a study on factors contributing brand preference...

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A STUDY ON FACTORS CONTRIBUTING BRAND PREFERENCE OF PASSENGER CAR 1 C. Dharmaraj *Assistant Professor, School of Management, Karunya University, Coimbatore-641114, Tamil Nadu, E-mail: [email protected]. 2 M. Sivasubramanian **Reader in Commerce, Government Arts College, Coimbatore-641018. Abstract: A consumer’s decision to buy a product or service is the result of interplay of many forces or stimuli. Consumer choice process is a complex phenomena. Selection of the product or services get involved many process. Especially for the selection of durable products, the customer has to spend much time to evaluate and choose the best based on their requirements. After the opening up of the economy in the 90s, People are so busy, they are not able to spend enough time to choose the right product or services as they wish. The study Endeavour to carry out a comprehensive study on brand preference of passenger cars. This study refined the factors that will influence the brand preference of passenger cars in India, addressed the preliminary issues relating to selection of a brand and pre purchase behavior of the respon- dents. Moreover it reveals the factors that contribute more on brand preference which will be more relevant and useful for general public as well as the manufacturers and dealers and also provides means which would equip them with effective marketing strategies to improve their performance, retain the customers and secure new customer for the business. Keywords: Factors influencing, brand preference, customer choice process, friedman’s test. 1. INTRODUCTION In India, after independence, industrialization has paved the way for people to possess luxury items such as television, refrigerators, home appliances, cars, etc. Motor – car is one of the commonly used conveyances by the upper and middle-class people. Before two International Journal of Economics and Business Review Vol. 1 No. 1 (January-June 2011) pp. 21-38

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A STUDY ON FACTORS CONTRIBUTINGBRAND PREFERENCE OF PASSENGER CAR

1C. Dharmaraj*Assistant Professor, School of Management, Karunya University,

Coimbatore-641114, Tamil Nadu, E-mail: [email protected].

2M. Sivasubramanian**Reader in Commerce, Government Arts College, Coimbatore-641018.

Abstract: A consumer’s decision to buy a product or service is theresult of interplay of many forces or stimuli. Consumer choice processis a complex phenomena. Selection of the product or services getinvolved many process. Especially for the selection of durable products,the customer has to spend much time to evaluate and choose the bestbased on their requirements. After the opening up of the economy inthe 90s, People are so busy, they are not able to spend enough time tochoose the right product or services as they wish. The study Endeavourto carry out a comprehensive study on brand preference of passengercars. This study refined the factors that will influence the brandpreference of passenger cars in India, addressed the preliminary issuesrelating to selection of a brand and pre purchase behavior of the respon-dents. Moreover it reveals the factors that contribute more on brandpreference which will be more relevant and useful for general publicas well as the manufacturers and dealers and also provides meanswhich would equip them with effective marketing strategies to improvetheir performance, retain the customers and secure new customer forthe business.

Keywords: Factors influencing, brand preference, customer choiceprocess, friedman’s test.

1. INTRODUCTION

In India, after independence, industrialization has paved the wayfor people to possess luxury items such as television, refrigerators,home appliances, cars, etc. Motor – car is one of the commonly usedconveyances by the upper and middle-class people. Before two

International Journal of Economics and Business ReviewVol. 1 No. 1 (January-June 2011) pp. 21-38

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decades, only a few industrialists and rich people owned cars. Therewas a time when one had to wait for weeks, months or even yearsto buy a car in India. The option of Indian drivers was limited to afew models. But, after industrialization, the earning capacity of themiddle-class people has also increased. Now-a-days, motor car isnot only bought for social status, but as a necessary one. Moreoverevery middle/upper middle class people wants to have a car today.A consumer’s decision to buy a product or service is the result ofinterplay of many internal and external forces or stimuli. The startingpoint is the manufacturers and marketer’s stimuli in the form ofproduct offering through some promotional methods, available ofthe product or services at a reasonable price and to satisfy and retainthe customers through proper customer relationship managementmethod. The marketing and environmental stimuli enter the buyer’smind through cultural, social, personal and psychological factorsi.e., the choice of the product/brand/service is totally depends uponthe consideration of many factors.

