Quantitative Statistics and Managerial Skills

Term Report
(STA202-A)
Effects of Japanese imported cars over locally
assembled cars in Pakistan
Submitted to:
Sir Rizwan Ahmed

Submitted by:
Ali Asmar (21082)
Fatima Nadim (21292)
Bilal Zaki Rizvi (21453)
 ACKNOWLEDGEMENT
May 06, 2019

Sir Rizwan Ahmed

Course: Quantitative Skills and Managerial Statistics

Respected Sir,

It gives us immense satisfaction and pleasure to submit the detailed research and study on the
approved topic.

This research report has enlightened us with even more knowledge about the Consumer buying
behavior towards locally assembles car over Japanese assembled car. It was a really good
experience as well as opportunity to broaden our horizon. Thank you for helping us on every
stage

Sincerely,

Group members.
 ABSTRACT

The objective of this study is to identify the impact of price, aesthetics, performance and
durability on Consumer buying preferences towards cars. Locally manufactured Suzuki WagonR
was compared with Japanese WagonR. The primary data was obtained through a survey
questionnaire. The results of this study retained and rejected certain variables as to the impact of
independent variables were positively and negatively affecting consumer buying preferences.

The research identified that price has a negative relationship with consumer’s buying preference
while performance, durability and aesthetics have a positive one. This study will help Suzuki
Pakistan to determine the cause why their WagonR is losing to the Japanese WagonR and will
also help Suzuki Pakistan to overcome those causes.

Key Words

 Suzuki Pakistan
 WagonR
 Consumer’s buying preference.
No # INDEX PG. NO
1 Company Profile 3
2 Background of the study 3
3 Research problem and objectives 4
4 Hypothesis 8
5 Importance of research 9
6 Literature review 13
7 Research Methodology 13
8 Target audience-Sample Size 13
9 Data Analysis 14
10 Conclusion 22
11 Recommendations 23
12 Limitations 23
13 References 24
 COMPANY PROFILE

Suzuki Motor Corp

Suzuki Motor Corporation manufactures and markets automobiles, motorcycles, and marine and
power products in Japan, Europe, rest of Asia, and internationally. It offers all-terrain vehicles,
mini-vehicles, sub-compact vehicles, standard-sized vehicles, outboard motors, engines for
electro senior vehicles, and houses, as well as motorized wheelchairs, industrial equipment, etc.
The company was founded in 1909 and is headquartered in Hamamatsu, Japan. Suzuki's growth
has been predicated on its distinctive domestic and international strategies. Domestically, the
company owes its success to its high-quality engines, around which it designs a wide variety of
vehicles for special or emerging niche markets. Internationally, Suzuki has traditionally targeted
developing countries with growing populations, including Cambodia, India, China, Hungary,
Indonesia, and Pakistan. Following the terms of the joint-venture agreement between Suzuki
Motor Corporation of Japan (SMC) and Pakistan Automobile Corporation (PACO), Pak Suzuki
Motor Company Limited (PSMCL) was incorporated as a public limited company in August
1983.[195]
The new company assumed the assets including production facilities of Awami Autos Limited.
PSMCL started commercial operations in January 1984 with the primary objective of passenger
cars, pickups, vans and 4x4 vehicles.
In September 1992 the company was privatized and placed directly under the Japanese
Management. At the time of privatization SMC increased its equity from 25% to 40%
subsequently; SMC progressively increased its equity to 73.09% by 31 December 2001.
The Bin Qasim Plant further expanded its production capacity to 50,000 vehicles per year in July
1994 and 300,000 vehicles had been manufactured at this plant by December 2003.
 SWIFT

 Price: Swift DLX with Navigation

1,515,000
 Swift Automatic with Navigation
1,651,000

CULTUS

o Cultus VXL
1,501,000
o Cultus AGS
1,608,000

CIAZ

o Ciaz (Manual)
1,960,000
o Ciaz (Automatic)
2,100,000.

JIMNY

 JLDX M/T
2,293,000

Wagon R

 VXR
1,184,000
 VXL
1,274,000
 MEHRAN

 Mehran VX Immobilizer
769,000
 Mehran VXR Immobilizer
840,000

BOLAN VAN

 Bolan
834,000

Mega Carry

 Mega Carry
1,499,000

Ravi Pickup

 Ravi
756,000

.
 BACKGROUND OF THE STUDY
High duties and tariffs on imported cars have caused the Automobile Industry prices to rise
significantly in Pakistan during recent years. Japanese reconditioned cars are now being
preferred over local assembled cars due to which the Domestic automobile industry has been
affected in an adverse way. The imports have been increased significantly which is also harming
the import/export index.

