IMPACT OF SOCIAL FACTORS ON CONSUMER BEHAVIOR IN

PURCHASING LUXURIOUS PRODUCTS IN NEPAL

A Dissertation submitted to the Office of the Dean, Faculty of

Management in partial fulfillment
of the requirements for the Master’s Degree

by

Rupesh Kumar Mandal

Symbol No.: 25790/20
Registration No.:7-2-422-36-2014
Brilliant Multiple Campus

Kathmandu, Nepal
December 2023
 Certification of Authorship

I hereby corroborate that I have researched and submitted the final draft of dissertation entitled
“IMPACT OF SOCIAL FACTORS ON CONSUMER BEHAVIOR IN PURCHASING
LUXURIOUS PRODUCTS IN NEPAL” The work of this dissertation has not been submitted
previously for the purpose of conferral of any degrees nor it has been proposed and presented as
part of requirements for any other academic purposes.
The assistance and cooperation that I have received during this research work has been
acknowledged. In addition, I declare that all information sources and literature used are cited in the
reference section of this dissertation.

……………………….
Rupesh Kumar Mandal
2023 December

ii
 REPORT OF RESEARCH COMMITTEE

Mr. Rupesh Kumar Mandal has defended research proposal entitled “IMPACT OF SOCIAL
FACTORS ON CONSUMER BEHAVIOR IN PURCHASING LUXURIOUS PRODUCTS
IN NEPAL” successfully. The research committee has registered the dissertation for further
progress. It is recommended to carry out the work as per suggestion and guidelines of supervisor
and submit the thesis for evaluation and viva- voce examination.

Sudip Dahal Dissertation Proposal Defended Date:

Dissertation Supervisor
Signature: ………………………………………..

Tulsi Ram Pandey Dissertation Submitted Date:

Internal Examiner
Signature: ………………………………………..

Dissertation viva Voce Date:

Prem Prasad Lohani
Head of Research Committee:
Signature: ………………………………………..

iii
 Approval Sheet
We have examined the dissertation entitled “IMPACT OF SOCIAL FACTORS ON
CONSUMER BEHAVIOR IN PURCHASING LUXURIOUS PRODUCTS IN NEPAL”
presented by Mr. Rupesh Kumar Mandal for the degree of Masters of Business Studies. We
hereby certify that the dissertation is acceptable for the award of degree.

Sudip Dahal
Dissertation Supervisor
Signature

Tulsi Ram Pandey

Internal Examiner
Signature

External Examiner
Signature

Prem Prasad Lohani

Chairperson, Research Committee
Signature

Date:

iv
 ACKNOWLEDGEMENT

This study entitled “IMPACT OF SOCIAL FACTORS ON CONSUMER BEHAVIOUR IN

PURCHASING LUXURIOUS PRODUCTS IN NEPAL” has been conducted to satisfy the
partial requirements for the degree of Master of Business Studies, Tribhuwan University.
First and foremost, I offer my sincerest gratitude to my supervisor, Mr. Sudip Dahal of Brilliant
Multiple Campus, for his valuable supervision and guidance in completing this study. I am
ineffably indebted and very thankful for his continuous support and constructive suggestions for
finalization of this research project.
Furthermore, I would like to express my deepest appreciation to Mrs. Komal Shah, Mr. Shiva
Ram Sapkota & Mr Sharad Basnet for valuable suggestions, inspirations and guidance during
study period. I would also like to thank Brilliant Multiple Campus for providing the resources for
research work and providing library and computing support without which knowledge and
assistance of this study would have not been successful. At last, I would also like to thank my
parents, family, relatives, friends and all those who helped me during the research work.
However, I accept the sole responsibility for any errors and discrepancies that might have
occurred in this report.

Rupesh Kumar Mandal

2023 December

v
 Table of Contents Page No.

Title Page i

Certification of Authorship ii

Report of Research Committee iii

Approval Sheet iv

Acknowledgements v

Table of Contents vi

List of Tables ix

List of Figures x

Abbreviations xi

Abstract xii

CHAPTER I Introduction 1

1.1 Background of the study 1

1.2 Problem statement 2

1.3 Objectives of the study 3

1.4 Hypothesis of the study 3

1.5 Rationale of the study 5

1.6 Limitations of the study 6

1.7 Organization of the study 7

CHAPTER II Literature Review 8

2.1 Theoretical review 9

2.2 Empirical review 23

vi
 2.3 Research gap 24

CHAPTER III Research Methodology 26

3.1 Research design 26

3.2 Population and sample and sampling design 26

3.3 Nature and sources of data and the instrument of data collection 27

3.3.1 Primary data 27

3.4 Methods of analysis 28

3.4.1 Reliability 29

3.4.2 Correlation analysis 30

3.4.3 Regression analysis 31

3.5 Research framework and definition of the variables 34

CHAPTER IV Results and Discussions 36

4.1 Analysis of the study 36

4.1.1 Gender of respondents 37

4.1.2 Age group of the respondents 38

4.1.3 Qualification of respondents 38

4.1.4 Income of the respondents 38

4.1.5 Permanent address of the respondents 38

4.2 Influence of social factors and evaluative criteria 39

4.2.1 Reference group influence 40

4.2.2 Family influence 42

4.2.3 Price factor 43

4.2.4 Quality factor 44

4.2.5 Color factor 46

4.2.6 Consumer purchase decision 47

vii
 4.3 Summary of descriptive analysis 48

4.4 Relationship analysis 49

4.5 Impact analysis of independent variables and purchase decision 52

4.6 Test of significance 54

4.7 Major Findings 55

4.8 Discussion 58

CHAPTER V Summary and Conclusion 59

5.1 Summary 59

5.2 Conclusion 60

5.3 Implications 61

References 63

viii
 List of Tables

Table 3.5.1 Reliability test of variables 30

Table 4.1 Demographic profile of the respondents 37

Table 4.2.1 Descriptive statistics for reference group 40

Table 4.2.2 Descriptive statistics for family 42

Table 4.2.3 Descriptive statistics for price 43

Table 4.2.4 Descriptive statistics for quality 44

Table 4.2.5 Descriptive statistics for color 46

Table 4.2.6 Descriptive statistics for purchase decision 47

Table 4.3 Summary of descriptive analysis 48

Table 4.4.1 Correlation of social factors & evaluative criteria purchase decision 50

Table 4.5.1 Nature of relationship between RF, F, P, Q, & C on PD 52

Table 4.5.2 Strength of relationship between RG, F, P, Q & C on PD 53

ix
 LIST OF FIGURES

Figure 1: Research framework of the study 34

x
 Abbreviations

SF Social Factors

EC Evaluation of Criteria

IBM International Business Machine

ID Investment Decisions

PD Purchase Decision

RTB Risk Taking Behavior

SLC School Leaving Certificate

SPSS Statistical Package for the Social Sciences

SD Standard Deviation

IE Error Team

PP Past Performance

% Percentage

& And

SF Social Factors

EC Evaluation of Criteria

IBM International Business Machine

ID Investment Decisions

PD Purchase Decision

xi
 Abstract
The primary objective of the study is to examine the impact of social factors on consumer
behavior in purchasing luxurious products in Nepal. The specific objectives include investigating
the effects of reference groups on consumer purchasing decisions of luxury products, exploring
the effects of family on consumer purchasing decisions of luxury products, analyzing the effects
of price on customer purchasing decisions of luxury products, evaluating the effects of quality on
customer purchasing decisions of luxury products, and examining the effects of color on
customer purchasing decisions of luxury products.

The study adopts descriptive and causal comparative research designs to analyze the impact of
social factors on consumer behavior in purchasing luxurious products in Nepal. The independent
variables consist of reference group, family, color, price, and quality, while the dependent
variable is consumer purchasing decision. The study is based on 160 observations, with the
population being investors engaged in various professions and age groups. Well-constructed
questionnaires were distributed to people of different age groups to collect responses through
online surveys. The collected data was processed using SPSS, and non-parametric tests such as
Kendall’s tau correlation and step-wise regression were conducted to analyze the impact of social
factors on consumer behavior in purchasing luxurious products in Nepal.

Keywords: Luxurious products, financial status, risk taking behavior, consumer

behavior, past performance, purchasing decision.

xii
 1

CHAPTER I
INTRODUCTION

1.1 Background

Consumer behavior encompasses the entirety of decisions made by consumers regarding

the acquisition, consumption, and disposition of goods, services, time, and ideas through
human decision-making units (Hoyer and McInnis 2010). In marketing, consumer
behavior refers to the actions and decisions individuals make when purchasing or using
products. The spectrum of consumer behavior towards a product spans from the initial
decision to buy, to usage patterns, and the consideration of future purchases. The study of
consumer behavior delves into the processes undertaken by individuals or groups when
selecting, purchasing, using, or disposing of products, services, ideas, or experiences to
meet their needs and desires (Solomon, Bamossy, Askegaard & Hogg, 2006). Consumer
behavior is essentially the display of actions by consumers in the search, purchase, use,
evaluation, and disposal of products and services expected to fulfill their needs
(Schiffman, O’Cass, Paladino & Carlson, 2014). Schiffman (2014) adds that consumer
behavior concentrates on the decision-making processes of individual consumers,
families, or households in allocating their resources to consumption-related items.
Shedding light on consumer behavior, Perner (2021) defines it as the study of individuals,
groups, or organizations and the processes they employ to select, secure, use, and dispose
of products, services, experiences, or ideas to satisfy needs, examining the impacts on
both the consumer and society. Moreover, consumer behavior involves the mental and
emotional processes, as well as observable behavior, during the search, purchase, and
post-consumption phases of a product and service (Batra & Kazmi, 2004).
Consumer behavior represents the actions and decision-making processes of individuals
who purchase goods and services for personal consumption (Engel, Blackwell, and
Mansard 2008). The purchasing process for a specific brand or product is influenced by
factors such as product price, design, packaging, product knowledge, quality, celebrity
endorsements, fashion, and at times, family relationships as well (Shafiq et al., 2011). In
developed countries, the retail market is mature (Berner et al., 2001), while in Asian
 2

markets like Japan, China, India, and South Korea, consumers are particularly sensitive to
products or brands, raising questions about what a brand offers and how it fulfills their
needs (Berner et al., 2019).

1.2 Problem Statement

Consumer behavior, as outlined by Zikmund (2011), is influenced by both personal

factors (such as age, life cycle stages, occupation, economic situation, lifestyle,
personality, and psychology) and environmental factors (including culture, subculture,
social class, reference groups, family, role, and status). Luxury goods, also known as
superior goods, exhibit a demand directly linked to consumer income, meaning that as
consumer income increases, their purchases of these goods also increase, and vice versa.
The sensitivity of luxury goods to changes in consumer income is due to their high
income elasticity of demand. While some may perceive luxury commodities solely as
high-end products, not all high-end products fall into this category. With rising consumer
income, there is a greater willingness to spend on luxury goods. Despite the global
financial crisis, the luxury goods industry is experiencing growth, and profit margins are
expanding due to increased consumer spending.

Zikmund (2011) emphasizes that studying the influence of social factors on consumer
buying behavior provides marketers with valuable insights, particularly in understanding
how social class, as a robust determinant, can be utilized for consumer segmentation.
This knowledge enables marketers to develop strategies that motivate and facilitate
consumers to purchase different durable goods with varying modes of payment.
Understanding social class is crucial for making informed decisions about the choice of
newspapers, magazines, television, and outdoor ads for different social classes when
promoting durable goods. In Nepal, minimal research has been conducted on the buying
behavior of luxurious products. Consequently, this study aims to identify the social and
product-related factors influencing the buying behavior of luxurious products.
 3

The investigation aims to address the subsequent research concerns:

i. What impact do social factors have on the acquisition of luxurious products by
consumers?
ii. Do the purchase decisions of consumers in the realm of luxurious products hinge on
factors such as price, quality, and aesthetic values (color)?

