Report on Consumer Behavior in the Second Hand Car Market

This report provides a comprehensive analysis of consumer behavior within the second hand car market. It begins with an executive summary outlining the report's focus on understanding the factors influencing consumer purchase decisions. The report delves into the product description, analyzing the purchase situation as medium-high involvement, and explores the perceived risks associated with buying a used car, including functional, physical, financial, social, psychological, time, and ownership risks. A detailed target market profile is presented, examining demographic, psychographic, and behavioral variables, including age, income, family size, and buying patterns, with insights into customer preferences for branded dealerships and the age of purchased vehicles. The report also discusses the factors influencing the consumer decision-making process, emphasizing the recognition of need, information sources, and the significance of product efficacy, including resale value, after-sales service, and driving experience. The report concludes by highlighting the importance of product efficacy in influencing consumer choices for second hand cars, emphasizing attributes such as performance, driving comfort, reliability, and cost-effectiveness.

Running head: MARKETING
Consumer Behavior
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The report aims at providing an overview of consumer behavior in relation to the second hand
car market. A large section of the consumers buy second hand car. It is therefore vital for the
marketers to analyze the variables that influence the purchase decision of the second hand car.
Against this particular backdrop, an attempt is made for uncovering the influencing factors
behind the purchase decision of the consumers. The report will thus put across an analysis
mentioning that the consumer segment opting for the second hand car has different set of priority
factors that guides their purchase decision.

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Table of Contents
1. Introduction:................................................................................................................................2
2. Purchase Situation and Target Market/ Customer Persona Profile............................................2
2.1 Description of Product / Service and Analysis of the Type of Consumption or Purchase
Situation.......................................................................................................................................2
2.2 Target Market Profile.............................................................................................................5
3. Factors Influencing Consumer Decision Making Process...........................................................8
4. Conclusions:................................................................................................................................9
5. Recommendations........................................................................................................................9
References:....................................................................................................................................10

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1. Introduction:
The report aims at providing an insight into consumer behavior in context of second hand
car market or used car market. The second hand cars were not a significant part of auto industry
due to its unorganized and risky buying procedures and lack of warranty (Maxcy & Silberston,
2017). The study makes an attempt in analyzing the preference and buying behavior of consumer
towards the second hand car. The report also evaluates the organized and the unorganized nature
of the second hand car market and the response and reaction of the consumers. The report thus
covers a complete view of the customers and the preference pattern for second hand cars. The
report also identifies the factors that influence customers’ decisions towards purchase of the
second hand car. The report also helps in understanding the second hand car market of Australia.
2. Purchase Situation and Target Market/ Customer Persona Profile
2.1 Description of Product / Service and Analysis of the Type of Consumption or Purchase
Situation
The product described here is the second hand car or used car. Buying a second hand car
is more like a treasure hunt. Nowadays, there are amazing deals all over the internet that turns it
into a tool for car shopping (Shende, 2014). Therefore, there is every chance for the customer to
find a suitable car deal that fit his budget and needs. Besides, there are ample incentives of
buying a second hand car. It helps in saving money on the registration, car insurance,
depreciation and taxes due loss of car value due to wear and tear with time (Klöckner, Nayum &
Mehmetoglu, 2013). This absolutely makes sense since the cars have never become more