PROBLEM STATEMENT
Japanese cars being preferred over local assembled cars due to which the local automobile
industry is being affected in an adverse way. The imports have been increased significantly
which is also harming the import/export index.

RESEARCH OBJECTIVE
The objective of our research is to identify the cause of Japanese cars being preferred over
locally manufactured cars.

IMPORTANCE OF THE RESEARCH

The study we are conducting will be mainly focused on ‘Suzuki WagonR’. This is because
Suzuki WagonR is assembled in Pakistan by PakSuzuki plant; on the other hand, Japanese
assembled Suzuki WagonR by Suzuki Motor Corp Japan is also available in the market and is
giving tough competition to the local product however, the makers of the product are same but
one product is affecting the sales of the other product.
 HYPOTHESIS
H1: Consumers highly responsive to price change will respond to changes in prices of locally
assembled cars.
H2: Consumers who take durability in account will positively respond to imported Japanese cars
while buying a new car.

H3: Consumers who take fuel efficiency as a key factor while buying a new car will respond
positively towards a Japanese reconditioned car.

H4: Consumers who give more importance to Aesthetics of a car will respond positively when
buying a Japanese assembled car.

LITERATURE REVIEWS

AESTHETICS
Considering the increasing interest in hedonic aspects of consumer behavior, consumer taste
plays a critical role in judgment and decision making, particularly for hedonic products and
services. Now, however, our understanding of consumer aesthetic taste and its specific role for
consumer behavior is limited. In today’s markets, it is often hard to differentiate products and
services by their functional value, and to create differentiation marketers are increasingly turning
into symbolic value that offerings deliver to consumers. Aesthetics has become such an
important aspect in our lives that some people even believe that Aestheticisms everything or
packaging is the product. The selection of the product highly depends on the package of the
product. Promotion chain is formed by the product packaging and most of the time it’s close to
the actual purchase and hence play important role in observing the customer results. The at hand
study intend to explore the Aesthetics of product on consumer buying behavior. The results
identified that the elements; color, label and designs influence the perception of the consumer
about the purchasing of the product. Some colors have a fuming effect while others have a cool
effect on the consumer mind. Labeling is compulsory as it makes the consumer aware of the
product. While now a day people wanted the product with “Look at me” Aesthetics. Every
marketing purpose can be gained by the clear understanding of what a consumer think and then
translating the thoughts and dream of the customer on package. Marketers should be ever ready
to make changes if he has to keep pace with the changing trends.

Links:

https://www.researchgate.net/publication/225549171_The_role_of_aesthetic_taste_in_consumer
_behavior

https://www.omicsonline.org/open-access/exploring-the-aesthetics-of-product-on-consumer-
buying-behavior-in-fmcgs-2167-0234.1000128.php?aid=38749
PRICE
Consumers rely on price as indicator of product quality. On the one hand, consumers appreciate
a bargain and are often likely to favor an economically-priced item. On the other, consumers
often perceive very inexpensive items as cheap and discard able. Especially sophisticated or
skeptical consumers are even prone to distrust a product that is considerably cheaper than the
alternatives. However, most often, consumers view price as an indicator of quality if they have
little information to go, or if they have little confidence in their own ability to make the product
or service choice on other grounds. When the consumer is familiar with a brand name, price
declines as a determining factor in product evaluation and purchase. (Schiffman, Leon.
Consumer Behavior, Pearson, 2011)

The price/quality relationship comprises consumers' perceptions of value. High prices are often
taken as a sign of quality, especially when the product or service lacks search qualities that can
be inspected prior to purchase. The quality and price relationship are often one of the first factors
brand positioning consultants will consider when working to improve the marketability of a
product. Studies have shown that the price tag is often one of the first things potential customers
will look at when deciding whether to buy a product. However, it would be a mistake to assume
that a lower price will always automatically lead to higher sales.

