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Business ResearchMethodZCZF 6033

Research Project:“Factors influencing the purchase of Engine Lubricant byconsumer who drive within Klang Valley”Lecturer: Prof. Dr. Zafir Mohd MakhbulPrepared by:V. Devakumar - ZP00363Shelly Elena - ZP005481

Submission Date:18-01-2011Table of ContentsRebekah Bennett & Sharyn Rundle-Thiele, “Customer Satisfaction Should Not be the OnlyGoal, University of Queensland, Brisbane, Australia. .............................................................18 7.1 Future ResearchRebekah Bennett & Sharyn Rundle-Thiele, “Customer Satisfaction Should Not be the OnlyGoal, University of Queensland, Brisbane, Australia. .............................................................18 ABSTRACTThe purpose of this research is to determine the contributors to the purchase d e c i s i o n o f e n g i n e l u b r i c a n t o i l . T h e t a r g e t m a r k e t w i l l b e p a s s e n g e r c a r owners in Klang Valley. The research also evaluates the brand awareness aswell as the purchase preferences of consumers. The consumers were asked ontheir awareness of lubricant brand, type of pricing, mechanic influence and theplace of purchase. From the results obtained, it is hoped that the oil companycan use this information in marketing and placing their products. The studyw a s m a d e o n 3 7 s a m p l e s o f c o n s u m e r w h o d r i v e . T h e r e s u l t s o n l y s h o w samples of the full population and cannot be used to determine the preferenceof everyone. The study has been divided to concentrate on four components.The components are the pricing factor (promotion), brand awareness,convenience place of purchase as well as mechanics influence.1 . 0 I n t r o d u c t i o nM o s t e n g i n e l u b r i c a n t s a r e n e a r l y t h e s a m e . I t ’ s t h e b r a n d o r f r i e n d ’ s recommendation which affect the purchase decision. When a customercompares the brands available, factors such as brand, promotion and ease of purchase as well as mechanics recommendation affects his/her decision. Marketing influences the decision making of the customer when purchasing2

the product. We are conducting this research to find other elements that influence the consumers buying behaviour. We need to understand and whatare the components that are most looked for by consumers when making thepurchase decision.Motor oil is a lubricant used in internal combustion engines. These include motor or road vehicles such as cars and motorcycles, heavier vehicles such asbuses and commercial vehicles, locomotives and aircraft, and static enginessuch as electrical generators. In engines, there are parts which move againsteach other causing friction which wastes otherwise useful power by convertingthe energy to heat. Contact between moving surfaces also wears away thoseparts, which could lead to lower efficiency and degradation of the engine. Thisincreases fuel consumption, decreases power output and can, in extreme cases lead to engine failure.1Lubricating oil creates a separating film between surfaces of adjacent movingparts to minimize direct contact between them, decreasing heat caused byf r i c t i o n a n d r e d u c i n g w e a r , t h u s p r o t e c t i n g t h e e n g i n e . I n u s e , m o t o r o i l transfers heat through convection as it flows through the engine by means of air flow over the surface of the oil pan, oil cooler and through the build up of oil gases evacuated by the Positive Crankcase Ventilation (PCV) system. Inpetrol (gasoline) engines, the top piston ring can expose the motor oil to temperatures of 320 °F (160 °C). In diesel engines the top ring can expose theoil to temperatures over 600 °F (315 °C). Motor oils with higher viscosity indices thin less at these higher temperatures.21.1 Conceptual Framework 1http://en.wikipedia.org/wiki/Motor_oil 2Klamman, Dieter,Lubricants and Related Products, Verlag Chemie, 19843PURCHASEDECISIONMechanicsRecommendationBrandAwareness

Chart 1: Conceptual Framework of Purchase Decision2.0 The Problem StatementThe problem of this study is to evaluate the key factors or components thatinfluence the purchase of lubricants by the consumer. The result gained canassist company to decide on how to market and target the product. This willalso help to promote the correct product placement at the right time and atthe right place to the correct person.3.0 The Research ObjectivesSpecifically, this study is seeking input to the following questions:1 . T o c h o o s e t h e k e y c o m p o n e n t s t h a t a f f e c t s t h e o v e r a l l p u r c h a s e o f passenger car motor oil from the consumer.2. To scrutinize which are the vital components that managers should allocate the resources for better quality services.3 . T o a s s i s t t h e l u b e m a r k e t i n g m a n a g e r o n w h i c h a r e t h e f o u r m a i n components that can boost the sales of the company.This research will also help companies to evaluate the information whetherthe product are meeting customer’s expectation and influence the mind of customer in purchasing lubricant. This study would help them to developand enhance the services provided to the consumers.4.0 Literature review4.1 Brand Awareness4

