An Integrated Research Project submitted to the Sri Lanka Institute of Marketing in partial fulfillment of the requirements for the Postgraduate Diploma in Marketing.

1. Factors Associated With Buying Behavior Related To Welding Rods
Among Construction Companies
by
H D S T Perera
0000022260
An Integrated Research Project submitted to the Sri Lanka Institute of Marketing in partial
fulfillment of the requirements for the Postgraduate Diploma in Marketing
Supervisor: Mr. R. A. B. Abeygunawardana
Sri Lanka Institute of Marketing
Postgraduate Diploma in Marketing (PGDIP)
Colombo
December, 2017

2. Research Proposal Evaluation
Marking Scheme
Student Name H D S T PERERA
Registration Number 0000022260
Criteria Allocated Awarded
Marks Marks
1 The background of the problem 10
2 The significance/rationale of the exploration of the problem 10
3 The objective/sof the report 15
4 Brief Literature Review 10
5 Methodology of perspective
15
5.1 Conceptual framework
5.2 Operationalisation 10
6 The approach to data collection 10
7 Delimitations of the study 5
8 The Time Plan 5
9 References (Harvard Reference System) 5
10 Adherence to stipulated format 5
Total 100
Special Remarks:
Signature of Examiner

3. APPROVAL FROM SUPERVISOR FOR THE PROPOSAL
Factors Associated With Buying Behavior Related To Welding Rods
Among Construction Companies
by
H D S T Perera
0000022260
This is to certify that I have examined and supervised the above integrated research project
proposal and have found that it is satisfactory to present before the evaluation/examination
committee.
R. A. B. Abeygunawardana
(the signature of your supervisor and date)
Sri Lanka Institute of Marketing
December, 2017

4. Table Of Contents Page No.
1. Industry Background………………………………………………… 1
2. Background Of The Problem…………………………………………. 2
3. Problem Statement………………………………………………….. 4
4. Significance Of The Exploration Of The Problem……………………… 4
5. Objectives Of The Research…………………………………………… 4
6. Research Questions…………………………………………………… 4
7. Brief Literature Review……………………………………………… 5
8. Methodology Of Perspective…………………………………………. 7
8.1 Conceptual Framework………………………………………….. 7
8.2 Operationalization……………………………………………….. 8
9. Approach To Data Collection…………………………………………. 9
10. Delimitations Of The Study…………………………………………… 10
11. The Time Plan…………………………………………………………. 11
12. References…………………………………………………………….. 13

5. 1
1. Industry Background
The welding rod supply industry in Sri Lanka is a niche industry within construction
material supplies. A welding rod is a consumable metal rod that is used to join two metals in
a process called welding.
Welding rods are used heavily in construction, manufacturing and maintenance industries
where there are steel fabrication applications. Some of the high user industries include
building construction, bridges, steel furniture, container trailer, automotive body, ship and
boat building, petrochemical, power generation, engineering and so forth.
According to data obtained from Statistics Directorate of Sri Lanka Customs (Sri Lanka
Customs, 2017) the import value of welding rods in 2014 and 2015 has been over Rs. 752
million and Rs. 723 million respectively.
Comparative to the market demand there are only a limited number of companies directly
importing and supplying welding rods in Sri Lanka. Owing to this oligopolistic environment,
welding rod suppliers maintain a profit margin of over 40%. The major suppliers of welding
rods in Sri Lanka are listed below.
C.W. Mackie PLC
Ceylon Oxygen Limited
Matrix (Pvt) Ltd
Nawaloka Trading Company
Rockweld International (Pvt) Ltd
United Tractor & Equipments Ltd
The Colombo district is the hub for welding procurement. All the main importers are
located within the Colombo district and welding rods are distributed island-wide from
Colombo. Colombo district is also home to the largest number of ongoing construction
projects at present. These projects will take several years to complete, providing suppliers
with a good demand for welding rods among construction companies operating in these
projects.

