Consumer Satisfaction and Service Quality Analysis of ACI Power Tiller
Bangladesh is a South Asian country with the record of highest population density (1.48% population growth per annum) where 77% people live in rural areas. Mainly three sectors (agriculture, industry and services) are behind the economic growth and agriculture is one of them. For a developing country like Bangladesh agriculture plays a dominant role in the economy as the agricultural sector holds a substantial amount in the country’s GDP (Gross domestic product). During financial year 2011-2012 agriculture sector alone had a contribution of 19.29% in the GDP growth. Though service sector brings almost half of economic earnings, two third of Bangladeshi people are engaged in agricultural activities.
Agro based sector is continuing to grow with the use of advanced technology and modern machineries. In Bangladesh agricultural sector refers to crop cultivation (mainly rice, jute, wheat, sugar, cotton, vegetable, tea, tobacco etc.), animal farming (poultry, dairy etc.), forestry, fisheries and other related services etc.
Like other industries, consumer preference of agricultural machineries is very necessary to identify since consumers choice influences the industry’s development. A country’s economic prosperity largely depends on consumers. In many cases, consumer’s demographic and economic trend determines the prospects of agricultural market. Before forecasting industry sales and revenues, marketers should have clear idea of consumer’s demand and expenditure pattern. To reach the profitable market segment or segments we must know the behavior of the segment.
Agricultural machinery can be of different types for different group of customers based on their age, income, social status, education level etc. Without knowing consumer preference in depth it is not possible to get significant market share and compete with other firms as well.
Again, consumer preference differs for the same product in different stages of industry life cycle. To take business decisions organizations need to know preference level of their customers. For ACI Motors, in order to introduce two new types of power tiller for the two different market segments, a research on ‘Consumer preference of ACI Power Tiller’ is required to do.
Objectives
Main objectives
- Identify demand of upcoming power tiller among different group of consumers
- Identify satisfaction related to power tiller and its usage
Specific objectives
- Determine maintenance procedure and duration of usage
- Determine service quality of dealers and mechanics
- Determine consumer’s demographic and other information’s relationships to other characteristics to purchase of power tiller.
Background
Agricultural sector has a noticeable contribution in the GDP of Bangladesh. When other sectors are developing and becoming modernized, agricultural system need to be mechanized as well for productive farming and development of country’s economic situation. Competing with other nations, agribusiness of our country is moving fast towards excellence. To assure continuous progress in this industry we need to provide farmers modern machineries for cultivation.
Keeping this in mind ACI Motors began its operation with a product range of agricultural machineries like tractor, power tiller, mini combined harvester and guaranteed supply of quality machineries and better after sales service. All of these brands have got tremendous responses from farmers. ACI Motors is importing quality power tillers from China and other countries since last 2.5 years. ACI Motors operates sales activities by establishing sales and service centre in many parts of the country and appointing dealers all over Bangladesh.
Power tiller sold by ACI Motors are not only well performed products but also ensures after sales service through qualified and experienced mechanical engineers. Now, considering Bangladeshi perspective in the upcoming months ACI Limited is planning to bring more developed brands of power tiller for improved and smooth cultivation. There, this survey was decided to conduct by the management for identifying consumer demand towards their potential power tiller in the market.
The study has assisted the managers to take decision regarding their investment in the new products. At the same time it aided to know consumers attitude and their readiness to purchase high priced products. We also got to know usage condition and satisfaction after purchasing power tiller. The outcome of this study can contribute largely to the organization by finding out demands among different group of consumers.
Organization Profile
ICI (Imperial Chemical Industries) Company was founded back in 1968 which is now known as ACI (Advanced Chemical Industries). After the liberation War ACI became a Public Limited Company and currently it is one of the largest and successful firms of Bangladesh. ACI has mainly four types of business divisions which are:
- Pharmaceuticals
- Consumer Brands and Commodity Products
- Logistics and
- Agribusiness
Mission
ACI’s mission is improving lifestyle standard of the community with proper functioning of information, expertise and know-how. The Company dedicates itself towards pioneering and providing superiority in first class brands by authorizing fulfillment to the workforce.