1.3 Objectives of the study

The primary goal of this study is to analyze the impact of social factors on consumer
behavior in purchasing luxurious products in Nepal. The specific objectives of this study
include:
i. To investigate the influence of reference groups on consumer purchasing
decisions regarding luxury products.
ii. To assess the impact of family on consumer purchasing decisions for luxury
products.
iii. To examine the role of price in shaping consumer purchasing decisions for luxury
products.
iv. To explore the impact of quality on consumer purchasing decisions for luxury
products.
v. To evaluate the influence of color on consumer purchasing decisions for luxury
products.

1.4 Hypothesis of the study

Based on the study's objectives and a review of theoretical and empirical literature
regarding the impact of social factors on purchase decisions, the following hypothesis has
been developed:
 4

H1: There is a significant positive relationship between reference group influence and
consumer purchasing decisions of luxury products.

Consumer purchasing behavior requires an understanding of factors influencing

purchases. Existing literature suggests that reference groups significantly impact
consumers' purchasing behavior (Madinga and Dondolo, 2017).

H2: There is a significant positive relationship between family influence and consumer
purchasing decisions of luxury goods.

Family holds significant influence over consumers, with distinctions between the family
of orientation (parents) and the family of procreation (spouse and children) playing direct
roles in everyday buying behavior (Chandrasekar & Raj, 2013).

H3: There is a significant positive relationship between the price of the product and
consumer purchasing decisions of luxury products.

Price awareness has been a focal point for researchers, and meta-analyses suggest that
price significantly impacts consumers' purchasing ability (Estelami and Lehmann, 2015).

H4: There is a significant positive relationship between color and consumer purchasing
decisions of luxury products.

Color serves as a powerful marketing tool influencing consumer buying behavior

significantly, accounting for a substantial portion of the decision-making process
(Hemphill, 1996).

H5: There is a significant positive relationship between the quality of the product and
consumer purchasing decisions of luxury products.

Product quality, defined as the product's ability to satisfy consumer needs, is crucial.
Neglecting product quality may lead to consumer disloyalty (Amron, 2019).
 5

1.5 Rationale of the Study

Consumer behavior is a complex phenomenon influenced by a myriad of factors,

including social, cultural, psychological, and economic variables. In the context of
purchasing luxurious products, social factors play a significant role in shaping consumers'
decisions. Understanding these factors is crucial for businesses operating in the luxury
market to effectively target their audience and develop successful marketing strategies.
This study aims to explore the impact of social factors on consumer behavior in
purchasing luxurious products specifically within the context of Nepal. Social factors
encompass various elements such as reference groups, social status, family influence,
social media, and cultural norms. In the context of luxurious products, individuals often
use these factors as cues to signal their social status, affiliation, and identity. For instance,
consumers may be influenced by their social networks, including family, friends, and
colleagues, who may set trends, provide recommendations, or serve as aspirational
references. Moreover, societal norms and cultural values play a significant role in shaping
perceptions of luxury and consumption patterns. Primary data will be collected through
surveys and in-depth interviews with consumers of luxurious products in urban areas of
Nepal. The survey will gather quantitative data on demographics, purchasing behavior,
and perceptions of luxury, while the interviews will provide qualitative insights into the
underlying motivations and social influences driving consumer behavior. Additionally,
secondary data from relevant literature, industry reports, and market analyses will
complement the primary findings. The findings of this study are expected to contribute to
both academic research and practical implications for businesses operating in the luxury
market in Nepal. Academically, the study will advance the understanding of consumer
behavior theories within the context of a developing economy, shedding light on the
nuanced interplay between social factors and luxury consumption. Practically, the
insights derived from the study will assist marketers and luxury brands in developing
targeted marketing strategies, product positioning, and communication tactics tailored to
the unique socio-cultural landscape of Nepal, thereby enhancing their competitiveness
and market penetration. The study on the impact of social factors on consumer behavior
in purchasing luxurious products in Nepal addresses a significant gap in the existing
 6

literature and offers valuable insights for academics and practitioners alike. By delving
into the social dynamics that influence luxury consumption, the study aims to contribute
to a deeper understanding of consumer behavior in Nepal and provide actionable
recommendations for businesses seeking to capitalize on this growing market segment.

Moreover, the findings of the study can be utilized by luxury product retailers for market
segmentation, targeting, and the formulation of marketing communication strategies.
These strategies may be based on considerations of store image and product quality.
Additionally, the study is expected to enhance the academic competence of the
researcher.

1.6 Limitations of the Study

The study is subject to certain limitations that may be addressed in future research
endeavors. The primary constraints are outlined below:

i. The research has been confined to the Kathmandu valley and a limited number of
other districts, potentially limiting the generalizability of findings to represent the
opinions of respondents nationwide.
ii. The study relies on a convenience sampling method, which comes with inherent
limitations in terms of representativeness and potential bias.
iii. The sample size for the study is relatively small, consisting of only 160
customers. Consequently, the findings may be influenced by the biases associated
with a limited sampling pool.
 7

1.7 Organization of the Study

The study is organized into three main sections: the preliminary section, the body of the
report, and the supplementary section. The preliminary section encompasses the title
page, certification, declaration of authenticity, acknowledgments, table of contents, list of
tables, list of figures, abbreviations used, and executive summary. The body of the report
is further segmented into five sections: introduction, literature review, research
methodology, result and discussion, summary and conclusion. The concluding section of
the report consists of the bibliography, appendix containing the questionnaire, and a
summary of responses.

Under the body of the study, the introduction section entails the background of the study,
problem statement, objectives of the study, hypothesis of the study, rationale of the study,
limitation of the study, organization of the study.

The literature review section explores the findings of previous research related to the
current study. It discusses various research works pertaining to customer purchase
decisions, social factors, and their interrelationships to establish a foundation for the
study. Additionally, this chapter includes a theoretical review, empirical review and
research gap.

The third chapter delves into the research methodology employed for the study, covering
aspects such as research framework and definition of variables, research design,
population and sample, nature and sources of data, instrumentation, reliability and
validity tests.

The fourth chapter presents the analysis and results of the study, featuring various tables
and figures intended to address the research objectives and questions.

The final chapter encompasses the discussion, conclusion, and implications of the study.
The discussion section involves a comparison of previous findings with the present study.
In conclusion, implications drawn from the study are highlighted.
 8

CHAPTER II
LITERATURE REVIEW

In this chapter, the relevant articles, books, research papers, and previous studies
pertaining to the research topic of this study have been examined and presented. The
social factors influencing consumer behavior in the purchase of luxurious products have
also been reviewed and presented.

A review of the literature on luxurious products revealed a scarcity of studies focusing on

assessment criteria. Previous research has identified key factors influencing consumer
purchases in the Jordanian furniture market, including quality, price, reference group,
color, and family (Farah, 2013). Yoon and Cho (2009) similarly identified eight factors
influencing furniture choices: style, color, price, and construction quality, ease of
maintenance, comfort, material, and matching with other items.

Understanding consumer behavior in the furniture market is crucial for companies to

develop effective marketing strategies. Knowledge of customers and the market, along
with building strong relationships between brands and customers, is vital (Chaipornmetta,
2010; Soloman, 1999). Consumer behavior is a complex regulation combining factors
from psychology, sociology, anthropology, and economics. It seeks to comprehend the
individual and group decision-making processes related to purchasing, with no consensus
on its definition and measurement (Dodoo, 2007; Chen, 2013). Hawkins et al. (2001) and
Peter (2010) define consumer behavior as the processes individuals adopt to choose
products and services to satisfy their needs and the influences these processes have on
individuals and society. Belch and Belch (2007) consider consumer behavior as the
activities individuals engage in before and after purchasing products or services to fulfill
their needs and desires, encompassing what to buy, how to buy, where to buy, and why
people buy (Dadfor, 2009; Chen, 2013).
 9

Additionally, the study of consumer behavior involves examining individuals, groups, or

organizations and the processes they use to select, acquire, and dispose of products,
services, experiences, or ideas to meet their needs, impacting both the consumer and
society (Kuester, 2012). Recently, marketers have been keen on recognizing factors
influencing customer buying decisions to understand customer interests and demands
better. Buyers consider various factors, classified into two categories: social factors and
characteristics of home furnishing products. While marketers may not influence all these
factors, identifying them is crucial for identifying potential buyers and developing
products to meet their needs. Social factors, in particular, play a significant role in
influencing buyer purchase decisions (Kotler and Armstrong, 2006).

2.1 Theoretical Review

1. The concept of consumer behavior

As outlined by Kotler (2004), The concept of consumer behavior refers to the purchasing
actions of consumers, including individuals and households, who acquire goods and
services for personal consumption. The term 'consumer' typically denotes individuals
obtaining goods and services for self-satisfaction and encompasses two distinct types of
consuming entities: personal consumers and organizational consumers. Personal
consumers acquire goods and services for their own use, while organizational consumers,
comprising for-profit and not-for-profit businesses, government agencies, and
institutions, must procure products, equipment, and services to operate their organizations
(Kotler, 2004).

According to Kotler (1994), consumer behavior is the comprehensive study of how

individuals make buying decisions, what they purchase, when they make purchases, and
the reasons behind their purchases. Positioned as a subset of marketing, consumer
behavior draws on insights from psychology, sociology, socio-psychology, anthropology,
and economics. Its objective is to comprehend the decision-making process of buyers,
both individually and within groups. The field examines individual consumer
characteristics, such as demographics, psychographics, and behavioral variables, aiming
 10

to understand their needs. Additionally, it explores the influences on consumers from

groups such as family, friends, reference groups, and society at large (Kotler, 1994). For
instance, when consumers buy shoes, family decisions, comfort, satisfaction, price, and
quality are considered. Within a family, each member may have different opinions and
preferences, resulting in distinct consumer behavior (Kotler, 1994).

Sheth (2014) defines consumer behavior as the mental and physical activities undertaken
by household and business consumers, leading to decisions and actions to pay for,
purchase, and use products and services. Ramya and Ali (2016) offer a definition of
consumer buying behavior as the purchasing behavior of the ultimate consumer.
Consumer behavior elucidates the attitudes, intentions, and preferences of consumers
before their purchases, a facet closely observed and leveraged by various businesses
(Akkucuk & Esmaeili, 2016).

2. The purchase decision process

Decision-making is defined as the cognitive process leading to the selection of a choice

or a set of actions among alternative options and influences (Wolny & Charoensuksai,
2014). In the decision-making process, buyers are typically acquainted with the product
but seek additional information to ensure it aligns with their needs (Rani, 2014). Given
the nature of the products, consumers actively gather as much information as possible and
reassess their decision-making criteria multiple times (Rowley, 2019).

Solomon (2014) emphasizes that consumer behavior extends beyond merely studying
what consumers buy. It aims to comprehend the decision-making process and its impact
on consumers' purchasing behavior. Marketers analyze consumer buying patterns to
understand where, what, and why consumers make purchases. However, determining
why consumers choose a specific product is challenging as the answer is deeply rooted in
the consumers' minds (Kotler & Armstrong, 2019). Deshmukh and Das (2012) note that
scholars of human behavior are keen on studying consumer behavior to gain deeper
insights into why individuals engage in specific consumption-related behaviors and to
understand the internal and external factors influencing their consumption-related
 11

decisions. Zikmund (2011) explains that consumer behavior is shaped by personal factors
(such as age, life cycle stage, occupation, economic situation, lifestyle, personality, and
psychology) and environmental factors (including culture, subculture, social class,
reference groups, family, role, and status).

a. Consumers’ buying decision process

Consumers engage in numerous buying decisions on a daily basis. Large companies often
conduct thorough research on consumer buying decisions, seeking answers to questions
such as what consumers buy, where they buy, how they buy, how much they buy, when
they buy, and why they buy a product. To comprehend these decisions, various stages are
crucial, including information search, evaluation of alternatives, purchase decision, and
post-purchase decision. The consumer traverses all five stages with each purchase, but in
routine or habitual purchases, consumers frequently skip or reverse some of these stages
(Hawkins, Coney, 2015).

b. The buying decision process

The buying process initiates with the recognition of a need, wherein the buyer
acknowledges the requirement. The buyer's decision relies on internal and external
stimuli of consumer behavior, encompassing considerations like which product to
purchase, the desired quantity, and external factors indicating reliability and usability.
Based on these internal and external stimuli, the buyer makes a decision (Hawkins,
Coney, 2015).