INCOME
This paper has focused on how household income affects the purchase of automobiles. Its
outcome states that income affects the timing of the purchase and not necessarily its level. The
results are consistent with previously published results on the added predictive power of
attitudinal variables in combination with objective variables (Hymans 1970; Juster and Wachtel
1972; Mueller 1963; Shapiro and Angevine 1969). However, the IO_easurement of the
anticipatory variable in this paper differs from its normal usage. In our case, anticipation refers to
a specific, as yet unmeasured, objective variable. The overall effects of these may indicate the
willingness to buy of households rather than their ability to buy. It also states that great emphasis
should be laid on evaluating current time expectations in the light of past income experience.
This means to refer to a period with a relatively predictable future. Results based on household
income may be less satisfactory considering rapid changes in prices and technology.

https://academic.oup.com/jcr/article-abstract/7/1/55/1802752

Levedahl, J. W. (1980). The Impact of Permanent and Transitory Income on Household

Automobile Expenditure. Journal of Consumer Research, 7(1), 55. doi:10.1086/208793
url to share this paper:
sci-hub.tw/10.1086/208793
DURABLITY
Durability in cars is most important thing now days. Now it is very much important to check the
durability of the car before purchasing it. Manufacturers of consumer durables do tend to sell
their consumer products with an eye toward long term use by the buyer. At the same time, many
of these manufacturers normally provide documentation that defines what is considered
reasonable use of the goods. This serves to set the standard for how long a consumer can
reasonably expect the items to function, provided that the durables are not abused or utilized in
an inappropriate manner. Consumer durables involve any type of products purchased by
consumers that are manufactured for long-term use. As opposed to many goods that are intended
for consumption in the short term, consumer durables are intended to endure regular usage for
several years or longer before replacement of the consumer product is required. The same
consumer behaves differently for consumer durable and consumer durables. As vehicle owners
have become increasingly testy over inconveniences like onerous infotainment systems, balky
Bluetooth cellphone pairing, and testy voice-command interfaces, the concept of reliability has
been stretched in recent years. Issues with electronics now account for 20 percent of all
consumer-reported car glitches in JD Power’s dependability ratings and have caused Consumer
Reports to give poor marks for what some might otherwise consider to be amenable rides. Still,
it’s the hardcore mechanical issues that could strand an owner at the side of the road or otherwise
require frequent trips to the dealer’s service department for repairs that should matter most to car
and truck buyers, particularly those who intend to keep them for longer than the original
warranty period.

Link:

https://www.researchgate.net/publication/324965352_Effects_of_Consumer_Buying_Behaviour
_Durable_Sellers
PERFORMANCE
The accomplishment of a given task measured against presetknown standards of accuracy,
completeness, cost, and speed. Ina contract, performance is deemed to be the fulfillment of
anobligation, in a manner that releases the performer from allliabilities under the contract.

PERFORMANCE that denotes the quality and performance of existingproducts and firms’ recor
ds with respect to the development of new products.The Product
Performance ranks product sales based onrevenue performance to inform your sales
teamwhich products are selling well. At the same time, you shouldrank the
poorestperforming products to determine whichproducts are failing to resonate with your
customersThe product performance are related to expectations. The generalfinding is that
products thatmeet or exceed expectations receivefavorable ratings on product performance, while
those thatperform below expectation gets less ratings.While product performance dimensions
may appear to be “naturalattributes” of the product at least two lines of the salient
productperformance thatare important to consumers limited by consumerperception and
conceptions.

Link:

https: //www.jstor.org/stable/1251003?read-now=1
 RESEARCH METHODOLOGY

Data

Both the primary and secondary data is being collected in this research. The source of primary
data will be obtained through a structured questionnaire while on the other hand; Secondary data
in this research is being obtained through different websites, research articles and journals
available online.

Variables

The following study is based on two different types of variables. The independent variables in
this research are price, aesthetics, performance and durability. The dependent variable in this
research is consumer buying preference.

Inclusive Criteria

The following inclusive criteria must be followed:

 Any study which is being used for any purpose such as literature reviews must be
published in the yearly duration from 2000 to 2017.
 The research article/study should contain empirical concept of research.

The purpose of the research should be the factors impacting the consumer’s purchasing behavior
towards cars.
Target audience
 Age Group: 18 years and above.
 Gender : Male and Female
 Family Size: 2-5 people
 Social Status: upper Middle Class, Middle Class, Lower Middle Class.
 Income Groups: 35K+ salary
 Users: Students, Business purposes, Early Professional career and Household purposes

Population
All the people residing in Karachi as we got our questionnaires filled by people belonging from
different walks of life.

Sampling Technique
Sampling technique used in this research is Convenience Sampling. It is a sampling type of non-
probability sampling that involves the sample being drawn from that part of the population that is
close to hand. We selected this sampling technique because it is fast, inexpensive, and the
subjects are readily available. Moreover, it is the most common sampling technique used. We
circulated the questionnaire among those people who belonged to the set of target population and
were most easy to contact.