Vision
In short, ACI holds a vision of promoting and aiding distinctive development to the stakeholders being a leader in its diversified industries.
Value
Some of ACI’s values are equality, simplicity, uninterrupted enhancement, novelty, client centeredness and quality.
ACI has strong policy for quality, environment and global compact endorsement with a large distribution network across the country.
Functional Departments
- Human Resource
- Finance and Planning
- MIS
- Commercial and Admin
- Training
Product Profile
ACI Motors sell power tiller, pump, light pick-ups and mini trucks, tractors, diesel engine, harvester, rice trans-planter, rice cutter, spray machine etc.
Industry Overview
Power tiller industry of ACI Motors falls under motors segment of agribusiness industry. Motors industry’s products for agriculture are mainly power tiller, tractor, combined harvester, trans-planter, water pumps etc. Power tiller industry is based on imported products of different power tiller models (mainly GN and DF models).
Market Analysis
Market situation
Basically power tiller cover 48% of total cultivation and it is hardly 2 years life, so need replacement in every two years. According to a data of Bangladesh customs in 2011, power tiller is one of the most demandable cultivation technologies in the industry (with 60000 units sold per year). In the recent year, market import of power tiller shrinks by 45% (23000 units sold up to August 2012) due to less crop price for farmers.
Market share
In the early years only one company used to bring imported power tiller. Nowadays many companies are bringing power tiller from abroad but the major Brand dominance in the market is mainly by CBM (Chittagong Builders Machineries) and ACI Motors, because of their good quality products. Market is lead by CBM with 73% market share where ACI has 13% market share in the last few years. This market is becoming cowed as new competitors (Rahimafrooz, Karnafuli, Power Plus etc.) taking interest in this industry.
SWOT Analysis
Strength
For ACI in the power tiller market there is some strength. Since ACI is a well known company in the country so people trust its brand name. All over the country ACI has large number of dealers and engineers who convince the farmers to buy ACI products. Since ACI is an established company with skilled employees it has better credit management than other competitors.
Weakness
In ACI perspective the main problem is lack of stronger dealers. Most of the cases dealers are not educated enough they know a little about power tiller maintenance. Again, products are sometimes not able to perform consistently. For the management it takes long time to take decision as well.
Opportunity
Opportunities in the markets are the new quality models and also the new features added to the existing machines. Since market is potential so there is opportunity to grab more market share.
Threat
The main threat of power tiller industry is there increased popularity of tractor among the farmers who are not fully aware of power tiller usage. Moreover, new competitors are coming in this industry that may lower the sales of ACI. Another problem is power tiller is sold mainly before the cultivation season, not throughout the year.
Competitor Analysis
In analyzing competitors of power tiller industry we have identified their strengths and weaknesses. Their opportunities and threats are just like ACI.
Strength
Competitors of ACI are importing power tiller since many years so they are strong brands in the industry and they have proper marketing control.
Weakness
Competitor’s main weakness is unorganized business. At the same time, they suffer due to lack of their Supplier’s ability.
Customer Analysis
ACI power tiller customers are dealers, rental service providers, user or farmer, mechanics, garden or farm owner and institutions. They get the facilities to buy power tiller in credit.
Their existing need is served by the brands they prefer in market. They mainly require power tiller for basic cultivation or carrying solution. Moreover, they get advantage of buying power tiller in low cost and also can resale. They can get maintenance services from local service providers and also get spare parts available when needed.
Customers augmented need is to have superior product which has better quality and perform well. They also want additional features in the power tiller they buy. When service availability with warranty is given they are happy with purchase.
