CHAPTER I

INDRODUCTION

The basic objective of any marketing program is to persuade consumers to choose a particular
option over many other alternatives available in the market. To achieve this objective, it is very
important to know about the consumer decision-making process involving pre-purchase
information seeking and the integration of information to arrive at a final purchase decision.

Consumer behaviour involves the psychological processes that consumers go through in

recognizing needs, finding ways to solve these needs, collecting and interpreting information,
making plans and implementing these plans, making purchase decisions, and engaging in post-
purchase behaviour (Kumra R. 2006). Because the development of effective marketing plans and
strategies for any market rests on a proper knowledge of how consumers go about making
purchase decisions,

Several theoretical models have been developed that describe how consumers make decisions for
high-involvement goods (Bettman, 1979; Engel et al., 1982; Howard & Sheth, 1969).

These models of consumer decision-making processes postulate that for high-involvement goods
(like cars), consumers in general are likely to engage in extensive pre-purchase information
seeking and develop a choice set out of several alternatives by using rational decision criteria and
rules. These models assume that consumers possess some prior knowledge about the product
markets because of ongoing search, past purchase experience, diffusion of information from
other buyers, the presence of many alternative sources of information, the availability of many
models and brands, well-developed choice criteria, and a certain degree of education to engage in
information search and evaluation of alternatives to make an optimum choice.

1.1. Background of the Study

In Nepal, especially in urban areas, the adoption of many high-involvement goods such as
automobiles (cars and motorcycles), televisions, home appliances, furniture, and others seems to
be growing. Although no data is available about their adoption rates, the growing traffic,
increasing demand for furniture, and growing numbers of video libraries are some indicators of
the increasing adoption of high-engagement products in Nepal. The present study is going to deal
with the purchasing behaviour of car-buying consumers in Nepal. In the present thesis, we try to
find out the decision-making patterns of car-purchasing consumers in Nepal. The consumers
selected for the study are recent car owners, i.e., people who purchased cars within the last year.
Since cars are expensive and people purchase either a new one or a used one, both new and used
cars are used for collecting data in the present study.
Cars are denoted as high-involvement products because their purchase is expensive and they
carry the risk of emotional consequences if a mistake is made. According to Neil Kokemuller, a
high-involvement purchase exists when a consumer must buy a product or service that is
expensive or that poses the risk of significant emotional consequences if a mistake is made.

Unlike in the past, consumers have some options to choose from, resulting in competition among
retailers.

Thus, the knowledge of marketing in general and consumers’ decision-making processes for
high-involvement goods are gradually becoming competition in the market.

Nepal is a small country with a high population. The area of Nepal is 147,181 square kilometres,
with a population of more than 30 million. It is situated in the lap of the Himalayas. The financial
status of the country is growing with an increasing standard of living. The use of private vehicles
is increasing day by day. The number of car-buying consumers is increasing, especially in

Kathmandu is the capital city of Nepal. According to the data of the Transportation Management
Department, more than 160,000 cars have been registered in Kathmandu to date. More than 20
different brands and 50 models of cars run on the streets of Kathmandu. The first car introduced
in Nepal was the 1938 Mercedes-Benz, which was bestowed by Adolf Hitler on the late King
Tribhuwan in 1940. The car was then carried by 100 people, as there was no road access to
Kathmandu Valley. (Kumar 2015).

How applicable are the models of consumer decision-making behaviour developed in Western
countries for understanding consumer decision-making behaviour in the context of a developing
country such as Nepal?

The model of consumer behaviour is inductively derived based on research studies in a very
different context. Because of the different characteristics of the products, markets, and
consumers in Nepal, the applicability of these models to the Nepalese market environment has
become an important research question. Unfortunately, research aimed at understanding
consumers’ decision-making processes is virtually non-existent in Nepal. Although there may be
a few proprietary market research studies conducted to solve specific problems for individual
organizations, the results of such research are not available to the public. Besides, this kind of
research may have very little to do with the consumer decision-making process in general. In the
absence of research in this area, researchers are forced to make assumptions about the way
Nepalese consumers make purchase decisions, which may not be valid. Due to the lack of
empirical work in this area, marketers also must assume the validity of decision models
developed elsewhere while developing their marketing plans and strategies. In the absence of an
"indigenous model", it is anybody's guess how robust these models are at capturing the consumer
decision-making process in Nepal or other undeveloped markets.

1.2. Statement of the Problem

In Nepal, vehicle importers are facing tough competition. Most of the importers are launching
ambitious marketing strategies in the market.

With more than a dozen automobile brands operating inside Nepal, people, especially
consumers, find it very difficult to make the correct choice of automobile.

Consumers are sometimes unclear about which brand to choose and which to reject. The
consumer buying process is complex, and a number of factors play an important role in deciding
about a certain brand.

Nepal is a mountainous country, due to which it is difficult to deliver the product to the
destination at the right time. So the importance of transportation is very high. Generally, in
Nepal, trucks, lorries, and tankers are used to carry goods from one place to another.

Due to the mountainous terrain, it is difficult to build roads, railway tracks, and airports in Nepal.
It is costly to construct roads and railway tracks in the hills. Besides, Nepal doesn't have enough
budget to construct the road and railway track on the hill.

The major problems encountered by car-buying consumers in Nepal are:

1. Nepalese people, due to the expensive price, cannot afford cars with 225% customer duty
imposed, which makes the cost very high.
2. The maintenance cost of a car is very high due to expensive spare parts in Nepal, the
continuous increase in oil prices, and the yearly tax policy of Nepal on automobiles.
3. Middle-class people cannot afford to buy cars due to their very high prices as compared
to our neighbouring countries like India, where the price of cars is much lower compared
to Nepal.
4. Due to the mountainous terrain, it becomes very difficult to supply goods from one place
to another.
5. Due to political and government policies, it is very difficult to import some other major
brands into Nepal.
6. After-sales service is not so satisfactory for car-buying consumers as per the promises
made by brands in Nepal, which impacts the consumer's perception of the brand.

1.3. Objective of Study

Understanding consumer behaviour is complex and requires a continuous effort of investigation
and exploration by consumers. In Nepal, knowledge of marketing in general and the consumer
decision-making process for high-involvement goods is gradually becoming essential, and
people know its value too. As of today, no study or research with such specific majors and
factors has been properly studied and how these different factors like economic, psychological,
functional, and environmental have impacted the consumer in their decision-making process.
Purchasing a car in Nepal is not affordable for the people, so this study will definitely help to
give an idea about the car’s market and their strategy, as well as help to strengthen that part, and
will assist if anyone wishes to carry it out.

 Evaluate and understand the factors that affect the buying behaviour of consumers in the
automobile sector.
 Analyse the decision-making process of the consumer while purchasing the brand.
Understand the profile of the car consumer.
 To analyse the information used by the consumer in the decision-making process.
 To study the consumer’s satisfaction level in terms of different attributes of their current
vehicle.
 To identify the profiles of consumers of a specific brand.
 To understand all the important factors, i.e., economic, psychological, functional, and
economic, and how they impact the purchase decision in the Nepalese market.

1.4. Significance of the Study:

The findings of this study are likely to be useful to several groups of people who are directly or
indirectly concerned with the diffusion of knowledge about products or markets. Specifically,
this study is likely to be useful to the following groups of individuals:

1) To the marketers: Marketers are concerned with the development of an effective marketing
program and strategy to persuade the prospective buyer to choose a particular product and brand.
In pursuit of these objectives, this study is likely to provide valuable input, especially in the area
of communication strategies.

2) To the Academicians and Researchers: Academicians and researchers are basically concerned
with understanding how consumers make buying decisions. In the absence of any study on
consumer decision-making processes, academicians and researchers need to rely on their
assumptions about the ways consumers make decisions and the models developed in different
contexts. This study of its kind in Nepal is likely to provide the foundation for basic research on
consumer buying behaviour for high-involvement goods in Nepal.
3) To the Public Policy Makers: Public policy makers are concerned with protecting consumers'
interests in the marketplace. In Nepal, this objective becomes even more important than in
developed countries due to the low level of consumer knowledge and the absence of independent
agencies that provide objective information. Knowledge of the extent of pre-purchase
information seeking and decision criteria consumers use will obviously help policymakers
develop a consumer-friendly model.

4) To the car-buying consumer: It will give an idea and prior knowledge about the type of
customer in Nepal and also give them an idea of the most important factors among all the factors
provided to be most important while purchasing a car in Nepal, as well as which brand is better
for the purchase decision and suitable for their family and individual.

 Research question and hypothesis:

1.5. Research Questions

Any kind of research work is accomplished to answer certain questions. In this case, the research
questions will be as follows:

 What patterns of decision-making strategies do consumers develop while making car

purchases in Kathmandu?

 To what extent do consumers seek pre-purchase information?

 What are the criteria for making a purchase decision, and what are the circumstances for
the evaluation of alternatives?

This is to help managers understand the decision process and then make quick reactions to
influence consumers purchasing decisions.

1.5.1. Research Purpose:

The purpose of this thesis is to understand the decision process and identify the most important
attributes of a car.

1.5.2. Hypothesis

H01: There is no significant positive impact of economic factors on car purchasing behaviour.

H02: There is no significant positive impact of psychological factors on car purchasing

behaviour.
H03: There is no significant positive impact of functional factors on car purchasing behaviour.

H04: There is no significant positive impact of environmental factors on car purchasing

behaviour.

1.6. Operational definition and assumption:

This section deals with the operational definition of the variables that have been used in this
study. The study attempts to measure or investigate the impact of different independent factors
like economic, psychological, functional, and environmental on car purchasing behaviour in
Kathmandu Valley. The brief discussion on how these variables have been used or interpreted in
this study is as follows:

Dependent variables: The variable whose value is derived from the value of another variable is
the dependent variable. The dependent variable represents the output or outcome whose variation
is being studied. Here, the car purchasing behaviour in Kathmandu is the dependent variable
against which we analysed all the data. We wanted to know what various factors affect this
dependent variable.

 Consumer Buying Behaviour: Consumers buying behaviour has to do with their

attitude, intention, preference, strength of commitment, and ways of identification
(Söderlund, 2001). Consumers buying behaviour can also be referred to as the buying
behaviour of the final consumer. In our case, we have monitored car purchasing
behaviour, which serves as our dependent variable, against which various impacts of
independent variables have been monitored in the context of Kathmandu Valley.

 Marketing: The market is the place where buyer and seller meet and function, goods and
services are offered for sale, and ownership transfers occur. (Philip Kotler and Gary
Armstrong, 1999) "A market will be defined as people with needs to satisfy, money to
spend, and the willingness to spend it. Thus, in the market demand for any given product
or service, there are three factors to consider: market = people with needs or wants +
money to spend plus willingness to spend it." (Etzel, M.J.; Walker; Stanton, W.J., 1997)
"Marketing is a social process by which individuals and groups obtain what they need
and want through cresting, offering, and freely exchanging products and services of value
with others." (Kotler P., Marketing Management: Analysis, Planning, and Control, 1998).
 Consumer Behaviour: Consumer behaviour can be defined as "the process and activities
people engage in when searching, selecting, purchasing, using, evaluating, and disposing
of products and services so as to satisfy their needs and desires." (Belch, G.E.; Belch,
M.A., 2004).
Independent Variables: The independent variable is the variable the experimenter manipulates
or changes and is assumed to have a direct effect on the dependent variable.