Brand awareness is the consumer’s ability to identify a brand under differentconditions (Keller, 2003). This is the factors which can expose or destroy thebrand. When a cue or special word is mentioned, the customer must be able torecall the specific brand. This is

known as brand recall. The minimum of brandawareness is brand recognition and is influenced by aided recall (Holden, 1993). When a consumer making a purchase decision at the point of purchase,brand awareness has a big influence on their decision.On the next level, unaided recall is brand awareness where the consumer isable to recall the brand by referring to any other cue about the brand. (Rossand Harradine, 2004). Although the brand name is not provided, the fact thatthey can recall the name implies that the brand has a very strong position in t h e i r m i n d . T h i s i s c a l l e d b r a n d a w a r e n e s s . T h e f i r s t - n a m e d b r a n d i n a n unaided recall thus represents the highest level of brand awareness (Laurent,1995; Mariott i , 1999). When repeated exposure to the brand is done, thefamiliarity of the brand increases and brand awareness is enhanced(Keller,2003).As seen from this, advertising is the first platform to build brand awareness(Gregory,1993;Hoyer and Brown,1990). Many world famous brands use thepower of television and magazines to advertise their products and expose potential customers to them.(Waterschoot, cited in Ross and Harradine,2004).Some functions that brands can perform for customers are such as signal of the product characteristics; simplify decision making; serve as a guarantee byproviding trust, consistency or a set of promises and a reduction of risk ; fulfilla personalization, social or status function; or provide pleasure.(Lambin,2002,Varrey 2002, Picton and Broderick,2001). The small set of brands which the consumer automatically retrieves is important since a brandis not part of the consideration set is unlikely to be chosen (Mowen and Minor,2001).5According to Woodside and Wilson(1885), there exists a relationship betweenbrand awareness and purchase decision. When the customer recalls the brandeasily in an unaided situation, the intention to purchase is higher and thepurchase is more likely. Usually brands which are at the top of the mind havethe highest possibility of purchase. The decision-making process is furthersimplified by a brand’s associated with quality (Vranesevic and Stancec, 2003).The usual consumers perception of brand is based on the belief that when theconsumer is familiar with the brand, the organization must have spent heavilyon advertising. If the organization spends a lot on advertising, it must havegood profits which mean that many consumers are satisfied with the product;therefore the product must be good, especially in brand awareness familiarityhas a great impact of a brand. (Macdonald and Sharp, 2003).4 . 2 P r i c eWhen consumer decides on purchase of the engine lubricant, one of the majorfactors affecting the purchase is pricing. This pricing is tailored according tothe class and standards of reliability. When the price is not set to include themarginal cost and the price does not reflect the actual

cost of production, itwill not influence the customer to purchase the optimal quantity. When thisprice-marginal-cost equality is violated due to inherent market conditions, second-best solutions are often utilized (Farrell, 1958; Leinbenstein, 1966;Lipsey and Lancaster, 1956).The determination of optimal prices together with cost-efficient operating isobviously is different (Boronicoe t a l. , 1995; Crew and Kleindorfer, 1993). Colvine t a l. (1992) argues that lubricants producers should reconsider theirmethods of pricing because of the current market trend of growing capital required for brand products. The reliability also affects the margins for theproduct since consumers usually choose a product based on the reliability.(Chen,1984). None of early records of oil and gas industry considers the reliability.64.3 Place of PurchaseMost consumers want an easy and accessible place to purchase the products.W h e n t h e s e r v i c e a t t h e o u t l e t i s g o o d , t h e y w i l l r e t u r n t o m a k e m o r e purchases. As stated by Levesque and McDougall, 1996, p. 14), satisfaction isand overall customer attitude towards a service provider. If what the customerreceives is different from what they anticipate then there will an emotionalresponds to this(Zineldin, 2000). A similar response is given by Gerpott(2001)who proposes that satisfaction is based on a customer’s estimated experienceof the extent to which a provider’s services fulfill his or her expectations. When customers are satisfied, this brings many benefits. Satisfied customersare less price sensitive, usually buy additional products, are less influenced bycompetitors and stay loyal longer (Zineldin, 2000). Although customersatisfaction is important, it is not equally important to all the customers. Therea r e t w o t y p e s o f c u s t o m e r s . T h e f i r s t d o n o t f a l l i n t o t h e s e r v i c e o f t h e company, while the second are customers who are crucial to the company’sexistence. The first type of customer can usually be ignored but the second type must be taken care of properly to ensure that the goal of satisfyingcustomers is met.(Bhote, 1996). Convenient for the customer can be definedas “a commitment to continue to purchase product on an ongoing basis” (Zineldin, 2000, p. 28).A more elaborated definition is to define conveniently as the customers’ liking,commitment, trust, willingness to purchase, and repurchase products, with thefirst four being emotional-cognitive convenient constructs, and the last twobeing behavioral intentions (Stausset al.