In this study the researcher focused, how the consumers aretaking decision or what are the factors contributing to purchase aparticular brand of passenger car.

2. CONCEPTUAL FRAMEWORK AND LITERATUREREVIEW

Brand preference is an abstract term and it is necessarily formedthrough more than one component. This study endeavours to puttogether the antecedents and components of brand preference andtries to create a comprehensive framework for the measurement ofthe brand preference in Indian automobile context. The AmericanMarketing Association (1994) defines a brand as a “name, term, sign,symbol or design, or a combination of them intended to encourageprospective customers to differentiate a producer’s product (s)from those of competitors”. The primary function of the brand isto provide convenience and clarity in decision making, providinga guarantee of performance and communicating a set of expectations,thereby offering certainty and facilitating the buying process. (Keller,2002) in his study said that the brand is the sum total of all elements

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of the marketing mix. Brands can also be explained based on theirelements-”…those trade mark able devices that serve to identifyand differentiate the brand (eg; brand names, logos, symbols,characters, slogans, jingles and packages)”. (Phillips, 1988) In hisstudy, a brand can be described as a “trademark that communicatesa promise”. (Broadbent and Cooper, 1987) in their study noted that,if the brand is to be successful, images and symbols must relate toand indeed exploit the needs, values and lifestyles of consumers insuch a way that the meanings involved give added values, anddifferentiate the brand from other brands. (Park et al., 1996) in theirarticle stated that, symbolic and functional attributes that the marketplace associates with the brand. Symbolic attributes are those thatsatisfy internally generated needs for self-enhancement, role position,group membership or ego identification whereas functional brandattributes solve an externally generated consumption related problem.Ambler and Styles (1996) describe two different views of defining abrand. The first is the product plus view, when the brand is seen asan addition to the product, and in this view a brand is also called anidentifier. The second is the holistic view that communicates thefocus on the brand itself that is considered to be much more thanjust the product. (Rogers, 1995; Mason, 1990) in their study explainedhow consumers form preferences for various goods and servicesusing theories of adoption. Ravichandran.K, and Narayanarajan.S(2004) studied factors determining the brand preference of consumerdurables. They concluded that the study with brand preference ofconsumer durables is largely influenced by a number of factors suchas advertisement, price, quality, performance, availability of spares,and after-sales service. Moreover, these factors play a vital role inthe decision-making process and in the brand preference. KottaThomas. L (1992) in his study the influence of extrinsic cause viz.price, reputation of the product and advertising has been investi-gated in a main experimental setting using multi-item measures.The results indicate that all the three signals affect consumer’s qualityperception and they have an indirect influence on purchase intent.Tickwell, Paul A, M Horgan, Dianne D and Keeny Charles Text (1993)investigated the implications of loyal and non-loyal brands and inthis study they found that, significant difference exist between loyal

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and non-loyal brands and also a high correlation exists betweenself image and product user rating. (Dorsch et al., 2000) they studiedConsumer choice behaviour using the five-step process (need-infor-mation search-evaluation of alternatives-purchase-post-purchaseevaluation) problem solving paradigm or through the progressionof consumer choice from a product class to brand choice. AbdulHaneef.M, Abdul Karim.B.A and Edwin Gnanadhas.M (2006) intheir study noted that consumer behaviour is influenced stronglyby cultural, social, personal and psychological factors. Culturalfactors include the set of basic values, perceptions, wants andbehaviour learned by a member of society from the family and otherimportant institutions. The social factors include consumer’s family,small group, social roles and status. The personal characteristics suchas buyer’s age, lifecycle stage, occupation, economic situation andlifestyle influence a buyer’s decision. A person’s buying choices arefurther influenced by four major psychological factors: Motivation,Perception, Learning, Beliefs and Attitudes. Wee (2003) conducteda study to identify the factors affecting adoption of new productinnovations in the consumer electronic industry of Singapore usingqualitative and quantitative research techniques, the researcherconsidered two brands and using factor analysis, seven factors wereidentified as critical in effecting adoption of a player: relative advantage,perceived risk, complexity, compatibility, observability, image andtrialability. Smita Sharma (2006) in her study pointed out the impor-tance of celebrity endorsement in advertisement and concluded thatadvertisers use endorsers to add excitement and glamour to theirbrands. Basically, celebrity endorsements give a brand a touch ofglamour in the minds of people, and the hope that a famous facewill provide added appeal and name recognition in a crowded market.Suresh. A.M and Raja. K.G (2006) made an attempt to measure thecustomer satisfaction with small cars. In this study the customersatisfaction is measured by using the following variable attributesunder different dimensions, namely, after sales service, ability tounderstand customer needs, behaviour and knowledge of themechanics, warranty, prompt delivery, 24 hours customer care,information about the cars, horse power, engine capacity, powersteering, technology, fuel capacity, acceleration, easy finance,

