A STUDY OF THE HOUSE PURCHASE BEHAVIOR
OF LOW-INCOME CONSUMERS
IN SAUDI ARABIA
Dar Alarkan Dev. Co. Ltd.
Dr Stephen Calcich
Associate Professor of Marketing
Department of Management and Marketing
Students and Instructor of MKT 345 (Marketing Research) course
Department of Management and Marketing
King Fahd University of Petroleum and Minerals
Dhahran, Saudi Arabia
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 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 Dar Al-Arkan Dev. Co. Ltd., 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.
2. RESEARCH OBJECTIVES
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 and whether or not they will react favorably 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:
· To examine the housing needs of Saudis with monthly incomes between SR 3,000 SR 5,000 and 5,001 SR 7,000.
· To examine the housing options normally considered by people in this target segment when they are considering buying a house
· To estimate how much consumers in this target segment can afford to spend monthly on mortgage payments
· To determine the factors that influence house purchase decisions of consumers in this target segment
· To determine what proportion of consumers in the target segment are likely to adopt the new low-income housing concept
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 15-week period of the semester.
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 company personnel (e.g. salespeople), 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.
4. DATA COLLECTION
Students of the Marketing Research course at King Fahd University of Petroleum and Minerals will distribute the questionnaires. Each student will be responsible for collecting information from a sample of respondents.
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.
6. PRESENTATION OF RESULTS AND RECOMMENDATIONS
Findings from the study, conclusions drawn, and related recommendations will be communicated to Dar Al-Arkan Dev. Co. Ltd. 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.
7. EXECUTION TIME SCHEDULE
The study would be completed by the end of the Spring semester June 2003. Dr Calcich will be available for further consultation July 2003.
8. BENEFITS OF THE PROJECT
We envisage that Dar Al-Arkan Dev. Co. Ltd. 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 Dar Al-Arkan Dev. Co. Ltd. in helping the company better develop the concept, formulate its marketing strategy, better serve the targeted customers, and improve the chances of success of 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 90 students taking the course know about the product concept, and they have also talked to their friends about it. Furthermore, each of them will be distributing questionnaires to 10 people resulting in more than one thousand people becoming aware of the product concept and the name of Dar Al-Arkan Dev. Co. Ltd.
We hope that Dar Al-Arkan Dev. Co. Ltd. will contribute to the research effort by meeting expenses involved in the data collection, and also providing a prizes for the student group steering the project and an honorarium for the instructor for supervising and directing student efforts to ensure that quality research is conducted.
These issues can be discussed further if the company finds the proposed research useful.