Methodology
Agriculture scenario
Bangladesh is ranked in the eighth place in terms of world population statistics and the most densely populated country that has a weak economy. In the economic activities most of the labor forces i.e. around 60% are engaged in agricultural activities. As like as other developing nations, Bangladesh has an agriculture controlled economy of low per capita earnings and huge population (Azmat, 2009). Bangladeshi economy largely depends on agriculture and agricultural growth heavily relies on rural progress (BBS, 1999; UO, 2005).
Power tiller in Bangladesh
Power tiller is one type of cultivation equipment that we use for land set up in order to get agricultural operations better. According to information the usual increase rate of power tiller usage in Bangladesh was 21% during 1993 to 2003. The maximum level of power tiller usage was 44.4 % in Rajshahi. On the other hand, the lowest level of usage found was 3.6% in Barishal. Statistics said that the sum of land area farmed by power tiller was nearly seventy percent. Different studies have showed that credit sales facility and adoption of power tiller are related to each other. The more education and increase of income found in different districts, the more possession of tower tiller was reported. In contrast, the areas where natural calamity and number of adult family members were high, the rate of power tiller usage was comparatively low than that of other areas.
Types of PT users
M.A. Taslim (1989) in one of his research about farmers of Mymensingh, Comilla and Rajshahi said that among the agricultural farmers there are four major groups: pure land lords, cultivator landlords, owner tenants, pure tenants. Pure landlords give their lands on rent to other farmers and do not actively engage in cultivation. On the other hand, cultivator landlords rent some of their lands to others and remaining portion they cultivate with the help of family members or rented labors. For cultivation purpose, owner tenants own some of their lands for agriculture and at the same time rent some lands. Lastly, pure tenants do not own any land by themselves and cultivate lands which are entirely owned by others. This information can be implemented to power tiller users as well. Some farmers buy power tiller for personal use of cultivating land while some give power tillers on rent being indirectly involved with cultivation.
Attitude
Arthur. C. Thomas (2001) said in his paper that risk attitude of farmers are significant for agricultural economy. Most of the farmers expressed consistent risk attitude from different income varieties. There is no statistical prove of risk varying factor among different ages of farmers or agricultural machineries users. So it can be said that choosing a new brand’s power tiller is a risk factor for farmers. In Bangladesh consumers are switching brands of power tiller because they are eager to take risk. This risk taking attitude does not depend on age rather level of risk varies for different income patterns. Fara Azmat (2009) in his research said that there is no strong point of agreement among diverse groups regarding price reduction of fertilizer and irrigation that are considered to be vital factors. So from this we can also say for our paper that price of power tiller does not matter in terms of sales and farmers have demand for high quality power tiller.
Relation between traders and farmers
He also said that in agricultural side, market based reforms identified many small traders have came into view since last few years who are linked with agricultural inputs trading. In many cases they lack knowledge, technical know-how, skills, and efficiency to take benefit of free market economy. Most commonly they do not highlight on good brand name, constructive image, and reliable association with farmers which work sometimes but do not work in long run.
Their main focus is only earning profit while they ignore responsible behavior. For power tiller mechanic, dealer etc. traders play important role in farmer’s buying decision. If these traders do not communicate to their consumer’s effectively high quality power tiller may remain unknown towards farmers.
For developing agricultural sector, more and more credit sales system should be introduced all over the country for agricultural machineries like power tiller, pump, harvester etc. in this way crop production can be efficient and farmers can be benefited (M. A. QUAYUM, 2012).
Hypothesis
We have predicted some hypothesis or probable statements about the possible solutions of the problem for the study. We have identified both dependent and independent variables. In our research independent variables are district, years of experience and other demographic information of a customer. We have divided the dependant variables into five groups on basis of marketing research. These groups are product, price, place, promotion and other characteristics.
