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A DEMOGRAPHIC STUDY
FOR
CONSUMER PRODUCT
(LAPTOP)
EVALUATION BASED ON ADD-
ON FEATURES
PREPARED BY GROUP 4:
EPGDIB 2009-11
IIFT, NEW DELHI
TABLE OF CONTENTS
1. Introduction __________________________________________________________ 3
2. Objective ____________________________________________________________ 4
2.1. Steps Undertaken for project execution: ______________________________ 4
3. Hypothesis ___________________________________________________________ 5
3.1. Consumer Perception for Add-On in Goods Sector: ______________________ 5
3.2. Demographics _______________________________________________ 5
3.2.1. Income ____________________________________________________________ 6
3.2.2. Occupation _________________________________________________________ 6
3.2.3. Age ______________________________________________________________ 6
4. Methodology _________________________________________________________ 7
5. Data Used and the Analysis _____________________________________________ 8
5.1. Demographic Data & Analysis ___________________________________ 10
5.1.1. Demographic Factor - Age: _____________________________________________ 10
5.1.2. Demographic Factor - Income____________________________________________ 13
5.1.3. Demographic Factor - Occupation _________________________________________ 15
6. Conclusion & Implications for firms _____________________________________ 17
7. ANNEXURE _________________________________________________________ 18
1. Introduction
Consumer behavior (in consumer business context) referred to as the study of when, why,
how, where and what people do or do not buy products. Consumer involvement is a source
to explain the differences in the degree of both mental and physical effort of a consumer and
his decision making. During the past five decades, consumer involvement received
noteworthy attention among academicians as it is considered to have paradigmatic
implications on the consumers’ decision.
Present study has its focus on understanding how consumers ' perceive and consider the
“Add-On Features” in products that help consumers draw inferences which changes the
perceived utility of the base good itself.
The goods such as Laptops come with a cluster of features. The features can be classified
as
Aligned Features: that enhance an existing feature
Non-Aligned Features: that provides a new capability
Literature references:
http://www.journals.uchicago.edu/doi/abs/10.1086/596717
http://ideas.repec.org/a/ucp/jconrs/v36y2009i1p17-28.html
2. Objective
Considering the above mentioned reasons the study on “How the consumer perceives the
Add-On features was conducted”.
The Objectives for the study are to analyze the role of “Add-On Features” in pre purchase
evaluations of goods and to understand how these impact the consumer behavior.
Alteration of Questionnaire
3. Hypothesis
To develop the formal hypothesis for the goods Sector, we draw primarily on the fact that
people perceive differences in the goods as either alignable or non-alignable. An alignable
difference relates to some common characteristics of objects, such as when two or more
options vary on the level of a shared attribute. In contrast, a non alignable difference is a
property of one object that has no direct correspondents in other objects, such as when one
option offers a benefit that competing alternatives do not.
The firm provides alignable add-on when it enhances features that base good already has,
and provides non-alignable add-ons when add on introduces new capabilities.
HYP-1
Consumers certain about the value of the product will judge it to be more appealing when a
firm offers alignable add-ons which enhance the product attributes.
HYP-2
Consumers certain about the value of the product will judge it to be less appealing when a
firm offers non alignable add-ons when no such option exists.
3.2. Demographics
Within a person related antecedents, demographics have considerable influence on the
add-ons.
The below figure depicts the relationship between demographics and consumer
involvement.
3.2.1. Income
Income of the individual combined with his accumulated wealth determines the purchasing
power. Though income enables purchases, however, it does not generally cause or explain
them.
It is likely that the occupation and education directly influence the preferences for products,
media and activities; income provides the means to acquire them.
HYP-3
The consumer from different income groups values the add-on features differently.
3.2.2. Occupation
Various studies have found differences in preferences of products with differences in the
occupations. Occupation is one of the widely applied cues to evaluate an individual
(Hawkins in 2003). It is strongly related to education and income.
However, it may be speculated that the differences in the perception levels of consumer
would be influenced by different occupations. Hence, the fourth hypothesis is stated as
HYP-4
The consumer perception for the add-on differs because of the differences in the
occupation.
3.2.3. Age
HYP-5
The consumer perception for the add-on differs because of the differences in the Age.
4. Methodology
The analysis was captured through a set of questionnaire targeted at the segment of
different Income/Age/ Occupation Groups. The main groups for the same have been the
Corporate where we all have been working.
The study was conducted on one product from the Goods industry. The Laptop was taken
as the product from Good Industry.
The set of surveys conducted explored the utility of the product to the consumer based on
the “Add-On Features” that were provided to the user.
The surveys also explored the effects of the Demographic such as Income, Occupation &
Age that influences consumer’s perception.
Please rate the below features, if the features are enhanced from their current specs ex. RAM size increased to 8GB,based on the
impact that feature has on overall utility of the laptop if you are in purchase of the laptop. Similarly the features marked in green
above have been improved to new specs. Please rate them accordingly
The questionnaire file along with the consolidated responses is attached as part of the
annexure.