, 2001). This research focused of thirdcomponents that affect the purchase of lubricants at Central Region. It is investigated that the component of convenient when purchase oil lubricants7difference in the mind of consumers that effecting of lube purchase oil amongthe Malaysians.4.4 Mechanics RecommendationOne of the important influences of purchase decisions especially for enginelubricant are the mechanics. This is stated as “A decision making processcarried out by individuals in interaction with other people, in the context of formal organization.”(Webster and Wind, 1972). The overall purchasingbehavior of consumers can be affected by mechanics recommendation. Thesefactors can be defined as variables which relate directly to the buying task,whereas non-task variables are those that extend beyond the buying problem,variables that may influence the individual decision maker(s), such asemotion, personal goals and internal wants.(Rui da Silva, Gary Davies, Pete Naudia, 2003). Sheth’s (1973) model states ageneric model of organizational buying, characterizing organizational buyer behaviour as encompassing three distinct aspects: the psychological world of the individuals involved in the buying decisions, the conditions that precipitatej o i n t o r g r o u p d e c i s i o n m a k i n g a m o n g t h e i n d i v i d u a l s i n v o l v e d , a n d t h e inevitable conflict among the decision makers and how it is resolved throughresorting to a variety of tactics. According to Rui da Silva, Gary Davies, PeteNaudia, 2003 conclude that consumer buying is influenced by experts(Mechanics) and personal characteristics. The way they buy will be affected byother factors such as context and organization. In our study we are particularlyinterested in component of experts like mechanics that affects the purchaselubricants.5.0 The Research MethodologyTo evaluate and categorize elements of the group factors which are significantto the influence of purchasing the engine lubricant within Klang Valley, thefollowing research methodology was utilized in the study.8

5.1 Sample and Data collection ProcedureThis research is based on causal research. The company will make decisionsbased on assumed causal relationships. This is a descriptive research designand survey. Data was collected from a sample of consumers. Survey formswere given to consumers who drive and they answered all the questions given.The population for this survey is the professional workers who drive a car tothe office every day from the private and public sectors. The respondents comprised of 37

consumers. The demographic and frequency of theconsumers are summarized in Table 1.As it’s shown there about 65% of the consumers participated in the study weremale while 35% were female. Also greater percentages of consumers werebetween 25 to 30 years old. All of them stay in the city of Klang Valley. About50% of all the consumers annual income is between RM 36,001 to RM 72,000.5.2 Questionnaire and AnalysisTo determine the job satisfaction of the professional workers, a questionnairecomprising four main factors that can influence the purchase decision inbuying engine lubricant oil and some demographic questions was constructed.The main factors are:(a)Part A : Brand Awareness(b)Part B : Purchase Decision(c)Part C : Mechanic Recommendations(d)Part D : Purchase LocationRespondents were asked to indicate the factors influencing the purchase of Engine Lubricant by consumer who drives within Klang Valley. Respondentswere asked to indicate the level of satisfaction or dissatisfaction which they derived from each of the 4 aspects of their jobs. The scale ranged from 1 to 59signifies 1 – “Strongly Disagree”, 2 – “Disagree”, 3 – “Neutral”, 4 – “Agree” and5 – “Strongly Agree”. The elements were formulated based on the commoninfluences of purchase decision by consumers.This research is a quantitative study where the researcher discovers the different factors influencing the Engine Lubricants purchased respectively. Thequantitative study in this research is about interpreting the data in the form of percentages. The data was analyzed using SPSS software.5 . 3 H y p o t h e s i sBased on literature review, hypotheses were developed as below:H1: There will be positive relationship between Brand awareness andPurchase decisionH2: There will be posit ive relationship between Mechanicrecommendations and Purchase decision6 . 0 D a t a A n a l y s i s 6.1 Demographics of respondentTable 1.0 shows the detailed analysis on the respondents’ backgrounds.M a j o r i t y o f t h e r e s p o n d e n t s w e r e m a l e w i t h 6 5 . 0 % . I t i s n o t e d t h a t respondents with annual income of 36,001 – 72,000 are the majority with50% of total followed by respondents who have worked for estimated 2-3years.Table 1: Respondents’ Demographic InformationF r e q u e n c y P e r c e n tGenderM a l e 2 6 6 5 .