Under product category some of the dependent variables are attractive features, color, fuel efficiency, after sales service, current performance satisfaction, expectation from upcoming models etc. In case of price, variables are eagerness to pay high price for high quality, price performance consistency, payment methods, usefulness of credit purchase etc. For place, availability is the variable and for promotion the variables are expert reference, leaflet, recommendation to others, dealer’s communication, brand name etc. In others category variables are cultivation purpose, replacement necessity, future purchase, rental purpose, social prestige etc. In determining the statements we have used underlying judgment and supporting information. For example: Attractive features, years of experience, credit purchase facilities, social prestige etc. influence consumers to buy power tiller. We also assumed that respondents age, educational background, income affect the purchase method of power tiller.
Moreover, we predicted that usage satisfaction depends on maintenance difficulties, timely after sales service, dealer’s communication and doing repairing services etc. At the same time, we assumed that consumers, who do not know proper usage of Mobil, grease in gear box, water tank are dissatisfied consumers and they are the ones who face maintenance difficulties usually.
Defining Research Problem and Developing Approach
In this research the main issue was to identify consumer’s preference level of ACI Power Tiller. This survey describes a comparative study of the consumer choice towards ACI Power Tiller in Bangladesh. To get this information we need to specifically find out consumers demographic and economic information and other concerns related to consumer behavior. A focus group discussion was made with few customers and product executives to gain idea about product concepts. Secondary data was collected from Company database, Governmental sources and other market information.
In developing approach some specific research steps were made. The research works were prepared in a way so that the statements can help to provide information while taking decisions. Before that, hypothesis was made.
Research Design
Since our sample is small and research process is flexible we have used exploratory research design for obtaining necessary information. To fulfill the objectives of the research survey method is chosen.
Population
The Entire part of anything is defined as population. The 150 registered customers of ACI power tiller like farmers, mechanics, dealers etc. are our population.
Data Collection
Data Collection methods
To get data about ACI power tiller consumers we have used both primary and secondary data collection process.
- Primary data: Primary data was collected directly from the consumer survey with the help of the field workers of ACI Motors. We gave some questionnaire to them and used their responses as our primary data.
- Secondary data: The secondary data was collected from company’s yearly business review report, marketing report, annual report, text book and information from internet etc.
Questionnaire Format Questionnaire Format
For the research the questionnaire was both structured and unstructured. Questionnaire survey includes specific mostly closed ended answers and one or two open ended answers.
Questionnaire was short and written in simple Bangla language so that respondents could easily understand and answer all the questions.
Interview Technique
Face to face interview with consumers was done to get primary data. After getting their responses, the field forces documented these in questionnaire format paper.
Scaling Technique
We have used nominal measurement where numbers assigned for each category represents only name. Since our respondents are not educated to judge a scale based on ranking so we have used questions which could be answered by choosing any option given.
Data Analysis Technique
To conduct the research we have done Frequency Table, Crosstabs and Correlation analysis. SPSS software (version 17) has been used for data analysis. At first, with the help of the software frequency testing has been done. After getting the category wise result, Crosstabs Correlation has been used to find out the result of the research.
Budget
The total budget of the report is done through existing resources of ACI Motors so we did not require any extra budget for it.
Analysis and Discussion
The three analysis of the SPSS software are given below:
Frequency
Our survey showed that, 40% samples are farmers, 36.7% of them are dealers and the rest are mechanics. This is logical because most of the power tiller customers are farmers who use for cultivation. Next are the dealers who sell or rent power tillers to others. Based on education qualifications our respondents were divided into four broad categories and among them highest percentage (46.7%) of respondents have at least Secondary level of education. Since our farmers are getting educated these days for implementing modern agricultural procedures, this is a logical survey. In case of age in years of respondents majority (43.3%) are from the age group of 25 years that is they are young users. This is usual because ACI power tiller users are the new users of the market who buy the machine by judging the quality. Who are very experienced they mostly rely on other existing power tiller companies who are providing services from long time. In years of power tiller usage, majority (46.7%) of the power tiller users fall under the category of having experience less than a year. It is rational because our age group is young and they have less experience. For the choosing of attractive features, users rely on taking expert advice than other features (36.7%). As the users are new so they trust on expert people’s opinion before buying power tiller. In respondent’s area, most of the respondents are from others area (46.7% of total) rather than the districts near to Dhaka and North Bengal. For the variable respondents total month wise income in Taka, majority fall under the category of more than 1 Lakh taka per month (50%). Since power tiller is an expensive product so users must be capable of buying it.
