ABSTRACT

Purpose - The objective of this research is to identify and assess the factors which influence
the customer’s purchase intentions towards the new Proton X70 among Malaysian middle-
income earners. Independent variables of brand trust and affective brand experience was
tested pre-launch and price quality as well as price perception was tested post launch towards
purchase intentions. Those variables were integrated together into a research framework and
then the hypotheses were tested. The main idea behind this research is that brand trust,
affective brand experience, perceived quality and price perception are the drivers of
purchasing intention among potential car buyers in Malaysia. The Proton X70 was launched
on 12th December 2018 by Prime Minister, Tun Dr. Mahathir Mohamad.

Design/methodology/approach – A 100 potential car buyers in Malaysia was chosen as

respondents in a self-administered questionnaire and it is the source of primary data for this
study. The questionnaires were distributed pre-launch and post launch to the same
respondents in order to get their feedbacks on the Proton X70 purchasing intentions ………….
XXXXXXXXXX

Findings – XXXXXXXXX

Research limitations/implications – The findings XXXXXXX…………………………

Practical implications – XXXXXXXXX

Keywords Malaysia, Price Intentions, Fairness, Affective Brand Experience, Price Quality,
Price Perception, Proton X70, Automobile industry

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1.0 INTRODUCTION

Warshaw and Davis (1985) refers purchase intentions as the conscious plans of
buying goods or services in the future based on the ability to commit. The tendency of
customers to purchase a product can be anticipated should the marketers identify the intensity
of the customers purchase intention. Dodds, Monroe, and Grewal, (1991); Schiffman and
Kanuk (2000) mentioned, the more eminent the purchase intention, the higher probabilities of
customers in purchasing a product or services. Purchase intention is of great importance to a
customer’s life for the customer took his time efforts and money in purchasing the product.
During the purchasing process, customers would always be greatly motivated by their
inclination and perception of a certain product or service (Saleem, Ghafar, Ibrahim, Yousuf, &
Ahmed, 2015).

Purchase intention is when a customer intends to buy the product or service. In other
words, purchase intention is when a customer has evaluated and after that, have the urge to
purchase the product or services (Younus, Rasheed, & Zia, 2015). The promise to invest
again, be it in a product or service, from the customer whenever they make the next trip to the
service provider or retail outlet, that is what is meant by purchase intention (Fandos & Flavián,
2006; Halim & Hamed, 2005). Companies can increase their profits and sale on the specific
product should they know the customers purchase intention. Purchase intention illustrates the
concept of customer retention and customer loyalty. According to (Goyal, 2014) a certain
brand can serve multiple functions that can associate itself with the customers purchase
intention such as having a strong brand image, product knowledge, product involvement,
brand loyalty, product quality and product attributes.

Purchase intentions are one of the main conceptions studied in the marketing
literatures. The fascination of marketing scholars to indulged in studying purchase intentions
comes from its affiliation to purchasing behavior (Ismail, Abdullah, Ahmad, & Sidek, 2018).
Past studies have investigated the positive connection between purchase intentions and
purchase behavior (Chandon, Morwitz, & Reinartz, 2005; Sun & Morwitz, 2010). Furthermore,
customer purchase intentions are what marketing managers are interested to know for it can
estimate sales of existing and/or new products and services.

By gathering customer purchase intention data, it can alleviate marketing managers or

service providers in knowing pertinent related marketing decisions such as the most popular
product(s) that are currently in demand (new or existing products), segmentation in the market
and promotional strategies (Rana & Paul, 2017). Past studies have also reported that an

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indirect ramifications of values (Pitts & Woodside, 1984) as well as a direct ramifications on
customer satisfaction (McQuitty, Finn, & Wiley, 2000; Reichheld, Teal, & Smith, 1996;
Zeithaml, Berry, & Parasuraman, 1996) on purchase intentions.