0 F e m a l e 1 4 3 5 . 010

Ethnic GroupM a l a y 2 1 5 2 .5 C h i n e s e 7 1 7 .5 I n d i a n 1 0 2 5 . 0Income Level (RM)< 1 8 , 0 0 0 3 7 . 5 1 8 , 0 0 1 – 3 6 , 0 0 0 6 1 5 . 0 3 6 , 0 0 1 – 7 2 , 0 0 0 2 0 5 0 . 0 7 2 , 0 0 1 – 1 4 4 , 0 0 0 9 2 2 . 5 > 1 4 4 , 0 0 0 2 5 . 0Age1 8 – 2 5 Y e a r s O l d 5 1 2 . 5 2 5 – 3 0 Y e a r s O l d 1 7 4 2 . 5 3 1 – 3 5 Y e a r s O l d 1 0 2 5 . 0 3 6 – 4 0 Y e a r s O l d 3 7 . 5 4 1 – 4 5 Y e a r s O l d 4 1 0 . 0 4 6 – 5 0 Y e a r s O l d 1 2 . 5Length of Service> 1 y e a r 1 2 . 5 2 t o 3 Y e a r s 6 3 2 . 5 4 t o 7 Y e a r s 4 2 0 . 0 8 t o 1 0

Y e a r s 8 2 0 . 0 1 1 t o 1 5 Y e a r s 3 2 5 . 0T o t a l 4 0 1 0 0 . 06.2 Influences between Age and Purchase Decision11

Chart 1: Respondents’ Age ProfileTable 1.1 indicates the respondent’s age profile. The Age 25 – 30 years hasthe highest frequency while age 46 – 50 represents the lowest with only2.5% since most of them seldom drive to work anymore. Generally, most of them were professional workers and lots of them have their own driveralready, hence they did not drive to office.6.3 Reliability AnalysisCronbach's AlphaN of ItemsMeanVarianceSDBrand Awareness0 . 4 5 0 6 19.275011.2303.35114MechanicRecommendations0 . 7 6 2 5 19.050015.5363.94156Purchase Decision0 . 6 8 2 6 18.550011.1773.34319Place of Purchase0 . 6 8 7 2 11..92506.8920.262520Table 2: Reliability AnalysisTable 2 shows the result of validity and reliability analysis formeasurement scales. I t was shown that only one research variablesexceeded the acceptable standard of reliabili ty analysis, Cronbach’salpha of 0.70. These statist ical analyses confirm that measurement12

scales have not measured the same constructs and does not met theacceptable standard of construct validity and reliability analysis.Aa.Predictors: (Constant), Recommendation, Brand_AwarenessANOVAbModel SummaryM o d e l R RSquareAdjusted RSquareStd. Errorof theEstimateChange StatisticsR SquareChangeFC h a n g e d f 1 d f 2 Sig. FChange1 . 4 2 3a. 1 7 9 . 1 3 4 3 . 6 6 7 4 8 . 1 7 9 4 . 0 2 4 2 3 7 . 0 2 6 13

ModelSum of S q u a r e s d f M e a n S q u a r e F S i g . 1 R e g r e s s i o n 1 0 8 . 2 3 6 2 5 4 . 1 1 8 4 . 0 2 4 . 0 2 6aR e s i d u a l 4 9 7 . 6 6 4 3 7 1 3 . 4 5 0 T o t a l 6 0 5 . 9 0 0 3 9 a. Predictors: (Constant), Recommendation, Brand_Awarenessb. Dependent Variable: Purchase_DecisionCoefficientsaModelUnstandardizedCoefficientsStandardizedCoefficientstSig.Collinearity StatisticsB S t d . E r r o r B e t a T o l e r a n c e V I F 1 ( C o n s t a n t ) 8 . 1 6 7 3 . 9 1 4 2 . 0 8 6 . 0 4 4 Brand_Awareness. 2 3 7 . 1 9 8.1911 . 1 9 8 . 2 3 9 . 8 7 7 1 . 1 4 0 Recommendation. 3 7 3 . 1 8 8.3161 . 9 8 9 . 0 5 4 . 8 7 7 1 . 1 4 0 a. Dependent Variable: Purchase_DecisionCorrelations between brand awareness and consumer decision to buy that branddue to influences from brand awareness and mechanics recommendation.Correlations1 2 3Brand_AwarenessRecommendationPurchase_Decision1 Brand_AwarenessPearsonCorrelation1 . 3 5 1*.301Sig. (2-tailed) . 0 2 7 . 0 5 9 N 4 0 4 0