 Economic Factor: This is one of the very important independent factors that impact the
consumer's purchasing decision when purchasing a car. It has included several variables
that are combined to form an economic factor, and they are as follows:

a) Price of the car: This is the most important and short-term factor that will cling to the
mind of the customer while purchasing the car. As we can see, the price of the cars is
very costly, so it is most obvious that this factor will surely be considered while the
consumer makes the purchase decision.
b) Brand: A brand is "a name, term, sign, symbol, design, or combination of these that
identifies the makers or seller of the product or services". A brand is a name that has the
power to influence a buyer. The influence could be a result of a set of mental associations
and relationships built up over time among customers or distributors.
c) Fuel Consumption: It is the most important and relevant variable that the consumer
looks at while purchasing a car, especially in Nepal, because the road in the Kathmandu
valley is sloped and the price of fuel is increasing day by day in the context of Nepal.
Fuel consumption will be an important factor for the customer when buying a car in the
Kathmandu Valley.
d) Maintenance Cost: When you purchase a car, your work is not over yet. It is the
beginning of the purchasing journey, so the customer will have focused on the cost they
have to bear on the spare parts while any damage occurs to the vehicle, which can be very
high as per what the particular brand is offering to the customer, and even other facilities
like free servicing and repair of damage up to a certain point in time.
e) Location: It is also one of the most important factors considered in the context of Nepal,
and as you know, Nepal is a mountain country where transportation is not so good and
even more expensive as the agencies have to manage a lot of headaches and burdens
cross-border before bringing the product to Nepal, which involve a lot of extra costs like
transportation expenses, government expenses, and other extra expenses they have to
bear to bring it from the cross-border of India to Kathmandu Valley.
f) Availability of spare parts: This is an important factor that impacts the consumer's car
purchasing decision in the context of Kathmandu Valley. As we know, most of the major
brands of cars are imported from India, so the spare parts, i.e., those brought to Nepal, are
expensive, and there are chances of duplicity and the sale of duplicate spare parts at a low
cost, so the customer must be vigilant and collect information from various sources about
the brands to make the purchase decision for them more simplified and easy.

 Psychological Factor: This is one of the very important independent factors that impact
the consumer's purchasing decision while purchasing a car. It is mainly concerned with
the attitude and belief toward the particular product and brand, i.e., mainly caused by
 family, friends, and influencers, which have an impact on our psychological thoughts
when making purchase decisions. It has included several variables that are combined to
form an economic factor, and they are as follows:

a) Friends and Family Motivation: This is the most important independent variable that
impacts the consumer's mind and results in their purchase decision. If the friends and
family own the car of the particular brand, they can recommend it to them, whether the
particular brand of their choice is wrathful or not, as per their requirements and demands
like safety, performance, design, and so on.
b) Perception: Perception plays a crucial role in decision-making as it forms the foundation
for our understanding of the world and shapes our thoughts, beliefs, and attitudes. Our
perception is influenced by a variety of factors, including our past experiences, cultural
background, personal biases, and the information available to us. It helps us filter and
process the vast amount of information we encounter, enabling us to make sense of
complex situations and make informed choices.
c) However, perception is not always an accurate representation of reality. It can be
subjective, as different individuals may perceive the same information differently based
on their unique perspectives and cognitive biases. These biases can lead to errors in
judgment and decision-making. For example, confirmation bias, where we seek
information that confirms our existing beliefs while disregarding contradictory evidence,
can distort our perception and hinder rational decision-making.
d) Attitude and belief towards a brand: Attitudes and beliefs towards a brand play a
significant role in the decision-making process of consumers. When making purchasing
decisions, individuals often consider their attitudes and beliefs about a brand as they
evaluate its perceived value, quality, and relevance to their needs and desires. Here's a
closer look at how attitudes and beliefs influence decision-making:

 Brand Preference: Positive attitudes and beliefs towards a brand can lead to brand
preference. Consumers who have favourable perceptions of a brand are more likely to
choose it over competitors when making purchase decisions. For example, if someone
believes that a particular brand consistently offers high-quality products and aligns with
their values, they may have a positive attitude towards that brand and be more inclined to
choose it over others.
 Perceived Value: Attitudes and beliefs shape consumers' perceptions of the value a brand
offers. A positive attitude towards a brand can create the perception that its products or
services are worth the price. On the other hand, negative attitudes or doubts about a
brand's quality or reputation can lead consumers to perceive it as overpriced or lacking
value.
 Trust and loyalty: attitudes and beliefs influence consumers' trust in a brand. If
individuals have positive attitudes towards a brand, they are more likely to trust its
promises, rely on its products or services, and become loyal customers. Trust and loyalty
 are often built over time through consistent positive experiences, effective branding, and
meeting customer expectations.
 Word of Mouth and Recommendations: Attitudes and beliefs also influence consumers'
likelihood of sharing their experiences and recommending a brand to others. If
individuals have a positive attitude towards a brand, they are more inclined to engage in
positive word-of-mouth, share their experiences on social media, and recommend the
brand to their friends, family, or colleagues. These recommendations can influence
others' decisions and contribute to brand growth.
 Emotional Connection: Attitudes and beliefs can create emotional connections with a
brand. Brands that successfully align with consumers' values, aspirations, and lifestyles
can evoke positive emotions and build stronger connections. Emotional attachments can
play a significant role in decision-making, as consumers may prioritize brands that make
them feel good or resonate with their personal identity.

It's important to note that attitudes and beliefs can be influenced by various factors, including
personal experiences, marketing and advertising efforts, brand reputation, social influences, and
cultural background. Marketers often aim to shape and influence consumer attitudes and beliefs
through branding strategies, advertising campaigns, product positioning, and customer
experiences to positively impact consumers' decision-making processes.

 Functional Factor: Functional factors in decision-making refer to the practical and

utilitarian aspects that influence individuals when making choices. These factors are
primarily concerned with the functionality, features, performance, safety, design, and
other benefits of a product or service. Here are some key functional factors that can
influence decision-making:

a) Performance: Performance refers to how well a product or service delivers the

desired outcomes or solves a problem. Consumers consider factors like efficiency,
effectiveness, speed, accuracy, and reliability when assessing performance. Positive
experiences and recommendations related to a product's performance can positively
influence decision-making.
b) Safety and Reliability: Consumers prioritize safety and reliability when making
decisions, especially when it comes to products or services that can have an impact on
their well-being or that of others. Assurance of safety standards, certifications,
warranties, and a reputation for reliability can influence decision-making.
c) Exterior design: Exterior design can be an important factor in decision-making,
particularly when considering products such as cars, homes, or consumer electronics.
Here's how exterior design can influence decision-making:

 Aesthetics and Visual Appeal: The exterior design of a product can evoke immediate
emotional responses and attract attention. Consumers are often drawn to products that
 have an appealing and visually pleasing design. Aesthetics can play a significant role,
especially for products where the external appearance is highly visible or reflects
personal style and taste.
 Brand Identity and Image: The exterior design of a product can reflect the brand's identity
and image. Companies often invest in creating a distinctive and recognizable design
language that sets their products apart from competitors. Consumers may choose a
product based on their affinity for a particular brand's design philosophy or their
perception of the brand's values and status.
 Functionality and Ergonomics: Exterior design can influence the functionality and
usability of a product. Design elements such as the shape, form, and placement of
buttons, controls, and interfaces can impact ease of use and the user experience.
Thoughtfully designed exteriors can enhance functionality and make products more
intuitive and user-friendly.
 Symbolism and Signalling: The exterior design of a product can convey symbolic
meaning and signal certain qualities or attributes. For example, sleek and aerodynamic
car designs may signal speed and performance, while clean and minimalist home designs
may signal simplicity and modernity. Consumers may be attracted to products that align
with their desired symbolic associations.
 Social Acceptance and Trends: Exterior design can be influenced by prevailing trends
and social norms. Consumers may choose products with designs that are currently
popular or considered fashionable to feel socially accepted or keep up with the latest
trends. Design trends often emerge and evolve in response to changing consumer
preferences and cultural shifts.

 Differentiation and Uniqueness: Exterior design can differentiate a product from its
competitors. Unique and innovative design elements can make a product stand out in a
crowded market, capturing consumers' attention and curiosity. Uniqueness in design can
be a compelling factor for those seeking a distinctive or exclusive product.

d) After-sales service: After-sales service refers to the support and assistance provided
to customers after they have made a purchase. It encompasses various activities
aimed at ensuring customer satisfaction, addressing issues or concerns, and
maintaining a positive relationship with the customer. After-sales service can
significantly influence decision-making in the following ways:

 Customer Support and Assistance: The availability of reliable and responsive after-sales
service can install confidence in consumers when making a purchase. Knowing that there
is a dedicated support team or customer service hotline to address any questions,
concerns, or problems can alleviate worries and provide peace of mind. Prompt and
effective assistance can positively influence the decision to choose a particular product or
brand.
 Warranty and Maintenance: The warranty offered by a company and the availability of
maintenance services can impact decision-making. Consumers often consider the
duration and coverage of the warranty when evaluating a product's overall value.
Knowing that a product is backed by a warranty and that there are provisions for repairs
or maintenance can increase trust and the willingness to make a purchase.
 Product Knowledge and Training: After-sales service may involve providing product
knowledge and training to customers. This can be particularly relevant for complex or
technical products. Consumers appreciate support in understanding how to use the
product effectively, troubleshoot common issues, or unlock its full potential. The
availability of training resources, user manuals, online tutorials, or in-person
demonstrations can positively influence the decision to purchase a product.
 Repair and Replacement Services: The availability of repair or replacement services can
be a crucial factor in decision-making, especially for products with a longer lifespan.
Consumers consider the ease and accessibility of repair services as well as the cost
implications. Knowing that a company offers reliable repair options or has a policy for
product replacement in case of defects or failures can increase confidence in the purchase
decision.
 Customer Feedback and Satisfaction: Positive after-sales service experiences shared by
existing customers can influence the decision-making process of potential buyers.
Consumers often rely on reviews, testimonials, or recommendations from others to assess
the quality of a company's after-sales support. High levels of customer satisfaction and
positive feedback can build trust and contribute to the decision to choose a particular
product or brand.
 Long-Term Relationship Building: After-sales service is an opportunity for companies to
build long-term relationships with customers. By providing exceptional support and
going above and beyond to address customer needs, companies can foster loyalty and
repeat business. Positive experiences with after-sales service can lead to future purchases
and recommendations, influencing not only the initial decision but also future decisions.
 Overall, after-sales service is a critical factor in decision-making as it enhances customer
trust, satisfaction, and loyalty. Consumers value the assurance of continued support and
assistance, making it an important consideration when evaluating products or brands.