The consolidated set of data for the alignable/ non-alignable Features of the Laptop is listed
below:
Laptop Ratings
Alignable Features 1 2 3 4 5
Processor 2.1 GHz,1066 FSB 15 13 72 22 58
Memory -RAM 8GB 15 13 68 74 10
Hard Drive 500GB 12 18 68 76 8
Video card 512MB 6 68 78 16 12
TOTAL 48 112 286 188 88
ANALYSIS
Alignable Feature Analysis
As can be seen from the graph below, higher ratings are given to the features which are
aligned with the product.
This effectively implies that our Hypothesis HYP-1 stands true.
As can be seen from the graph, the lower ratings are given to the features which are not
aligned with the product. This effectively implies the utility of these add-ons to the users is
low. A noteworthy fact is that the segment of the consumers we have targeted, have good
knowledge about the product and its usage.
This effectively implies that our Hypothesis HYP-2 stands true.
400
350
300
CONSUMER RATINGS
250
ALlIGNED FEATURES
200
UNALLIGNED FEATURES
150
100
50
0
1 2 3 4 5
RATING SCALE
The above graph typically proves that the consumers certain about the value of the product
will judge the alignable add-on to be more valuable than the non-aligned add on.
Hence the Hypothesis-1 and 2 are believed to be true.
The graph below provides an insight into the perception differences that exists for add-on
features across the consumers belonging to different age.
160
140
120
100
CONSUMER RATING
Age Group 20-30
80 Age Group 30-40
Age Group >40
60
40
20
0
1 2 3 4 5
RATING SCALE
As can be seen from the above graph, the consumers of different age groups have given
higher ratings for the aligned features. This helps us to conclude that the aligned features of
a good are valued across at a higher scale by the group of people across the different age
groups.
The graph below provides a insight into the perception differences that exists for non
aligned add-on features across the consumers belonging to different age.
200
180
160
140
120
Consumer rating Age 20-30
100 Age 30-40
Age >40
80
60
40
20
0
1 2 3 4 5
Rating Scale
As can be seen from the above graph, the consumers from different age groups have given
lower ratings for the non aligned features. This helps us to conclude that the non-aligned
features of a good are valued across at a lower scale by the group of people across the
different age groups.
This effectively implies that our Hypothesis HYP-5 stands true.
The consumer survey done has been segregated, and the data collected based on different
income groups is listed below.
The graph below provides an insight into the perception differences that exist for aligned
add-on features across the consumers belonging to different income groups.
Demographic Income: Consumer Behavior for Aligned Add-Ons
160
140
120
100
60
40
20
0
1 2 3 4 5
Rating Scale
As can be seen from the above graph, even though the consumers are from different
income groups they have provided substantially higher ratings for the aligned features of the
product.
160
140
120
100
Consumer Ratings
Income level < 25000
Income level 25000-50000
80
Income level 50000-75000
Income level 75000-100000
60
40
20
0
1 2 3 4 5
Rating Scale
As can be seen from the above graph, the consumers from the income group of less than
25000 have provided substantially lower ratings for the non-aligned features of the product.
The same is reflected across for all the income groups.
This effectively implies that our Hypothesis HYP-3 stands true.
The graph below provides an insight into the perception differences that exist for aligned
add-on features across the consumers belonging to different occupations.
160
140
120
Consumer Ratings
100
Profession :Business
80 Profession :Services
Profession :Students
60
40
20
0
1 2 3 4 5
Rating Scale
As can be seen from the above graph, the consumers of different occupations have given
different ratings to the aligned features. The students and working professionals such as
Engineers, Doctors have given higher ratings to the aligned features as compared to the
consumers from business domains.
As can be seen in the below graph, the consumers from nearly all professions have rated
the non-aligned features to be lower. Thus, it further adds on to our hypothesis that the non-
aligned features do not capture much of the consumer’s decision making process as
compared to the aligned features.
This effectively implies that our Hypothesis HYP-4 stands true.
160
140
120
Consumer Ratings
100
Profession: Business
80 Profession: Service
Profession: Student
60
40
20
0
1 2 3 4 5
Rating Scale
After doing an elaborate survey across a section of the 180 consumers (who were primarily
well educated about the products), we identified that the consumer perception is
comparatively more driven by the value of the money a base product offers, and then
subsequently for the additional goodies that the firm offers with the goods.
The comparisons again were done across consumers with different demographics.
Later, we found out that that most of the demographic variables have significant influence
on the perception level of the consumers for the product. The data collected and segregated
for the demographic variables like age, income, occupation helped us conclude the
significant influence of these factors on the consumer decision making process.
These findings are interesting and useful for marketers. Marketers of products can use age
income and occupation, as the key variables for planning their marketing strategies.
The relevant differences as had been captured in the study for the Add-on for Product can
help marketer to adopt different marketing programs for each of the product.
An even bigger challenge for marketer is to bring the low perceived add-on features such as
printers in case of laptops to a highly perceived item or all together capture the attention of
educated consumers with some different aligned add-on.
The findings of the study are constrained by three major factors; only one product for the
study, moderate sample size with majority of the samples being from a section of the
consumer who are well educated about the product. Though some of the findings are similar
to the results of past studies; there are also contrasting results that our study has found.
In that sense, this study would be useful as an addition to the existing literature. Further, the
scale is moderately consistent internally and we have not validated the instrument to our
context which remains another constraint.
7. ANNEXURE
Questionnaire:
Laptop
(Product)_questionnaire.xls