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reliable. It is amazing to find some vehicles that have remained trouble free even after travelling
100,000 miles.
The type of consumption or purchase situation for a second hand car would be medium
high involvement. It would not be a solely low involvement, medium involvement or high
involvement purchase decision. This is because low involvement represents those products that
reflect everyday purchase decisions whereas high involvement represents products that reflect
consumer status, personality and the justifying lifestyle and involves high price (Rani, 2014).
Medium involvement purchase decisions are decisions made in store over longer period of time.
For example, consumers show medium level involvement while buying a pair of shoes (Holmes,
Byrne & Rowley, 2014). Here the consumer is more involved than they have been in buying
household items but they definitely do not undertake a research in buying a pair of shoe. Instead,
they try onto other pairs until they find the suitable pair. Buying a second hand car requires the
consumer to spend substantial amount of money and get more involved than buying the
household products so the purchase decision remains inclined towards medium high involvement
that reflects gathering more information, careful consideration and a complex process of decision
making.
Perceived risk refers to the uncertainties that the consumers faces when they are not able
to foresee consequences of the purchase decisions (Schaefers, Lawson & Kukar-Kinney, 2016).
The nature of perceived risk in buying a second hand car includes (Goldsmith, 2016):
 Functional risk: It is the risk that the product does not perform as per expectation
 Physical risk: It is the risk that the car might impose on self and on the others.
 Financial risk: It is the risk involved when the product is not worth the cost.

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 Social risk: It is the risk involved when a poor choice of product results in social
embarrassment.
 Psychological risk: It is the risk attached with a poor product hampering the consumer
ego.
 Time risk: It refers to the risk of time being wasted when the product does not deliver
performance as expected.
 Ownership risk: It is the risk associated with the buyer who does not hold a good title of
the product. Ownership risks materialize if the second hand car is a stolen product.
Thus, the perception of risk and their impact on the purchase decision of the consumers
have been crucial decisions within the market place (Ma, Yang & Mourali, 2014). It has been
found that a risk which is not perceived is unable to influence consumer behavior. Most of the
studies conducted on the perceived risk of the consumer behavior had been on the basis that
amount of risk perceived by consumer in a purchase situation is found to determine not only
the purchase behavior but also his or her attitude.
2.2 Target Market Profile
The customers of the second hand car have consistent characteristics in terms of the
demographic, psychographic and the behavioral variables. Demographic variables include age,
income, gender and attributes like age, gender, sex, educational qualification and religion
(Chong, 2013). The target market in terms of demography is mentioned as follows:
 67 percent of the customers buying second hand cars lie within the age group of 26 to 35
years
 22 percent of all the customers fall between the age group of 36-48 years

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 66 percent of customers buying second hand cars have been found to have close to 2 to 4
members in the family, 30 percent comprise of 4 to 6 family members while the
remaining 4 percent have 2 members. This represents people with families who primarily
focus on practical and safe vehicles that not only fits within the budget but is also able to
perform longer trips, carry kids and fetch groceries.
 53 percent of the customers represents the small business owners
 60 percent of the customers have been found to be employees of the private sector.
 88 percent customers of the second hand car have been students who are pursuing a
postgraduate or college degree. They mostly look for an economical and safe car. These
group of customers have been more concerned with the flashy looks, price and in staying
cool.
The target market profile based on behavioral variables is mostly based on the buying
patterns of the customers that included brand loyalty, frequency and benefits (Walter, Cleff &
Chu, 2013). As far as the buying patterns are concerned, the parameters that influence the
purchase are the budget, brand, kilometers run, condition of vehicle, resale value, vehicle type,
fuel type, internal features and the maintenance cost. The targeted customers in urban regions
mostly prefer the branded dealerships. It has been found that although customer looks for
information over the internet but the transaction remains concluded at physical dealership.
Besides the age of the purchased second hand car ranges between 2 to 4 years. This particular
trend remains similar from the perspectives of dealer and customers and across the regions. A
very small percentage of customers opt for cars that are 4 to 6 years old. It is also been found
that multi-brand dealers and Original Equipment Manufacturer (OEM) comparatively sell a
higher percentage of the second hand car that has already run over 50,000 kilometers compared