 Environmental Factor: Environmental factors play a significant role in decision-making

as individuals increasingly consider the impact of their choices on the environment.
These factors encompass various aspects related to sustainability, conservation, and the
overall ecological impact of products, services, and actions. Here are some key
environmental factors that can influence decision-making:

 Sustainability and Eco-Friendliness: Consumers are increasingly concerned about the

environmental sustainability of products and services. They consider factors such as the
use of renewable resources, energy efficiency, waste reduction, recyclability, and the
 overall carbon footprint. Choosing products or services that are eco-friendly and promote
sustainable practices aligns with consumers' values and can influence their decision-
making.
 Environmental Impact: Individuals evaluate the potential environmental impact of their
choices. They may consider the extraction of raw materials, production processes,
transportation, and disposal or recycling methods associated with a product or service.
Opting for options that have a lower environmental impact, such as products made from
recycled materials or services that minimize energy consumption, can be a significant
consideration in decision-making.
 Environmental Certifications and Labels: Consumers look for environmental
certifications, labels, or standards that validate a product's sustainability claims. These
certifications, such as ENERGY STAR for energy-efficient appliances or organic labels
for food products, provide consumers with reassurance and facilitate their decision-
making process. Recognized certifications act as indicators of a product's adherence to
specific environmental criteria.
 Waste Reduction and Recycling: Consumers are increasingly mindful of waste generation
and recycling practices. They may choose products or services that prioritize waste
reduction, offer recycling programs, or use packaging materials that are recyclable or
biodegradable. Decision-making can be influenced by consideration of the entire product
life cycle, including its disposal and potential environmental impact.
 Conservation of Natural Resources: The conservation of natural resources, such as water,
forests, or biodiversity, can be a driving factor in decision-making. Consumers may opt
for products or services that promote responsible resource management, support
sustainable agriculture or forestry practices, or minimize water usage. Choices that
contribute to the conservation of natural resources are often preferred by environmentally
conscious individuals.
 Environmental Policies and Corporate Social Responsibility: Consumers consider a
company's environmental policies and commitment to corporate social responsibility
when making decisions. Companies that prioritize environmental sustainability, engage
in environmental initiatives, or support environmental causes are often viewed more
favourably by consumers. Support for environmentally responsible businesses can
influence purchasing decisions and brand loyalty.
 Environmental Awareness and Education: Increased environmental awareness and
education play a crucial role in decision-making. As individuals become more informed
about environmental issues and their impact, they are more likely to consider these
factors when making choices. Environmental campaigns, educational programs, and
access to reliable information contribute to informed decision-making.
 It's worth noting that the significance of environmental factors in decision-making can
vary among individuals based on their personal values, beliefs, and level of
environmental consciousness. However, the growing concern for environmental
 sustainability has resulted in a broader consideration of these factors across various
industries and consumer segments.

1.7. Organization of the Study

The study has been organized into five chapters. The first chapter includes the introduction of the
study, which contains the general background, statement of the problem research questions,
objectives of the study, hypotheses, the significance of the study, limitations of the study, and the
organization of the study. The second chapter of the study elaborates on the review of other
kinds of literature. It includes reviews of previous writing, studies, and related kinds of literature
that are relevant to the problem being explored, as well as a theoretical framework. The third
chapter includes the research methodology that has been used for the study. It comprises research
design, population and sample size for the study, nature and sources of data, data analysis and
interpretation, reliability and validity of the data, and scales used in the study. The fourth chapter
includes the presentation and analysis of the data that has been collected through the
questionnaire survey. The fifth chapter is the final chapter, which presents the findings of the
study, including the summary, conclusion, and further recommendations.

                 

 
 CHAPTER II
LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK

This section aims to provide literature review on the Car purchasing behaviour in Kathmandu
Valley. A literature review is a critical analysis of a segment of a published body of knowledge
through summary, classification, and comparison of prior studies, review of literature and
theoretical studies. It is divided into three sections. First section consists of review of literature
which gives in depth review of the related studies in context of purchasing behaviour and
different factors that impact on car purchasing decision. This section also provides various
literatures conducted among variables along with the relationships with each other it also deals
with brief review of empirical works in context of Nepal. Second section presents a conceptual
framework of the study. The conceptual framework clarifies how the study is organized and what
various variables have been selected. And, finally the third section presents concluding remarks
on empirical review.
2.1. Literature Review

William C. Johnson and Lieh-Ching Chang of Nova South-eastern University have conducted a
comparative study of car buying behaviour between American and Chinese people living in
North America. According to the study, both American and Chinese consumers prefer Japanese
cars to American cars because of their quality. Cultural differences, attitudes towards the
products, and personality traits influence consumers' purchase decisions (Kolar & Zabkar, 2014).
These differences differentiate American car buyers from Chinese car buyers. The results of the
study suggest that both Chinese and American car buyers prioritize low costs when making their
purchasing decisions. Pre-purchase information seeking is important for car buyers in American
society, and almost all consumers seek out pre-purchase information. The study finds differences
in the pre-purchase information-gathering process. The Americans would like to conduct
research by themselves before purchasing cars, whereas Chinese customers like to take
suggestions from their friends before making a purchase decision. Although both consumers
prefer to rely on their previous experiences, brand image is of high importance (Johnson &
Chang). A similar study was conducted by Furse, Punj, and Stewart (1984), in which the
purchasing behaviour of American car buyers was studied. The results show that almost 81% of
the buyers made purchase decisions based on their previous experience, and 19% of the buyers
were purchase-pal assisted shoppers with less experience and little confidence in their ability to
judge the cars. The level of pre-purchase information seeking was almost out of question for
19% of the car buyers, whereas others used to collect information through advertisements and
personal visits to the dealers. As in the present studies, low cost and mileage were the priorities
for American car buyers, followed by colour, quality, and model. Comparing the studies of
Johnson & Chang and Furse, Punj, & Stewart (1984), the purchasing behaviour of American
consumers seems to remain the same. The tendency to rely on purchase pals before making
purchase decisions seems to be unchanged.

The study of Vietnamese car purchasers (Cuong, 2014) shows that most of the purchasers seek
information from the previous car owners, followed by information seeking over the internet,
referring to family and friends, and visiting the car dealers. The study further shows that
economic aspects, sale services, and after-sale services have a positive effect on car purchasing
decisions. Vietnamese car purchasers usually prefer to choose a car with an affordable price, low
maintenance costs, fuel savings, and a high salvage value. However, the Vietnamese consumers
are unaware of performance factors like maximum speed, engine power, balancing, engine
sound, etc., and safety factors like brakes, air bags, alarm systems, etc. The conclusion shows
that economic aspects and services offered play a more important role than safety and comfort
(Cuong, 2014).

The 2014 global automotive consumer study shows that Gen Y consumers in Europe state
affordability and cost as the top reasons for not owning a vehicle. Gen Y consumers are the
group of consumers that were born during the 1980s and have had access to the latest
technologies ever since their birth. The report thus concludes that 81% of consumers are
interested in buying cars, but the condition is that the vehicles should be cheaper, more fuel
efficient, and have more affordable payment options. The study also shows that the family and
friends of European consumers mostly influence purchase decisions. Among the Gen Y
consumers who participated in the survey, 59% would like to refer family and friends before
making purchase decisions. 49% of consumers rely on car reviews on independent websites, and
42% check manufacturer websites before purchasing cars. News articles and media reviews are
friendly to 40% of Gen Y consumers, while 37% would like to visit the salesperson, and 20%
regard social networking sites as significant in making purchase decisions (Deloitte, 2014).

Although the models of consumer behaviour describe the consumer decision making process for
car purchasing following a certain pattern characterizing extensive information seeking and
evaluation of different alternatives, the review of studies on consumer decision-making indicates
that consumers follow different decision-making strategies. The review shows that only a portion
of consumers seem to confirm the decision-making process described by theoretical models. The
rest of the consumers have been able to develop various kinds of simplified decision-making
strategies. These results should be seen in the context of the product markets where these studies
took place. These studies were conducted using samples from European and American markets,
which are well developed to permit an individual to engage in an extensive search for
information. Many sources of information are available in these markets. Because of the
availability of a large number of alternatives, models, and brands, and a large number of stores
carrying them, information search and evaluation of alternatives become worthwhile in such
markets. The extensive decision-making process is further facilitated by a high level of
education, access to high-speed internet, and previous experiences in advanced countries.
Despite such situations, many individuals seem to prefer a simplified decision-making process.

The characteristics of the market and consumers in Nepal are very different from those of
western countries. In general, the product market in Nepal is characterized by scarcity and
uncertainty in the supply of products. The auto market is very uncertain because of political
instability and road conditions. Besides, the number of car dealers is relatively low. As a result,
consumers usually have very limited choices.

In the qualitative research of car purchasing behaviour in context of Nepal where my data
collection is through questionnaire where no of samples collected where 202 and the studied
period required a lot of understanding of car purchasing customer so it require time and effort
both to make it possible through and by different support of customers and car companies during
my study.

Consumer behaviour is a vast subject with many different aspects. It is not possible to include
each aspect in the study. So, the present study addresses only a few aspects related to the
consumer decision making process. It would be wise to say that a large portion of the consumer
decision-making process remains untouched in the present study. This is qualitative research, and
the main method of data collection is a questionnaire. Different questions are framed together to
form a set of questionnaires. The questions included in the thesis aim to understand the decision-
making patterns of car purchasing consumers in Nepal. The questionnaire is mainly divided into
four parts:

a) Demographic factors: Questions Q1, Q2, Q3, Q4, Q5 and Q6 is all about the
demographic profile of the respondents. It includes several information about the car
purchasing customers like their age group, gender, educational status, occupation, income
level (month wise) and married status respectively.
b) Brand Identification and purchasing behaviour: It has ten questions from 1 to 10 in
the questionnaire which is mostly focused towards the brand of the car and their pre-
purchasing mind set, roles and their pattern of the car purchasing consumers in
Kathmandu valley.
 c) Factor Influencing Car purchasing decision: It has overall four factor i.e. economic,
psychological, functional and environmental factor containing 4 to 5 questions each for
supporting the different factors validity. It contains all the independent variables of our
study which can impact the car purchasing decision of customers in Kathmandu valley.
d) Indicators of car purchasing behaviour: It contains all the questions regarding the
indicators of dependent variable of our study i.e. purchasing decision of the customer.

The questionnaire does not contain a few of the above-mentioned theories, like the temporary
and enduring involvement of decision-making, the cultural and ethnic factors in decision-
making, the Gen X and Gen Y consumers, and the personality traits of the consumers. Moreover,
the theories are related to consumer behaviour, and they are the basis of the present study. The
following chapters discuss more about the methodology used in the present study and the
analysis of the data. The questionnaire does not contain a few of the above-mentioned theories,
like the temporary and enduring involvement of decision-making, the cultural and ethnic factors
in decision-making, the Gen X and Gen Y consumers, and the personality traits of the
consumers. Moreover, the theories are related to consumer behaviour, and they are the basis of
the present study. The following chapters discuss more about the methodology used in the
present study and the analysis of the data.

2.2. Conceptual Framework

The conceptual framework outlines the various independent factors that influence car purchasing
behaviour in Nepal, including economic, psychological, functional, and environmental factors.
These factors collectively shape consumer decisions and ultimately lead to the dependent factor,
car purchasing behaviour. It provides a foundation for understanding the drivers and
considerations involved in the car-buying process in Nepal.

Here is the conceptual framework for car purchasing behaviour in Nepal, based on the provided
independent and dependent factors:

Independent factors are:

1. Economic Factors:

 Price of the car: The price of the car directly influences the car purchasing
behaviour of consumers in Nepal. Consumers consider their budget and
affordability when making a purchasing decision.
 Fuel consumption: Consumers in Nepal are concerned about the fuel efficiency of
cars due to the high cost of fuel. Fuel consumption plays a role in the decision-
making process as consumers aim for cost-effective and fuel-efficient options.
  Location: The geographic location of Nepal can impact car purchasing behaviour.
Consumers may prefer cars suitable for specific terrains or climates prevalent in
their region.
 Maintenance cost: The anticipated cost of maintenance, including servicing and
spare parts, influences the car purchasing decision. Consumers consider the long-
term financial implications of maintaining the car.
 Availability of spare parts: The accessibility and availability of spare parts play a
crucial role in car purchasing behaviour. Consumers prefer cars for which spare
parts are easily obtainable and affordable.