In the effectiveness of credit purchase, most of the respondents gave their opinion it was not effective (40%). As the power tiller information media, majority (33.3%) said they got information about power tiller from the mechanics. In case of social prestige, 40% respondents were agreed that power tiller did not bring any social prestige for them. In terms of time of purchasing, 43.3% respondents buy power tiller before cultivation. As our respondents are mainly farmers so it is natural for them to buy this machine before the season of cultivation. In timely getting after sales services, most of the respondents (53.3%) agreed they get the services in time. In case if maintenance difficulties, there were equal number of respondents who faced problems (33.3%), who did not face (33.3%), and who did not want to comment about it(33.3%). In case of doing repair solution, most of the respondents (30%) rely on local mechanics than other people. In case of usefulness of usage directory, 40% of total said it is not useful. In case of major usage problem, most of the respondents said it is for slow loading (26.7%) and high diesel cost (26.7%).
Communicating with dealer’s variable showed 36.7% agreed dealers communicate with them regularly and the 36.7% said dealers do not contact at all. The rest of the respondents said dealers communicate with them sometimes. Again, 36.7 % i.e. a large percentage of respondents do not remember whether they have read the usage directory. Most of the respondents (36.7%) said they are agreed on willingness to pay more for better quality. Considering ACI for future purchase, under this variable, 36.7% said they will consider it for future and the other 36.7% said they do not know. The others will not consider ACI in future purchase. 40% of respondents want to recommend ACI power tiller to others. A large number of respondents (40%) want to buy the upcoming next power tiller within Taka 1 Lakh and 30 thousands or more.
Cross Tabulation
In the Chi-square tests, the significance level between two variables has shown to find their association. The significance level of the research was assumed 10%. From the test, there is significant association (significance level is .047) between attractive features of power tiller and respondents age in years. So we can that, for variation in age groups, respondents prefer different features while buying power tiller. In case of choosing attractive features and respondent’s occupation, there is association (significance level is .066) between these two variables. Different work groups prefer different criteria for choosing attractive features of power tiller purchase decision. Farmers usually prefer expert references and dealers prefer brand name before buying power tiller. In can be also said that information media and occupation are associated to each other because significance level is .084 here. Different work groups rely on respective media before purchase decision is taken. If we look at the association between maintenance difficulties and occupation, there is an association between these two variables because the significance level of Chi-Square test is .072. In terms of the association between time of purchase and years of usage there is strong association between the variables as the significance level is .097. For the variables performance satisfaction and years of usage, there is strong association between the variables here because the significance level is .042.
There are also few variables which we thought might be associated to each other but did not find any association between them from our statistical analysis of Chi-square tests. For the variables satisfaction from performance and respondents age is years, we thought there could be association between these variables but from the significance level we got to know there is no association between the variables (significance level is .766). So we can say that respondent’s satisfaction level from usage of power tiller does not depend on their age. In case of power tiller information media and respondents districts there is no association between these variables (since level of significance is .993). So we can comment that source of information about buying power tiller is not associated with the area or district where respondents live. Like the same way, we can also say that occupation and respondents purchase method is not associated to each other, that is, our assumption regarding the relation between occupation and respective purchase method is not statistically proved. Satisfaction from performance and occupation are not associated to each other in this way and also there is no association between experiences i.e. years of power tiller usage and difficulties in maintenance. So we can say that experience of usage not necessarily prevent maintenance problems. At the same time, we cannot say that a particular group of occupation is satisfied or dissatisfied with usage of power tiller.