Sample Size
We collected the set of information from 150 people belonging from age group of 20 and above
with income of 35,000 and above. This included people studying in different universities,
working in offices, and those who use cars as their means of transport
 DATA ANALYSIS

Statistical Analysis

Correlation
Correlation Test was performed in order to identify if there’s a relation between our Independent
variables with consumers buying preference while choosing Japanese assembled cars over
locally assembled cars

Descriptive Statistics

Mean Std. Deviation N

PC_mean 2.8533 .74833 150

PR_mean 3.8250 .61766 150

AES_mean 3.7756 .65253 150

DUR_mean 3.4267 .70802 150

The research identified that price has a negative relationship with consumer’s buying preference
while performance, durability and aesthetics have a positive one.
 Correlations
PC_mean PR_mean AES_mean DUR_mean

Pearson Correlation 1 -.060 -.097 .037

PC_mean Sig. (2-tailed) .469 .238 .657

N 150 150 150 150

Pearson Correlation -.060 1 .553** .333**

PR_mean Sig. (2-tailed) .469 .000 .000

N 150 150 150 150

Pearson Correlation -.097 .553** 1 .431**

AES_mean Sig. (2-tailed) .238 .000 .000

N 150 150 150 150

Pearson Correlation .037 .333** .431** 1

DUR_mean Sig. (2-tailed) .657 .000 .000

N 150 150 150 150

**. Correlation is significant at the 0.01 level (2-tailed).

Descriptives

Descriptive Statistics

N Mean Std. Deviation Skewness

Statistic Statistic Statistic Statistic Std. Error

PF_mean 150 1.6667 .31374 -.538 .198

PC_mean 150 2.8533 .74833 -.082 .198

PR_mean 150 3.8250 .61766 -.621 .198

AES_mean 150 3.7756 .65253 -.332 .198

DUR_mean 150 3.4267 .70802 -.455 .198

Valid N (listwise) 150

Descriptive Statistics
Kurtosis

Statistic Std. Error

PF_mean -.711 .394

PC_mean -.517 .394

PR_mean 1.299 .394

AES_mean .165 .394

DUR_mean -.378 .394

Valid N (listwise)
 Model Summary

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 .314a .099 .074 .30192

a. Predictors: (Constant), DUR_mean, PC_mean, PR_mean,

AES_mean

ANOVAa
Model Sum of df Mean F Sig.
Squares Square
Regressio
1.449 4 .362 3.973 .004b
n
1 Residual 13.218 145 .091
Total 14.667 149

a. Dependent Variable: PF_mean

b. Predictors: (Constant), DUR_mean, PC_mean, PR_mean, AES_mean
 Coefficientsa

Model Unstandardized Coefficients Standardized t

Coefficients

B Std. Error Beta

(Constant) 1.141 .207 5.509
PC_mean -.029 .033 -.070 -.878
1 PR_mean .027 .048 .053 .557
AES_mean .042 .048 .087 .870
DUR_mean .102 .039 .229 2.592

Coefficientsa
Model Sig.

(Constant) .000
PC_mean .381
1 PR_mean .578
AES_mean .386
DUR_mean .011
 INTERPRETATION

AESTHETICS

1. Japanese WagonR has more features

From the above pie chart it can be clearly seen that 23.8% people strongly agree, 52.3% people
agree with this and 21.2% people are neutral. Only 2% people disagree while 0.7% people
strongly disagree. This is because Consumers think that the Pakistani WagonR has less features
to offer than the Japanese one.
DURABILITY
1. Japanese WagonR is more reliable.

From the above pie chart it can be clearly seen that 13.9% people strongly agree, 50.3%
people agree with this and 19.9% people are neutral. Only 15.9% people disagree while
no one strongly disagrees. This is because according to consumers the Japanese WagonR
is more reliable than the locally manufactured one considering all reliability factors
PRICE
1. Price of Pak Suzuki cars are Justified.

From the above pie-chart it can be clearly seen 2.7% of the respondents strongly agree,
23.8% of respondents agree, 33.1% people had a neutal response, 23.2% of respondents
disagree, and 17.2% of respondents strongly disagree towards the prices set by Pak
Suzuki. So highest percentage of people”s response was neutral towards this question and
then there was an equal respose of agreeing and disagreeing with the prices. But still
highest percentage of people do not agree that the prices are justified if we combine
strongly agree and agree.

2. Prices of Japanese Imported cars are justified.

From the above pie-chart it can be clearly seen 8.6%% of the respondents strongly agree, 27.8%
of respondents agree, 27.2% people had a neutal response, 27.2% of respondents disagree, and
9.3% of respondents strongly disagree towards the prices of Japanese Imported cars. So highest
percentage of people”s response was Strongly disagree, But still there is a minor difference
between agreeig and disagreeing
PERFORMANCE
1. Increment in demand of imported Wagon-R is due to the lack of technological
advancement locally assembled Wagon-R.

