Consumer preferences and market segments for 1.3-liter cars in Davao City, Philippines: An application of conjoint analysis as a predictive technique

• Main Author: Cruz, Marvin M.
• Format: text
• Language: English
• Published: Animo Repository 2004
• Subjects: Consumers' preferences; Brand choice; Market segmentation; Conjoint analysis (Marketing); Automobiles; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_doctoral/45; https://animorepository.dlsu.edu.ph/context/etd_doctoral/article/1044/viewcontent/CDTG003774_P.pdf
• Institution: De La Salle University

The study made use of conjoint analysis as a predictive technique in marketing research. It highlighted the use of the technique in analyzing consumer preferences for new 1.3-liter passenger cars in Davao City, Philippines and in segmenting the City’s market for these products. Specifically, the study answered the following marketing research questions: What product attributes form the preference structure of consumers for the current models of selected Toyota and Honda passenger cars in the 1.3-liter class in Davao City? What are the perceived values or utilities that consumers attach to the different product attributes forming the preference structure for the current models of Toyota and Honda passenger cars in the 1.3-liter class in Davao City? Do price changes generally affect the consumer preference for either a Toyota or a Honda as a brand? Do all consumers value product attributes of the current models of Toyota and Honda passenger cars in the 1.3-liter class in Davao City in a similar fashion or are there segments of consumers with different preferences? If significant consumer segments exist, what are the distinguishing characteristics of these segments? Which of the two brands (Toyota or Honda) of current models of 1.3-liter passenger cars is more preferred by Davao City consumers? Not all product attributes that may be considered important by different consumers in forming preferences can be included in the study. This limitation is due to the technical restrictions in the statistical methods used. Therefore, as an initial procedure, the researcher first conducted two FGDs in Davao City to determine qualitatively only those attributes that may be considered important by Davao City consumers. The researcher subsequently tested the selected attributes that resulted from the FGDs through the use of conjoint analysis, a quantitative procedure. Moreover, the researcher tested the following hypotheses: All six attributes (brand, price, color, body style, feature, and financing scheme) are important in the determination of preferences of Davao City consumers for the current models of selected Toyota and Honda passenger cars in the 1.3-liter class. Price significantly affects the preferences of Davao City consumers for a new Toyota or a new Honda passenger car in the 1.3-liter class. There are significant differences in the preferences of main groups of Davao City consumers for the current models of selected Toyota and Honda passenger cars in the 1.3-liter class. The new 1.3-liter Toyota passenger car is more preferred by Davao City consumers than the new 1.3-liter Honda passenger car. The researcher collected data from a sample of 300 randomly selected respondents who were stratified in two stages to form a priori segments. The first a priori group consisted of 100 college students from Ateneo de Davao De La Salle University, University, University of the Philippines – Mindanao, University of Mindanao, Holy Cross of Davao College at Sta. Ana, and Brokenshire College. The second a priori group consisted of 100 junior professionals and the third a priori group consisted of 100 senior professionals. Data were collected through the usual conjoint method of collecting data, that is, through the personal interview method. The researcher used a specially designed conjoint questionnaire generated by efficient nonorthogonal experimental design constructed by the OPTEX procedure of SAS. It was designed to include brand by price interaction effects. The questionnaire also collected additional data from respondents such as demographic, psychographic, and behavioral data that were later used to cross-classify post hoc market segments formed by a subsequent statistical technique called cluster analysis. Based on the tested hypotheses, the following conclusions are given by the study: All six attributes (brand, price, color, body style, feature, and financing scheme) contribute to the total worth or utility assigned by the main groups of Davao City respondents to a new 1.3-liter class passenger car. Price significantly affects the total worth or utility of either a new Toyota or a new Honda passenger car. The conjoint model with brand by price interaction is valid at the aggregate levels for all three main groups of Davao City respondents. The total worth or utility of either brand decreases for all three main groups of respondents as price increases. The three main groups of respondents differ in terms of preference for a new 1.3-liter passenger car. Toyota is the more preferred brand of both senior professionals and junior professionals. Even if they are considered two separate segments, they have the same preference for a brand. On the other hand, Honda is the more preferred brand of college students. Likewise, the following additional conclusions are also given by the study: Conjoint analysis could be used for segmentation but it needs to be complemented with cluster analysis to determine more distinctive market segments from a larger segment. More distinctive market segments could be identified within each a priori segment of respondents in Davao City. Three distinctive post hoc segments are found to be significant within the group of college students. Three more post hoc segments are also found in each of the other two groups, namely, the group of junior professionals and the group of senior professionals. More segments of Davao City consumers prefer Toyota than Honda. There are six consumer segments that prefer Toyota than Honda while there are only three consumer segments that prefer Honda. In terms of size, Toyota is preferred by around 63% of all respondents with significant preferences while Honda is preferred by only 37% of all respondents in Davao City. In terms of sex, grouping, and age, Toyota is more preferred by male college students who are about 20 years old from Ateneo de Davao University, male college students from the University of Mindanao who are also about 20 years old, male junior professionals who are aged around 32 years old, male senior professionals who are aged around 45 years old, female junior professionals who are about 31 years old, and male senior professionals who are about 46 years old. In terms of sex, grouping, and age, Honda is more preferred by female junior professionals who are about 31 years old, female college students who are about 20 years old, and female senior professionals who are about 43 years old. Based on the conclusions, it can be inferred that a better strategy for a car dealer in Davao City is to consider the different groups as different market segments with differing preferences for new 1.3-liter passenger cars. A segmenting strategy, therefore, will work better than a combining strategy.