Therefore, these variables like price, fuel consumption, maintenance cost and availability of
spare parts have significant positive relationship in the context of our study and thus economic
factor most be considered to be in mind while purchasing the car in context of Nepal.

2. Psychological Factors:

 Friends and family motivation: Recommendations and experiences shared by

friends and family significantly influence car purchasing behaviour. Positive
feedback or personal referrals can sway consumer decisions.
 Perception: Consumer perception of a car brand's reputation, reliability, and
performance impacts their purchasing behaviour. Strong brand perception may
lead to brand loyalty and influence the decision-making process.
 Attitude: Consumer attitudes, such as preferences for certain features, styles, or
brands, shape their car purchasing behaviour. Personal values and beliefs may
guide their choices.
 Beliefs towards the brand: Consumer beliefs about a brand's quality, safety, and
value proposition play a role in car buying decisions. Trust in a brand's attributes
influences consumer behaviour.

Therefore, these variables like friends and family motivation, perception, attitude, beliefs
towards the brand have significant positive relationship in the context of our study and thus
psychological factor most be considered to be in mind while purchasing the car in context of
Nepal.

3. Functional Factors:
  Safety: Safety features of a car, such as airbags, an anti-lock braking system
(ABS), and electronic stability control (ESC), influence car purchasing behaviour.
Consumers prioritize their own safety and that of their passengers.
 Performance: Consumers consider the performance characteristics of a car,
including engine power, acceleration, and handling, in their purchasing decisions.
Performance-oriented individuals may favour cars with higher performance
capabilities.
 Exterior design: aesthetics and visual appeal impact car purchasing behaviour.
Consumers may prefer cars with attractive exterior designs that align with their
personal style and preferences.
 After-sales service: Consumer perception of a brand's after-sales service,
including warranty coverage, service quality, and dealer network, affects car
purchasing behaviour. Good after-sales service enhances the overall ownership
experience.

Therefore, these variables like safety, performance, exterior design and after sales service have
significant positive relationship in the context of our study and thus functional factor most be
considered to be in mind while purchasing the car in context of Nepal.

4. Environmental Factors:

 Environmental safety: Increasing awareness and concern for the environment

drive car purchasing behaviour. Consumers may prioritize electric vehicles or cars
with lower emissions to minimize their environmental impact.

Therefore, these variables like environmental safety and electric car have non- significant
relationship in the context of our study and thus environmental factor most be considered to be in
mind while purchasing the car in context of Nepal which is can be seen slowly seen to become
significant and people are more approaching towards the electric car. The reason behind this is
people are not interested in electric car earlier was because of geographical structure and
charging channels availability as per the people perception and which will slowly grow and
people in coming days will be more keen toward the electric car if there will proper support from
government in building charging channels in different places of Nepal which will contribute the
environment conservation and safety in Nepal.

Dependent Factor is:

 Car purchasing behaviour: This factor represents the outcome of all the independent
factors mentioned above. It refers to the decision made by consumers in Nepal to either
 purchase a car or not, and the specific make, model, and brand they choose based on their
evaluation of the economic, psychological, functional, and environmental factors.

Figure: 2.1 Conceptual framework showing the relationship between variable

Independent Variables Dependent Variables

Economic Factor

Psychological Factor

 Car Purchasing Behavior.

Functional Factor
The
entire
analysis
and the Environmental Factor
interpretation of this study are based upon two
types of variables, i.e., Dependent variables and
independent variables.

2.3. Research Gap

A research gap refers to an area or topic within a particular field of study that has not been
sufficiently addressed or explored by existing research. It represents a knowledge deficit or a
lack of understanding in a specific area where further investigation is needed to fill the gap and
contribute to the existing body of knowledge.

Identifying a research gap is an essential step in the research process, as it helps researchers
identify areas that have not been adequately studied or understood. By identifying a research gap,
researchers can define the purpose and scope of their study, formulate research questions or
hypotheses, and design research methods to address the gap and contribute new insights to the
field. Some of the major research gaps of the studies are as follows:

1. Limited studies on the Nepalese market: There is a scarcity of comprehensive research

specifically focused on car purchasing behaviour in Nepal. Most of the existing studies
are conducted in developed countries, and their findings may not directly apply to the
unique context and characteristics of the Nepalese market.
 2. Lack of understanding of local preferences: The factors influencing car purchasing
behaviour may vary across different countries and cultures. Nepal has its own distinct
cultural, economic, and social dynamics that may influence consumer preferences and
decision-making. There is a need to explore and understand the specific factors that
impact car purchasing behaviour in the Nepalese context.
3. Limited exploration of economic factors: While economic factors such as price, fuel
consumption, maintenance costs, and availability of spare parts are known to influence
car purchasing behaviour, there is a lack of in-depth research on how these factors
specifically impact the Nepalese market. The unique economic conditions, pricing
structures, and availability of specific car models and brands in Nepal may present
different challenges and considerations for consumers.

Closing these research gaps would provide valuable insights into the specific factors that
influence car purchasing behaviour in Nepal. It would help car manufacturers, dealerships,
policymakers, and marketers to better understand the needs and preferences of Nepalese
consumers and develop strategies to cater to their unique demands in the automotive market.

CHAPTER III
RESEARCH DESIGN AND METHODOLOGY

The research design outlines the overall plan and structure of the study. In the case of
studying car purchasing behavior in Kathmandu Valley, a mixed-methods research design
can be considered, combining qualitative and quantitative approaches. This approach allows
for a comprehensive understanding of the factors influencing car purchasing behaviour and
provides a richer context-specific analysis.
With a view to attaining the overall objective of examining the consumer decision-making
process for purchasing cars in Nepal, this study attempts to identify and analyse pre-purchase
activities performed by Nepalese buyers in Kathmandu valley. In this attempt, efforts are
made to obtain information pertaining to the specific aspects of the decision-making process
from the buyers themselves. In this chapter, a detailed description of the nature of data and
the procedures for collecting and analysing the data is provided.
3.1. Research Design
A research design is a plan for designing the ways to gather and analyse the information
needed. It is a plan developed for designing ways to gather different types of data and
analyse the information needed. The aim of this study was to identify factors affecting car
purchasing behaviour in the Kathmandu Valley as well as new insights that companies may
take advantage of. The survey was carried out in the form of a questionnaire in order to meet
the research objectives. A descriptive as well as casual comparative research design was
carried out for the purpose of carrying out this research. The data were collected through a
survey approach. The data for this research was collected by formulating a set of
questionnaires, which were then distributed to the respondents. The questionnaire was self-
administered. The findings were totally based on the data and facts provided by the sampled
respondent. The software called Statistical Package for Social Science (SPSS) and Microsoft
Excel were used to analyse and interpret the quantitative data.

3.2. Description of Samples

The selection of a sample is a very important part of the research. The population for this study
was the customers within Kathmandu Valley who have their own cars, especially the
businessmen, doctors, and government workers. For accuracy in the result, only those
respondents who had at least one car in their family and government workers who had their own
cars of different brands were selected. The overall survey and study were guided by the
objectives of the study that are set out in the first chapter. The respondents to the research were
those who had been using cars for their daily purposes. As part of the study, it was very difficult
to find car customers because, as you know, the price of the car is so high and not easily
affordable by middle- and low-class people in Nepal. Generally, people of high class who have
their own business, government jobs or who have been well established are my real customers.
So, the level of understanding of the respondents was considered while drawing the sample. The
sample size was 201 respondents, and convenience random sampling was used in this study.
3.3. Data Collection Procedure
Primary data was collected through the preparation of a questionnaire survey and distributed to
respondents to obtain quantitative data. Personal and electronic survey methods were used as
modes of administration. In the personal method, respondents filled out the questionnaire in
physical location as per convenience. I have also visited the previously worked showroom of
cars, i.e., the Pioneer Group company, to collect the email and phone number through which I
can know the actual perception of car purchasing consumers in Kathmandu Valley. Data is
collected by visiting the customers of cars in the Nepal tax office, where questionnaires are filled
out by different car customers. In the electronic method, links to questionnaires were sent to
respondents using the internet as a medium to conduct the survey. After the respondents filled
out the questionnaire following the instructions given in the questions, the responses were
collected for further study.

3.4. Instrumentation of Data Collection

In the initial phase, for the purpose of developing a conceptual framework, the data collection
procedure was secondary. Basically, the secondary sources of data were the internet, books,
journals, newspapers, and articles. Whereas, in the later stage, the primary source of data was
used and analysed for making findings. The major tool used in data collection was a
questionnaire. There were structured questions, including multiple choice questions, single
choice questions, multiple response questions, ranking questions, and five-point Likert scale
questions for data collection.

3.5. Validity and reliability of data:

The main purpose of the validity and reliability analysis is to determine whether data are trust
worthy or not. Validity refers to how well a measurement truly represents characteristics that
exist in the phenomenon being investigated. In order to ensure the validity of the research, the
questionnaire was pilot tested, so that the questionnaire could be refined to assure respondents
won’t encounter problems in answering the questions. For the assurance of external validity,
measures were taken to collect a sample that is as representative as possible. In order to
maximize content validity, a comprehensive literature review has been done in order to grasp the
major variables that can affect the perception of customers in inferring the service quality.
Reliability refers to the correlation of an item, scale or instrument with a hypothetical one which
measures what it is supposed to.
Cronbach’s alpha, α (or coefficient alpha), developed by Cronbach, (1951), measure’s reliability,
or internal consistency. “Reliability is another name for consistency. Cronbach’s alpha tests to
see if multiple-question Likert scale surveys are reliable. These questions measure latent
variables hidden or unobservable variables like: a person’s conscientiousness, neurosis or
openness. These are very difficult to measure in real life. Cronbach’s alpha will tell you how
closely related a set of test items are as a group.
Cronbach’s Alpha Formula
Where:
N = the number of items.
c̄ = average covariance between item-pairs. v̄ = average variance

To measure the validity and reliability of the study, Cronbach’s Alpha was used which measures
the inconsistency of data. The cut-off level of Cronbach’s Alpha is 0.7. Cronbach alpha
coefficient value for this study was 0.889 which is more than 0.7; hence data collected was
considered as the reliable and validated.
3.6. Data Analysis Method:

After the collection of data, all the information was gathered, edited, coded, categorized, and
properly recorded in Microsoft Excel file and SPSS. The data were processed in a systematic
manner so that they would be accurate and consistent in order to meet the research objective.

To analyse and interpret the data, SPSS and Microsoft Excel were used. For the presentation of
data, several tools like tables and diagrams were used. Moreover, other tools like the Chi-square
test, ANOVA test, t-tests, mean, standard deviation, and frequency distribution were carried out
to draw inferences from the collected responses.

3.6.1. Descriptive Statistics

In this research study, some statistical tools are used for the analysis of the data more accurately,
which are given below

Mean

The mean is a statistical tool to calculate the average of the numbers. It is calculated by summing
up all the frequencies and dividing them by the total number. It is the most commonly used tool
in research to analyse and interpret the results.

Standard Deviation

It is also a statistical tool that is denoted by the letter sigma or the Latin letters. It is a measure
that is used to quantify the amount of variation or dispersion of a set of data values. A low
standard deviation indicates that the data points tend to be close to the mean of the set, while a
high standard deviation indicates that the points are spread out over a wider range of values.

