Business Research MethodZCZF 6033

Research Project:

“Factors influencing the purchase of Engine Lubricant by

consumer who drive within Klang Valley”

Lecturer: Prof. Dr. Zafir Mohd Makhbul

Prepared by:

V. Devakumar - ZP00363

Shelly Elena - ZP00548

Submission Date: 18-01-2011

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Table of Contents

Abstract...................................................................................……….3

1.0 Introduction..................................................................................3

1.1 Conceptual Framework.........................................................4

2.0 The Problem Statements..............................................................4

3.0 The Research Objectives..............................................................4

4.0 Literature Review.........................................................................5

4.1 Brand Awareness.................................................................5 4.2 Price.....................................................................................5 4.3 Place of Purchase.................................................................6 4.4 Mechanics Recommendation...............................................6

5.0 The Research Methodology..........................................................8

5.1 Sample and Data Collection Procedure................................8 5.2 Questionnaire and Analysis..................................................9 5.3 Hypothesis...........................................................................9

6.0 Data Analysis.............................................................................10

6.1 Demographics of Respondent.............................................10 6.2 Influences between Age and Purchase Decision................10 6.3 Reliability Analysis.............................................................11

7.0 Results and Conclusions.............................................................14

7.1 Future Research....................................................................................................15

8.0 References.................................................................................16

Appendix 1 (Questionnaire)..............................................................17

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ABSTRACT

The purpose of this research is to determine the contributors to the purchase decision of engine lubricant oil. The target market will be passenger car owners in Klang Valley. The research also evaluates the brand awareness as well as the purchase preferences of consumers. The consumers were asked on their awareness of lubricant brand, type of pricing, mechanic influence and the place of purchase. From the results obtained, it is hoped that the oil company can use this information in marketing and placing their products. The study was made on 37 samples of consumer who drive. The results only show samples of the full population and cannot be used to determine the preference of 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 Introduction

Most engine lubricants are nearly the same. It’s the brand or friend’s

recommendation which affect the purchase decision. When a customer

compares 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 purchasing

the product. We are conducting this research to find other elements that

influence the consumers buying behaviour. We need to understand and what

are the components that are most looked for by consumers when making the

purchase 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 as

buses and commercial vehicles, locomotives and aircraft, and static engines

such as electrical generators. In engines, there are parts which move against

each other causing friction which wastes otherwise useful power by converting

the energy to heat. Contact between moving surfaces also wears away those

parts, which could lead to lower efficiency and degradation of the engine. This

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increases fuel consumption, decreases power output and can, in extreme

cases lead to engine failure. 1

Lubricating oil creates a separating film between surfaces of adjacent moving

parts to minimize direct contact between them, decreasing heat caused by

friction and reducing wear, thus protecting the engine. In use, motor oil

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. In

petrol (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 the

oil to temperatures over 600 °F (315 °C). Motor oils with higher viscosity

indices thin less at these higher temperatures.2

1.1 Conceptual Framework

Chart 1: Conceptual Framework of Purchase Decision

2.0 The Problem Statement

1 http://en.wikipedia.org/wiki/Motor_oil 2 Klamman, Dieter, Lubricants and Related Products, Verlag Chemie, 1984

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PURCHASE DECISION

PURCHASE DECISION

Mechanics Recommend

ation

Mechanics Recommend

ation

Brand Awareness

Brand Awareness

The problem of this study is to evaluate the key factors or components that

influence the purchase of lubricants by the consumer. The result gained can

assist company to decide on how to market and target the product. This will

also help to promote the correct product placement at the right time and at

the right place to the correct person.

3.0 The Research Objectives

Specifically, this study is seeking input to the following questions:

1. To choose the key components that affects the overall purchase of

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. To assist the lube marketing manager on which are the four main

components that can boost the sales of the company.

This research will also help companies to evaluate the information whether

the product are meeting customer’s expectation and influence the mind of

customer in purchasing lubricant. This study would help them to develop

and enhance the services provided to the consumers.