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to the local traders and the dealers. This indicated comfort of the warranties that comes with the
purchase of a refurbished car from a branded dealer.
On the other hand, the target market profile of the second hand car based on psychographic
variables includes beliefs, traits, values, interest, lifestyle and attitudes (Shukla, Banerjee &
Adidam, 2013). Hence, these variables determine the nature of purchase for the second hand
cars. 78 percent of the customers are found to be first time buyers. Amongst them, a higher
percentage of consumers have been found to upgrade them from two -wheeler to car. Close to 38
percent of the consumers have been repeat buyers while 18 percent of the customer previously
owned a used car. Thus, it was found that the owners of the two wheelers formed a greater
portion of the second hand car buyers.
Figure 1: Diagrammatic Representation of the Nature of Purchase
Source: (Baltas & Saridakis, 2013)
Opposing to the common person, it can be said major portion of the customers purchase
second hand car for the personal use. There are also customers who use it for both the personal
and the commercial use. More importantly, the dealers also believe that most of the urban

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customers buy them for the personal use. It has been found that the multiband dealers and thee
local agents get a preference over the OEM dealers amongst the customers who buys second
hand car for commercial and personal use.
3. Factors Influencing Consumer Decision Making Process
The process of buying begins with the recognition of need. In this stage, the consumer
recognizes a need or a problem and thereby responds to the marketing stimulus (Kumar &
Ghodeswar, 2015). When the need is strong and product seems to be available that precisely
meet the need then the consumers make a purchase decision. Information regarding the product
can be obtained from various sources like personal, commercial, public and experiential sources.
The personal sources include the friends, family and the neighbors while the commercial sources
mostly include the salespeople, advertisers and dealers. Public sources seem to be including
radio, television, newspaper, public sources and the specialist magazine while experiential
sources includes examining and handling the products. However, the influence and the
usefulness of the information sources varies based on products and customers. Researches have
put across that customers values and respects the personal sources over commercial sources.
Besides, the customers also make a comparison amongst the different brands based on which he
makes a purchase decision. The decision for purchase also depends on the product quality and
the benefits of using the chosen product.
However, in the above context, it can be said that one of the most important factor that is
believed to influence the consumers purchase decision for second hand cars is the product
efficacy (Maniatis, 2016). It has been found that for the purchase of the new car, the attraction
remains not only on the functional or the tangible level but also at the symbolic or the intangible

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level. It has been found that the key factor influencing the consumer buying decision for a
second hand car is the product efficacy. The important items in this factor that are considered
while buying a second hand car includes a better resale value, availability of after sales service,
comfortable riding experience, stylish interiors and space and look (Ling, 2013). The factor
therefore explains that while buying the second hand car, the consumer emphasizes on the
performance of the product (Lysonski & Durvasula, 2013). Besides, while picking and choosing
a second hand car some benefits that the consumer looks forward to include attributes like
performance, driving comfort, reliability, conveying interiors that reflects status, cost in relation
to driving and residual value. Here, it is to be noted that the consumers have already satisfied the
psychological and the social need with the first car and hence for the purchase of the second
hand car they bank on more tangibles which included benefits and attributes.
4. Conclusions:
On a concluding note, it can be said that that the consumer has a medium high
involvement in the purchase of the product thereby leading to a complicated process of decision
making. The report also portrays how the second hand cars have targeted its customers based on
demographic, psychographic and behavioral variables. The report also makes it clear that in the
second hand car market product efficacy is one of the factors influencing the purchase decision
of the consumers. Nevertheless, with tine the second hand car market is believed to experience a
boom with increasing number of consumers expressing interest in buying the product.
5. Recommendations
The second hand car dealers should note that the educated and the younger buyers remain
risk averse in purchasing these cars. Therefore, these customers should be paid enhanced

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attention for enhancing customer retention, attraction and satisfaction. It is therefore
recommended that although they remain risk averse but it is important for the dealers to
minimize the perceived risk for enhancing the sales. They can however achieve this by
undertaking by overhauling and necessary repairing before resale. This would help in reducing
perceived risks like the physical, financial and the functional risk.
It is also recommended that expressing honesty, customer relationship management and
frankness may minimize every form of perceived risk of second hand cars thereby resulting in
customer loyalty and attraction.

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