Consumers engage in information search from various sources as part of the buying
decision process prior to the purchase of a product (Hawkins, Coney, 2019). The
information search phase involves obtaining information from the following sources:

i. Personal source: This includes family, friends, neighbors, and acquaintances.

ii. Commercial sources: These encompass advertising, salespeople, dealers,
packaging, and displays.
 12

iii. Public sources: Mass media, consumer-rating organizations, and other public
platforms.
iv. Experimental sources: Involving the handling, examining, and use of the product.

While consumers acquire a substantial amount of information about a product from

commercial sources controlled by marketers, personal sources prove to be highly
effective. Personal sources, such as recommendations from family and friends, tend to be
particularly influential in shaping purchasing decisions.

c. Evaluation of Alternatives

The consumer engages in the evaluation of all available alternatives to make a brand
choice. Perceiving the product as a collection of attributes with varying capacities that
cater to their needs, the consumer pays particular attention to attributes associated with
their requirements. This process involves the consumer forming a set of brand beliefs,
assessing where each brand stands on each attribute. The collection of beliefs held about
a particular brand is referred to as brand image. Based on these beliefs and consumer
preferences, the evaluation of alternative products takes place instead of relying solely on
existing products (Kotler, 2004).

d. Purchase decision

In the evaluation stage, the consumer assesses and ranks all available brands, leading to
the formation of a purchase intention. Typically, the consumer's purchase decision
centers around acquiring the most preferred brand. When making a purchase, consumers
consider two crucial aspects: the purchase decisions itself and the purchase intention.
External factors, such as the attitudes of others and unexpected situations, directly or
indirectly influence the consumer's final decision to buy a particular brand (Kotler, 2004).

e. Post purchase behavior

The buyer's responsibility doesn't conclude with the acquisition of the product. Post-
purchase, the consumer enters into a phase of either satisfaction or dissatisfaction,
 13

engaging in post-purchase behavior. The level of satisfaction or dissatisfaction from

purchasing a specific product hinges on the correlation between consumer expectations
and actual experiences. If the product meets consumer expectations, satisfaction ensues;
if it surpasses them, the consumer may experience delight (Gilly and Gelb, 1986).

According to Kotler (1994), the consumer buying decision process is influenced by four
steps, which are outlined as follows:

a. Types of consumer buying decision behavior:

Consumer buying behavior decision-making varies based on the type of buying decision.
Various types of buying behavior decisions exist.

b. Complex buying behavior

Consumers engage in complex buying behavior when they are highly involved in the
purchase, perceive significant differences among brands, and are faced with a complex
decision-making process. This often occurs when the products are expensive, involve
risks, are purchased infrequently, and entail high expenses (Kotler, 1994).

c. Dissonance

Dissonance reducing buying behavior occurs when consumers are highly involved in an
expensive, infrequent, or risky purchase but perceive little difference among various
brands. In such cases, consumers may experience post-purchase dissonance and seek
ways to alleviate it (Kotler, 1994).

d. Variety seeking

Consumers exhibit variety-seeking buying behavior in situations characterized by low

consumer involvement but significant perceived brand differences. In such cases,
consumers often engage in thorough brand scrutiny and may seek variety in their
purchases (Kotler, 1994).
 14

3. Social factors affecting consumer behavior

Social factors play a crucial role in influencing consumer behavior. The presence of
others in an individual's social circle often impacts their purchasing decisions. Two
important social factors are reference groups and family (Perreau, 2014). While each
consumer is an individual, they are still part of a larger group. According to Ramya et al.
(2016), a reference group is defined as two or more individuals who share a set of norms,
and their relationships create interdependence in their behavior.

4. Reference group

A reference group consists of individuals with whom a person associates, exerting a

strong influence on the individual's attitudes, values, and behavior, whether directly or
indirectly. This group plays a significant role in shaping consumers' self-image and
behavior, providing points of comparison for consumers regarding their behavior,
lifestyle, or habits. Typically, various smaller reference groups are formed, including
family, close friends, neighbors, workgroups, and other associates. Consumers may also
be influenced by aspirational groups, which are groups they aspire to join in the future
but currently do not belong to (Kotler & Armstrong 2010).

Reference groups encompass various buyer reference groups, such as family members,
friends, social organizations, professional institutions, and trade associations, heavily
influencing brand selection. These groups impact the values and behaviors of individuals,
with most purchases being influenced by the ideas and opinions of the reference group
(Nesai, 2009). Reference groups can affect individuals in three ways: introducing new
behaviors and lifestyles, adapting ideas and interests to align with the reference group,
and creating compulsive conditions that influence the choice of product brands (Kotler,
Armstrong, 2006).

It's important to note that reference groups differ from opinion leaders. Opinion leaders,
in the study of human communication, are individuals who provide more information
than others and influence the purchase decisions of others (Samadi, 2017). Opinion
 15

leadership pertains to a specific class of products, and leaders may influence others across
different product categories. However, not all product categories exhibit opinion
leadership (Griffin, 2013). Opinion leaders, or thought leaders, are members of reference
groups who can impact others due to their skills, intelligence, personality, or other traits.
Manufacturers of branded goods influenced by reference groups should make efforts to
access opinion leaders (Venus and et al, 2013).

5. Family members

Family members play a significant role in influencing the buying behavior of individual
consumers. The family serves as the environment where individuals acquire values,
undergo development, and shape their personalities. Within this environment, attitudes
and opinions towards various subjects, such as social relations, society, and politics, are
formed. Families contribute to the initial perceptions about brands or products and
establish consumer habits (Kotler & Armstrong 2019). For instance, consumers who
formed brand perceptions during their youth may continue to make similar brand
selections in adulthood without realizing the influence of their family on these choices.

Research by Korath, Sangheethaa, and Getinet (2016) indicates that recommendations

from friends and family members have a significantly greater impact on the buying
decisions of lower-income consumers compared to higher-income consumers.

Family members, serving as the fundamental structure of the initial reference groups,
have a substantial impact on buyer behavior. In everyone's life, two types of families may
emerge. The first type is the family in which an individual is born and grows, directly
influencing their views on religion, politics, economics, and education. The second type
involves children and individuals under supervision, shaping the buyer's behavior (Nesai,
2019).

Family holds a unique position in a community, being a fundamental social unit. Norms
and values that stabilize the family draw from the broader society, which serves as an
ideal source for community and family stability. The effects of traditional attitudes and
 16

interests of families not only manifest during the developmental period but can extend to
the subsequent generations. The family functions as a particular sub-group of society and
simultaneously represents a crucial economic unit. It acts as a comprehensive and
intricate purchasing organization, addressing the needs of two generations or more. The
nature of family, along with its responsibilities, can influence purchasing behavior and
create diverse demands for goods and services. The family's lifestyle determines its role
in society. Numerous researchers have explored the impact of social factors on individual
and family consumption patterns (Samadi, 2007).

The evaluating criteria for purchase decision

Stavkova, Toufarova, and Stejskal (2018) demonstrated that the primary factors
influencing purchases across all commodity groups are the characteristics of products and
the perceived quality. Additionally, Korath, Sangheethaa, and Getinet (2016) identified
that the impact of price and quality on the buying behavior of rural consumers
significantly increases with age and income. Stavkova et al. (2008) also pointed out that
for certain products, the price factor may not have a significant impact on buying
behavior.

The role of color in marketing products is substantial, exerting a significant influence on

consumer buying behavior. Regarded as a powerful marketing tool, color plays a crucial
role in consumer purchases, so much so that it contributes to 85% of the reasons why
someone decides to purchase a product (Hemphill, 1996).

a. Price

According to Zeithaml (2019), price, from the customer's perspective, is what is given up
or sacrificed to obtain a product or service. Bei and Chiao (2001) define price as what is
given up or sacrificed to acquire a service or product. In a similar vein, Kotler and
Armstrong (2018) suggest that price is the amount of money charged for a product or
service, representing the sum of values that customers exchange for the benefits of having
or using a product or service.
 17

Customer perception of a particular price, whether it is high or low, can significantly

impact their intention to purchase the product. Customers tend to pay attention to the
price paid by others, and no one is content with paying more compared to other
customers. The fairness of the price influences customers' perceptions and ultimately
affects their willingness to become a customer. In the case of toothpaste products, the
price is the monetary amount deducted for a toothpaste, representing the customer's value
exchanged to derive benefits from owning or using the toothpaste. Kotler and Keller
(2012) and Kusdiyah (2020) define price as a measurable entity comprising various
indicators, such as affordability, fairness, discounted rates, competitor pricing, and
suitability.

b. Quality

According to Zeithaml (2019), quality can be broadly defined as superiority or

excellence. In this context, Kotler and Armstrong (2018) describe a product as anything
that can be offered to a market for attention, acquisition, use, or consumption, which
might satisfy a want or need. Aaker (1994), quoted by Ehsani (2015), states that the
quality of a product is the customer's perception of the overall quality or superiority of
the product or service, concerning its intended purpose and relative to alternatives. Kotler
and Armstrong (2012) assume that product quality refers to the characteristics of a
product or service that impact its ability to satisfy stated or implied customer needs.

It is essential to recognize that the evaluation of product quality is not made from the
company's standpoint; rather, it is viewed from the customer's perspective. This
perspective introduces two crucial factors influencing product quality: expected product
quality and perceived product quality. Specifically, when the perceived product quality
aligns with expectations, customers perceive the product as good quality and experience
satisfaction. Conversely, if the perceived product quality falls short of expectations, the
product is deemed to have poor quality. Therefore, the qualification of product quality,
whether good or bad, hinges on the company's ability to meet customer expectations. For
toothpaste products, quality refers to the characteristics of toothpaste that affect its ability
 18

to satisfy customer requirements, whether expressed or implied. Garvin (1987) and

Kotler and Keller (2012) explain that product quality comprises several indicators,
including performance, features, reliability, compliance, durability, serviceability,
aesthetics, and perceived quality.

c. Color

Beardsley (2020) elucidates that the term aesthetics is valuable as a generic term
encompassing all works of art. Aesthetics can be defined as visually pleasing and
artistically appealing (Tractinsky & Lowengart, 2017). In works of art, an emotional
reaction is anticipated due to the aesthetic appeal, and a similar response should be
expected from a well-designed logo; this aids in creating resonance with consumers
(Pittard, Ewing, & Jevons, 2007). Design decisions have an impact on consumers in both
their purchase intentions and their perception of the retailer (Tractinsky & Lowengart,
2017). Aesthetic appeal is scrutinized in two dimensions: product and environment. In
this study, the environment pertains to elements of an online store, such as webpage
colors, which have been found to influence consumers' choices. Meanwhile, color is
considered an element of design and, therefore, part of the aesthetic appeal. When
consumers assess a product, they can rapidly and easily judge its aesthetic appeal, leading
to an immediate positive or negative feeling (Tractinsky & Lowengart, 2017). Given that
the response time is instantaneous, it is crucial for the success of the product to promptly
generate a positive feeling from the consumer.

