A STUDY OF THE HOUSE PURCHASE BEHAVIOR

 OF LOW-INCOME CONSUMERS IN SAUDI ARABIA

 

 

 Supported By:

 

Rikaz Development Company

 

 

Prepare by

Dr. Al-Hassan Abdul-Muhmin

 

To be conducted by:

 

Students and Instructor of MKT 345 (Marketing Research) course

Department of Management and Marketing

King Fahd University of Petroleum and Minerals

Dhahran, Saudi Arabia

 

1.  INTRODUCTION

2.   RESEARCH OBJECTIVES

3.   RESEARCH DESIGN

4.   DATA COLLECTION

5.   DATA ANALYSIS

6.   PRESENTATION OF RESULTS AND RECOMMENDATIONS

7.   EXECUTION TIME SCHEDULE

8.      BENEFITS OF THE PROJECT

9.      COST


1. INTRODUCTION

As part of the requirements for completing the Marketing Research course offered by the Department of Management and Marketing at King Fahd University of Petroleum and Minerals (KFUPM), students are often required to conduct research on a marketing-related topic of interest. In order to facilitate the learning process in the course, I often prefer that the research address a real-life marketing problem faced by a company. Upon recommendation from the Business Development Center of the College of Industrial Management at KFUPM, this semester the Marketing Research class has decided to study the feasibility of a low-income housing/apartment project that Rikaz Development Compnay is planning to introduce to the Saudi market to target buyers with monthly incomes between SR 3,000 – SR 5,000 and 5,001 – SR 7,000.

 

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2. RESEARCH OBJECTIVES

Following a brainstorming exercise and extensive discussion of the study topic in class with the students, we have arrived at the following set of objectives that the research will be designed to address.

 

In broad terms, the study will examine the current house/apartment purchasing behavior of Saudi consumers in the SR 3,000 - SR 7,000 income range specified by Rikaz, and whether or not they will react favorable to a new type of low-income housing concept that the company is planning to develop.

The following specific objectives will be pursued in our effort to achieve this broad project objective:

 

1.     To examine the housing needs of Saudis with monthly incomes between SR 3,000 – SR 5,000 and 5,001 – SR 7,000.

2.     To examine the housing options normally considered by people in this target segment when they are considering buying a house

3.     To estimate how much consumers in this target segment can afford to spend monthly on mortgage payments

4.     To examine their preferences for alternative financing options

5.     To determine the factors that influence house purchase decisions of consumers in this target segment

6.     To determine what proportion of consumers in the target segment are likely to adopt the new Rikaz low-income housing concept

 

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3. RESEARCH DESIGN

To achieve the above objectives, we plan to survey Saudis with monthly incomes between SR 3,000 – SR 5,000 and 5,001 – SR 7,000 and resident in the Eastern Province. A structured self-administered questionnaire will be used in the study. We have chosen the option of conducting a survey because this is the type of research that can conveniently be conducted by the students within the 12-week period that is available for the remainder of the course.

 

Prior to the main survey, exploratory research will be conducted to identify the factors that influence Saudis’ housing purchase. This will be achieved through focus group interviews and depth interviews with selected customers and resource personnel (e.g. salespeople) in Rikaz, other real estate companies, and real estate agents. Results from this investigation will be used to design the questionnaire that will then be tested in a small-scale pilot study before final implementation in the main survey.

 

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4. DATA COLLECTION

Students of the Marketing Research course at King Fahd University of Petroleum and Minerals will be responsible for the data collection. Each student will be responsible for collecting information from a sample of respondents large enough to enable him to write a separate individual report on his findings in order to fulfill the course requirements. At the end of the course, the course instructor will pool together the responses obtained by all students in the course, analyze the pooled data, and prepare a separate report of the findings for Rikaz.

 

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5. DATA ANALYSIS

Each student will code and enter his data into a computer for electronic processing using the SPSS (Statistical Package for the Social Sciences) software. Specific analysis techniques to be employed will be dictated by requirements of the research objectives formulated for the study. The usual approach is for us to take the objectives one-by-one, discuss the appropriate statistical analysis to be performed, and how to go about implementing the analysis in SPSS.

 

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6. PRESENTATION OF RESULTS AND RECOMMENDATIONS

Findings from the study, conclusions drawn, and related recommendations will be communicated to Rikaz in a written report. An oral presentation could also be arranged if this would be of interest to the company. This will provide the opportunity for management to seek clarification of issues contained in the written report.

 

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7.  EXECUTION TIME SCHEDULE

            Table 1 shows a schedule of the time requirements for executing the research contained in this proposal.

 

TABLE 1

EXECUTION TIMETABLE FOR PROPOSED STUDY

 

 

October

November

December

Jan.

Week #:

1

2

3

4

1

2

3

4

1

2

3

4

1

2

RESEARCH ACTIVITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPLORATORY STUDY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Focus groups

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. Depth interviews

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SURVEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Questionnaire design

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. Data collection (by students)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. Coding and data entry (by students)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. Data analysis (by students)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5. Student reports

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6. Pooled data analysis and written company report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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8.  BENEFITS OF THE PROJECT

We envisage that Rikaz will derive significant benefits from this project. First, the research objectives have been formulated taking into account the practical marketing issues involved with a new product launch like the type represented by the new housing concept - issues related to customer behavior, ability of customers to buy, likelihood of buying, factors important to customers when making the decision, and preferred alternative financing schemes. We believe that information collected from the project will be valuable to Rikaz in helping the company to better develop the concept, formulate its marketing strategy, better serve the targeted customers, and improve the chances of success for the concept.

 

Second, implementation of the project itself will contribute to creating awareness of the product concept among potential buyers. Just by virtue of the project being discussed in the Marketing Research class, all the 54 students taking the course know about the product concept, and they have definitely also talked to their friends about it. Furthermore, each of them will be distributing questionnaires to at least 20 people resulting in more than one thousand people becoming aware of the product concept and the name of Rikaz just by filling out the questionnaires.

 

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9.  COST

 We hope that Rikaz will contribute to the research effort by meeting expenses involved in the data collection (e.g. incentives for respondents to fill out the questionnaires), and also providing a prize for the best three students’ reports and a honorarium for the instructor for preparing an overall report and presentation to the company. These issues can be discussed further if the company finds the proposed research useful.

 

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