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convenience and accessibility, ground clearance, easy processingand documentation, price, discount and rebates, fuel efficiency,maintenance cost, luggage capacity, safety measures, model andcolour of the car, music accessories, engine pickup, availabilityof spares, cost of labour and spares. Park C.H and Kim Y.G. (2003)investigated the relationship between various characteristicsof online shopping and consumer purchase behaviour. Results ofthe online survey indicates that information quality, user interfacequality and security perceptions affect information satisfaction andrelational benefit, that in turn are significantly related to eachconsumer’s site commitment and actual purchase behaviour.Karjaluoto et al. (2005) investigated the consumer choice in thecontext of the mobile phone industry in Finland used to assessconsumer motivations in mobile phone choice. Seven estimatedfactors influencing mobile phone choice were: Innovativeservices, multimedia, design, brand and basic properties, outsideinfluence, price. (Doyle, 2002) in his study pointed out the importantproduct decisions in any marketing context are product, variety,product performance, product features, product design, productpresentation, sizes, etc. (Kotler, 2003) in his study stated that,consumer surveys often reveal that quality is one of the important,if not the most important decision factors for consumers andproduct quality stands for the ability of a product to perform itsfunctions.

3. STATEMENT OF THE PROBLEM

Consumer decision making is a complex phenomena. Making adecision to buy a product or services get involved many process.Selection of durable products, especially passenger car, the customerhas to spend much time to evaluate and choose the desired onebased on their need and economic condition. Moreover, the mar-keting strategy which is followed by manufacturer and marketer aswell as pre-conceived idea of the buyer also play a vital role inselection of a particular brand. Based on these basic questions, theresearcher has developed an interest to study the factors contributingbrand preference of passenger car.

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4. OBJECTIVES OF THE STUDY

1. Identifying the factors contributing brand preference.

2. To analyze the factors identified on brand preference of passengercar.

5. METHODOLOGY

The study was conducted from April, 2005 to April, 2008 inCoimbatore city of the State of Tamil Nadu, India. This study isbased on primary data. The primary data were collected throughQuestionnaire from 712 respondents.

6. TOOL USED

Friedman’s non-parametric test is used for analyses to find the moreinfluencing factors towards brand preference. The Friedman test isbased on the following assumptions:

1. The rows are mutually independent. That is, the resultswithin one row do not affect the results within other row.

2. The data can be meaningfully ranked.

The Friedman test is a nonparametric alternative to the repeatedmeasures analysis of variance. The Friedman test is the nonpara-metric equivalent of a one-sample repeated measures design or atwo-way analysis of variance with one observation per cell. Friedmantests the null hypothesis that k related variables come from the samepopulation. For each case, the k variables are ranked from 1 to k.The test statistic is based on these ranks. The Friedman test ranksthe scores in each row of the data file independently of every otherrow. Moreover the test statistic for the Friedman’s test is a Chi-squarewith a-1 degrees of freedom, where a is the number of repeatedmeasures. When the p-value for this test is small (usually <0.05) wehave evidence to reject the null hypothesis.

This study covers the important pre purchase and post purchasebehaviour of the respondents relating to the car was analyzedthrough the factors that will influence the respondents towardsbrand preference.

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7. ANALYSES AND DISCUSSIONS

The Friedman test statistic is mainly used for rank the variables.The Friedman test ranks the scores in each row of the data fileindependently of every other row. The factors that will influencethe respondents towards the brand preference were classified intofour dimension namely, “Information factors, Psychological factors,Economic factors and Product factors”. The variables used underthe above said four dimensions are developed with the help of litera-ture review and classified using factor analyses. Apart from thissome of the important pre purchase behaviour of the respondentsrelating to the car was also analyzed. In this study, Friedman test isused to identify the factor which is more influencing the respondenttowards brand preference.