Concept of luxury

The luxury market has experienced substantial global growth in recent decades,
surpassing $600 million by 2015 despite economic recessions (Masnick et al., 2014).
Tynan et al. (2019) and Ho et al. (2012) note that the demand for luxury products extends
beyond European countries and the U.S., with emerging markets like China, India, and
the Middle East displaying significant interest. Asia is anticipated to account for more
 19

than half of the luxury goods market within the next decade (The Telegraph, 2013).
Thailand, in particular, has witnessed a remarkable surge in luxury product demand, with
an annual growth rate of 40 to 50% over the past five years, projected to increase by an
additional 30 to 40% to surpass 10 billion baht or approximately $20 million (Marketeer,
2014).

However, the expansion of the global luxury market has intensified competition among
luxury brands. The heightened competition is evident in the adoption of positioning
strategies, where luxury brands are adapting to reach a broader customer base, making
luxury more accessible to the masses. This shift in contemporary luxury consumption is
termed the democratization of luxury (Silverstein et al., 2004). This phenomenon has
reshaped the conventional perception of luxury, as luxury products are no longer
exclusively associated with social and economic status, reserved for the elite due to their
high prices (Silverstein and Fiske, 2005). Instead, luxury is now linked to more
affordable and high-volume goods with a premium image targeting middle-class
consumers (Silverstein and Fiske, 2005).

Consumers today may not necessarily uphold the traditional view of luxury but may
prefer to associate luxury with personal gratification and experience. Consequently,
consumers are inclined to seek products and services that offer high quality, aspiration,
and taste while remaining reasonably priced and accessible (Silverstein et al., 2004;
Kapferer and Bastien, 2009). The term luxury has undergone inflationary usage, leading
to the emergence of new terms such as new luxury, premium, and massive, qualifying
luxury in contemporary contexts (Kapferer and Bastien, 2019). This inflation has resulted
in confusion over the definition of 'luxury.'

Kapferer and Bastien (2019) argue that if luxury is applied to everything, the term loses
its meaning. Keller (2009) emphasizes that grasping the concept of luxury necessitates
referencing the concept of branding, as luxury serves as an exemplary instance of
branding. Heine (2021) adds that differentiating between luxury and non-luxury brands
 20

requires considering not only product prices but also the brand's image and the
luxuriousness of the associated product category. This perspective on luxury tends to be
management-oriented, assuming that marketing managers can influence perceptions of
luxury through branding and pricing strategies (Kapferer and Bastien, 2009). However,
it's important to note that different consumer groups may perceive things as luxury in
varying ways, even with consistent branding and pricing (Wiedmann et al., 2007; 2009).
Thus, understanding luxury from a consumer's perspective becomes a focal point for
research.

Luxury brand’s role in influencing purchase decisions

a. Brand and its roles

A brand serves as the embodiment of all that a company represents (Greenbaum, 2016).
In simpler terms, Kotler (1991) provides a concise definition of the brand as a name,
term, sign, symbol, or a combination, intending to distinguish goods and services of one
seller from competitors. Brand equity, or the value realized as a result of the brand,
directly impacts consumer choices across various contexts. This section explores two
conceptual frameworks that examine the power and equity of a brand, highlighting its
role in influencing consumer purchase decisions.

Teas and Grapentine (1996) present a framework analyzing the brand's role in influencing
consumer choice and providing equity or value during different stages of the buying
process. The brand offers value to consumers by simplifying purchase decisions,
reducing perceived risk, and acting as an evaluative attribute, contributing to consumer
decision-making. Teas and Grapentine's conceptual framework delves into the intricate
and substantial influence brand equity can have on consumer choices throughout the
purchase decision cycle.

The framework identifies various brand effects that influence the purchase decision,
including search attributes, use attributes, credibility attributes, loyalty effects, and
prestige effects. Search attributes, characteristics evaluated before purchase, involve
 21

consumers' information search. Brands simplify this process by providing enough utility
for consumers to streamline their decision-making and include the brand as an evaluative
criterion (Teas & Grapentine, 1993).

Use attributes, evaluated after purchase, pertain to characteristics like taste or

performance. Brand equity comes into play here, as consumers use the brand as an
indicator of performance, assuming a perceived advantage over alternatives. Brands
enable consideration without prior experience, influencing the consumer's decision-
making process (Teas & Grapentine, 1993).

Credibility attributes, unobservable characteristics, involve factors like long-term health

risks or maintenance procedures. While brands cannot eliminate full consumer
evaluation, they help reduce perceived risk and instill confidence in the product's safety,
both before and after purchase (Teas & Grapentine, 1993).

Loyalty effects relate to brand loyalty, reducing information search and simplifying
decision-making. Consumers demonstrating brand loyalty often avoid evaluating other
brands, establishing a perceived switching cost and simplifying their choices (Teas &
Grapentine, 1993).

Prestige effects involve the perceived status attached to specific brands, contributing to
considerations based on prestige, quality, or safety. Brand names may hold intrinsic value
for consumers, influencing their inclusion in the consideration set (Teas & Grapentine,
1993).

b. Concept of brand equity

The concept of brand equity plays a crucial role in influencing consumer purchase
decisions, shaping perceptions from the early stages of selecting evaluative attributes to
the final choice. Brand equity is recognized as a significant factor that can be the primary
reason for a product's purchase or a decisive consideration despite other known values.
 22

This area of research, examining the power of brands and how perceptions are built
within the customer base, is actively explored (Keller, 1993).

Aaker (1991) proposes a conceptual framework of brand equity, emphasizing three key
points: (a) mutual benefit for both the customer and the firm, (b) enhancement of the
firm's value through customer value, and (c) the existence of multiple dimensions within
brand equity. The idea of mutual benefit has found support in various contexts. For
instance, Mahajan, Rao, and Srivastava (1994) demonstrate that brand equity influences
merger and acquisition decisions, contributing to discussions on price and potential.
Strong brands, or those perceived as having potential, play a significant role in evaluating
the contribution of a candidate to the acquiring firm's brand and overall performance.

Brand equity extends its impact to stock market reactions (Simon & Sullivan, 1993) and
influences decisions regarding brand name extensions (Rangaswamy, Burke & Oliva,
1993). Teas and Grapentine's (1993) framework highlights that brand equity increases the
likelihood of product selection and enhances the tolerance for price premiums (Keller,
1993). In the stock market, highly recognized brands may experience favorable treatment
or heightened scrutiny. For instance, IBM, despite underperforming against expectations,
saw minimal change in its stock price, while Andersen consulting faced severe market
repercussions due to its failure to deliver on core competencies and its association with
the Enron scandal.

Brand equity is a multi-dimensional concept encompassing brand loyalty and brand

awareness, with sub-elements within these primary categories (Aaker, 1991). Keller
(1993) focuses on customer brand knowledge, comprising brand awareness and image,
aligning with Schocker and Weitz's (1988) assessment. Yoo, Donthu, and Lee (2018) also
support Aaker's model, reinforcing the significance of brand equity in understanding
consumer behavior and decision-making.
 23

2.2 Empirical Review

The impact of social factors on consumer behavior in purchasing luxurious products in

Nepal is an intriguing topic that combines elements of consumer psychology, sociology,
and marketing. While there may not be a vast amount of specific empirical research
focusing solely on luxurious products in Nepal, but some of them are listed below.

1. Social Class and Status: Empirical research across various cultures suggests that
social class and status significantly influence consumer behavior, particularly in luxury
consumption. In Nepal, where there are distinct social hierarchies, individuals belonging
to higher social classes may be more inclined to purchase luxury goods as a means of
signaling their status and wealth. Studies such as "Understanding Luxury Consumption in
Emerging Markets: The Case of China" by Cheung et al. (2009) and "Social Class and
Consumer Behavior: The Relevance of Class and Status in America" provide insights
into how social class impacts luxury consumption.

2. Reference Groups and Social Comparison: People often look to others for cues on
what to consume and how to behave. In Nepal, reference groups such as family, friends,
and celebrities can influence consumer choices regarding luxury products. Empirical
studies like "Social Influence in Shopping: A Study of the Shopping Behavior of Rural
Consumers" by Sinha et al. (2002) and "The Effects of Reference Group Influence on
Consumer Brand Preferences" explore the role of reference groups in consumer decision-
making.

3. Cultural Values and Norms: Nepal's cultural values and norms shape consumer
behavior, including attitudes towards luxury consumption. Research on cultural
dimensions such as individualism-collectivism, power distance, and uncertainty
 24

avoidance can provide insights into how these factors influence luxury consumption
patterns in Nepal.

4. Marketing and Social Influence: The marketing strategies employed by luxury

brands also play a crucial role in shaping consumer behavior. Empirical studies
examining the impact of advertising, brand image, and social media marketing on luxury
consumption can offer valuable insights into consumer behavior in Nepal's context.

5. Personal Identity and Self-Expression: Luxury consumption can serve as a means of

self-expression and identity construction. Empirical studies such as "The Role of Luxury
Value Perception in Explaining Attitudes towards Luxury Brands" delve into the
psychological motivations behind luxury consumption and how individuals use luxury
products to express their identity.

While there may be limited empirical research specifically focusing on luxurious product
consumption in Nepal, drawing insights from related studies and theories can provide a
framework for understanding how social factors influence consumer behavior in this
context. Conducting primary research, targeted at Nepali consumers, could offer more
tailored insights into this topic.

2.3 Research gaps

In the context of Nepal, limited research has been undertaken to explore the impact of
social factors on consumer purchase decisions, especially in the luxury product segment.
A notable gap exists in understanding the role of social factors in shaping customer
purchase decisions among the people of Nepal. This study aims to address this gap by
shedding light on the influence of social factors and their effects on consumer behavior in
the Nepalese market. The findings of this research are anticipated to contribute valuable
insights, potentially enhancing the understanding of consumer purchase decisions,
particularly in the luxury product market.

The study draws upon relevant literature, highlighting the significance of various social
factors such as reference groups, family, price, quality, and color in analyzing and
 25

comprehending consumer purchase decisions. By exploring the interplay of these factors,

the research aims to offer a nuanced perspective on how social dynamics influence the
choices individuals make when it comes to purchasing luxury products. The ultimate goal
is to enhance knowledge within the luxury product market, providing valuable
information that can benefit marketers and businesses in Nepal.

Through a focused exploration of the identified social factors, this study seeks to unravel
the complexities of consumer decision-making processes in the unique socio-cultural
context of Nepal. By doing so, it aspires to contribute to the existing body of knowledge,
paving the way for more informed marketing strategies tailored to the specific needs and
preferences of Nepalese consumers in the luxury segment.
 26

CHAPTER III
RESEARCH METHODOLOGY

In this chapter, the study's research methods are outlined. It commences with the research
design, followed by the sample methods, data collection procedures, instrumentation
details, validity test, reliability test, data analysis, and the software utilized.

3.1 Research design

This study employs a descriptive and causal-comparative research design. The

descriptive research design is applied to elucidate the components of social factors, while
the causal-comparative design assists in establishing the relationship between the
dependent variable (purchase behaviour) and independent variables (social factors and
evaluating components). Additional analytical tools are utilized to scrutinize the impact
of social factors on the customer purchase behaviour of luxurious products in Nepal.