3.6.2. Correlation Analysis

The correlation coefficient is the process of studying the strength of that relationship with
available statistical data. It is one of the most common and useful statistics. It is a single number
that describes the degree of relationship between two variables. The data collected from different
sources has been presented in tabular form.

The Pearson correlation coefficient is a descriptive statistic, meaning that it summarizes the
characteristics of a dataset. Specifically, it describes the strength and direction of the linear
relationship between two quantitative variables. It was developed by Karl Pearson from a
related idea introduced by Francis Galton in the 1880s, for which the mathematical formula was
derived and published by Auguste Bravais in 1844.
 Although interpretations of relationship strength vary between disciplines, the table below gives
general rules of thumb:

Table 3.1 Pearson Correlation Coefficient (Rule of Thumb)

Pearson correlation coefficient (r) value Strength Direction

Greater than .5 Strong Positive

Between .3 and .5 Moderate Positive

Between 0 and .3 Weak Positive

0 None None

Between 0 and –.3 Weak Negative

Between –.3 and –.5 Moderate Negative

Less than –.5 Strong Negative

3.6.3. Regression analysis

The Model

Regression is a statistical tool that is used to determine the statistical relationship between two
(or more) variables and to make an estimation (or prediction) of one variable on the basis of the
other variable(s). In other words, regression is a statistical tool with the help of which the
unknown value of one variable can be estimated on the basis of the known value of the other
variable. Regression equation showing the relation between all independent variables and
dependent variables The multiple regressions were as follows:

Y0 =β0 + β1X1 +β2X2 +β3X3 +β4X4 +β5X5 +e

  Where,

Y0= Customer Satisfaction X1= Tangibility

X2= Reliability

X3= Responsiveness X4= Assurance

X5= Empathy e= Error Terms

β0= the intercept on the regression model

β1, β2, β3, β4, β5= Slope of regression coefficient

3.7. Variable and Hypothesis

Dependent Variables: Car purchasing behavior

The dependent variable in this study is car purchasing behaviour in Kathmandu Valley. It refers
to the actions, decisions, and behaviours exhibited by individuals or households when
considering and acquiring a car within the specific geographical context of Kathmandu Valley.

Car purchasing behaviour encompasses a range of activities and choices related to buying a car,
including:

1. Purchase Intention: The intention or inclination to buy a car within a certain timeframe It
reflects the individual's or household's decision to move forward with the car acquisition
process.
2. Brand Choice: The selection of a specific car brand among the available options in the
market It involves factors such as brand reputation, perception, product features, and
personal preferences.
3. Model Selection: The choice of a particular car model within the chosen brand. It
involves considerations such as size, body type (sedan, SUV, hatchback, etc.),
performance, features, and pricing.
4. Purchase Decision: The final decision to purchase a specific car may involve negotiating
the price, arranging financing, and completing the transaction with the car dealer or
seller.
5. Post-Purchase Behaviour: The actions and attitudes exhibited by car owners after the
purchase, such as vehicle maintenance, usage patterns, satisfaction levels, and potential
recommendations or referrals to others.
Understanding car purchasing behaviour in Kathmandu Valley is important for various
stakeholders, including car manufacturers, dealerships, policymakers, and marketers. It provides
insights into the factors influencing consumers' decisions and helps identify opportunities to
meet their needs, improve marketing strategies, and tailor product offerings. By studying car
purchasing behaviour in Kathmandu Valley, researchers can gain insights into the preferences,
motivations, and decision-making processes of consumers in the region. This knowledge can
inform the development of targeted marketing campaigns, the design of suitable car models, and
the implementation of effective sales and after-sales strategies. It can also contribute to the
understanding of the local automotive market dynamics and help policymakers and industry
stakeholders make informed decisions to cater to the needs and demands of consumers in
Kathmandu Valley.

Independent Factors: The independent factors in the context of car purchasing behaviour in
Kathmandu Valley of Nepal can be categorized as follows:

1. Economic Factors:

 Price of the car: The cost of the car, including the purchase price, financing
options, and affordability, influences the decision-making process.
 Fuel consumption: The efficiency and cost of fuel consumption play a significant
role, considering the ongoing fuel prices and the impact on long-term ownership
costs.
 Location: The geographical location within Kathmandu Valley can influence car
purchasing behaviour due to factors such as road conditions, traffic congestion,
and the availability of parking spaces.
 Maintenance cost: The anticipated expenses related to regular maintenance,
servicing, and repairs are considered by buyers in their decision-making process.
 Availability of spare parts: The accessibility and availability of genuine spare
parts for the chosen car brand or model impact the convenience and cost of
maintenance.

 H1: There is significant positive impact of economic factor on car

purchasing behavior.

2. Psychological Factors:

 Friends and family motivation: Recommendations, experiences, and opinions

shared by friends and family members can influence a person's decision to
purchase a particular car.
 Perception: The perception of a car brand's reputation, quality, reliability, and
image influences the buyer's evaluation and decision-making process.
  Attitude: Personal attitudes towards car ownership, preferences for specific
features or designs, and alignment with personal values impact the choice of a car.
 Belief in the brand: Consumer beliefs about the performance, durability, and
overall value of a specific brand can influence the car purchasing decision.

 H2: There is significant positive impact of psychological factor on

car purchasing behavior.

3. Functional Factors:

 Safety: The safety features and ratings of the car, such as airbags, an anti-lock
braking system (ABS), electronic stability control (ESC), and crash test results,
are important considerations for buyers.
 Performance: Factors like engine power, acceleration, handling, and overall
performance characteristics contribute to the decision-making process.
 Exterior design: The aesthetic appeal and design of the car, including its styling,
shape, and visual attractiveness, influence buyer preferences.
 After-sales service: The perceived quality of after-sales service, including
warranty coverage, availability of service centres, and customer support, can
impact the decision-making process.

 H3: There is significant positive impact of functional factor on car purchasing

behaviour.

4. Environmental Factors:

 Environmental safety: Increasing awareness of environmental concerns and the

preference for eco-friendly practices may influence the decision to choose electric
or hybrid vehicles, which have lower emissions.

 H4: There is significant positive impact of environmental factor on car

purchasing behaviour.

These independent factors collectively shape the car purchasing behaviour of individuals in
Kathmandu Valley. By considering these factors, researchers and industry stakeholders can gain
insights into the key drivers and considerations that influence car buyers' decisions in the specific
context of Nepal.

3.8. Limitation of study

The limitations of a study refer to the potential shortcomings or constraints that may affect the
research process, data collection, analysis, and interpretation of findings. These limitations can
arise due to various factors and should be acknowledged to provide a balanced assessment of the
study's scope and generalizability. Some common limitations include:

There are some limitations to the study:

1. The findings of the research may not be used as generalizations because of the sample
used in the present Despite sincere efforts, a random sample could not be extracted,
which forced the use of a convenient sample for the study.
2. The geographical region selected in the present study is Kathmandu, where mostly
educated and financially strong people live. Thus, the purchase decisions of the people
might be different than those of other cities.
3. The study focuses mainly on the information search before making a purchase decision.
There might, however, be some other variables more significant in explaining the search
and choice behaviour of customers.
4. The study fails to get a higher response rate, which might generate the results in a
different way than they really do.
5. The car-buying customer is typically a high-class people with a high income level, so the
sample collection is very difficult to find and requires a larger audience.
6. The study's findings and conclusions may be limited to the specific sample of participants
chosen for the research. It is essential to acknowledge that the sample may not fully
represent the entire population of car buyers in Kathmandu Valley, which could affect the
generalizability of the results.
7. The study may not account for the cultural and societal nuances specific to Kathmandu
Valley and the Nepalese context. Car purchasing behaviour can be influenced by cultural
norms, values, and socio-economic factors that are unique to the region. The
generalizability of these findings to other cultural contexts should be approached with
caution.
8. The study may not account for external factors such as economic fluctuations, policy
changes, or market dynamics that could influence car purchasing behaviour. These
factors could impact the generalizability and applicability of the study's findings.
9. While the study considers various independent factors influencing car purchasing
behaviour, there may be additional factors not included in the analysis that could also
play a role. The study should acknowledge that other unexplored variables might
contribute to car buying decisions in Kathmandu Valley.
10. Participants may have difficulty accurately recalling and reporting past car purchasing
decisions, especially if the purchases were made a considerable time ago. This could
impact the reliability and accuracy of the collected data.

.
 CHAPTER IV

RESULT AND DISCUSSION

Data analysis is the process of examining and interpreting data to come up with solutions to
queries. Identifying issues, assessing the availability of adequate data, selecting which methods
are appropriate for addressing the questions of interest, implementing the methods, and
evaluating, summarizing, and conveying the results are the fundamental processes in the analytic
process.

This chapter discusses the research analysis and findings in which the consumer’s car purchasing
behavior and the impacts of different factors on their purchasing decision in Kathmandu Valley
were investigated. The primary data was collected from a questionnaire. As an important part of
the graduate research project, this chapter presents the analysis of the data collection for the
research. The data analysis was done using SPSS software. This chapter contains a detailed
demographic profile of respondents, along with the analysis and interpretation of the collected
data through descriptive analysis and correlation and regression analysis of the dependent and
independent variables. The final part includes a discussion of the results obtained through
analysis. These study findings are presented in tables and charts. Statistical findings for each
item in the questionnaire and inferences made are discussed under specific subheadings.

This chapter presents the results obtained from the data analysis and research methodology. The
data set is used to examine the assumptions of factor analysis. The results of various frequencies,
Chi-square tests, and cross-tabulation are presented, and the five hypotheses are tested. The
results are discussed in terms of their relationship to each of the relevant research objectives. The
data was analysed using SPSS version 26.0 and MS Excel. The data and information collected
from the respondents are presented, interpreted, and analysed according to their responses to the
field survey. Frequency charts and cross-tabulation are used, and relationship analysis through
chi-square has been done, presented, and interpreted below.

4.1. Assessing the respondent's perception of economic, psychological, functional, and

environmental factors and purchasing behaviour in Kathmandu Valley

It deals mainly with the socio-demographic characteristics of the respondents. These include
gender, age, education, income level, marital status, level of education, and profession. 

The distribution of frequencies gives information in a table or graphical representation about the
number of occurrences or frequency of unique values spread throughout a certain period of time
or interval. The demographics of the population are presented in the tables below. Respondents
who took part in this research.

4.1.1 Analysing the response rate:

Gender of the Respondent
Table 4.1 shows the gender of the respondents. Out of the total 202 respondents, 61 are females
representing 30.20% of total respondents and 69.80 are males representing 69.80% of total
respondents.
Table 4. 1.1
Distribution of Respondents Based on Gender
Gender Respondent Percentage
Male 61 30.20
Female 141 69.80
Total 202 100%
Note: - Google form survey data analysed through SPSS 27
Age of Respondent
Table 4.2 shows the distribution of respondents based on age. The respondents have been
categorized into 4 groups: 20 years and below, 21-35 years, 36-50 years and 51years and above.
Table 4. 1.2
Distribution of Respondent Based on Age
Age Group Number Of Respondent Percentage
20 Years and below 3 1.49
21-35 Years 132 65.35
36-50 Years 53 6.93
51Years and Above 13 6.93
Total 202 100%
Note: - Google form survey data analysed through SPSS 27.