6. 2
2. BackgroundOf The Problem
Welding suppliers have enjoyed relatively stable business conditions for a long time. But
in the past few years there have been several changes within the industry that has had an
adverse effect on its profitability.
One of the changes observed is the entrance of hardware traders into the welding supply
industry. As explained in the previous section, the welding industry was catered to by a
handful of dedicated (welding supplies only) businesses. Hardware traders are those that
mainly deal with metals and related products which can be classified as commodities. In the
past hardware vendors acted as retail channels for the main welding rod suppliers. Today the
same hardware’s are expanding their product portfolio so as to offer a one-stop solution for
construction buyers. In doing so, they too have become direct importers of welding rods.
The surprising factor has been that these hardware traders are also able to generate
commendable revenue as newcomers. It was believed that industrial buyers give more
preference to dedicated welding suppliers with a technical competency and long history in
the industry. But the prevailing market conditions seem to indicate otherwise.
Secondly there is the effect of the product life cycle. Top brands have been in the market
for a long time and according to product life cycle concept maybe facing the decline stage.
Another phenomenon that has been observed over the past few years is the high imports
volume of Chinese manufactured welding rods into Sri Lanka (table 2).
Table 2 Average Monthly Imports Of Welding Rods In 2016 (By Country)
Country Imported Quantity in kgs
China 329,600 kgs
India 4,650 kgs
Indonesia 3033 kgs
South Korea 16,023 kgs
Singapore 4,965 kgs
Malaysia 5,270 kgs
Source: Sri Lanka Customs, 2017. Import Statistics for HS Code 8311 for 2016. Colombo:
Sri Lanka Customs

7. 3
Chinese manufactured welding rods were once perceived as “poor quality” by industrial
buyers. Today this perception has changed dramatically. Buyers are more knowledgeable
about products and quality of welding rods from various countries. Adding to this dilemma is
the fact that leading world brands have set up factories in China and other low labor cost
countries to manufacture lower cost welding rods to compete in the Asian markets.
These changes have led to a shift in buying behavior among industrial buyers. Criteria that
were once considered as important in the buying decision process are no longer as influential.
This shift in buying behavior has led to confusion in the industry. Mainstream welding
importers are trying to compete by sourcing reputed brands from their Chinese factories.
Hardware traders who import from China are looking to sell with lower margins and are
trying to gain economies of scales through bulk ordering. Yet at the same time some buyers
prefer to buy reputed brands at higher prices.
This competitive environment has resulted only in a drastic drop in prices and profitability
for all (refer table 3). It has also forced smaller scale suppliers to move out of the industry
altogether.
Table 3 Price Comparison Of Welding Rods Between 2013 And 2017
Type of Welding Rod Average kg price
in 2013
Average kg price
in 2017
Change %
Mild Steel 185 158 -17
High Tensile Steel 450 315 -42
Stainless Steel 2850 1000 -185
Cast Iron 8500 5000 -70
Hardfacing 890 690 -28
Source: C.W.Mackie, Ceylon Oxygen, United Tractor, Price List 2013 and 2017. Colombo
In such an environment, understanding the current factors associated with buying behavior
is critical to the success and sustainability of the welding supplies business. Without this
knowledge suppliers are unable to develop profitable marketing strategies in line with the
expectations of customers.

8. 4
3. The Problem Statement
With the changes observed in the industry, it is critical to understand the current factors
associated with buying behavior among industrial buyers in relation to purchase of welding
electrodes.
4. The Significance OfThe Exploration Of The Problem
The significance of the research is that it will help identify and understand current factors
associated with the buying behavior among industrial customers. These findings will help
marketing decision makers to develop a better marketing mix that will be in-line with the
current buying behavior of customers and profit objectives of the selling organization.
This research will help the reader to gain a general understanding of the welding rod
supplies industry of Sri Lanka. The reader will be better informed of factors that welding rod
buyers consider as most critical in making the purchasing decision.
The research will also be a catalyst to new entrants who are considering entry into the
welding supplies industry.
5. The Objectives Of The Research
The main objective of the research is to identify factors associated with the buying
behavior among construction industry customers in purchasing welding rods.
The sub objectives of this research are as follows.
a. To identify the factors associated in selecting a welding rod
b. To identify the factors considered for selecting a supplier
c. To identify the methods used by buyers to locate new suppliers
6. ResearchQuestions
a. What are the factors associated with buying behavior of welding electrodes
among construction industry customers?
b. What are factors associated in selecting a welding rod
c. What are factors considered in selecting a supplier?
d. What are methods used by buyers to locate new suppliers?