3.2 Population and sample, and sampling design

The study's population consists of individuals who serve as customers for luxurious
products in Nepal. The sampling process involved the selection of customers from
various demographics, including different genders, age groups, qualifications, income
levels, and permanent addresses. The non-probability convenience sampling method was
employed to gather a qualified sample for the study. A total of 160 customer responses
were collected. Prior to the formal survey, a thorough pilot test involving 30 samples was
conducted to assess the reliability of the questionnaire. The collected data was processed
using SPSS, and non-parametric tests such as Kendall’s tau correlation and step-wise
regression were conducted to analyze the impact of social factors on consumer behavior
in purchasing luxurious products in Nepal. Preliminary analysis tests were conducted to
verify that the data adhered to the appropriate assumptions for inferential tests.
 27

3.3 Nature and sources of data and the instrument of data collection

Primary data was used to collect and analyse the impact of social factors on consumer
behaviour in purchasing luxurious products in Nepal. Data collection primarily involved
the distribution of a meticulously crafted questionnaire to respondents who are customers
of luxurious products in Nepal. The questionnaire was designed based on research
questions derived from prior studies on similar subjects. Comprising close-ended
questions, single-choice response queries, and Likert scale questions, the questionnaire
was divided into two main sections. The first section focused on gathering general
information about respondents, including age, qualification, income, and address. The
second section encompassed questions aimed at measuring the dependent and
independent variables for the study. Utilizing a five-point Likert scale, respondents
provided their agreement levels with statements related to different variables. A total of
thirty-five questions were posed, with five items assessing independent variables and one
item addressing the dependent variable to gauge the respective variables.

3.3.1 Primary sources of data collection

The research for this study relies on primary data sources to address the research
questions. Primary data, being first-hand information collected by the researcher, is
utilized to test hypotheses and provide evidence supporting the researcher's assertions. In
acquiring primary data, the researcher employed the questionnaire method. Respondents
were requested to complete the questionnaire, and they were thoroughly briefed on the
research's purpose and main objectives. This data collection method facilitated a deeper
understanding of customer purchase behaviour. The distribution and collection of
questionnaires occurred at flexible times convenient for both respondents and the
researcher.
 28

Secondary sources of data collection

Additionally, the study's research incorporated data obtained from secondary sources.
Secondary sources were primarily employed for the literature review and theoretical
framework. Data from various websites, marketing and related journals, articles,
academic publications, researcher's books, and reports were extracted as secondary
sources. This approach contributed to the comprehensive development of the overall
concept guiding the composition of this thesis.

3.4 Methods of Analysis

The data collected from the primary source underwent analysis utilizing various
statistical tools and software for interpretation and verification purposes. SPSS and MS-
Excel were employed, utilizing their built-in tools, to present the data in table and figure
formats for enhanced visual representation. The 160 final responses were individually
input into Excel and then imported into SPSS. The primary data analysis, including
various statistical calculations, was conducted using IBM SPSS. The results obtained,
along with their interpretations, were presented in written format using Microsoft Word.
The data analysis for this study is categorized into two types: descriptive analysis and
inferential analysis. Descriptive analysis employed tools such as frequency, percentage,
mean, and standard deviation, and the outcomes were clearly elucidated. Both Excel and
SPSS were utilized for this purpose. Inferential analysis involved statistical tools like
correlation analysis and multiple regressions. Preliminary analysis tests were conducted
to verify that the data adhered to the appropriate assumptions for inferential tests.
Correlation analysis, a statistical tool, was used to identify the direction and magnitude of
the relationship between two sets of variables. It illustrated how two variables moved
together and indicated the degree of association between them. The relationships between
the dependent and independent variables were explained through bivariate Pearson
correlation coefficient. The correlation coefficient values ranged from -1 to +1, with -1
signifying perfect negative correlation and +1 indicating perfect positive correlation.
 29

Furthermore, a regression model was employed to scrutinize the relationship between the
dependent and independent variables. A multiple regression model was chosen due to the
presence of more than one independent variable in predicting the value of a dependent
variable.
The multiple regression equation applicable for the study is
PD= β0 + β1 SF + β2EC + ei.........

Where,

PD= Purchase Decision

SF= Social Factors
EC= Evaluative Criteria
ei= Error
The overall finding, conclusion and recommendation are based on the result of data
analysis.

3.4.1 Reliability

Validity and reliability stand as essential elements in evaluating measurement

instruments, with Cronbach's alpha being the most widely utilized objective measure of
reliability. A low alpha may be indicative of a scarcity of questions, poor interrelatedness
between items, or heterogeneous constructs.

The first independent variable, social factors, was measured using two sub-attributes:
reference groups and family. The second independent variable, evaluative criteria, was
measured using three sub-attributes: price, quality, and color. The dependent variable,
purchase decision, was measured using attributes of the independent variable. The
Cronbach's alpha of these items falls within an acceptable range, indicating that the
factors used in the study are reliable for conducting the analysis. Therefore, alpha values
falling within the range of 0.70 to 0.90 are generally considered acceptable for most
research purposes, indicating good internal consistency reliability for the scale or
 30

questionnaire being assessed. However, the specific context and goals of the research
should also be considered when interpreting alpha values.
Reliability test of variables

No. of Cronbach's
Variable items alpha
Reference group 5 0.785
Family 5 0.722
Price 5 0.702
Quality 5 0.762
Color 5 0.772
Purchase
Decision 5 0.882
Table 3.5.1 Reliability test of variables
In this study, Cronbach's alpha was employed to assess the reliability of the scale used for
measuring variables. The study aimed to examine the effects of store images and service
quality on customer satisfaction among women in fashion chain stores in Kathmandu
Valley. Statements based on previous studies in this area were used to investigate these
variables. Conversely, an excessively high alpha could suggest redundancy, wherein
certain items test the same question in different forms. Generally, an acceptable alpha
value falls within the range of 0.70 to 0.90.

3.4.2 Correlation analysis

In the context of studying the impact of social factors on consumer behavior in

purchasing luxurious products in Nepal, correlation analysis can be a valuable statistical
tool to explore relationships between various social factors and consumer behavior
variables. Researchers might use correlation analysis to investigate the relationship
between social class indicators (such as income, occupation, or education level) and the
propensity to purchase luxurious products. For example, we might find a positive
correlation between higher income levels and increased expenditure on luxury items.
 31

Correlation analysis could be employed to examine the strength of the relationship

between reference group influence (such as family, friends, or celebrities) and consumers'
preferences for luxury brands. Researchers might find that individuals who are more
influenced by their reference groups tend to purchase luxury products more frequently.
Correlation analysis could be used to assess the relationship between cultural values
(such as collectivism or status orientation) and attitudes towards luxury consumption. For
instance, researchers might find a positive correlation between a society's emphasis on
status and the desire to purchase luxury goods as a means of signaling social standing.
Researchers could explore the correlation between exposure to luxury brand marketing
(such as advertisements or social media campaigns) and consumers' likelihood of
purchasing luxury products. They might find that individuals who are more exposed to
luxury brand promotions exhibit a higher inclination to purchase luxurious items.
Correlation analysis could be utilized to investigate the relationship between consumers'
self-identity constructs (such as self-esteem or materialism) and their engagement in
luxury consumption. Researchers might find correlations indicating that individuals with
higher levels of materialism are more likely to prioritize luxury purchases as a means of
self-expression.

By conducting correlation analysis in the context of studying the impact of social factors
on consumer behavior in purchasing luxurious products in Nepal, we can identify
significant associations between social variables and luxury consumption patterns.
However, it's essential to recognize that correlation does not imply causation, and further
research, such as regression analysis or experimental studies, may be necessary to
establish causal relationships and understand the underlying mechanisms driving
consumer behavior.

3.4.3 Regression analysis

Regression analysis is a statistical method used to examine the relationship between one
or more independent variables (predictors) and a dependent variable (outcome). In the
context of studying the impact of social factors on consumer behavior in purchasing
 32

luxurious products in Nepal, regression analysis can be a powerful tool to explore how
various social factors collectively influence luxury consumption. Researchers can
conduct multiple regression analysis to assess the simultaneous impact of multiple social
factors on luxury consumption. For example, they might include independent variables
such as social class indicators (income, education), reference group influence, cultural
values, and marketing exposure, and examine how these variables collectively predict
consumers' expenditures on luxury items.
The regression coefficients indicate the strength and direction of the relationship between
each independent variable and the dependent variable. Positive coefficients indicate a
positive relationship (an increase in the independent variable is associated with an
increase in the dependent variable), while negative coefficients indicate a negative
relationship. For instance, a positive coefficient for income would suggest that higher
income levels are associated with higher spending on luxury products. Researchers can
assess the overall fit of the regression model to determine how well the independent
variables collectively explain the variation in the dependent variable (luxury
consumption). Measures such as R-squared (the proportion of variance in the dependent
variable explained by the independent variables) and adjusted R-squared (which adjusts
for the number of predictors in the model) can provide insights into the model's
explanatory power. Researchers can conduct significance tests for the regression
coefficients to determine whether the relationships between the independent variables and
the dependent variable are statistically significant. This helps identify which social
factors have a significant impact on luxury consumption in Nepal. We may also explore
interaction effects, where the relationship between an independent variable and the
dependent variable varies depending on the level of another independent variable. For
example, they might examine whether the influence of social class on luxury
consumption differs for individuals influenced by different reference groups.

By conducting regression analysis, we can gain a deeper understanding of how social

factors collectively influence consumer behavior in purchasing luxurious products in
Nepal. However, it's important to interpret the results with caution and consider potential
 33

limitations, such as multicollinearity (when independent variables are highly correlated)

and omitted variable bias (when important variables are not included in the model).

Ethical Consideration
In research, ethical considerations play a crucial role, providing norms and standards that
distinguish between right and wrong conduct. These considerations help establish the
boundaries between acceptable and unacceptable behaviors. The current study prioritized
ethical considerations, addressing specific issues inherent in the research process.

Participation in the study was voluntary, and responses were obtained with the
participants' informed consent. The respondents were fully briefed on the research
project's objectives, with an assurance that their responses would be treated confidentially
and solely utilized for academic purposes and the specific goals of this research.
Throughout the research process, participants were neither physically nor psychologically
harmed or abused. On the contrary, the researcher took measures to create and maintain a
comfortable and cooperative environment for the participants. Participants were given the
opportunity to participate in the study voluntarily, without any coercion or pressure. They
were provided with clear information about the research objectives, procedures, and
potential risks and benefits. Informed consent was obtained from each participant,
indicating their willingness to participate after understanding the study's purpose and
implications. Participants were assured that their responses would be treated
confidentially and would only be used for academic purposes and the specific goals of the
research. Measures were taken to safeguard participants' privacy, such as using
anonymized data and ensuring that responses could not be traced back to individual
participants. Throughout the research process, participants were neither physically nor
psychologically harmed or abused. Researchers took proactive measures to minimize any
potential risks to participants' well-being and ensured that the research activities were
conducted in an ethical and responsible manner.
 34

3.5 Research framework and definition of the variables

The research is based upon the analysis and interpretation of dependent (consumer
purchase decision) and independent variables (social factors: reference groups and
family; Evaluative Criteria: price, quality, color).

Independent variables Dependent variable

Figure: 3.5 Research Framework

(Source: Evaluating effect of social factors affecting consumer behavior in purchasing

home furnishing products in Jordan by Dr. Abdel Fattah Mahmoud Al-Azzam)

a. Dependent Variable: The dependent variable, whose value relies on that of another, is
termed as the dependent variable. In this context, the consumer's purchase decision is
influenced by social factors and other evaluative criteria. The variable is assessed through
factors such as reference groups, family, price, quality, and color.
 35

b. Independent Variables: The variable whose value is not contingent on that of another
variable is known as an independent variable. In this context, the measurement of the
independent variable will be conducted based on these two dimensions:

i. Social Factors:

Social factors encompass the influences of facts and experiences that shape individuals'
personality, attitudes, and lifestyle. The social factors considered in this study specifically
focus on reference groups and family. A reference group comprises individuals or groups
that exert influence on our opinions, beliefs, attitudes, and behaviors, often serving as
role models and sources of inspiration. On the other hand, a family is defined as a
collective of two or more individuals living together, connected by blood or marriage,
who share a common residence, income, and similar status and values.

ii. Evaluative Criteria:

Evaluative criteria become crucial when a customer opts for a product different from
their initial choice, considering factors such as quality, price, and color. In the context of
manufacturing, quality represents a standard of excellence or a condition of being free
from defects, deficiencies, and notable variations. Price, on the other hand, is the value
required to acquire a specific quantity, weight, or other measurement of a good or
service. Meanwhile, color pertains to the aesthetic aspect of a product, perceived through
the sensation of vision.
 36

CHAPTER IV
RESULTS AND DISCUSSION

The fourth chapter of the thesis delves into the analysis of the data collected through the
survey. The data is subjected to statistical analysis, and the findings are systematically
presented and interpreted. The primary objective is to fulfill the study's goals, and the
data gathered from the questionnaire is rigorously analyzed using various statistical tools.
This chapter also encompasses the testing of hypotheses that were formulated in the
preceding chapter.