The main idea behind this research is that brand trust, brand experience, perceived
quality and price perception are the drivers of purchasing intention among potential car
buyers. The five-seater X70, which is technically a re-engineered Geely Boyue, is positioned
as a premium C-segment sized SUV that competes with the likes of Honda CR-V and Mazda
CX-5 (the smaller Honda HR-V and Toyota CHR are one-segment below). The launch was
held on the 12th of December, 2018. The previous decade has seen the Proton’s reputation
substantially weakened and its market share sharply eroded within the Malaysian auto sector
(Currently the brand is positioned below market leaders Perodua and Honda in terms of annual
sales volume). With the introduction of Proton X70, it would be an exciting time to see the
purchasing intentions of Malaysian car buyers hence, this research would like to identify brand
trust, affective brand experience, price quality as well as price perception in distinguishing
those variables to be the main factors towards purchase intention of the Proton X70 car
buyers.

1.1 Background of PROTON

In Malaysia, the race of innovation and technology has entered the automobile
industry. The automotive industry is one of the contributing key players to the GDP growth in
Malaysia. Being the first national badged car company in Malaysia, PROTON Holdings Berhad
or widely known as PROTON, is a homegrown automotive brand that is close to the hearts of
Malaysians. PROTON was launched in 1983 and its first car, Proton Saga, became an instant
hit. Proton Saga was commercially launched on July 9, 1985 by then Malaysian Prime
Minister, Dato’ Seri Mahathir Mohamed, who had originally conceived the idea of a Malaysian
car. The automobile business of Proton was great for a decade until the Asian financial crisis
in 1997. Ever since then, PROTON has been in a roller-coaster ride, with declining sales and
reducing market share.

In December 2017, PROTON’s market share in Malaysia fell from its grace of 74% in
1993 to the lowest of 8.8%. In 2002, while at its peak, PROTON sold 214,373 units, down to
just 72,290 in 2016. This is far below its break-even of 100,000 to 120,000 cars per year. By
end of March 2016, PROTON reported a net loss of RM1.46 billion. In 2017, DRB-HICOM
sold-off 49.9 per cent stake of PROTON to a Chinese automaker, Zhejiang Geely Holdings
Group for RM460.3 million. Out of the total sum, RM170mil will be paid via a cash injection,

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with the remaining RM290mil as a transfer of Geely’s Boyue sports utility vehicle (SUV)
platform to Proton. With Zhejiang Geely making Proton its right-hand-drive hub for the Asean
region, Proton can now target the immense Asean passenger car market for both our models
and Geely’s (Kana, 2017).

Figure 1: The Proton Saga as seen The Proton Saga is widely credited as the first Malaysian car. It is
Proton's flagship model and the company's longest running nameplate, having been produced for over
31 years (Source: Wikipedia)

Figure 2: Proton Saga “The Vision Realised”

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1.2 The Rise in Automobile Usage in Malaysia

Prior to the launch of Proton, the automotive industry in Malaysia is almost non-
existent. Cars in Malaysia at that time were imported or assembled locally with completely
knocked down (CKD) kits. A Swedish-Malaysian automobile assembler was the first
automaker in Malaysia and began assembling their CKD kits for the local market in 1967. In
1981, after Dr. Mahathir Mohammed became the Prime Minister, Proton was debuted as the
National Car Project (Tong, Terpstra, & Lim, 2012).

An outstanding development in recent years as well as the progress can been seen in
the number of passenger cars on the roads all around the globe. According to Chang, Liao,
and Wu (2017) the increase of automobiles has not only made great improvements to the
economic progression of a country but also remarkably changes people’s life. The Malaysia
Automobile Association (MAA, 2018) have mentioned that (in Figure 3), the total production
of the passenger cars in 2018 were 483,973 while the sales figures shown were 490,776. It
can be seen that the production figure of passenger cars in 2017 depicts the value of 427,183
and the sales figure is 466,608 passengers’ cars.