9. 5
7. Brief Literature Review
Hassan and Hamid (2010) argued that buying decisions vary according to the type of
buying situations. There research was conducted under two buying situations i.e. new task
buy and modified re-buy. Hassan and Hamid (2010) argue that if suppliers can identify the
buying situation they can understand the factors that guide the purchasing organization
towards the identification of appropriate suppliers. The suppliers, on the other hand, will be
able to determine the preferences of the purchasing organizations and hence use the right
marketing strategies targeted at the right influencers to boost the sales of their goods and
services.
Buying behavior is also influenced by an organization’s purchasing objectives. Some of
the major factors identified by Webster (1991) include buyer’s problems, product
specifications and quality, amount of purchase, price, availability, delivery and relationship.
The importance of various dimensions is debatable. Price is the most significant factor,
followed by product, promotion, and location according to Sallauddin’s (1999) study.
Suppliers credibility appears to be the most significant variable, argued Gonzalez et al.
(2004). He explained that supplier credibility helps in achieving high quality products and
customer satisfaction (Gonzalez et al., 2004).
Kuhn, Kerri, Alpert and Pope (2008) added that organizational buyers give greater
emphasis to the selling organization, including its corporate brand, credibility and staff, than
on individual brands and their associated dimensions.
Garvin (1987) proposes eight critical dimensions of quality that can serve as a framework
for strategic analysis: Performance, features, reliability, conformance, durability,
serviceability, aesthetics, and perceived quality.
The perception of product quality comes up when buyers are confronted with the selection
between a Chinese manufactured welding rod and a non-Chinese product. Schniederjans and
Cao (2011) found that the average quality rating of Chinese industrial products was 2.082 out
of 10 in the US, which indicated a poor rating. This supported their hypothesis that Chinese

10. 6
manufactured products are “perceived” as having significantly lower quality than those
imported from other countries.
Khan and Ahmed (2012) argued that this wasn’t the case in reality. Based on their
industrial consumer survey where price and product durability was used as measures to
assess the perceived quality of Chinese and non-Chinese products, found that the average
price of Chinese products are significantly less than the average price of non- Chinese
products.
Khan and Ahmed (2012) also found that this low pricing was perceived by buyers as a
measurement of the low-quality of Chinese products, although in reality quality varied across
brands that were in the same price range. However they did not find any significance
difference between the average perceived life and average perceived value of Chinese
products and non-Chinese products.

11. 7
8. MethodologyOf Perspective
8.1. Conceptual Framework
Following the previous work sited on the literature review above, the following conceptual
framework will be undertaken to find out of factors associated with industrial buying
behavior of welding rods.
Three independent variables have been selected for the conceptual framework. They are
product attributes, supplier attributes and competitor attributes. There could be many other
independent variables in studying buying behavior, but for the purpose of this research we
have limited the number of variables to three.
The dependent variable is buying behavior of the construction industry buyer. The
following diagram demonstrates the relationship between the independent variables and the
dependent variable.
Diagram 1. The Conceptual Framework
Independent Variable Dependent Variable
Product
Attributes
Buying Behavior in
construction industry
Supplier
Attributes
Competitor
Attributes