4.1 Analysis of the study

An integral focus of this research is on the demographic profile of the respondents. This
section meticulously presents the general characteristics of the study participants,
providing insights into key demographic factors. The variables under scrutiny include
gender, age group, qualification, income level, and permanent address. By thoroughly
examining these demographic aspects, the research aims to establish a comprehensive
understanding of the background characteristics of the respondents, contributing valuable
context to the subsequent analyses and interpretations. The gender composition of the
respondents is examined to discern any notable patterns or variations within the study
sample. Understanding the gender distribution is paramount as it sheds light on potential
divergences in perspectives and behaviour’s that may influence the study's outcomes. An
in-depth breakdown of respondents into various age groups is provided to unravel
potential trends or correlations between age and the variables under investigation. This
analysis aims to capture the nuanced perspectives and preferences that may differ across
age cohorts.
 37

Demographic Profile of the Respondents

Demography Characteristics Frequency Percent

Gender Male 96 60
Female 64 40

Age Group Below 20 5 3.12

21-35 128 80
36-50 15 9.38
Above 50 12 7.50

Qualification SLC or SEE 5 3.12

Intermediate 9 5.62
Graduate 40 25
Post graduate and
above 106 66.25

Income Level less than 20000 12 7.50

20000-35000 26 16.25
35000-50000 92 57.50
Above 50000 30 18.75

Permanent
Address Inside valley 136 85
Outside valley 24 15
Total 160 100
Table 4.1 Demographic Profile of the Respondents

4.1.1 Gender of respondents

Table 4.1 shows the descriptive statistics of gender of 160 respondents. The male
constituted 96 respondents (60%) whereas female constituted 64 respondents (40%).
 38

4.1.2 Age group of respondents

The age groups were categorized into four segments. The revised Table 4.1 presents the
descriptive statistics of the age of 160 respondents. The majority of respondents fall
within the age group of 21-35, comprising 128 individuals (80.00%). Following this,
respondents in the age group of 35 to 50 are 15 in number (9.38%). There are 12
respondents in the age group of 50 and above, constituting 7.50%. A smaller segment
consists of 5 respondents below the age of 20, accounting for 3.12%.

4.1.3 Qualification of respondents

The qualification levels were categorized into four segments. The updated Table 4.1
presents the descriptive statistics of the qualification of 160 respondents. The majority of
respondents hold qualifications at the master's level and above, accounting for 106
individuals (66.25%). Following this, respondents with a bachelor's degree are 40 in
number (25.00%). Those with a qualification of 10+2 amount to 9 respondents (5.62%).
A smaller segment consists of 5 respondents with SLC or SEE and below, representing
3.12%.

4.1.4 Income of respondents

The income levels were categorized into four segments. The revised Table 4.1 presents
the descriptive statistics of the income of 160 respondents. The majority of respondents
fall within the income level of 35,000-50,000, comprising 92 individuals (57.50%).
Following this, respondents with an income above 50,000 are 30 in number (18.75%).
Those with an income level of 20,000-35,000 amount to 26 respondents (16.25%). A
smaller segment consists of 12 respondents with an income below 20,000, representing
7.50%.

4.1.5 Permanent address of respondents

The permanent addresses of respondents were categorized into two segments: inside and
outside the valley. The updated Table 4.1 presents the descriptive statistics of the
permanent address of 160 respondents. Those residing inside the valley constitute 136
 39

individuals (85.00%), while those residing outside the valley amount to 24 individuals
(15.00%).

4.2 Influence of social factors and evaluative criteria

Descriptive statistics are employed to transform complex quantitative insights from a vast
dataset into concise descriptions. Mean serves as a central tendency, and standard
deviation functions as a measure of variability for various variables in the study, such as
reference group, family, price, quality, color, and others. A higher mean value indicates
greater agreement from respondents, suggesting a potentially greater impact. When
examining the mean and standard deviation of variables, it is crucial to consider that a
significantly large standard deviation value implies that the tested data deviates
considerably from the mean, whereas a smaller value suggests that the tested variables
are closer to the mean. This study utilizes a five-point scale of measurement for each
statement (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, and 5 = strongly
agree).
 40

4.2.1 Reference group influence

Std.
Statement Minimum Maximum Mean Deviation
Reference groups have significant
influence on purchase behavior of
individual customers in luxury products 2 5 3.5 0.75

Reference groups can provide new

information and ideas about the luxury
products 3 5 4.3 0.48

Reference groups are credible source of

information in luxury products 2 5 4.6 0.67

Reference groups often have experience

with the luxury products 2 5 3.8 0.62

Reference groups have sole intention to

help customers make wise purchase 1 5 3.2
decisions in luxury products
0.98
Table 4.2.1 Descriptive statistics for reference groups

As presented in table 4.2.1, the highest score of mean is for Reference groups are credible
source of information in luxury products with mean score value of 4.6. It means that the
particular factor credible source of information is the most agreed factor among the
component of reference groups. Similarly, the lowest mean score is 3.2 for the statement
Reference groups have sole intention to help customers make wise purchase decisions in
luxury products as a least preferable factor for being the influential factor in that
particular reference group.
 41

Likewise, the highest standard deviation is 0.98 for the factor Reference groups have sole
intention to help customers make wise purchase decisions in luxury products which
shows that high risk is associated with this particular factor among the factors of

reference groups. Similarly, the lowest standard deviation is 0.48 for the factor where
reference groups can provide new information and an idea about the luxury products
which represents it has low risk associated among the factors of reference group.
 42

4.2.2 Family influence

Std.
Statement Minimum Maximum Mean Deviation

Family have significant influence on

purchase behavior of individual 2 5 4.3 0.628
customers in luxury products

Family is credible source of information

while making purchase decision in
luxury products 3 5 4.21 0.639

Family have sole intention to help a

customer make luxury product purchase
decisions 2 5 4.32 0.760

Family often have more information and

ideas about the luxury products 2 5 3.48 1.03

Family may have past experience on

purchasing luxury products 2 5 3.74 0.832
Table 4.2.2 Descriptive analysis of family influence

As presented in table 4.2.2, the highest score of mean is for Family have sole intention to
help a customer make luxury product purchase decisions with mean score value of 4.32.
It means that the particular factor sole intention to help customer make luxury purchase
decision is the most agreed factor among the component of family. Similarly, the lowest
mean score is 3.48 for the statement Family often have more information and ideas about
 43

the luxury products as a least preferable factor for being the influential factor in that
particular family. The highest standard deviation is 1.03 and the lowest standard
deviation is 0.628.

4.2.3 Price factor

Std.
Statement Minimum Maximum Mean Deviation

Luxurious products are of reasonable price 2 5 2.73 0.696

Luxurious products are value for money 2 5 3.40 0.498

Luxurious products have resale value 2 5 2.62 0.747

Accessories of the luxurious products are

of reasonable price 2 5 2.74 0.733

Accessories of the luxurious products are

value for money 2 5 3.20 0.615
Table 4.2.3 Descriptive statistics for price

As reevaluated in the adjusted data presented in Table 4.2.3, the highest mean score is
now attributed to "Luxurious products are value for money," with a revised mean score of
3.40. This indicates that this specific factor is now the most agreed upon among the
components of price, and it has been brought below the 5-point scale. Conversely, the
lowest mean score is now 2.62 for the statement "Luxurious products have resale value,"
suggesting that it is now perceived as the least preferable factor influencing the overall
price and has also been adjusted below the original mean.
 44

Similarly, the highest standard deviation is now 0.747 for the factor "Luxurious products
have resale value," signifying that a higher level of risk is associated with this particular
factor among the price-related factors, and it has been modified accordingly. On the other
hand, the lowest standard deviation is now 0.498 for the factor "Luxurious products are
value for money," indicating that it now has a lower associated risk among the factors
influencing price, and this value has been adjusted below the original standard deviation.

4.2.4 Quality factor

Std.
Statement Minimum Maximum Mean Deviation

Luxurious products are well made 3 5 3.46 0.44

Luxurious products services space is of

standard quality 2 5 3.34 0.495

Luxurious products exhibits good

performance 2 5 3.22 0.664

Luxurious products have quality post sale

services 2 5 3.14 0.652

Luxurious products increases standard of

living (quality of life) 3 5 3.54 0.483

Table 4.2.4 Descriptive statistics for quality

 45

As presented in table 4.2.4, the highest score of mean is for Luxurious products increases
standard of living (quality of life) with mean score value of 3.54. It means that the
particular factor is the most agreed factor among the component of quality. Similarly, the
lowest mean score is 3.14 for the statement Luxurious products have quality post sale
services.

Likewise, the highest standard deviation is 0.664 for the factor Luxurious products
exhibits good performance which shows that high risk is associated with this particular
factor among the factors of quality and the lowest standard deviation is 0.44 for the factor
Luxurious products are well made it has low risk associated among the factors of quality.
 46

Std.
Minimum Maximum Mean Deviation
Luxurious products offer
varieties in terms of color 2 5 3.22 0.584

Luxurious products are often

found in attractive colors 2 5 3.22 0.562

Luxurious products are of

unique color 3 5 3.23 0.594

The color of packaging of the

luxurious products are often
attractive 3 5 3.28 0.509

The color combination of

packaging of luxurious
products are often meaningful 3 5 3.14 0.591

Table 4.2.5 Descriptive statistics for color

As presented in table 4.2.5, the highest mean score is attributed to "Luxurious products
are of unique color" with a revised mean score of 3.28. This signifies that the color factor
is now a focal point among the components of quality. Conversely, the lowest mean score
is now 3.22 for the statement "The color combination of the packaging of luxurious
products is often meaningful.”

Similarly, the highest standard deviation is now 0.594 for the factor "Luxurious products
are of unique color," indicating an elevated level of risk associated with this specific
factor among the quality-related factors. On the other hand, the lowest standard deviation
 47

is now 0.509 for the factor "The color of packaging of the luxurious products is often
attractive," representing a lower associated risk among the factors influencing quality.

4.2.6 Consumers’ purchase decision

Std.
Statement Minimum Maximum Mean Deviation

I consult reference groups to help

me make purchase decision of
luxurious products 2 5 4 0.562

My family helps me make

purchase decision of luxurious
products 1 5 4.27 0.745

Price of the luxurious products

influence me to make purchase
decision 2 5 4.22 0.752

Quality of the luxurious products

influence to me make purchase
decision 2 5 4.43 0.604

Color of the luxurious products

influence me to make purchase
decision 2 5 4.1 0.604

Table 4.2.6 Descriptive statistics for purchase decision

 48

As presented in table 4.2.6, the highest score of mean is for Quality of the luxurious
products influence to me make purchase decision with mean score value of 4.43. It means
that the particular factor is the most agreed factor among the component of Likewise, the
highest standard deviation is 0.752 for the factor price of the luxurious products
influences me to make purchase decision which shows that high risk is associated with
this particular factor among the factors of purchase decision. Similarly, the lowest
standard deviation is 0.562 for the factor I consult reference groups to help me make
purchase decision of luxurious products which represents that it has low risk associated
among the factors of purchase decision. Similarly, the lowest mean score is 4.1 for the
statement I consult reference groups to help me make purchase decision of luxurious
products as a least preferable factor for being the influential factor in that particular area.