Hence, it is evident that the overall production and also the sale of the cars in Malaysia
have increased from the year 2017 to 2018. These figures only incorporate the passenger
cars. There are different classifications of vehicles for instance trucks, busses, vans and jeeps
(4 × 4) and ranch tractors; the figures also have shown a very sharp increment in the sales
and production figures from MAA (2018). Consequently, it is can be seen that the overall roads
and highways in Malaysia are congested with vehicles.

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 Figure 3: Production and Sales for November 2018 (MAA, 2018)

Figure 4: Registered Vehicles (passenger and commercial) from 1980 to Year to Date (YTD) September
2018
Source: MAA (2018)

In Figure 2 above, is the summary of registered vehicles for passengers as well as commercial
for the year 1980 till Year to date (YTD), September of 2018. Despite the volatile times

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between 1995 and 1997 as well as a dip in the figures in 2018, it can be seen that with every
year, the number of vehicles registered has increased steadily for the past 38 years. This
concludes that the demand for automobiles usage in Malaysia is quite impressive and
encouraging even if there is an economic downturn.

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1.3 The Official Launch of Proton X70 (excerpts from the PROTON (2018) website)

PROTON officially launched the Proton X70 at a glittering ceremony officiated by Tun
Dr Mahathir Mohamad, the Prime Minister of Malaysia, held at the Kuala Lumpur Convention
Centre (KLCC). Full details of the flagship SUV were also revealed at the event including the
selling price, service, financing and warranty packages. The Proton X70 is the first vehicle to
be jointly developed by PROTON and its partner Geely, and is the first premium SUV by a
Malaysian automotive brand. It also introduces PROTON to a new market segment and is the
key catalyst for the total rejuvenation of the brand. When developing the Proton X70, both
PROTON and Geely collaborated on multiple levels. From the cross deployment of staff in
China and Malaysia, to testing in Malaysia’s hot and humid climate to the collaboration
between local and international vendors, the goal was to ensure a product that is perfectly
suited to the needs of Malaysian and ASEAN car buyers.

To prepare for its introduction, PROTON embarked on a comprehensive marketing

plan to build an unprecedented level of excitement amongst car buyers via on-ground events,
the launch of an online booking portal and giving the SUV its public debut at the 2018 Kuala
Lumpur International Motor Show (KLIMS). These efforts began in September and were
further strengthened by social media campaigns that included a naming contest and numerous
teaser videos on Facebook and YouTube. At the same time, significant investments to
PROTON’s network were made for the arrival of the Proton X70. Training activities for sales
and service staff and the launch of the inaugural PROTON After Sales Service Competition
(PASSC) were part of efforts to ensure everyone had sufficient knowledge of the new vehicle.
The Company also embarked on an ambitious network expansion plan by inviting new
investors to start PROTON outlets and offering generous incentives for existing dealers to
upgrade their facilities to 3S and 4S centers. To date 115 plans for such centers have been
approved with 71 already launched thus far this year.

According to Chief Executive Officer of PROTON, Dr Li Chunrong, the Proton X70 is

the result of more than one year of hard work by PROTON and Geely engineers, designers
and hundreds of other people working together to develop the first premium SUV by a
Malaysian car manufacturer. PROTON believes that Malaysian car buyers will be equally
proud to own an SUV that will help to transform the Proton brand. With over 10,000 bookings,
it is a good start for PROTON to deliver on their product and brand promise. Deliveries of the
Proton X70 will commence over the coming weeks in November and December onwards for

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PROTON wants their customers to get their cars as soon as possible. Some customers have
given their name to dealers before bookings were even officially opened.

To enhance the ownership experience of the Proton X70, special value-added

packages were announced at the launch event. Defined as Xtra packages, they affect four
distinct areas. The Xtra Service Package offers free parts and labour for the first service as
well as free labour for five scheduled service appointments within 100,000km or five years.
Next, there is the Xtra Low Financing Package, offering low interest rates that start from 2.34%
p.a. for qualified buyers. PROTON is the first national automotive brand to offer an unlimited
mileage warranty as the Xtra Warranty Coverage Package will cover the Proton X70 for up to
five years regardless of mileage.

