he/she found any product which completely satisfied them. Then it is difficult to switch them from that specific brand. Just like the identity of Dawlance in the PAKISTAN. Now a day there is almost a perfect competition in the market of home appliance. If everyone has any idea of economics he/she might know that in such completion no one can increase their market shares by playing war on price. Instead of price companies make improvement in their product quality. This technique is used by the Dawlance they have made their brand identity in the market due to their quality product. As I explained it is not easy to switch any consumer from one brand to another. The quality standard is almost same but the image created by Dawlance is so strong that consumer does not want to switch themselves from their current products. This fact can also be seen the buying behavior of some quality products like Apple laptops, I phone Mercedes cars and many more. In Pakistan people who use Honda auto-mobiles product does not change there brand although the change the models. That all because of the image that has been created by the Honda in there early years. This is all what we have found from our research.

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References:
These resources are study during the preparation of research proposal: Websites: www.tutor2u.net.com
http://writing4students.blogspot.com http://ivythesis.typepad.com http://www.thesiswritingservice.com http://www.dawlance.com.pk/ http://www.pel.com.pk/index.html

Writers Thoughts: Books: Managing customer value Author ---Bradley T Gale & Robert Chapman wood Food quality & consumer behavior Author---- Monika J.A Schroder Feigenbaums Jurans Taguchi Ishikawa

Professionals of PEL 1. 2. 3. 4. Kashif islam Fahad ali Mr irfan Mr humayyu (engineer) (engineer) (marketing executive) (HR manager)

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