4.0 Literature review

4.1 Brand Awareness

Brand awareness is the consumer’s ability to identify a brand under different

conditions (Keller, 2003). This is the factors which can expose or destroy the

brand. When a cue or special word is mentioned, the customer must be able to

recall the specific brand. This is known as brand recall. The minimum of brand

awareness 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 is

able to recall the brand by referring to any other cue about the brand. (Ross

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and Harradine, 2004). Although the brand name is not provided, the fact that

they can recall the name implies that the brand has a very strong position in

their mind. This is called brand awareness. The first-named brand in an

unaided recall thus represents the highest level of brand awareness (Laurent,

1995; Mariotti, 1999). When repeated exposure to the brand is done, the

familiarity 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 the

power 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 by

providing trust, consistency or a set of promises and a reduction of risk ; fulfill

a 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 brand

is not part of the consideration set is unlikely to be chosen (Mowen and Minor,

2001).

According to Woodside and Wilson(1885), there exists a relationship between

brand awareness and purchase decision. When the customer recalls the brand

easily in an unaided situation, the intention to purchase is higher and the

purchase is more likely. Usually brands which are at the top of the mind have

the highest possibility of purchase. The decision-making process is further

simplified by a brand’s associated with quality (Vranesevic and Stancec, 2003).

The usual consumers perception of brand is based on the belief that when the

consumer is familiar with the brand, the organization must have spent heavily

on advertising. If the organization spends a lot on advertising, it must have

good profits which mean that many consumers are satisfied with the product;

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therefore the product must be good, especially in brand awareness familiarity

has a great impact of a brand. (Macdonald and Sharp, 2003).

4.2 Price

When consumer decides on purchase of the engine lubricant, one of the major

factors affecting the purchase is pricing. This pricing is tailored according to

the class and standards of reliability. When the price is not set to include the

marginal cost and the price does not reflect the actual cost of production, it

will not influence the customer to purchase the optimal quantity. When this

price-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 is

obviously is different (Boronico et al., 1995; Crew and Kleindorfer, 1993).

Colvin et al. (1992) argues that lubricants producers should reconsider their

methods of pricing because of the current market trend of growing capital

required for brand products. The reliability also affects the margins for the

product since consumers usually choose a product based on the reliability.

(Chen,1984). None of early records of oil and gas industry considers the

reliability.

4.3 Place of Purchase

Most consumers want an easy and accessible place to purchase the products.

When the service at the outlet is good, they will return to make more

purchases. As stated by Levesque and McDougall, 1996, p. 14), satisfaction is

and overall customer attitude towards a service provider. If what the customer

receives is different from what they anticipate then there will an emotional

responds to this(Zineldin, 2000). A similar response is given by Gerpott(2001)

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who proposes that satisfaction is based on a customer’s estimated experience

of the extent to which a provider’s services fulfill his or her expectations.

When customers are satisfied, this brings many benefits. Satisfied customers

are less price sensitive, usually buy additional products, are less influenced by

competitors and stay loyal longer (Zineldin, 2000). Although customer

satisfaction is important, it is not equally important to all the customers. There

are two types of customers. The first do not fall into the service of the

company, while the second are customers who are crucial to the company’s

existence. 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 satisfying

customers is met.(Bhote, 1996). Convenient for the customer can be defined

as “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 the

first four being emotional-cognitive convenient constructs, and the last two

being behavioral intentions (Stauss et al., 2001). This research focused of third

components that affect the purchase of lubricants at Central Region. It is

investigated that the component of convenient when purchase oil lubricants

difference in the mind of consumers that effecting of lube purchase oil among

the Malaysians.

4.4 Mechanics Recommendation

One of the important influences of purchase decisions especially for engine

lubricant are the mechanics. This is stated as “A decision making process

carried out by individuals in interaction with other people, in the context of

formal organization.”(Webster and Wind, 1972). The overall purchasing

behavior of consumers can be affected by mechanics recommendation. These

factors can be defined as variables which relate directly to the buying task,

whereas non-task variables are those that extend beyond the buying problem,

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variables that may influence the individual decision maker(s), such as emotion,

personal goals and internal wants.

(Rui da Silva, Gary Davies, Pete Naudia, 2003). Sheth’s (1973) model states a

generic 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 precipitate

joint or group decision making among the individuals involved, and the

inevitable conflict among the decision makers and how it is resolved through

resorting to a variety of tactics. According to Rui da Silva, Gary Davies, Pete

Naudia, 2003 conclude that consumer buying is influenced by experts

(Mechanics) and personal characteristics. The way they buy will be affected by

other factors such as context and organization. In our study we are particularly

interested in component of experts like mechanics that affects the purchase

lubricants.