According to the findings, 1.49 percent of the respondents belong to the age group 20 Years and
below, 65.35 percent of the respondents belong to the age group 21-35 Years, 26.23 percent of
the respondents belong to the age group 36-50 Years and 6.93 percent of the respondents belong
to the age group 51years and above.
The Profession of the Respondents
Table 4.3 shows the distribution of respondents based on Profession. The profession of
respondents has been categorized into six groups as shown below:

Table 4. 1.3
Distribution of Respondents Based on Profession
Profession Respondent Percentage
Student 24 11.88
Farmer 11 5.44
Businessman 57 28.21
Official Worker 38 18.81
Government Service 47 23.26
Others 25 12.37
Total 202 100%
Note: - Google form survey data analysed through SPSS 27.

According to the findings out of 202 respondents, 11.88 percent of the respondents belong to the
Student,5.44 percent of the respondents belong to the Farmer, 28.21 percent belong to the
Businessman which is highest among all the profession which show most of car customer in
Kathmandu valley are businessman having a good income level, 18.81 percent belong to the
Official Worker 23.26 percent belong to the Government service and 12.37 percent people
belong from others categories which are not mentioned in the category.
The Income of Respondents
Table 4.4 shows the distribution of respondents based on Income. The income of respondents has
been categorized into six groups as shown in table below.
Table 4. 1.4
Distribution of Respondents Based on Income
Income Level Respondent Percentage
Below Rs.35000 48 23.76
35001-50000 20 9.90
50001-65000 47 23.27
65001-80000 24 11.88
80001-95000 11 5.45
Above 95000 51 25.25
Total 202 100
Note: - Google form survey data analysed through SPSS 27.

According to the findings, 23.76 percent of the respondents belong to the Income level below
Rs.35000, 9.90 percent of the respondents belong to the Income group 35001-50000, 23.27
percent of the respondents belong to Income group 50001-65000, and 11.88 percent of the
respondents belong to the Income Group 65001-80000, 5.45 percent of the respondents belong to
the Income Group 80001-95000and 51 percent of the respondents belong to the Income Group
above 95000.
Respondents Based on Marital Status
Table 4.5 shows the distribution of respondents based on Marital status. The status of
respondents has been categorized into married and un-married groups.
Table 4. 1.5
Distribution of Respondents Based on Income
Marital Status Respondent Percentage
Married 91 54.95
Un-Married 111 45.05
Total 202 100
Note: - Google form survey data analysed through SPSS 27.

The table 4.3 shows that married were 91, un-married were 111, and separated were not
available. From the figure 4.3, Out of the 202 respondents, (45.05%) are never married (single);
(54.95%) are married. However, there were no separated respondent in the sample population.
We also see that; it is always a family who own a car more than a single person as what number
above in table 4.4 shows.
Education Level of the Respondents
Table 4.6 shows the distribution of respondents based on Education Level. The education level
of respondents has been categorized into four groups as shown below in table.
Table 4.1.6
Distribution of respondents Based on Education
Educational Level Respondent Percentage
SLC or below 3 1.48
Intermediate 14 6.93
Bachelors 92 45.54
Masters or above 93 46.03
Total 202 100
Note: - Google form survey data analysed through SPSS 27.

According to the findings, 1.48 percent of respondents are SLC or below which is not mark able
at all for the study, 6.93 percent of respondents hold Intermediate level which is very low,45.54
percent of respondents are post- graduated, 46.03 percent of respondents are of master’s and
above which show most people belong to educated level who are involve in car purchasing
activity and by the professions.

4.1.2. Descriptive Analysis of Economic factor, Psychological factor, Functional factor and
Environmental factor on Car Purchasing Customer in Kathmandu valley.
The mean and standard deviation of each question asked to the respondents are analysed in the
descriptive analysis. The link between the dependent and independent variables was investigated
using Likert Scale questions. Five-point Likert scale for the study, a scale questionnaire was
employed. The descriptive analysis is reported in the following format: The variables are laid up
in a table for simple comprehension.
Economic Factor
The mean and standard deviation associated with the variables under investigation
were employed as descriptive statistics in this study. As a result, descriptive statistics
allow data to be presented in a more meaningful form, allowing for easier data
interpretation. The items' responses are graded on a 5-point Likert scale. A total of
202 answers were gathered for each item.
Table 4.1.2.1: Economic Factor in purchasing Decision(N=202)
S.NO Question Number Of Mean Standard
Respondent (N) Deviation
1 I always go for 202 3.49 1.39
a renowned
brand of car
regardless of
price.
2 I am 202 2.99 1.28
influenced to
buy a car based
on the location
and
accessibility.
3 Maintenance 202 3.88 1.17
costs influence
my decision of
the motor
vehicle to
select to
purchase
4 Price is a 202 3.46 1.33
determining
factor on the
choice of car
I’d buy
5 Fuel 202 3.75 1.35
consumption
& prices
influence my
choice of
motor
vehicle
6 Availability of 202 3.99 1.33
the spare parts
of the car
impact the
purchase
decision of the
car
Sources: Results are drawn from SPSS.20
Table 4.2.1.1 The table includes the following information:
Question: The question being asked in the survey
Number of Respondents (N): The number of people who responded to the survey question
Mean: The average response to the survey question on a scale of 1 to 5, where 1 indicates
strong disagreement and 5 indicates strong agreement.
Standard Deviation: A measure of the variation in responses to the survey question
Based on the table, the following information can be inferred:
Question 1: "I always go for a renowned brand of car regardless of price." had a mean score
of 3.49, indicating that, on average, respondents were somewhat likely to agree with this
statement. The standard deviation of 1.39 suggests that there was a fair amount of variability
in responses.
Question 2: "I am influenced to buy a car based on the location and accessibility." had a mean
score of 2.99, indicating that, on average, respondents were somewhat neutral about this
statement. The standard deviation of 1.28 suggests that there was a fair amount of variability
in responses.
Question 3: "Maintenance costs influence my decision of which motor vehicle to select to
purchase" had a mean score of 3.88, indicating that, on average, respondents were somewhat
likely to agree with this statement. The standard deviation of 1.17 suggests that there was
relatively low variability in responses.
Question 4: "Price is a determining factor in the choice of car I’d buy" had a mean score of
3.46, indicating that, on average, respondents were somewhat likely to agree with this
statement. The standard deviation of 1.33 suggests that there was a fair amount of variability
in responses.
Question 5: "Fuel consumption and prices influence my choice of motor vehicle" had a mean
score of 3.75, indicating that, on average, respondents were somewhat likely to agree with
this statement. The standard deviation of 1.35 suggests that there was a fair amount of
variability in responses.
Question 6: "Does the availability of the spare parts of the car impact the purchase decision
of the car?" had a mean score of 3.99, indicating that, on average, respondents were
somewhat likely to agree with this statement. The standard deviation of 1.33 suggests that
there was a fair amount of variability in responses.
Psychological Factor:
There are four psychological factors that influence consumer behaviour: Motivation,
perception, learning, and attitude or belief system. Motivation speaks to the internal needs of
the consumer. The way your target customer perceives the world or learns about your
product, whether online or in person, can also influence behaviour.
The response to the items in Table 4.8 were measured in 5- point Likert scale. Based on the
response collected from the questionnaire mean and standard deviation value are chosen. The
number of responses collected for each item was 202.
Table 4.2.1.2: Psychological Factor in Decision Making (N=202).
Question Respondent Mean Standard
Number (N) Deviation
My perception about the car and brand 202 3.63 1.209
influences my purchase decision of a car
Motivation from friends and family on a 202 2.89 1.19
specific brand influences my purchase
decision for the motor vehicle
My attitude towards the brand of car 202 3.27 1.08
affects my purchase decision for the
motor vehicle
My personal beliefs and knowledge are 202 3.44 1.23
an important factor in the purchase
decision of a motor vehicle

Table 4.2.1.2 The table includes the following information:

Question: The question being asked in the survey
Respondent Number (N): The number of people who responded to the survey question.
Mean: The average response to the survey question on a scale of 1 to 5, where 1 indicates
strong disagreement and 5 indicates strong agreement.
Standard Deviation: A measure of the variation in responses to the survey question
Based on the table, the following information can be inferred:
Question 1: "My perception about the car and brand influences my purchase decision of a
car" had a mean score of 3.63, indicating that, on average, respondents were somewhat likely
to agree with this statement. The standard deviation of 1.209 suggests that there was a fair
amount of variability in responses.
Question 2: "Motivation from friends and family on a specific brand influences my purchase
decision for the motor vehicle" had a mean score of 2.89, indicating that, on average,
respondents were somewhat neutral about this statement. The standard deviation of 1.19
suggests that there was a fair amount of variability in responses.
Question 3: "My attitude towards the brand of car affects my purchase decision for the motor
vehicle" had a mean score of 3.27, indicating that, on average, respondents were somewhat
likely to agree with this statement. The standard deviation of 1.08 suggests that there was a
relatively low amount of variability in responses.
Question 4: "My personal beliefs and knowledge are an important factor in the purchase
decision of a motor vehicle" had a mean score of 3.44, indicating that, on average,
respondents were somewhat likely to agree with this statement. The standard deviation of
1.23 suggests that there was a fair amount of variability in responses.
Functional Factor: It is also one of the important factor that impact purchasing decision
which includes several affecting factor like Performance, Safety and Protection , Exterior
design and After sales service.
Table 4.1.2.3: Functional Factor in Decision Making(N=202).
Question Respondent Mean Standard
Number (N) Deviation
Performance of the car is important 202 3.81 1.32
aspects while choosing and purchasing
the car.
Safety and protection will be my first 202 3.98 1.24
aspects while choosing the car.

Exterior design and look are important 202 3.40 1.27

factor for me while choosing the car
model.
After sales service facilities is 202 3.91 1.30
important for me while purchasing the
car
Table 4.1.2.3 The table includes the following information:
Question: The question being asked in the survey
Respondent Number (N): The number of people who responded to the survey question.
Mean: The average response to the survey question on a scale of 1 to 5, where 1 indicates
strong disagreement and 5 indicates strong agreement.
Standard Deviation: A measure of the variation in responses to the survey question
Based on the table, the following information can be inferred:
Question 1: "Performance of the car is an important aspect while choosing and purchasing the
car" had a mean score of 3.81, indicating that, on average, respondents were somewhat likely
to agree with this statement. The standard deviation of 1.32 suggests that there was a fair
amount of variability in responses.
Question 2: "Safety and protection will be my first aspects while choosing the car" had a
mean score of 3.98, indicating that, on average, respondents were somewhat likely to agree
with this statement. The standard deviation of 1.24 suggests that there was a fair amount of
variability in responses.
Question 3: "Exterior design and look are important factors for me while choosing the car
model" had a mean score of 3.40, indicating that, on average, respondents were somewhat
likely to agree with this statement, but not as strongly as the other factors. The standard
deviation of 1.27 suggests that there was a fair amount of variability in responses.
Question 4: "After sales service facilities are important for me while purchasing the car" had
a mean score of 3.91, indicating that, on average, respondents were somewhat likely to agree
with this statement. The standard deviation of 1.30 suggests that there was a fair amount of
variability in responses.
Environmental Factor:
As per the today world, it is very important to consider the environmental factor which as car
purchasing consumer is very important factor in consumer decision making process.
The response to the items in Table 4.10 were measured in 5- point Likert scale. Based on the
response collected from the questionnaire mean and standard deviation value are chosen. The
number of responses collected for each item was 202.
Table 4.1.2.4: Environment Factor in Decision Making(N=202).
Question Respondent Mean Standard
Number (N) Deviation
Environment protection and safety will 202 3.02 1.11
be my priority while buying car.
Electric car will be my important 202 2.90 1.21
priority which will create less pollution
like dust & smoke.
You will choose environment friendly 202 2.83 1.26
car over others factors to be
responsible citizen of the country.