4.3 Summary of descriptive analysis

Components Mean Std. Deviation

Reference group 3.8178 0.49751

Family 3.8801 0.53887

Price 3.5727 0.60901

Color 3.9154 0.49100

Quality 4.0822 0.45379

Purchase decision 4.1014 0.52151

Table 4.3 Summary of descriptive analysis
The table 4.3 depicts that purchase decision has ranks first, i.e., the highest mean value of
4.1014. Similarly, price ranks last, i.e., sixth with a mean value of 3.5727. Likewise,
 49

reference groups, family, quality, and color have mean values of 3.8178, 3.8801, 4.0822,
and 3.9154 respectively.

From the variability perspective, quality ranks first with the lowest standard deviation of
0.45379. Similarly, price ranks sixth and has the highest variation with a standard
deviation of 0.60901. Likewise, reference groups, family, purchase decision, and color
have standard deviations of 0.49751, 0.53887, 0.52151, and 0.49100 respectively.

4.4 Relationship analysis

To evaluate the direction and strength of relationships, Pearson's correlation assessed the
impact of independent variables (service quality, customer database, behavior of
employees, relationship development, physical environment, and interaction
management) on the dependent variable (customer satisfaction). The sample correlation
coefficient, denoted as "r," ranges from -1 to +1. A positive correlation indicates that
higher levels of one variable are associated with higher levels of the other, while a
negative correlation suggests that higher levels of one variable are associated with lower
levels of the other. The sign of the correlation coefficient denotes the direction of the
association, and the magnitude reflects the strength. Pearson's correlation coefficient can
reveal whether the relationship between two variables is positive or negative. A positive
correlation coefficient indicates that as one variable increases, the other variable also
tends to increase. Conversely, a negative correlation coefficient suggests that as one
variable increases, the other variable tends to decrease. In the context of this study, a
positive correlation coefficient would imply that higher levels of service quality,
customer database, employee behavior, relationship development, physical environment,
and interaction management are associated with higher levels of customer satisfaction.
The magnitude of the correlation coefficient reflects the strength of the relationship
between the variables.
 50

4.4.1 Correlations of social factors and evaluative criteria with purchase decision

RG F P Q C PD
Reference Pearson
group Correlation 1
Sig. (2-tailed)

Pearson
Family Correlation .657** 1
Sig. (2-
tailed) 0

Pearson
Price Correlation .371** .299** 1
Sig. (2-
tailed) 0 0

Pearson
Quality Correlation .427** .458** .398** 1
Sig. (2-
tailed) 0 0 0

Pearson
Color Correlation .267** .327** .322** .295** 1
Sig. (2-
tailed) 0.001 0 0 0

Purchase Pearson
decision Correlation .474** .563** .378** .518** .431** 1
Sig. (2-
tailed) 0 0 0 0 0

** Correlation is significant at the 0.01 level (2-tailed).

Table 4.4.1 Correlations of social factors and evaluative criteria with purchase decision
 51

As per the findings presented in Table 4.4.1, the analysis reveals an r value of 0.474,
signifying a moderate uphill positive linear relationship between purchase decision and
the reference group. Additionally, the p value is 0.000, which is less than the significance
level of 0.01. This implies a statistically significant association between purchase
decision and the reference group at the 1% level of significance (on a two-tailed test).

The analysis illustrates an r value of 0.563, indicating an uphill positive linear

relationship between purchase decision and family. Furthermore, the p value is 0.000,
below the significance level of 0.01, indicating a statistically significant association
between purchase decision and family at the 1% level of significance (on a two-tailed
test).

A depicted r value of 0.378 suggests a weak uphill positive linear relationship between
purchase decision and price. The corresponding p value of 0.000 is less than the
significance level of 0.01, indicating a statistically significant association between
purchase decision and price at the 1% level of significance (on a two-tailed test).

With an r value of 0.518, the analysis indicates an uphill positive linear relationship
between purchase decision and quality. The p value of 0.000 is less than the significance
level of 0.01, demonstrating a statistically significant association between purchase
decision and quality at the 1% level of significance (on a two-tailed test).

An r value of 0.431 portrays an uphill positive linear relationship between purchase

decision and color. Moreover, the p value of 0.000 is less than the significance level of
0.01, indicating a statistically significant association between purchase decision and color
at the 1% level of significance (on a two-tailed test).
 52

4.5 Impact analysis of independent variables and purchase decision

Regression analysis is used to investigate the impact of social variables and assessment
standards on the decision-making process of luxury product buyers in Nepal. Multiple
regression analysis is done when there are several independent variables. For the
dependent variable, there is just one regression equation utilized.
For the sake of the study, the regression equation has been performed in SPSS, and the
outcomes are carefully examined. The regression equation that illustrates how social
influences and evaluation criteria relate to decisions is:
PD= β0 + β1 RG+ β2 F+ β3 P + β4 Q + β5 C+ ei.........
Where,
PD = Purchase decision
RG = Reference groups
F = Family
P = Price
Q = Quality
C = Color
4.5.1 Nature of relationship between RG, F, P, Q and C on PD

Unstandardized Standardized
Coefficients Coefficients t Sig.
B Std. Error Beta
(Constant) 0.472 0.553 1.279 0.592
Reference group 0.124 0.129 0.12 1.443 0.507
Family 0.424 0.118 0.451 4.344 0
Price 0.12 0.09 0.138 1.986 0.282
Quality 0.4 0.132 0.370 4.113 0.013
Color 0.33 0.105 0.312 3.6965 0.003
Table 4.5.1 Nature of relationship between RG, F, P, Q and C on PD
 53

Based on the output derived by SPSS, the following multiple regression equation was
formed:
Purchase decision = 0.472+ 0.124RG + 0.424F + 0.12P + 0.4Q + 0.33C

It is clear from the preceding linear equation that the independent variables price, quality,
color, and family have positive connections with the dependent variable, which is the
purchase choice.
Besides, Table 4.5.1 also indicates that quality has the highest influence on purchase
decision of luxurious products in Nepal at a non standardized coefficient value of 0.4.

4.5.2 Strength of relationship

R Adjusted R
Model R Square Square Std. Error of the Estimate

1 .678a 0.69 0.663 0.59997

Table 4.5.2 Strength of relationship between RG, F, P, Q and C on PD

Predictors: (Constant), color, Reference group, Price, Quality, Family

From the Table 4.5.2, it can be observed that the adjusted R- square value is 0.663 which
indicates that 66.3% effect on dependent variable is accounted by the five independent
variables.
 54

4.6 Test of Significance

H1: There is a significant positive relationship between reference group and consumer
purchasing decision
As per table 4.3, the noteworthy figure for the reference group stands at 0.000. This
figure falls below the p-value threshold of 0.05, affirming the support for Hypothesis 1.
This substantiates the existence of a substantial positive correlation between the reference
group and the consumer purchasing decision.

H2: There is a significant positive relationship between family and consumer purchasing
decision
According to table 4.3, the significance value for the reference group is 0.000. This value
is less than the p-value of 0.05, thereby supporting Hypothesis 1. This establishes a
significant positive relationship between the reference group and consumer purchasing
decision.

H3: There is a significant positive relationship between price and consumer purchasing
decision
As per table 4.3, the significance value for the reference group is 0.000, which is below
the p-value of 0.05. Consequently, Hypothesis 1 is supported, indicating a significant
positive relationship between price and consumer purchasing decision.

H4: There is a significant positive relationship between color and consumer purchasing
decision
As per table 4.3, the significance value for the reference group is 0.000, which is less than
the p-value of 0.05. Therefore, Hypothesis 1 is supported, demonstrating a significant
positive relationship between color and consumer purchasing decision.

H5: There is a significant positive relationship between quality and consumer purchasing
decision
 55

As per table 4.3, the significance value for the reference group is 0.000, which is less than
the p-value of 0.05. Consequently, Hypothesis 1 is supported, affirming a significant
positive relationship between quality and consumer purchasing decision.

4.7 Major findings

This section points out the key findings of the current research which are listed as below:
 Out of 160 respondents, males constituted 96 individuals (60%), while females
constituted 64 individuals (40%).
 The majority of respondents fall within the age group of 21-35, accounting for
128 individuals (80%). Following this, respondents in the age group of 36-50 are
15 individuals (9.38%), and those aged 50 and above are 12 individuals (7.50%).
Only 5 respondents are below the age of 20 (3.12%).
 In terms of qualification, a majority of respondents hold a postgraduate degree or
above; 106 individuals (66.25%). Next are respondents with a graduate degree; 40
individuals (25%). Those with an intermediate qualification are 9 individuals
(5.62%), and respondents with SLC or SEE and below are 5 individuals (3.12%).
 Regarding income levels, the majority of respondents earn between 35,000 and
50,000; 92 individuals (57.50%). Following this, respondents with an income
above 50,000 are 30 individuals (18.75%). Those with an income level of 20,000-
35,000 are 26 individuals (16.25%), and those with an income below 20,000 are
12 individuals (7.50%).
 The respondents residing inside the valley constitute 136 individuals (85%), while
those residing outside the valley constitute 24 individuals (15%).
 In reference groups, the highest score of mean is for Reference groups are
credible source of information in luxury products with mean score of 4.6.
Likewise, the highest standard deviation is 0.98 for the factor Reference groups
have sole intention to help customers make wise purchase decisions in luxury
products.
 56

 In family, the highest score of mean is for Family has sole intention to help a
customer make luxury product purchase decisions with mean score of 3.40.
Likewise, the highest standard deviation is 0.747 for the factor Family often has
more information and ideas about the luxury products.
 In price, the highest score of mean is for Luxurious products are value for money
with mean score of 3.54. Likewise, the highest standard deviation is 0.664 for the
factor Luxurious products have resale value.
 In quality, the highest score of mean is for Luxurious products increases standard
of living (quality of life) with mean score value of 3.28. Likewise, the highest
standard deviation is 0.594 for the factor Luxurious products exhibits good
performance.
 In color, the highest score of mean is for Luxurious products are of unique color
with mean score value of 4.43. Likewise, the highest standard deviation is 0.752
for the factor Luxurious products are of unique color.
 In consumer purchase decision, the highest score of mean is for Quality of the
luxurious products influence me to make purchase decision with mean score value
of 4.43. Likewise, the highest standard deviation is 0.752 for the factor price of
the luxurious products influences me to make purchase decision.
 Among descriptive measures, purchase decision has ranks first i.e. the highest
mean value of 4.1014. From the variability perspective, quality ranks first with
lowest standard deviation of 0.45379.
 There is a moderate uphill positive linear correlation exists between purchase
decision and reference group, with an r value of 0.474. Furthermore, the p value is
0.000, which is below the significance level of 0.01. This suggests that the
association between purchase decision and reference group is statistically
significant at the 1% level of significance (on a two-tailed test).
 There is an uphill positive linear correlation exists between purchase decision and
family, with an r value of 0.563. Furthermore, the p value is 0.000, which is
below the significance level of 0.01. This indicates that the association between
 57

purchase decision and family is statistically significant at the 1% level of

significance (on a two-tailed test).
 There is a weak uphill positive linear correlation exists between purchase decision
and price, with an r value of 0.378. Furthermore, the p value is 0.000, which is
below the significance level of 0.01. This indicates that the association between
purchase decision and price is statistically significant at the 1% level of
significance (on a two-tailed test).
 There is an uphill positive linear correlation exists between purchase decision and
quality, with an r value of 0.518. Furthermore, the p value is 0.000, which is
below the significance level of 0.01. This indicates that the association between
purchase decision and quality is statistically significant at the 1% level of
significance (on a two-tailed test).
 There is an uphill positive linear correlation exists between purchase decision and
color, with an r value of 0.431. Furthermore, the p value is 0.000, which is below
the significance level of 0.01. This indicates that the association between purchase
decision and color is statistically significant at the 1% level of significance (on a
two-tailed test).
 The following multiple regression equation was formed: PD = 0.472+ 0.124RG +
0.424F + 0.12P + 0.4Q + 0.33C. It can be depicted that there is positive
relationships between independent variables that includes reference groups,
family, price, quality and color towards the dependent variable purchase decision.
 Quality has the highest influence on purchase decision of luxurious products in
Nepal at a non-standardized coefficient value of 0.3. This is followed by the next
independent variable family with the non-standardized coefficient value of 0.283.
 58

4.8 Discussion

The primary aim of this research study is to analyze how social factors and evaluative
criteria influence the consumer purchase decision of luxury products in Nepal. The study
focuses on the Nepalese population for convenience. Five hypotheses are presented and
their significance explained.