5.0 The Research Methodology

To evaluate and categorize elements of the group factors which are significant

to the influence of purchasing the engine lubricant within Klang Valley, the

following research methodology was utilized in the study.

5.1 Sample and Data collection Procedure

This research is based on causal research. The company will make decisions

based on assumed causal relationships. This is a descriptive research design

and survey. Data was collected from a sample of consumers. Survey forms

were 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 to

the office every day from the private and public sectors. The respondents

comprised of 37 consumers. The demographic and frequency of the

consumers are summarized in Table 1.

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As it’s shown there about 65% of the consumers participated in the study were

male while 35% were female. Also greater percentages of consumers were

between 25 to 30 years old. All of them stay in the city of Klang Valley. About

50% of all the consumers annual income is between RM 36,001 to RM 72,000.

5.2 Questionnaire and Analysis

To determine the job satisfaction of the professional workers, a questionnaire

comprising four main factors that can influence the purchase decision in

buying 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 Location

Respondents were asked to indicate the factors influencing the purchase of

Engine Lubricant by consumer who drives within Klang Valley. Respondents

were 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 5

signifies 1 – “Strongly Disagree”, 2 – “Disagree”, 3 – “Neutral”, 4 – “Agree” and

5 – “Strongly Agree”. The elements were formulated based on the common

influences of purchase decision by consumers.

This research is a quantitative study where the researcher discovers the

different factors influencing the Engine Lubricants purchased respectively. The

quantitative study in this research is about interpreting the data in the form of

percentages. The data was analyzed using SPSS software.

5.3 Hypothesis

Based on literature review, hypotheses were developed as below:

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H1: There will be positive relationship between Brand awareness and Purchase decision

H2: There will be positive relationship between Mechanic recommendations and Purchase decision

6.0 Data Analysis

6.1 Demographics of respondent

Table 1.0 shows the detailed analysis on the respondents’ backgrounds.

Majority of the respondents were male with 65.0%. It is noted that

respondents with annual income of 36,001 – 72,000 are the majority with

50% of total followed by respondents who have worked for estimated 2-3

years.

Table 1: Respondents’ Demographic Information

Frequency PercentGender

Male 26 65.0Female 14 35.0

Ethnic GroupMalay 21 52.5Chinese 7 17.5Indian 10 25.0

Income Level (RM)< 18,000 3 7.518,001 – 36,000 6 15.036,001 – 72,000 20 50.072,001 – 144,000 9 22.5>144,000 2 5.0

Age

18 – 25 Years Old 5 12.525 – 30 Years Old 17 42.531 – 35 Years Old 10 25.036 – 40 Years Old 3 7.541 – 45 Years Old 4 10.0

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46 – 50 Years Old 1 2.5Length of Service

>1 year 1 2.52 to 3 Years 6 32.54 to 7 Years 4 20.08 to 10 Years 8 20.011 to 15 Years 3 25.0Total 40 100.0

6.2 Influences between Age and Purchase Decision

Chart 1: Respondents’ Age Profile

Table 1.1 indicates the respondent’s age profile. The Age 25 – 30 years has

the highest frequency while age 46 – 50 represents the lowest with only

2.5% since most of them seldom drive to work anymore. Generally, most of

them were professional workers and lots of them have their own driver

already, hence they did not drive to office.

6.3Reliability Analysis

 Cronbach'

s AlphaN of

ItemsMean

Variance

SD

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Brand Awareness0.450 6 19.275

011.230 3.3511

4Mechanic Recommendations

0.762 5 19.0500

15.536 3.94156

Purchase Decision0.682 6 18.550

011.177 3.3431

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Place of Purchase0.687 2 11..92

506.892 0.2625

20Table 2: Reliability Analysis

Table 2 shows the result of validity and reliability analysis for

measurement scales. It was shown that only one research variables

exceeded the acceptable standard of reliability analysis, Cronbach’s

alpha of 0.70. These statistical analyses confirm that measurement

scales have not measured the same constructs and does not met the

acceptable standard of construct validity and reliability analysis.

Aa.Predictors: (Constant), Recommendation, Brand_Awareness

Model Summary

Model R

R

Square

Adjusted R

Square

Std. Error

of the

Estimate

Change Statistics

R Square

Change

F

Change df1 df2

Sig. F

Change

1 .423a .179 .134 3.66748 .179 4.024 2 37 .026

ANOVAb

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Model

Sum of

Squares df Mean Square F Sig.