Finally, to ensure owners enjoy a premium connectivity experience the Xtra Data
Package offers free internet data for five years (capped at 1GB per month). The Xtra packages
offered will enhance the experience for owners by offering peace of mind, savings for servicing
and financing as well as free data. PROTON will also create history by offering the Proton X70
at one price for one nation. This means East and West Malaysia car buyers will pay the same
price for the same vehicle, making PROTON the first automotive brand to offer such a deal. It
the hope of PROTON, that by doing this, PROTON will proved that a Malaysian product can
be offered at the same price for all Malaysians regardless of where they live (PROTON, 2018).

Figure 5: Prime Minister Tun Dr. Mahathir Mohamad and his wife Tun Dr. Siti Hasmah Mohamad Ali launching the
Proton X70 at Kuala Lumpur Convention Centre on Wednesday, December 12 th, 2018.

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 Figure 6 : Proton X70 Variant Comparison (PROTON, 2018)

Figure 7: Proton X70 full preview at the 2018 Kuala Lumpur International Motor Show (KLIMS) which is
based on the facelifted Geely Boyue, and will be offered in Standard 2WD, Executive 2WD, Executive
AWD and Premium 2WD variants

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 Figure 8: Proton X70 Exterior Colour Options (PROTON, 2018)

Figure 9: Another Proton X70 exterior color variant.

Prices for the Proton X70 start at RM99,800 upwards to RM123,800 (on the road, valid for Peninsular
Malaysia, Sabah and Sarawak).

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Figure 10: The Proton X70 interior image at the 2018 Kuala Lumpur International Motor Show (KLIMS)

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2.0 Literature Review on Variables

2.1 Brand Trust

A brand is described as a name, design, symbol or a consolidation of all three that

juxtaposition of a product or service and makes it distinctive from other competitors (Kotler,
Calder, Malthouse, & Korsten, 2012). Lee and Kang (2012) mentioned that brand trust is
proven to be a interceding variable that is akin to brand predictability, brand competency,
brand reputation, brand experience, brand satisfaction towards the organization and brand
loving with brand loyalty .Customers trust in the marketing literature is an idea which has a
solid relationship with customers observation (Setyawan, Kussudiyarsana, & Imronudin,
2015).

Trust is the desire for the operators which includes in an exchange or transaction and
the liability which is related with the expectation and one’s conduct (Alok & Srivastava, 2013;
Atkinson & Rosenthal, 2014). Assael (1998); Mohammad (2012) mentioned that trust could
be measured by estimating and deciding the trait and advantage of a brand. Morgan and Hunt
(1994); Parasuraman, Zeithaml, and Berry (1985) also mentioned that a considerable amount
of discussion on trust is connected to relationship marketing. Trust and commitment are
intervening factors in an organization with association with their customers (Morgan & Hunt,
1994b; Shah Alam & Mohd Yasin, 2010; Tezinde, Smith, & Murphy, 2002). There are two
levels of trust which are personal/individual trust and organizational trust which was mentioned
by Ekelund (2002). Brand trust is a segment of personal/individual trust. Trust of the customer
and fulfillment of satisfaction with a retailer intercedes the effect of trust in brand and fulfillment
on customers desire to repurchase (Zboja & Voorhees, 2006).

Sirdeshmukh, Singh, and Sabol (2002) proclaimed that trust of the customer is a
crucial and essential element in creating strong customer connections and to accomplish
continuous profits in the market. Delgado-Ballester and Luis Munuera-Alemán (2005)
mentioned trust is related from past experiences which in turns, transformed it into the part for
current purchases and terms the customer as steadfast which further unblemished the brand
value.

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2.2 Affective Brand Experience

Schmitt (2011) defined affective experiences (FEEL) are as promoting claims to

customers internal sentiments and feelings, with the goal of creating affective encounters and
experiences that connects from the range of subliminal positive moods that associates a
customer’s positive state of mind towards a strong brand/product and compelling feelings of
euphoria and pride. Additionally, Xu and Chan (2010) mentioned that the feel experiences of
the customers are defined as the discernment of enjoyment and gratification.

