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Factors Affecting Consumer Purchasing Decision in Kenya’S Motor Industry: Case of Toyota Kenya Customers

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Factors Affecting Consumer Purchasing Decision in Kenya’S Motor Industry: Case of Toyota Kenya Customers FACTORS AFFECTING CONSUMER PURCHASING DECISION IN KENYA’S MOTOR INDUSTRY: CASE OF TOYOTA KENYA CUSTOMERS BY HITESH MEHTA UNITED STATES INTERNATIONAL UNIVERSITY AFRICA SPRING 2015 FACTORS AFFECTING CONSUMER PURCHASING DECISION IN KENYA’S MOTOR INDUSTRY: CASE OF TOYOTA KENYA CUSTOMERS BY HITESH MEHTA A Project Report Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirements for the Masters of Business Administration (MBA) ii UNITED STATES INTERNATIONAL UNIVERSITY AFRICA SPRING 2015 STUDENT’S DECLARATION I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution or university other than United States International University. Signed: ________________________ Date: __________________ Mehta Hitesh Nitin (625367) This research report has been presented for examination with our approval as the appointed supervisors. Signed: ________________________ Date: __________________ Dr. Peter Kiriri Signed: ________________________ Date: __________________ Dean Chandaria School of Business iii COPYRIGHT All rights reserved including rights of reproduction in whole or part in any form without the prior permission of the author or United States International University or Office of the Deputy Vice Chancellor Academic Affairs. © 2015 iv ABSTRACT The general objective of the study was to examine factors affecting consumer purchasing decisions in Kenya’s motor vehicle industry. The study was guided by the following specific objectives: to determine the economic factors affecting consumer purchasing decisions in Kenya’s motor vehicle industry; to examine the psychological factors affecting consumer purchasing decisions in Kenya’s motor vehicle industry; to examine the social-cultural factors affecting consumer purchasing decisions in Kenya’s motor vehicle industry, and; to analyze the demographic factors affecting consumer purchasing decisions in Kenya’s motor vehicle industry. Descriptive research design was employed in the study. The target population included all 2,913 customers of Toyota Kenya in Nairobi. Simple random sampling techniques was employed while data collection was conducted with the help of a questionnaire. The data was analyzed using descriptive and inferential statistics with the help of the Statistical Package for Social Sciences (SPSS). The results were then presented in tables and figures. The study revealed that there was a positive significant relationship between economic factors and purchasing decision. Implying that the consumer purchasing decision is influenced by economic factors such as level of income, price, quality of car, maintenance costs, resale value of the car, payment options, ease of finding a mechanic to repair the specific car brand, interest rates as well as fuel prices. The study further revealed there was a positive significant relationship between psychological factors and purchasing decision. This findings imply that the consumer purchasing decision is influenced by psychological factors such as perception, motivation from friends and family, attitude towards the brand, innovative of the car and brand, personal beliefs as well as knowledge sharing from friends and colleagues. v It was also revealed that there was a positive significant relationship between Social-cultural factors and purchasing decision. This finding implies that the consumer purchasing decision is influenced by Social-cultural factors such as perception, motivation from friends and family, attitude towards the brand, innovative of the car and brand, personal beliefs as well as knowledge sharing from friends and colleagues. Finally the study revealed that there was a positive significant relationship between demographic factors and purchasing decision. This finding implies that the consumer purchasing decision is influenced by demographic factors such as demographic factors such as personality, gender, Age, Changing life, level of education, lifestyle, lifecycle status and occupation. The study concludes that psychological factors, social-cultural factors, economic factors, as well as demographic factors affect consumer purchasing decisions in Kenya’s motor vehicle industry in Kenya. The study recommends that firms dealing with motor vehicle need to consider the various economic factors that influence consumer decision making such as interest rates, income as well as rising fuel prices. In this regard they need to design motor vehicle for different categories of customers in different income brackets in Kenya. There is a need to make sure that investments in quality occur in areas that will resonate with customers. Finally it was important to understand the little things that consumers use as the basis for making a judgment of when it comes to purchasing decisions. The study recommends the need for automobile companies to consider consumers’ demographic characteristics such as age, gender, marital status, occupation, education and income when designing the products to offer into the Kenyan market. This is because demography factors are vital and measurable statistics of a population that helps to locate target market, they are easier to measure and are suitable for psychographic and socio-cultural studies. Additionally demographic factors have a huge impact on the assessment of different features which are generally associated with consumer behaviour. vi ACKNOWLEDGMENTS I wish to acknowledge my Supervisor for his guidance throughout my research and my parents for their support. vii DEDICATION This study is dedicated first and foremost to God for seeing me through, to my family and my friends. viii TABLE OF CONTENTS STUDENT’S DECLARATION ........................................................................................... iii COPYRIGHT ........................................................................................................................ iv ABSTRACT............................................................................................................................ v ACKNOWLEDGMENTS ................................................................................................... vii DEDICATION .................................................................................................................... viii TABLE OF CONTENTS ..................................................................................................... ix LIST OF TABLES ............................................................................................................... xii CHAPTER ONE .................................................................................................................... 1 1.0 INTRODUCTION ....................................................................................................... 1 1.1 Background to the study ................................................................................................ 1 1.2 Problem Statement ......................................................................................................... 5 1.3 General Objective .......................................................................................................... 5 1.4 Specific Objectives ........................................................................................................ 5 1.5 Significance of the Study ............................................................................................... 6 1.6 Scope of the Study ......................................................................................................... 6 1.7 Definition of Terms ....................................................................................................... 7 1.8 Chapter Summary .......................................................................................................... 8 CHAPTER TWO ................................................................................................................... 9 2.0 LITERATURE REVIEW ........................................................................................... 9 2.1 Introduction .................................................................................................................... 9 2.2 Economic Factors Affecting Consumer Purchasing Decisions ..................................... 9 ix 2.3 Psychological Factors Affecting Consumer Purchasing Decisions ............................. 14 2.4 Social-Cultural Factors Affecting Consumer Purchasing Decisions ........................... 18 2.5 Demographic Factors Affecting Consumer Purchasing Decisions ............................. 22 2.6 Chapter Summary ........................................................................................................ 26 CHAPTER THREE ............................................................................................................. 27 3.0 RESEARCH METHODOLOGY ............................................................................. 27 3.1 Introduction .................................................................................................................. 27 3.2 Research Design .......................................................................................................... 27 3.3 Population and Sampling Design................................................................................. 28 3.4 Data Collection Methods ............................................................................................. 30 3.5 Research Procedures ...................................................................................................
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