SDM College of Engineering and Technology, Dharwad-580002

DEPARTMENT OF MANAGEMENT STUDIES

EMI AND ITS IMPACT ON SPENDING SPLURGE

Report submission as part of Course Teacher Assessment for the subject

“Consumer Behaviour” (18PMBAM301).

Date of Submission : 28th November, 2019

Course Faculty : Mr.Prashant U.Gujanal

Report submitted by: Signature of the Course Faculty

1. Ashmika Tari (2SD18MBA59)
2. Sushmita Pawar (2SD18MBA52)
3. Sameer Umarji (2SD18MBA37)
4. Shridhar Mallya (2SD18MBA45)
CONTENTS

1. EMI AND ITS IMPACT ON SPENDING SPLURGE ................................................... 2

1.1 INTRODUCTION .................................................................................................. 2
1.2 OBJECTIVES OF THE STUDY............................................................................. 2
1.3 RESEARCH METHODOLOGY ............................................................................ 3
1.4 FINDINGS AND ANALYSIS ................................................................................ 8
CONCLUSION ..................................................................................................................... 9

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1. EMI AND ITS IMPACT ON SPENDING SPLURGE

1.1 INTRODUCTION

An EMI scheme is nothing but a loan product, where you get to buy and start using the merchandise
immediately but pay for it over an extended period of time. The lenders break up the loan
repayment in instalments and interest rates are charged accordingly. The EMI value depends on
the loan amount, interest rate charged and the tenure. An EMI scheme is nothing but a loan product,
where you get to buy and start using the merchandise immediately but pay for it over an extended
period of time. The lenders break up the loan repayment in instalments and interest rates are
charged accordingly. The EMI value depends on the loan amount, interest rate charged and the
tenure. Opting for an EMI repayment expands the spending capacity of the customer, thereby,
increasing the chances of a bad debt.

A splurge generally focuses around a want and price sensitivity goes out the window. Splurges are
high quality items that will command a premium price. The motivation to splurge on an item can
be psychological – also known as retail therapy. Regardless of the source of the “want”, splurges
will cost you more than you would normally be willing to pay and should be approached very
carefully. With EMI option available, people tend to purchase more at lower price while some
choose to stick to purchasing only those items that are a necessity.

The study attempts to understand the impact of EMIs on the spending habits of customers. The
study was designed to gain insights on whether availability of EMI option creates a spending
splurge among customers. The study also highlights the views or opinions of customers on EMI
as a mode of payment. The study was conducted for only those customers who chose EMI as a
payment method in order to get clear picture of how EMI has affected their buying habits.

1.2 OBJECTIVES OF THE STUDY

 To study whether EMIs create a spending splurge among customers.
 To study how EMIs are changing customer buying habits.
 To know whether EMI option induces overspending.
 To understand whether EMI has created excessive financial burden on the customers.

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1.3 RESEARCH METHODOLOGY
Data Collection and Sample Size

The primary data was collected through questionnaire method with a sample size of 106. People
falling in the group of 25-65 were chosen as the respondents for the survey. The research
methodology employed in this study is Descriptive as it broadly describes the study by taking into
consideration the Demographics (Age, Gender & Occupation) of population carried out within a
particular geographical area.

Sample size: 106

Analysis and Interpretation of Data

Out of all the respondents, Female members constitute 24.6% whereas Male members constitute
75.4% of the total population under study.

y-axis: no. of respondents

x-axis: age group
75
80
70
60
50
40
30 15
20 9 7
10
0
25-35 36-45 46-55 56-65

It is evident from the above graph that respondents belong to different age groups wherein 75 of
them belong to 25-35 age group, 15 in 36-45, 9 from 46-55 and 7 members from 56-65 age group.

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The above bar graph shows the different occupations of the population under study.

Q1. Have you purchased any consumer electronic products recently? (For example: Air
Conditioner/Refrigerator/Television etc)

Interpretation: From the Pie chart we can infer that 100% of the respondents have recently
purchased consumer electronic products.

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Q2. How did you make the payment?

EMI

100%

Interpretation: The above chart shows that 100% of the respondents have purchased consumer
electronic products for which they chose EMI as the mode of payment.

Q3. Do you think EMI option is advantageous?

Interpretation: It is evident from the above Pie chart that 57.5% of the total respondents strongly
agree to the statement that EMI is advantageous for people. 31.1% of the respondents also agree
for the same whereas 8.5% of the respondents are neutral about it and the remaining 2.9% have
disagreed to EMI being advantageous.

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Q4. How has EMI option changed your buying habits?

Interpretation: Out of all the 106 respondents, 55.7% believe that they buy as per the requirement
or need whereas remaining 44.3% people admit that they buy more at lower price.

Q5. With EMI option available, have you purchased more than required?

Interpretation: The above chart depicts that 69.8% of the total respondents have not purchased
more than their requirement whereas 21.7% admit that they have purchased more with EMI option
available. The remaining 8.5% are unsure about their overall purchase behavior.

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Q6. (i) Did you ever feel that such purchases were unnecessary?

Interpretation: From the above chart we can infer that 43.4% of the total respondents claim that
all the purchases made on EMI were a necessity whereas 31.1% chose to remain neutral.
Remaining 12.3% agree to the fact that their purchases were unnecessary.

(ii) Did you fall short in meeting other financial obligations/needs after overspending through EMI
option as a mode of payment?

Interpretation: The above chart show that 47.2% of the respondents did not fall short in meeting
other financial obligations after overspending whereas 34.9% remained neutral for the same. The
remaining 12.3% agree to the fact that they fell short in fulfilling other financial needs.

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1.4 FINDINGS AND ANALYSIS
After interpreting the following conclusion is drawn:

 100% of the respondents have made the purchase through EMI option as a mode of payment.
 88.6% of the total respondents agree to the statement that EMI is advantageous whereas 3%
have disagreed for the same.
 55.7% of the respondents claim that they buy as per the requirement or need whereas remaining
44.3% people admit that they buy more at lower price.
 69.8% of the total respondents have not purchased more than their requirement whereas 21.7%
admit that they have purchased more with EMI option available.
 43.4% of the total respondents claim that all the purchases made on EMI were a necessity
whereas 12.3% agree to the fact that their purchases were unnecessary.
 47.2% of the respondents did not fall short in meeting other financial obligations after
overspending whereas remaining 12.3% agree to the fact that they fell short in fulfilling other
financial needs.

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CONCLUSION

From the study conducted on EMI and its impact on spending splurge, we can conclude that today
many people are aware about the EMI i.e., Equated Monthly Instalment as a mode of payment
available at the time of purchase. The study conducted shows that customers falling in the age
group of 25-65 prefer paying through EMI and most of them find it to be advantageous due to the
convenience of paying in instalments. The results also show that most of the customers tend to buy
products as per the requirement whereas some tend to spend more at lower price. Out of all the
respondents spending more on goods believe that all of their purchases were a necessity whereas
very few think of their purchases being unwanted. Due to overspending, some of the respondents
felt that they were not able to fulfil their other financial needs.