Consumer’s Tastes Preferences and Priorities for Pricey Durablesas Revealed by Actual Purchases in National Capital Region of Delhi

Abstract

especially the pricey consumer durables in a highly competitive globalized Indian market. Conventional wisdom postulates that price and income constraints are the major determinants of consumers’/buyers’ choices and resultant purchase decisions. Income constraint is overcome by access to finance, but prices have no such options except the choice of inferior quality lower priced goods/models. In fact, there is a wide range of options to choose from and many white Goods have relatively cheaper local brands available in the market. There exists highly marked market segmentation based on product prices and paying capacity of the buyers. Price constraint may constitute the bottleneck for only buyers in one segment of the market. A substantial proportion of low/moderate income group of buyers also tend to use finance to overcome their income constraint in order to buy high priced white consumer goods. The high income upward mobile and trendsetting consumers choose pricey options; they often go for newly produced goods on low scales which enter the market for the first time and which command extremely high prices. Greater the price of such goods, lower is demand for the same and higher is their conspicuousness, distinctiveness and snob value even among the higher income peer groups (See, Baghati, Arvind, 2012, Shri Prakash, 2010, and Shri Prakash, Shalini Sharma and Arvind Baghati, 2010). Generally, such products as enter the market for the first time embody entirely new designs and models while new designs and new models of existing products command extremely high prices due to production on a lower scale, high cost of innovation embodied in the evolving of new product or designs and attractive features, and high cost of market exploration and marketing (Cf. Cramer, 1972). High price, in its turn, limits the market size. This also adds to demonstration effect and snob value for the owners. First group of buyers of such new market entrant goods become the lead buyers for subsequent purchasers of these goods; they in fact act as advertisers of such goods without getting paid for it by the producers. They act as the leading consumers and trend setters in society and activate urges in others for the acquisition for these goods. This makes such buyers/owners of such goods feel not to be a part of the crowd and as ones who belong to exclusive class like the erstwhile Maharajas and Nobabs. Price is, however, also supposed to be a proxy of quality; higher the price, greater is the perceived quality, and the snob or demonstration value for the owners. All above facets reflect psychological urges and drivers of motivation, which directly or indirectly influences buyers’/consumers’ tastes and preferences. Tastes and preferences have, however, remained hidden behind the invisible curtain simply because these are neither observable directly nor measurable quantitatively. Therefore, tastes and preferences have generally been taken as given and fixed at the given point in time, though no one questions the validity of the hypothesis the tastes and preferences tend to change through time in ad dynamically growing economy due to (i) increase in incomes, (ii) rise in social status, (iii) upward movement in occupational ladder, (iv) Increased level of education of the younger members and their influence on purchase decisions of the households, and (iv) continuous entry of new and better products or models in the market. This study assumes that observed buying behavior of purchasers/consumers reveal their tastes and preferences. Under the given price and income conditions confronting buyers/consumers at any given time, actual purchases reflect the choices based on tastes and preferences; tastes and preferences are the real drives of choices reflected by actual purchases. For example, if m models of a pricey good are available at Pm, m=1,2,…j,……. m. The following relation is satisfied by the observed prices: P1 less than P2 less than P3 less than Pj>Pj+1>….> Pm. Thus, Pj is the highest observed price at the given time. If we observe one or some buyers opting for j-th model, he/she has displayed his/her preference for model j. His tastes and preferences afe defined by this choice. This notion of tastes and preferences is based on Marshall’s adage that the ‘strength of’ abstract and unobservable factors and forces ‘such as motivation’ is defined by the outcome(s) that have emanated from the operative influence of these factors on human behavior. This paper explores the influence of tastes and preferences and factors affecting the same on consumer’s choices involved in purchase decisions of pricey white goods. The determinants of tastes and preferences lie in the domain of psychological urges/ motivation/drivers. One may be motivated by the desire to move up the social ladder by keeping up with peers or group leaders, or to maintain the current status, or move from lower to higher lifestyle, or to catch up with neighbors, friends and relatives. Pushed by needling of spouse and children, taunts or sneering by neighbors, friends, colleagues and/or desire to acquire snob value or satisfy the urge to show off, and backed by purchasing power people opt for the best available in the market. In some cases, income constraint induces to opt for 2nd or 3rd best. But psychological urges/drivers cannot be translated into actuality without the backing of adequate purchasing power and willingness to part with the money required for the purchase of a chosen good. This paper explores and examines these facets of purchase behavior of consumers. The study is based on primary data collected from households residing in National capital region of Delhi. The sample comprises 600 respondents through geographically stratified systematic random sampling procedure. The study focuses on purchases related to White goods. Both quantitative and non-parametric methods are used in data analysis.