4 0 2 RecommendationPearsonCorrelation.351*1 . 3 8 3*S i g . ( 2 -t a i l e d ) . 0 2 7 . 0 1 5 14

N 4 0 4 0 4 0 3 Purchase_DecisionPearsonCorrelation. 3 0 1 . 3 8 3*1S i g . ( 2 -t a i l e d ) . 0 5 9 . 0 1 5 N

4 0 4 0 4 0 * Correlation is signficant at the 0.05 level(2-tailed)15

7.0 Results and ConclusionThe results of the study show that the only the Mechanic’sRecommendation variable to be above 0.7. The rest are all unreliabledata since they fall below 0.7. The significant value of 0.59 showsthat brand awareness plays a big role influencing the consumer’sdecision.On the other hand, value of 0.027 for mechanics’ recommendationshow that this does not influence the purchase decision. Purchase hasa positive correlation with lube brand, trusted mechanic andconvenience place of purchase. However it has a negative correlationwith price. This is shown in the Pearson correlation. Lube brand is important and has the highest positive correlation with purchase fromtrusted mechanics.Price also has the highest correlation with the purchase from trustedmechanics. Convenient place of purchase has the highest correlationwith purchase from the trusted mechanics. The one-tailed significancedisplayed that there is a significant correlation between lube brand andmechanic and price and purchase from mechanic. Based on the study,consumers feel that the most important factor in deciding the purchaseof lubricant is the lubricant brand. Secondly, mechanic is also a majorinfluence and pricing. It was also shown that the convenience place of purchase is the least factor in deciding the lubricant to be purchased.From the study, it is recommended that the company increase theirmarketing to create a better brand awareness for their brand. As suchtargeted advertising and promotions is important to increase theawareness thus increase the purchase of lubricant. Since mechanicplay an important therefore emphasis should also be given byencouraging the mechanics to promote the brand. Perhaps incentiveshould be given to mechanics to promote the brand.16

Since convenient place of purchase is not the main factor therefore itdoesn’t affect much on purchasing. Lubricant can be sold in all outletsand motorist does not decide the purchase merely on convenienceplace of purchase. (this can be expanded further once the analysis iscompleted)7.1Future Research1. Introducing mediating variable such as family advice, carmanufacturer’s recommendation.2. The scope of survey should be more concentrated on

motoristswho are the actual consumers of engine lubricant oil. This willgive a better representation of the survey group and much moreaccurate results.3. The questionnaire should be more specific in terms of finalizingthe actual representative data to be more accurate andsignificant for the intended objective.178 . 0 R e f e r e n c e sAhmad Jamal & Mark M. H. Goode, “A Study of the Impact of Self-imageCongruenceon Brand Preference and Satisfaction” ,Cardiff Business SchoolCorinne Gangloff, “Lubricant Growth Forecast”,Freedonia Group, Inc.,Erik L Olson & Hans Mathias Thjomoe, “The Effects of Peripheral toInformation onBrand Preference”,Journal of Norwegian School of Management,Sanvika, Norway .INTERNET, “Motor Oil”athttp://en.wikipedia.org/wiki/Motor_oil,Accessed at07012011.Klamman, Dieter,Lubricants and Related Products, Verlag Chemie,1984.Macdonald, E., Sharp, B., “Management perceptions of the importanceof brand awareness as an indication of advertising effectiveness”,Marketing Buletin,Vol.14 No.2 (2003): 1-15.Rebekah Bennett & Sharyn Rundle-Thiele, “Customer Satisfaction Should Not be the Only Goal,University of Queensland,Brisbane, Australia.Tony Meenaghan, “The Role of Advertising in Brand ImageDevelopment,Journal of Product and Brand Management Vol 4 No 4 1995 pg 23-34Zineldin M.& Jonsson P., “An examination of the main factors affectingtrust/