Correlation
In the correlation, relationships between the variables have shown in form of Pearson correlation and significance level. In case of years of usage and respondents monthly income in Taka, there is relationship between the variables (as significance level is .018) and this relationship is positive (Pearson correlation is .324) that is, as the experience increases, total monthly income of respondents is increasing. In the case of willingness to pay more for better quality and considering ACI for future purchase, there is relationship between these two variables (as significance level is .004). This relation is also positive in nature (Pearson correlation is .512) that is, the higher the level of willingness to pay more, higher the consideration of future purchase. Willingness to pay more for better quality and range of willingness to pay in Taka also show positive relationships between these variables (significance level is .052 and Pearson correlation is .358). This can be understood that, the more the willingness to pay will be, more will be the amount of money range to pay.
The correlation analysis did not show the expected result as we assumed for some variables. There are some variables in the correlation table which we thought might be related to each other but the statistical analysis did not show any significant relation between them. We had an assumption that recommending ACI power tiller to others and considering it for future purchase might be correlated but the statistical figure showed there is no relation between these two (significance is .459). So people who recommend ACI machines to others not necessarily they will think about repeat purchase of ACI machines. Purchase method of power tiller and respondents district are not related to each other that is, method of purchasing does not depend on area of respondents (significance is .819). Like the same way, purchase method and years of power tiller usage does not depend on each other (significance is .319). We can say that experience of usage do not effect on method of purchasing. Finally, educational qualification and information source of power tiller do not relate to each other (significance is .370). It can be said that, respondents information media to know about power tiller not necessarily has any connection to their education background.
Managerial Implication
From the research findings the managers of ACI Motors can decide to continue their plan of introducing new category power tillers in premium price for the current market segment as well as for the new potential customers since the most of the consumers showed interest to pay more for the new quality power tillers. ACI should immediately start selling the new imported power tillers within the preferable price range of consumers in this research. At the same time managers should make the usage directory more practical so that it can be user friendly and useful to the readers. ACI need to create awareness among the consumers about the positive learning from the usage directories. If their consumers read the usage directions before using the products, they will face less difficulty in using the machine. We have also seen from the analysis that credit purchase was not effective based on customer opinion. Since large number of customers showed they are not satisfied with the usage of power tillers so ACI managers should be careful to emphasize more on providing after sales services to the consumers.
After analyzing we can recommend that agribusiness based motors companies like ACI should consider the issues like age, occupation for choosing attractive features of machines before introducing their products in the market. Additionally, they should focus on taking references from experienced personnel to motivate others while buying power tiller. While selling their products to customers it will help them to generate large amount of market share as the market goes on basis of references. Agriculture based companies in selling the motors products should reduce focusing on some less important issue which customers do not prefer. Such issues are types of Mobil used, use of grease in gear box, engine over hauling, grade of oil etc.
Management can understand this because consumers rely more on expert or mechanic references than their own perception. This will help management to decide where to do cost minimization actions. Motors companies should continue their ongoing research so that they can be up to date with the changing preferences or choices of their customers.
Conclusion
To conclude, this research can be said to be further than the regular opinion taken from the respondents and reached to the depth of investigation to seek attitude as well as behavior of the respondents. The research outcomes are showed basically in the figure of self expressed tables.
With the help of this report, Government, policy makers, local and international companies can get an idea about the major dominant issues which are affecting the preference of the customers while buying power tiller. The most dominant issues while buying power tiller that we found are expert references, years of experiences, age, occupation etc. The organization owners can change or modify their business strategy based on those major influential issues.
Finally, this research shows ways to new possibilities for the development of agribusiness. Though many customers are not satisfied with the current usage, a large number of consumers of ACI power tiller showed interest in buying new quality power tiller on high price. It shows that there is increasing demand for good quality product in market.
Government should focus on minimizing hazards on the import of power tillers so that our farmers or end users can easily use such quality machines for agricultural development.