Table 4.1.2.4 The table includes the following information:

Question: The question being asked in the survey
Respondent Number (N): The number of people who responded to the survey question.
Mean: The average response to the survey question on a scale of 1 to 5, where 1 indicates
strong disagreement and 5 indicates strong agreement.
Standard Deviation: A measure of the variation in responses to the survey question
Based on the table, the following information can be inferred:
Question 1: "Environment protection and safety will be my priority while buying a car" had a
mean score of 3.02, indicating that, on average, respondents were somewhat likely to agree
with this statement, but not strongly. The standard deviation of 1.11 suggests that there was a
fair amount of variability in responses.
Question 2: "Electric cars will be my important priority, which will create less pollution like
dust and smoke," had a mean score of 2.90, indicating that, on average, respondents were
somewhat likely to agree with this statement but not strongly. The standard deviation of 1.21
suggests that there was a fair amount of variability in responses.
Question 3: "You will choose an environmentally friendly car over other factors to be a
responsible citizen of the country" had a mean score of 2.83, indicating that, on average,
respondents were somewhat likely to agree with this statement, but not strongly. The standard
deviation of 1.26 suggests that there was a fair amount of variability in responses.

4.3 Descriptive Analysis of Overall Variables:

Table 4.3 consists of the individual statements of respective questions concerning Economic
factor, Psychological factor, Functional Factor and Environmental factor that have been
computed into single variables. The number of responses for each independent variables was
202. Table 4.3 presents descriptive statistics of overall variables that will be further used for
inferential analysis.
Std.
Variable Minimum Maximum Mean Deviation Skewness Kurtosis
Purchasing
Behaviour 0.250 5.000 3.446 1.039 -0.857 0.265
Economic 0.167 5.000 3.591 1.037 -1.524 2.224
Psychological 0.250 5.000 3.306 0.871 -1.333 2.884
Functional 0.000 5.000 3.774 1.173 -1.391 1.539
Environmental 0.334 5.000 2.915 1.015 -0.338 -0.201

4.4 Examine the Association among Purchasing behaviour, Economic factor,

Psychological factor, functional factor and environmental factor.
Correlation analysis was done to determine the link between the independent factors and the
dependent variable. After descriptive statistics were used to determine mean and standard
deviation, statistical tests such as Pearson's Correlation Coefficient and Multiple Linear
Regression were used to obtain further insight into the data. These inferential analyses are
carried out particularly to assess the hypothesis in question. Multiple Linear Regression was
used to test how changes in the combination of two or more independent variables predict the
level of change in the dependent variable. Pearson's Correlation Coefficient was used to
examine the strength of association between variables, while Multiple Linear Regression was
used to test how changes in the combination of two or more independent variables predict the
level of change in the dependent variable.
Pearson's Correlation
Test statistics are used to determine the statistical link, or association, between two
continuous variables. Because it is based on the concept of covariance, it is recognized as the
best approach for quantifying the relationship between variables of interest.

Purchasing Economic Psychological Functiona Environmenta

Behaviour l l
Variable
Purchasing 1.000 .660** .736** .784** .488**
Behaviour
Economic .660** 1.000 . 743** .834** .542**
Psychological .736** .773** 1.000 .725** .574**
Functional .784** .834** .725** 1.000 .571**
Environmental .488** .542** .574** .571** 1.000
** Correlation is significant at the 0.01 level (2-tailed).
Note: If r = 1, the correlation is said to be perfect positive. If r = -1, the correlation is said to
be perfect negative. If r = 0, the variables X and Y are said to be uncorrelated. If 0< r ≥ 0.4,
low correlation. If 0.4 < r > 0.7, moderate correlation. If 0.7 < r > 1, high correlation.
Table 4.4 shows the relationship between Dependent variable and independent variables
whether the relationship between both is strong or weak. The correlation coefficient between
the purchasing behaviour and economic factor is 0.660 indicating that there is positive
correlation between the variables. The correlation coefficient between the purchasing
behaviour and psychological factor is 0.736 indicating that there is positive correlation
between the variables. The correlation coefficient between the purchasing behaviour and
functional factor is 0.784 indicating that there is positive correlation between the variables.
The correlation coefficient between the purchasing behaviour and environmental factor is
0.488 indicating that there is positive correlation between the variables.
The correlation coefficient between the economic factor and psychological factor is 0.773
indicating that there is positive correlation between the variables. The correlation coefficient
between the economic factor and functional factor is 0.834 indicating that there is positive
correlation between the variables. The correlation coefficient between the economic factor
and environmental factor is 0.542 indicating that there is positive correlation between the
variables.
The correlation coefficient between the psychological factor and functional factor is 0.725
indicating that there is positive correlation between the variables. The correlation coefficient
between the psychological factor and environmental factor is 0.574 indicating that there is
positive correlation between the variables.
The correlation coefficient between the functional factor and environmental factor is 0.571
indicating that there is positive correlation between the variables.
4.5 Impact of Economic factor, Psychological factor, Functional factor and
Environmental factor on Purchasing behaviour.
Table No: 4.5 Regression Analysis:

Variable Coefficients t-statistics Sig. Collinearity Statistics

Tolerance VIF
(Constant) 0.360 2.129 0.34

Economic -0.219 -2.706 0.007 0.245 4.090

Psychological 0.522 6.569 0.001 0.358 2.791

Functional 0.587 8.731 0.001 0.277 3.614

Environmental -0.024 -0.457 0.648 0.620 1.613

Respondents =202 R-Square =0.686 Adjusted R-Square =0.680 F-value=107.76

Std. Error of Estimate =0.587 F-value(Sig) =0.000

Table 4.5 shows the multiple linear regression analysis model summaries for the study.
The R Square value refers to the percentage of the dependent variable variation that is
explained by the independent variables. For the study, R-square value is 0.686; which
indicates that 68.6 percent of the variation in dependent variable (car purchasing behaviour)
can be explained by all the four independent variables used in the research (economic factor,
psychological factor, functional factor and environmental factor). However, remaining 31.4
percent of the variations in dependent variable are due to other additional factors that affect
purchasing behaviour which have not been discussed in the study.
Likewise, Adjusted R-Square is penalized form of R-Square to tackle the increment in R-
Square due to additional of one or more variables. For the study, Adjusted R-Square is 0.680
which indicates that 68 percent of the variations in dependent variable can be explained by
additional variables along with four independent variables used in the study.
Standard error of estimates shows that chances of correct estimates from the model. Lower,
the standard error of estimates, higher the chances of correct estimates. For this study, the
standard error of estimates is 0.587 which is less than 1 showing higher chances of correct
estimates.
The result of Table 4.5, shows that the P-value of F-statistics is less than 0.01 i.e., 0.00 which
states the acceptance of the regression equation as sig=0.00, the model is significant at a 1
percent level of significance. So multiple linear models can be used to analyse the data.
Higher beta values indicate a higher dominant influence of independent variables on the
dependent variable. The Table 4.5 shows that responsiveness has the highest dominant
influence with a beta of 0.587 for functional factor, psychological factor with a beta of 0.522,
environmental factor with a beta of -0.024, economic with a beta of -0.0219.
A significance value lower than 0.05 indicates there is a significant relationship between the
independent variable and dependent variable. The regression coefficient of functional factor,
psychological factor and economic factor is less than 0.05 i.e., 0.001, 0.001 and 0.007
respectively indicating that there is a significant relationship between customer satisfaction
and these variables. Whereas, the regression coefficient of environmental factor is greater
than 0.05 i.e., 0. 648.indicating that there is no significant relationship between customer
satisfaction and these variables.
Further, the variance inflation is performed to support the validity of the regression result. As
per the rule, VIF exceeding 5 requires further investigation, and exceeding 10 indicates the
sign of serious multi-collinearity requiring correlation or changes in variables. The result of
the data analysis shows that the VIF of all independent variables is less than 5 so there is no
requirement for any changes and the data are valid for analysis.

4.6 Discussion
This study has mainly focused on the relationship between determinants of car purchasing
behaviour in the Kathmandu Valley. This study has considered economic factors,
psychological factors, functional factors, and environmental factors as independent variables,
and purchasing behaviour as a dependent variable. The results are based on the data gathered
from 202 respondents who own their own cars or through family members.

The study collected data from a total of 202 respondents in the Kathmandu Valley to
understand car purchasing behaviour. The respondents were categorized based on several
demographic factors. In terms of age group, the majority of respondents (65.35%) fell within
the 21–35 age range, while a smaller percentage (26.23%) belonged to the 36–50 age group.
Respondents aged 20 or below accounted for 1.49%, and those aged 51 and above comprised
6.93% of the sample.

In terms of gender distribution, the study had a higher representation of male respondents
(69.80%) compared to female respondents (30.20%). This gender imbalance in the sample
should be taken into consideration when analysing the findings related to car purchasing
behaviour.
Regarding educational status, the majority of respondents held a bachelor's degree (45.54%)
or a master's degree or above (46.03%). A smaller percentage had completed intermediate-
level education (6.93%), and only a few respondents (1.48%) had education up to SLC or
below.

The study also examined the current occupations of the respondents. The largest group
consisted of official workers (28.22%), followed by businessmen (25.24%), students
(11.88%), and government service employees (13.36%). Farmers and individuals engaged in
other occupations accounted for 8.41% and 12.37% of the sample, respectively.

When considering income levels, the majority of respondents had an income below 35,000
Nepalese rupees (23.76%), while 9.90% fell in the range of 35,001–50,000 rupees.
Approximately one-fourth of the respondents fell into the income brackets of 50,00–15,000
rupees (23.27%) and 65,001–80,000 rupees (11.88%). A smaller percentage had an income
between 80,001-95,000 rupees (5.45%), while 25.25% reported earnings above 95,000 rupees
per month.

In terms of marital status, more than half of the respondents were unmarried (54.95%), while
the remaining 45.05% were married.

These demographic factors provide important insights into the characteristics of the
respondents participating in the study. Analysing these factors alongside their car purchasing
behaviour can help identify potential associations or patterns related to age, gender,
education, occupation, income, and marital status in the context of car buying decisions in
Kathmandu Valley.

In hypothesis testing, the p-value is a measure of the strength of the evidence against the null
hypothesis. It helps determine the statistical significance of the relationship between the
independent variables (economic factor, psychological factor, functional factor, and
environmental factor) and the dependent variable (car purchasing behaviour) in this case.
Based on the given p-values shown in Table 4.14:

1. Economic factor: The p-value of 0.034 is less than the significance level of 0.005.
This suggests that there is statistically significant evidence to reject the null
hypothesis and conclude that the economic factor has a significant relationship with
car purchasing behaviour in Kathmandu Valley. In other words, economic factors,
such as the price of the car, fuel consumption, location, maintenance cost, and
availability of spare parts, have a significant impact on car purchasing behaviour.
2. Psychological factor: The p-value of 0.001 is less than the significance level of 0.005.
This indicates strong statistical evidence to reject the null hypothesis and conclude
that the psychological factor has a significant relationship with car purchasing
behaviour. Psychological factors, such as friends and family's motivation, perception,
attitude, and belief towards a brand, play a significant role in influencing car
purchasing decisions in Kathmandu Valley.
3. Functional factor: The p-value of 0.001 is less than the significance level of 0.005.
This provides strong statistical evidence to reject the null hypothesis and suggest that
the functional factor has a significant relationship with car purchasing behaviour.
Factors like safety, performance, exterior design, and after-sales service of a car have
a significant influence on the car buying decisions of individuals in Kathmandu
Valley.
4. Environmental factor: The p-value of 0.648 is greater than the significance level of
0.005. This indicates that there is not enough statistical evidence to reject the null
hypothesis and conclude that the environmental factor has a significant relationship
with car purchasing behaviour in Kathmandu Valley. It suggests that using electric
vehicles for environmental safety may not have a significant impact on car buying
decisions in this particular context.