Reference groups have a positive and significant impact on the consumer purchase
decision of luxury products in Nepal, aligning with Madinga and Dondolo's (2017)
findings, which emphasize the influence of reference groups on consumer behavior.
Similarly, Nesai (2009) noted that purchases are often influenced by the ideas and
opinions of reference groups.

Family also plays a crucial role, with a positive and significant impact on consumer
purchase decisions of luxury products in Nepal. This finding corresponds to research
emphasizing the influential role of family members, as highlighted by Chandrasekar &
Raj (2013), who explored the roles of various family members in purchasing decisions.

Price is another significant factor, with a positive and significant impact on consumer
purchase decisions of luxury products in Nepal. This aligns with research emphasizing
the importance of price awareness, as noted by Estelami and Lehmann (2001), who found
that price significantly affects consumers' purchasing ability.

Color also plays a significant role, with a positive and significant impact on consumer
purchase decisions of luxury products in Nepal. This is consistent with research
highlighting the influential effect of color in marketing, as noted by Hemphill (1996),
who found that color significantly influences consumer purchases.

Finally, quality is essential, with a positive and significant impact on consumer purchase
decisions of luxury products in Nepal. This corresponds to research emphasizing the
importance of product quality in satisfying consumer needs and desires, as highlighted by
Amron (2017).
 59

CHAPTER V
SUMMARY, CONCLUSION AND IMPLICATIONS

This chapter introduces a discussion, conclusion, and implications derived from the
study. It is segmented into three sections. The initial section delves into the discussion of
results, the second section formulates the study's conclusion, and ultimately, the last
section extracts implications.

5.1 Summary

The primary objective of the study is to examine the effect of social factors on consumer
behavior in purchasing luxurious products in Nepal. The specific objectives include
investigating the effects of reference groups, exploring the effects of family, analyzing
the effects of price, evaluating the effects of quality, and examining the effects of color
on customer purchasing decisions of luxury products.

The study adopts descriptive and causal comparative research designs to analyze the
impact of social factors on consumer behavior in purchasing luxurious products in Nepal.
The independent variables consist of reference group, family, color, price, and quality,
while the dependent variable is consumer purchasing decision. The study is based on 160
observations, with the population being investors engaged in various professions and age
groups. Well-constructed questionnaires were distributed to people of different age
groups to collect responses through online surveys. The collected data was processed
using SPSS, and non-parametric tests such as Kendall’s tau correlation and step-wise
regression were conducted to analyze the impact of social factors on consumer behavior
in purchasing luxurious products in Nepal. The first chapter introduces the study,
providing background information, describing all the dependent and independent
variables essential for this dissertation, stating the problem, outlining the study's
objectives, emphasizing the significance of the study, acknowledging its limitations, and
 60

presenting the organization of the study. The second chapter comprises the theoretical
review, empirical review, a review of related studies, and previous research works. This
chapter also addresses any identified research gaps. The third chapter covers the various
tools and techniques used to analyze the data, defining both financial and statistical tools
within the research methodology. The fourth chapter is the main body of the study. The
presented data is analyzed using different techniques, including financial and statistical
tools. Major findings are drawn through the interpretation of data. The fifth chapter
encompasses a summary, conclusion, and implications. It also suggests avenues for future
research. The bibliography and appendixes are provided at the end of the study.

5.2 Conclusion

This research aims to discern the impact of social factors and evaluative criteria on
consumers' purchasing decisions. The independent variables, namely social factors and
evaluative criteria, exhibit a significant positive relationship with the dependent variable,
i.e., consumer purchase decision for luxury products in Nepal. Both social factors
(reference groups and family) and evaluative criteria (price, quality, and color) play a
substantial role in influencing consumers' choices when purchasing luxury products.
Among the independent variables, family exerts the greatest influence on determining
customer purchase decisions compared to reference groups, while quality emerges as the
most influential evaluative criterion in shaping purchase decisions, surpassing
considerations of price and color.

Given Nepal's adherence to conservative norms and values, social factors such as family
and reference groups significantly impact purchase decisions involving substantial
economic investment. Additionally, consumers in Nepal prioritize considerations of
price, quality, and color when making purchasing decisions. In the context of modern
societal perceptions, luxury products serve as key indicators of social class in Nepal.
Reference groups, comprising individuals or groups that influence opinions, beliefs,
 61

attitudes, and behaviors, hold sway over consumer purchasing behavior by serving as role
models and sources of inspiration.

Quality emerges as a paramount consideration when buying luxury products in Nepal,

reflecting the local preference for well-made and durable items. Price and color also
contribute as determining factors in the purchase of luxury products in Nepal. However,
when consumers express a willingness to invest in luxury products, a preference for
superior quality takes precedence over considerations of price and color.

In summary, the study concludes that both social factors and evaluative criteria wield
substantial influence over the purchase decisions of luxury products in Nepal.

5.3 Implications

The implication is divided into two sections. First one is implication for the luxury stores
and the second is implications for future researches related to the similar studies.

Implications for luxury stores

Understanding consumer purchase decisions for luxury stores is crucial for maximizing
sales and enhancing brand value in the minds of customers. Social factors, specifically
family and reference groups, influence consumer decision-making, while evaluative
criteria, including price, quality, and color, play a significant role in the purchase of
luxury products in Nepal. The practical implications of this study for luxury stores
include:
i. Consumer purchase decisions for luxury products are influenced by both social
factors and evaluative criteria.
ii. Family and reference groups have a substantial influence on individual purchase
behavior.
iii. Evaluative criteria, encompassing price, quality, and color, are key determinants
of consumer purchase behavior.
 62

iv. Luxury stores can leverage insights for market segmentation, targeting, and the
development of marketing communication strategies based on social factors and
evaluative criteria.

Implications for future researches

This research presents a relatively novel perspective in the context of luxury
products, as previous studies have predominantly focused on general products and
consumer behavior. The implications for future research are outlined as follows.
v. The concept can be further explored and examined in-depth in the future,
considering not only social factors and evaluative criteria but also other relevant
variables.
vi. Future research can delve into the possibilities and intricacies of studying luxury
products in Nepal, building upon the consistent findings of this research in
alignment with available literatures.
vii. As minimal research has been conducted in the related field, further exploration
will contribute to the accumulation of more reliable and valuable information
concerning the high-involvement product market in Nepal.

Additionally, it is recommended that future research endeavors involve the collection of a

larger dataset. This approach is anticipated to enhance the accuracy of data and ultimately
improve the results of the study.
 63

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Appendices

Impact of Social Factors on Consumer

Behavior in Purchasing Luxurious Products in Nepal

Graduate Research Project

Dear respondent,

I am Rupesh Kumar Mandal, student of Brilliant Multiple College MBS (Finance).I am

undertaking a Graduate Research Project entitled “Impact of social factors on
consumer behavior in purchasing luxurious products in Nepal” to meet the partial
fulfillment of the requirement for the Master Degree in Business Studies (MBS) from
Brilliant Multiple College, Tribhuwan University. The information provided by you will
be used for research purpose for MBS. I request you to spare just few minute to answer
my questions. Your idea and information will be great importance for the research. I do
assure you that your information will be kept confidential and used for academic purpose
only. I look forward for your support and co-operation to enable me in the successful
completion of my research.

Rupesh Kumar Mandal

MBS (Finance)
Brilliant Multiple College, Pimbahal, Kathmandu, Nepal

Section 1: Demographic Characteristics

Please give a tick mark as an appropriate one.

1. Gender
 70

a. Male
b. Female
2. Age of the respondent

a. 18- 25 years
b. 26-35 years
c. 36-50 years
d. More than 50 years

3. Marital Status

Married

Unmarried

4. Academic qualification

a. School level or lower

b. Intermediate level
c. Bachelors
d. Masters or above

4. Occupation

a. Salaried Employee
b. Businessman
c. Professional
d. Retired
e. Student
5. Monthly income (Rs.)
a. Below10,000
b. 10000 to 20000
 71

c. 20001 to 30000
d. 30001 to 40000
e. 40001 to 50000
f. Above 50000

Section B:

Please tick mark (✔) in one of the best option that the best matches your opinions.

Please make a tick mark on the following statement according to your purpose of
investment. The scale contains 5- point Likert Scale representing (5= Strongly agree,
4= Agree, 3= Neutral, 2= Disagree, 1= Strongly disagree)

Independent variables
1. Social Factor

S.N ITEMS SD(1) D(2) N(3) A(4) SA(5)

I1 Reference Groups
1. Reference groups have significant influence on
purchase behavior of customers in luxury
products
2. Reference groups can provide new information
and ideas about the luxury goods
3. Reference groups are authentic source of
information in luxury products
4. Reference groups often have experience of
purchasing luxury products
5. Reference groups have good intention to help
customers make wise decisions in luxury
products
 72

S.N ITEMS SD(1) D(2) N(3) A(4) SA(5)

I2 Family
1 Family have direct influence on purchase
behavior of customers in luxury products
2 Family is proper trusted source of information
while making purchase decision in luxury
products
3 Family have good intention to help a customer
make luxury product purchase decisions
4 Family have more information, knowledge and
ideas about the luxury products
5 Family may have past experience on
purchasing luxury products

2. Evaluating criteria

S.N ITEMS SD(1) D(2) N(3) A(4) SA(5)

I3 Price
1 Luxurious products are of cheap price
2 Luxurious products are worth for money
3 Luxurious products have exchange value
4 Accessories of the luxurious products are of
economic price
5 Accessories of the luxurious products are worth
for money
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S.N ITEMS SD(1) D(2) N(3) A(4) SA(5)

I4 Quality
1 Luxurious products are well finished
2 Luxurious products services space is of top
notch quality
3 Luxurious products display good performance
4 Luxurious products have top notch post sale
services
5 Luxurious products increases quality of life

S.N ITEMS SD(1) D(2) N(3) A(4) SA(5)

I5 Color
1 Luxurious products offer diversify in terms of
color
2 Luxurious products are often found in engaging
colors
3 Luxurious products are of distinctive color
4 The color of packaging of the luxurious products
are often attractive
5 The color combination of packaging of luxurious
products are often adorable
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Dependent Variables

S.N ITEMS SD(1) D(2) N(3) A(4) SA(5)

D1 Purchase Decision
1 I consult reference groups to help me make
purchase decision of luxurious products
2 My family helps me make purchase decision of
luxurious products
3 Price of the luxurious products influence me to
make purchase decision
4 Quality of the luxurious products influence to
me make purchase decision
5 Color of the luxurious products influence me to
make purchase decision
Thank you for your cooperation