From the above pie-chart it can be seen that 48.3% of respondents strongly agree to the statement
mentioned above, 22.5% agree, 23.2% had a neutral response, and least percentage of people
disagreed to the statement so in short people think that pak suzuki lacks in technological
advancement.

2. Our Locally assembled Suzuki Wagon-R is losing market due to imported Japanese
Wagon-R.

From the above pie-chart it can be seen that 48.3% of respondents agree to the statement
mentioned above, 17.9% strongly agree, 19.2% had a neutral response, and least percentage of
people disagreed to the statement so in short people think that pak suzuki is losing market
because of Japanese Wagon-R because of performance.
 CONCLUSION
The last question in the questionnaire was whether consumers will prefer Pakistani
manufactured WagonR or Japanese WagonR. In short, whether a consumer will prefer a
locally manufactured car or Japanese imported car keeping fuel efficiency, maintenance
cost, price, resale value, comfort, availability of spare parts and every other factor in
mind. The following results were obtained;

Japanese WagonR
Pakistani WagonR

72.2% people chose Japanese WagonR over Pakistani WagonR which was only selected by
27.8% people. This means that Suzuki Pakistan must improve in aesthetics and durability of their
cars. They should also keep justified price according to their cars as well improve in
technological department as well by making their R&D department better.
 DISCUSSION AND RECOMMENDATION
The above analysis shows that there is a relation between the customer and impulsive buying
decisions. The data has shown that there is correlation between impulsive purchase decisions
(dependent variable) and the four independent variables. The Consumers rely on price as
indicator of product quality. On the one hand, consumers appreciate a bargain and are often
likely to favor an economically-priced item. On the other, consumers often perceive very
inexpensive items as cheap and discard able.

LIMITATIONS
Our data collection through questionnaires limited to students and faculty IOBM, therefore it
might not reflect views of entire city or country. Respondents might not have filled the
questionnaires seriously or truthfully as there is a certain amount of biasness.

REFERENCES
https://www.researchgate.net/publication/225549171_The_role_of_aesthetic_t
aste_in_consumer_behavior

https://www.omicsonline.org/open-access/exploring-the-aesthetics-of-product-
on-consumer-buying-behavior-in-fmcgs-2167-0234.1000128.php?aid=38749

https://www.ukessays.com/essays/marketing/importance-of-consumer-
behaviour-to-business-managers-marketing-essay.php
 Appendix-1 Questionnaire
Preference of Japanese assembled WagonR over Pakistani WagonR
1. Age
o Below 25
o 25-45
o 50 and above
2. Income
o Below 30000
o 30000-50000
o Above 50000
3. Do you prefer Suzuki over other brands?
o Yes
o No

4. Your preference while buying a new car?

o Local car
o Imported/ reconditioned car

5. In what ways do imported cars provide better customer satisfaction as

compared to local cars?
o Fuel efficiency
o Price
o Better resale value
o Maintenance cost
o Wide dealership network
o Availability of spare parts

6. Increment in demand of Imported WagonR is due to the lack of

technological advancement in locally assembled WagonR.
o H
7. Current prices of Local WagonR and other local brands are
satisfactory.
o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

8. The import of use cars is increasing the competition in local sector.

o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

9. Our locally assembled Suzuki WagonR is losing the market due to

imported Suzuki WagonR.
o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

10.The comfort level of Japanese WagonR is high compared to same priced

locally assembled WagonR.
o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

11.Japanese cars look better than the locally manufactured cars

o Strongly Agree
o Agree
o Neutral
 o Disagree
o Strongly Disagree

12.Locally manufactured cars look better than the Japanese cars

o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

13.Japanese cars are better than locally manufactured cars in fuel

efficiency
o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

14.Locally manufactured cars are better than Japanese cars in fuel

efficiency
o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

15.Japanese cars are better in comfort

o Strongly agree
o Agree
o Neutral
o Disagree
o Strongly Disagree
16.Locally manufactured cars are better in comfort
o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

17.Our market has become saturated due to vast import of used cars
o Strongly Agree
o Agree
o Neutral
o Disagree
o Strongly Disagree

18.If you were to buy Pakistani WagonR or Japanese WagonR which one
would you prefer keeping fuel efficiency, maintenance cost, price, resale
value, comfort and availability of spare parts in mind
o Japanese Wagon R
o Pakistani Wagon R