7.1. Influencing Factors Towards Brand Preference – InformationFactors

To identify the information factors which are more influencing therespondents towards brand preference, the Friedman’s test is usedand result of the test is given in Table 1.

Table 1Descriptive Statistics - Information Factors

Information factors Mean SD Mean Chi- Df PRank Square

Advertisement 2.71 .770 6.57 251.77 9 0.00**Dealer’s schemes 2.51 .806 5.83Salesmanship 2.45 .854 5.71Internet 2.37 .917 5.56Friends 2.66 .790 6.43Relatives 2.57 .829 6.12Coworkers 2.50 .830 5.85Neighbours 2.44 .892 5.68Decision influenced 2.52 .857 5.98by spousePast experience 2.49 .895 5.85

The Friedman chi-square tests the null hypothesis that the ranksof the variables do not differ from their expected value. For a constant

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sample size, the higher the value of this chi-square statistic, the largerthe difference between each variables rank sum and its expectedvalue. For these rankings, the chi-square value is 251.77; Degrees offreedom are equal to the number of variables minus 1. The asymp-totic significance is the approximate probability of obtaining a chi-square statistic as extreme as 251.77 with nine degrees of freedomin repeated samples if the rankings of each factors are not trulydifferent. Because a chi-square of 251.77 with 9 degrees of freedomis unlikely to have arisen by chance, it has to be concluded that the712 respondents do not have equal preference for all factors.

It could be noted from the above Table 1 that among the tenfactors, Advertisement (6.57) was ranked first. It is followed byFriends (6.43), Relatives (6.12), Decisions influenced by spouse (5.98),Past experience (5.85) and Dealer schemes (5.83) which were rankedsecond third, fourth, fifth and sixth respectively.

Hence, it is concluded that among the 10 factors, Advertisement,Friends, Relatives and Decisions influenced by spouse influencesare more in consumer’s car preference.

7.2. Influencing Factors Towards Brand Preference–PsychologicalFactors

In order to identify the psychological factors which are influencingmore the respondents towards brand preference, the Friedman’stest is used and results of the test is given in Table 2.

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Table 2Descriptive Statistics - Psychological Factors

Psychological factors Mean SD Mean Chi- Df PRank Square

Social status 2.65 .786 6.47 639.80 12 0.00**Celebrity endorsements 2.35 .924 5.46Image of the manufacturer 2.66 .806 6.55Brand superiority 2.81 .717 7.09Brand loyalty 2.77 .764 6.99Brand name 2.85 .726 7.28Personal values 2.64 .779 6.36Necessity 2.66 .788 5.42After sales service 2.63 .745 6.33Status symbol 2.63 .754 6.29Driving comfort 2.74 .743 6.81Style and colour 2.72 .773 6.77Logo/Symbol 2.41 .894 5.60

It is clear from the above Table 2 that among the thirteen factors,Brand name (7.28) was ranked first. It is followed by Brand superio-rity (7.09), Brand loyalty (6.99), Driving comfort (6.81) and Image ofthe manufacturer (6.55) which were ranked second, third, fourth,and fifth respectively.

Thus, it can be concluded that among the 13 factors, Brand name,Brand superiority, and Brand loyalty play major role in influencingconsumers’ car preference.

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7.3. Influencing Factors Towards Brand Preference– EconomicFactors

To identify the economic factors which are influencing more therespondents towards brand preference, the Friedman’s test is usedand results of the test is given in the Table 3.

Table 3Descriptive Statistics - Economic Factors

Economic Mean SD Mean Chi- Df Pfactors Rank SquarePrice 2.67 .798 4.60 112.93 7 0.00**Disposable income 2.57 .800 4.26Easy finance 2.60 .787 4.37Discount offers 2.61 .828 4.42Maintenance cost 2.66 .822 4.61Free insurance 2.64 .797 4.50Resale value 2.60 .824 4.41Mileage 2.76 .770 4.84

It could be noted from the above Table 3 that among the eightfactors, Mileage (4.84) was ranked first. It is followed by Maintenancecost (4.61), Price (4.60), Free insurance (4.50), Discount offers (4.42)and Resale value (4.41) which were ranked second, third, fourth,fifth and sixth respectively.