1 Regression 108.236 2 54.118 4.024 .026a

Residual 497.664 37 13.450

Total 605.900 39

a. Predictors: (Constant), Recommendation, Brand_Awareness

b. Dependent Variable: Purchase_Decision

Coefficientsa

Model

Unstandardized

Coefficients

Standardize

d

Coefficients

t Sig.

Collinearity Statistics

B Std. Error Beta Tolerance VIF

1 (Constant) 8.167 3.914 2.086 .044

Brand_Awa

reness

.237 .198 .191 1.198 .239 .877 1.140

Recommen

dation

.373 .188 .316 1.989 .054 .877 1.140

a. Dependent Variable: Purchase_Decision

Correlations between brand awareness and consumer decision to buy that brand

due to influences from brand awareness and mechanics recommendation.

Correlations

  1 2 3

     Brand_Awaren

essRecommendat

ionPurchase_Decisi

on1 Brand_Awarene

ssPearson Correlation

1 .351* .301

Sig. (2-tailed)   .027 .059

N 40 40 40

2 Recommendation

Pearson Correlation

.351* 1 .383*

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Sig. (2-tailed) .027   .015

N 40 40 40

3 Purchase_Decision

Pearson Correlation

.301 .383* 1

Sig. (2-tailed) .059 .015  N 40 40 40

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

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7.0 Results and Conclusion

The results of the study show that the only the Mechanic’s

Recommendation variable to be above 0.7. The rest are all unreliable

data since they fall below 0.7. The significant value of 0.59 shows

that brand awareness plays a big role influencing the consumer’s

decision.

On the other hand, value of 0.027 for mechanics’ recommendation

show that this does not influence the purchase decision. Purchase has

a positive correlation with lube brand, trusted mechanic and

convenience place of purchase. However it has a negative correlation

with price. This is shown in the Pearson correlation. Lube brand is

important and has the highest positive correlation with purchase from

trusted mechanics.

Price also has the highest correlation with the purchase from trusted

mechanics. Convenient place of purchase has the highest correlation

with purchase from the trusted mechanics. The one-tailed significance

displayed that there is a significant correlation between lube brand and

mechanic and price and purchase from mechanic. Based on the study,

consumers feel that the most important factor in deciding the purchase

of lubricant is the lubricant brand. Secondly, mechanic is also a major

influence 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 their

marketing to create a better brand awareness for their brand. As such

targeted advertising and promotions is important to increase the

awareness thus increase the purchase of lubricant. Since mechanic

play an important therefore emphasis should also be given by

encouraging the mechanics to promote the brand. Perhaps incentive

should be given to mechanics to promote the brand.

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Since convenient place of purchase is not the main factor therefore it

doesn’t affect much on purchasing. Lubricant can be sold in all outlets

and motorist does not decide the purchase merely on convenience

place of purchase. (this can be expanded further once the analysis is

completed)

7.1 Future Research

1. Introducing mediating variable such as family advice, car

manufacturer’s recommendation.

2. The scope of survey should be more concentrated on motorists

who are the actual consumers of engine lubricant oil. This will

give a better representation of the survey group and much more

accurate results.

3. The questionnaire should be more specific in terms of finalizing

the actual representative data to be more accurate and

significant for the intended objective.

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8.0 References

Ahmad Jamal & Mark M. H. Goode, “A Study of the Impact of Self-image Congruence

on Brand Preference and Satisfaction” , Cardiff Business School

Corinne Gangloff, “Lubricant Growth Forecast”, Freedonia Group, Inc.,

Erik L Olson & Hans Mathias Thjomoe, “The Effects of Peripheral to Information on

Brand Preference”, Journal of Norwegian School of Management, Sanvika, Norway.

INTERNET, “Motor Oil”at http://en.wikipedia.org/wiki/Motor_oil, Accessed at

07012011.

Klamman, Dieter, Lubricants and Related Products, Verlag Chemie, 1984.

Macdonald, E., Sharp, B., “Management perceptions of the importance of 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 Image Development, Journal of

Product and Brand Management Vol 4 No 4 1995 pg 23-34

Zineldin M.& Jonsson P., “An examination of the main factors affecting trust/

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commitment in supplier-dealer relationship: An empirical study of the Swedish wood industry”, The TQM Magazine, Vol.12 No.4 2000, pg 245 – 265

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