In the discussion above, it is found that in this research there is significant relationship of
economic factor which includes price of car, fuel consumption, maintenance cost and
availability of spare parts have significant impact on purchasing decision of car and by
comparing with different empirical research paper for car purchasing customer.

Empirically, the economic factor positively affects the consumer experience in hospitality
marketing (Ismail, 2010). Moreover, Verhoef et al. (2009) consider price as an important
stimulus of consumer experience in a retailing context. For economists, consumers assign
high weight to price compared with other attributes when evaluating alternatives to make a
buying decision (McFadden, 1996). Zeithmal (1998) states that consumers’ attention and
weighing to price increase with high price products (Zeithmal, 1988). Consumers tend to pay
high prices for brands perceived to have high value (Erdem et al., 2004). There is a general
belief that consumers perceive price as an indicator of quality and quality influence for the
brand preference. Therefore, economic factor in overall is the major indicator that impact the
consumer purchasing decision of car.

Similarly, psychological and functional factor are also having positive significance which
includes friends and family motivation, beliefs, ownership of car from family, perception and
beliefs towards the particular brand and as on with functional factor which includes safety,
performance, exterior design and so on which is an important factor while making purchasing
decision.

From the previous study, Psychological factor has a great impact on the consumer’s buying
decision as per the Etzel et al., (2007) which argues that the four elements of the marketing
mix, namely product, place, distribution and promotion, are likely to influence consumers’
perceptions and beliefs of the business, and therefore their selection. Manning & Reece
(2007) also opines that customers are likely to perceive the product’s value on the basis of its
benefits which, in turn, is greatly influenced by the product’s performance, features, quality,
warranties, packaging as well as labelling.

If you keep an eye towards the functional factor, there is also great impact of this factor
because as per the previous empirical studies it is found that the customer purchasing car
mostly focused towards safety of car as the accident has been immensely increasing so the
protection and quality of car they purchase become relevant factor of purchasing decision and
in context of Nepal which is the country of mountains, hills and terai customer has claimed
for good functional features in regard to safety and performance.

Lastly, in our study it is found that environmental factor is not been so relevant which is not
good for the long term prospect and even in previous empirical l studies in context of Nepal
this factor is not considered by the researcher except some few in other countries like china,
japan and others developed nations but now a days electric car is being the first choice in
these countries because as fuel price is high and difficult to import so they have established a
lot of charging stations inside different parts of countries to manage the situation and control
the pollution by promoting electric vehicles.

In context of Nepal, as people are switching towards the electric vehicle nowadays which is
good sign but as per our study this factor is not significant the reason behind this could be is
people are not interested in electric car earlier was because of geographical structure and
charging channels availability as per the people perception and which will slowly grow and
people in coming days will be more keen toward the electric car if there will proper support
from government in building charging channels in different places of Nepal which will
contribute the environment conservation and safety in Nepal.
From the overall discussion of hypothesis, it is concluded that the p-value for the economic,
psychological and functional factor is considered significant and environment factor is not
significant as per the study but as per the growing technology and if there will proper
charging stations availability in the future this factor will also be seen significant and relevant
for other researchers in context of Nepal.

Hypothesis Remarks Results Acceptance

H1: There is significant P- value < 0.05 Accepted 0.03
positive impact of economic
factor on car purchasing

H2: There is significant P- value < 0.05 Accepted 0.001

positive impact of
psychological factor on car
purchasing
H3: There is significant P- value <0.05 Accepted 0.001
positive impact of functional
factor on car purchasing

H4: There is significant P- value > 0.05 Rejected 0.648

positive impact of
environmental factor on car
purchasing

Table 4.14: Summary of Result

In summary, the study investigated the impact of various factors on car purchasing. The
results indicate that economic factors have a significant positive influence on car purchasing,
as evidenced by a p-value of 0.03. Similarly, psychological factors were found to play a
significant role, with a p-value of 0.001. Functional factors also demonstrated a significant
positive impact on car purchasing, with a p-value of 0.001. However, the study did not find a
significant positive influence of environmental factors on car purchasing, as the p-value was
0.648, indicating a lack of statistical significance. Overall, the findings suggest that
economic, psychological, and functional factors are important drivers of car purchasing
decisions.
 CHAPTER V

SUMMARY AND CONCLUSION

This chapter deals with the summary of the findings and conclusion of the study. It contains
the major findings of the study. Findings are the results derived from the data analysis. The
conclusions and recommendations of the researcher are defined in separate sections of the
research. Conclusions are the inferences or generalizations of the research drawn from the
findings. And recommendations are the action plans put forward to policymakers and users of
the research findings.

5.1 Summary of Findings

This section is basically a brief discussion about the results of the thesis work. The general
objective of this study was to examine the patterns of decision-making processes among car-
purchasing consumers in Kathmandu valley. The study tried to address the following issues:

1. Patterns of decision-making strategies consumers develop while making car purchases

in Kathmandu valley.
2. The criteria for making a purchase decision and the circumstances for the evaluation
of alternatives.
3. Different factor that has impact on decision making of consumers.
4. Demographic statistics of the car purchasing customer in Kathmandu valley.

The study began with the general background, which provides general information about
Nepal, the market situation in Nepal, and the consumers in Nepal. It was followed by the
problem statements and the theoretical framework. Different established theories about
consumer behaviour are discussed throughout the report. After various research, discussions,
and surveys were conducted, it was possible to generate the data and analyse it in such a way
that it addressed the research questions stated earlier.

During the study, the questionnaire is prepared which is distributed among 202 respondents
which is divided into different demographic factors like on the basis of gender, age group,
income level, education and marital status. It is found that on the basis of gender the number
of males are more as compared to female who are involved in purchasing decision. As per the
age group it is found that people under the age of 21-35+ are highly involved in purchasing
decision. As per the income level, the people having income more than above 95000 are
involved in car purchasing decision and mostly the businessman are more involved with
professions wise as compared to other in purchasing behaviour as per the study conducted.

Similarly, in the research we have four independent factor which are economic factor,
psychological factor, functional factor and environmental factor which have significantly
impact the car purchasing customer and their mind-set. Among all these independent factor in
the study the most considered and valuable factor which impact the purchasing decision is
economic, psychological and functional factor and these factor have significant relationship
with the purchasing behaviour of consumer.

Based on the analysis of the data, the major findings are summarized as follows:

1. The maximum number of car-buying consumers are male, which is an indication of a

male-dominant Nepalese society. The female owners are not the primary decision-
makers in the company. They are the actual owners of the car, but the decision-
making is likely to be done by their family, their husband, or some other person.
2. Most consumers know which brand and which model of car they are going to buy.
This is because of previous ownership of the car and the use of different information
channels.
3. A car is a major purchase for Nepalese consumers, and most of them search for
information about cars before making a purchase decision. The internet is the major
source of information for car-buying consumers in Nepal. However, other sources of
information like advertisements, talking to friends and colleagues, and visiting
showrooms are also used by many.
4. The consumers are aware of the importance of seeking pre-purchase information, and
they love to spend time searching for information using different sources. However,
the time spent searching for information is not outstanding enough. Consumers do not
rely on only one source for The results suggest that people spend little time on many
different sources.
5. Interpersonal sources of information (talking to friends, family, and colleagues) are
still a powerful tool for pre-purchase information seeking for Nepalese consumers.
However, consumers spend less time seeking information from interpersonal sources.
6. Compared to the past, a more positive attitude towards shopping has developed
among Nepalese car-buying consumers. They take time to reach a purchase decision
after considering a lot of sources of Usually, consumers compare the prices of
different brands and models of cars. Consumers are aware of the brands and models,
but many of them are not sure which brand and model meet their requirements.
7. Most Nepalese consumers’ choice of cars is determined by their price. The economic
factor plays the most important role in shaping the consumer’s decision. Whereas, few
consumers like to go for style and comfort while deciding the purchase of
 8. Similarly, functional factors, which include safety, performance, and exterior design,
have the most impact on the purchase decision of a car in the context of the Nepalese
market.
9. The environmental factor is not considered a major and significant factor in car
purchasing decisions due to the lack of proper charging stations in different rural and
urban parts of the country, but the trend for electric cars is increasing slowly, which is
good for the country as it will help to manage the pollution level and maintain a
healthy environment.
10. The level of family involvement in car purchases is greater in Nepal. Most decisions
are made with the involvement of family. Again, gender determines the level of
family involvement. Female consumers are more likely to be involved in family
decision-making than male consumers. As a car is a major purchase, family
involvement in the purchase decision plays an important role.
11. Nepalese car purchasers are those who possess average knowledge about cars before
purchasing them. They are also familiar, to some extent, with the makes and models
of cars. And they have an average level of confidence in their ability to judge the car
before buying it.

As per the study, Nepalese car-buying consumers develop a purchase strategy by determining
the factors that are important. The major factors consumers consider are the economic factor,
the functional factor, and the psychological factor. The price of a car, mileage, safety,
performance, after-sales service beliefs, and trust towards a particular brand are the main
things that define the purchasing behaviour of car customers in Kathmandu Valley. After
determining the factors, the consumers determine the brand and model of car that meet their
expectations. This is followed by seeking pre-purchase information. An adequate amount of
information is necessary for major purchases, and Nepalese consumers search for enough
information using different sources. However, the time spent at each source is relatively short
to get enough information. This is the reason consumers lack a greater level of confidence in
their ability to judge a car before purchasing it. Dealer visits and interpersonal sources are
also strong sources of information search on the internet. Family involvement is another
important part of the purchase decision. A lot of family involvement proves that the car
purchase is a major purchase, and it takes family decision-making to decide the purchase of a
car.

In summary, in the research, we have identified four independent factors—economic factor,

psychological factor, functional factor, and environmental factor—that significantly impact
the car-buying customer and their mind-set. Among all these independent factors in the study,
the most considered and valuable factors that impact the purchasing decision are the
economic, psychological, and functional factors, and these factors have a significant
relationship with the purchasing behaviour of consumers. The environmental factor is not
significant as per our study, but the trend for the electric car is increasing day by day, which
in the future is good for the people and country as it saves a lot of fuel and helps to minimize
the pollution level in the Kathmandu valley.
5.2 Conclusion

The purpose of the study was to examine the car purchasing behaviour in Kathmandu valley.
In the literature review section of the paper, four different factors (economic, psychological,
functional and environmental) of car purchasing consumer has been identified in the study.

The objective of this research was to identify influential factors for car-buying customers and
also examine the relationship between the influential factors and their buying behavior.
According to the results of the study, it was found that there is a significant relationship
between demographic variables like age group, gender, occupation, and monthly income on
car purchasing customers in Kathmandu Valley.