Therefore it can be concluded that Mileage, Maintenance costand Price play a major role in influencing consumer’s car preference.

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7.4. Influencing Factors Towards Brand Preference – ProductFactors

To find the product factors which are influencing more the respondenttowards brand preference, the Friedman’s test is used and result ofthe test is given in the following Table 4.

Table 4Descriptive Statistics - Product Factors

Product Mean SD Mean Chi- Df Pfactors Rank Square

Quality 2.81 .761 11.79 780.36 19 0.00**

Comfort 2.77 .724 11.41

Appearance 2.66 .786 10.65

Seating capacity 2.69 .717 10.85

Technology 2.75 .698 11.14

Durability 2.70 .751 10.86

Availability 2.66 .757 10.62

Warranty terms 2.67 .760 10.75

Road grip 2.68 .765 10.76

Horsepower 2.69 .733 10.80

Engine capacity 2.68 .772 10.78

Luggage capacity 2.56 .835 10.00

Accessories 2.60 .800 10.20

Parking convenience 2.55 .840 10.08

Safety features 2.61 .846 10.49

Gift packages 2.24 .950 8.31

Luxury 2.54 .878 9.98

Recent Euro norms 2.42 .889 9.27

Space 2.60 .829 10.26

Brake, Power Steering 2.70 .775 10.98

It is noticed from the above Table 4 that among the twentyfactors, Quality (11.79) was ranked first. It is followed by Comfort(11.41), Technology (11.14), Brakes, Power Steering (10.98), Dura-bility (10.86) and Seating capacity (10.85) which were ranked second,third, fourth, fifth and sixth respectively.

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It can be concluded that among the 20 factors, Quality, Comfort,Technology, Brakes, Power Steering and Durability play major rolesin influencing consumer’s car preference.

7.5. Brands Considered Before Actual Purchase

To identify the brands which are considered more before the actualpurchase by the respondent towards brand preference, theFriedman’s test is used and the results are given in Table 5.

Table 5Brands Considered Before Actual Purchase

Brands Mean SD Mean Chi- Df pRank Square

Maruti 5.27 3.715 9.28 1,387.47 11 0.00**Tata 5.82 3.069 5.85Hyundai 4.88 2.957 8.90Fiat 8.32 3.230 6.36Honda 5.39 3.274 5.41Toyota 4.94 3.057 4.96Ford 5.04 3.041 8.06Opel 7.89 3.141 7.90Mitsubishi 7.36 3.207 7.38Hindustan 9.26 2.505 4.29Chevrolet 6.05 3.122 6.08Mahindra 7.51 3.062 7.54

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It could be noted from the above Table 5 that among the twelvebrands, Maruti (9.28) was ranked first. It is followed by Hyundai(8.90), Ford (8.06), Opel (7.90), Mahindra (7.54), Mitsubishi (7.38)and Fiat (6.36) which were ranked second, third, fourth, fifth, sixthand seventh respectively.

Thus, it is concluded that Maruti, Hyundai, Ford, Opel andMahindra are better considered brands before the actual purchaseby the respondent towards brand preference.

7.6. Features Considered for Car Brand Purchase

To identify the features which are better considered by the respond-ents towards brand preference, the Friedman’s test is used and theresults are given in Table 6.

Table 6Features Considered for Brand Purchase

Features Mean SD Mean Chi- Df pRank Square

High mileage 3.28 2.623 3.30 777.216 9 0.00**Low maintenance 4.88 2.625 4.90Pick up and power 5.31 2.628 5.32Durability 6.33 2.440 6.34Easy availability of spares 7.00 2.661 7.02Easy to drive 5.30 2.579 5.31Fuel efficiency 4.87 2.549 4.89

Contd Table 6.