Accordingly, in order to have the best relationships with customers (affective or

emotional in nature) companies must accomplished in fulfilling certain requirements as well
as making the collaborations with its customers pleasurable, therefore, customers are
progressively disposed to remain faithful to the company, notwithstanding even when there is
a service or product failure (Pine & Gilmore, 2011).

Emotional certainty demonstrates that the assurance related with a feeling can
influence product or service information (Kim, Ferrin, & Rao, 2003). Past researches have
deduced that nowadays, customers do not only buy just the products and services alone but
they will also explore and implore purchases that will also have an emotional experience all
around (Ekström & Brembeck, 2004; Ratneshwar & Mick, 2005).

2.3 Perceived quality

In their study, Saleem, Ghafar, Ibrahim, Yousuf, and Ahmed (2015) found that product
perceived quality directly influences to purchase intention. Customers have a few perceptions
about the item quality, cost and styles before obtaining the product. Subsequently, after
utilizing the product, the customers purchase intention could increase or it could also diminish
being that purchase intention has an immediate influence with each other. In the event that
the quality of a product is high, the customers purchase intention will likely to be increased.

According to Oliver and Rust (1994) the researchers have mentioned that a company
can have the authority to have control of the quality of its products. Therefore, it is proposed
that when perceived quality is viewed as a comprehensive measurement, it can also be said
that perceived quality is the foundation of customer satisfaction (Bou-Llusar, Camisón-
Zornoza, & Escrig-Tena, 2001). Grunert, Bredahl, and Brunsø (2004) mentioned that the

14
perceived quality of a product is the assessment made by the customer entrusting that all
arrangements of the basic as well as external element of the product or services.

2.4 Price perception

A customer’s decision making can be affected by many variables and the price of a
product or service is one of the variables that can influence a customer’s mind in purchasing.
The majority of customer will behave differently to certain prices. Price is an element that must
be controlled amicably with the objective accomplished by the organization (Widyastutir &
Said, 2017). The definition of price according to Ashaduzzaman, Khan, and Ahmed (2011) is
that sum of monetary that is charged on a product or services or various total of customer
trades in order to have the advantage from having or utilizing a product as well as service that
is traded.

Price undisputedly is one of the most pivotal market placing indications. A customer’s
income will influenced the price that is paid by the customer (Widyastutir & Said, 2017). In
order to reduce financial risks, boost price fairness perceived and intensify outstanding buying
intention from price strategy held, companies need to set a reduced price for their items (Lan
& Sheng, 2014). The advertising and pricing strategies played an attractive factor that can
sway the customers perceptions and purchase intentions (Wu, Wu, Lee, & Tsai, 2014) .
Othman and Rahman (2014) believed that by having a discounted price on a product or
service, it will be more advantageous than premium priced products. Rajput, Kesharwani, and
Khanna (2012) agrees that the sensitivity in price of a product has led to a remarkably
moderate impact towards value of quality and customer purchasing intentions.

According to Khare, Achtani, and Khattar (2014) price perception factors influences
the customers shopping centre retailer promotional dispositions. Shopping retailers can utilize
the promotional advertising efforts to draw value conscious, price conscious and coupon
inclined customers. The discounted items as well as rebates offered by shopping centres has
empowered customers to buy marked items at discounted price. Since that strategies in
pricing are essential issue for retailers, the researcher’s findings were able to contribute viable
insights of knowledge on promotional mix decisions. Geçti (2014) have stated that price
perception is regarded on multidimensional base, in which price perception’s dimensions may
change in regards of the roles that the price plays on customers' buying behaviour.

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16
 CONCEPTUAL FRAMEWORK

Brand Trust

Affective brand
experience Purchase
Intention
Perceived
Quality

Price
perception &
fairness

Before X70 After X70 launch

launch

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