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Fabulous look 6.29 2.887 6.29Space 6.31 2.872 6.33Price 5.30 3.038 5.31

The above Table 6 portrays that among the ten factors, Easyavailability of spares (7.02) was ranked first. It is followed byDurability (6.34), Space (6.33), Fabulous look (6.29), Pickup andpower (5.32) and Price (5.31) which were ranked second third, fourth,fifth and sixth respectively.

Hence, it is concluded that Easy availability of spares, Durability,Space and Fabulous look are better considered factors and thesefactors play major role in car preference.

7.7. Impression of Advertisement Media

To identify the most influencing advertisement media towards brandpreference, the Friedman’s test is used and the results are given inthe Table 7.

Table 7Impression of Advertisement Media

Media Mean SD Mean Chi- Df PRank Square

TV 3.52 0.697 3.30 459.642 3 0.00**

Outdoor 2.77 0.773 2.26

Print media 2.72 0.841 2.26

Internet 2.63 1.032 2.18

Contd Table

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It is observed from the above Table 7 that among the four media,TV (3.30) was ranked first. It is followed by Outdoor (2.26), Printmedia (2.26) and Internet (2.18) which were ranked second, thirdand fourth respectively.

So, it is concluded that TV, Outdoor and Print media play majorrole in consumer’s car preference.

7.8. Dissatisfying Factors Considered Before ActualPurchase

To know the dissatisfying factor which is better considered by therespondents towards brand preference, the Friedman’s test is usedand the results are given in the Table 8.

Table 8Dissatisfying Factors Considered Before Actual Purchase

Dissatisfying Mean SD Mean Chi- Df Pfactors Rank Square

Poor safety 3.33 0.749 6.30 293.846 9 0.00**

Poor mileage 3.33 0.805 6.23

High maintenance cost 3.25 0.741 5.88

Discomfort in riding 3.09 0.818 5.28

Non-availability of spares 3.00 0.863 4.95

Warranty terms 2.91 0.776 4.63

Low capacity 3.04 0.813 5.08

Poor pickup 3.19 0.823 5.70

Poor mechanism 3.20 0.811 5.67

Low speed 3.11 0.894 5.38

It is clear from Table 8 that among the ten factors, Poor safety(6.30) was ranked first. It is followed by Poor mileage (6.23), Highmaintenance (5.88), Poor pick up (5.70), Poor mechanism (5.67) andLow speed (5.38) which were ranked second, third, fourth, fifth andsixth respectively.

So, it can be concluded that Poor safety, Poor mileage, Highmaintenance cost and Poor pick up are considerable factors beforethe consumer’s car preference.

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8. IMPLICATIONS OF THE STUDY

This study refined the factors that will influence the brand preferenceof passenger cars in India and addressed the preliminary issuesrelating to selection of a brand. This study reveals the factors thatcontribute more on brand preference which will be more relevantand useful for general public as well as the manufacturers anddealers and also provides means which would equip them witheffective marketing strategies to improve their performance andretain the customers. A few paramount implications of the studyare outlined here.

1. Findings of this study indicate that it is worthwhile for thecar buyer to take note of the results of this study before gofor actual purchase.

2. Findings of this study also indicates that it is more usefulfor the manufacturer and dealer of automobiles to take noteof the results of this study and formulate competitiveoperation strategy, so as to reinforce the customers’ trustand expectation and consequently attain personal, professio-nal and profitable relationship with customers.

3. Academic researchers in a developing economy like Indiacan gain further, by using the inventory in this study in theirdurable sectors study.

9. CONCLUSION

When people decided to buy / avail the particular product or service,before that they may have bundle of questions in their mindregarding that product and its services. The present study made asystematic effort on studying consumer brand preference towardspassenger cars in India by analyzing the factors that influence brandchoice of the customers and addressed the preliminary issuesrelating to selection of a brand. It is indeed obvious from the studythat the performance factors of the passenger car brands havedominated the preference of customers, based on their economicstatus. The marketing communication unleashed by manufacturersand dealers also had a fair say on the total decision of the customerpreference. Overall, it is the all round ability of the car brands, viz,

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reliability, safety, technology, value for money, high resale value,high mileage, maintenance cost, quality, comforts, durability, etc.,that prove to be decisive factors of choice right across the globe andmore so in the Indian context.

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