12. 8
8.2. Operationalization
The following table demonstrates how each of the above four variables will be measured
in this research. The second column of the table shows the indicators which will be studied
and subsequently measured through a questionnaire.
Variables Indicators Measurements No. of
questions
Product attributes  Perception of brand
name
 Perception of country of
origin
 Expected approvals
 Expected weld quality
Ranking questions
Likert scale
Thirty
(30)
Supplier attributes  Industry experience
 Terms & conditions
 Services expected
 Relationship history
Competitor
attributes
 Awareness of
competitors
 Competitive advantage
 Payment terms
 Delivery period
Buying behavior  Purchasing frequency
 Purchase volume
 Number of suppliers per
year
 Supplier change
frequency

13. 9
9. The Approach To Data Collection
9.1.The Sample
This research is conducted among construction industry buyers within the Colombo
district. The population considered for this research is 586 construction companies. These
companies are registered with the Construction Development Authority (Ministry of Housing
and Construction) under building construction category.
The rationale behind selecting such a sample is that these companies consume a high
proportion of welding rods annually and therefore are main revenue generators for welding
suppliers. Due to the impracticability of conducting a census among all the above registered
construction companies, a sample will be obtained to gather the required data for the
research.
The sample for this research will be selected using the simple random sampling method.
Simple random sampling is a type of probability sampling method where a selection is made
from a group of subjects (a sample) for study from a larger group (a population). Each
individual is chosen entirely by chance and each member of the population has an equal
chance of being included in the sample. Every possible sample of a given size has the same
chance of selection.
The desired sample size is 100. The sample selection process will begin by entering the
names of the 586 construction companies into a database. The questionnaires will be
administrated among Purchasing Executives of each selected organization.
9.2. Data Collection Instruments
The questionnaire will be administered among the sample by email and followed up by
telephone to make sure of receiving timely response. The questions will be simplified to
generate interest, encourage the participation and ensure speedy reply by the participants.
There will be thirty (30) questions in total which will be used to collect answers for the
research question and meet the research objectives. A variety of questioning methods will be
used including and not limited to rank order and Likert scale.

14. 10
A coding system will be established prior to collecting the data and will only be made
available to the researcher. Coding will not be displayed in the self-administered
questionnaires which will be emailed to each participant. The questionnaire sent by email
will be accompanied by a covering letter which explains the purpose of the survey. Each
participant will be allocated a two week time period to fill and return the questionnaires.
Reminders will be given to participants by phone to assure timely submission of
questionnaires.
Once questionnaires are collected the responses will be manually transferred from the
questionnaires into a spreadsheet. Each question number will be used as a column heading,
and one row for each participant’s answer. Then each possible answer will be assigned a
number or ‘code’. After going through each respondent’s questionnaire in turn, adding in the
codes and entering this data into a spreadsheet, the results will be calculated to know how
many people selected each response. The SPSS (Statistical Package for the Social Sciences)
software will be utilized for this purpose. The findings will be presented using graphs/charts
as required to illustrate the data in clear and apprehensible manner.

15. 11
10. Delimitations Of The Study
The first delimitation of this study is that only construction industries will be considered
for the population. This is because construction industries contribute over 70% of the sales in
the welding rod supply industry. Though this population would be considered sufficient to
generalize the findings, it will not give a complete picture as manufacturing and maintenance
industries are excluded from the research study. Manufacturing and maintenance industries
also using welding applications and may have provided a different perspective to that of
construction buyers.
Secondly, the construction companies (population) selected for this study are those located
within the Colombo district. Constriction companies that are located outside the Colombo
district parameters will not be considered for this study due to the limited time and budget
available for the research. Therefore it should be expected that this study would not cover the
overall target market for welding rods in Sri Lanka as the data collected may not be sufficient
to generalize it to the entire country.
Thirdly, the conceptual framework in this research is meant to study only the relationship
between the independent variables and the dependent variable. Though there could be
relationships among independent variables they will not taken into consideration in this
study.
There could also be other independent variables in addition to the ones considered in this
study. But this study will be limited only to those variables selected for the conceptual
framework.
Finally, there is a possibility for the information collected to be inaccurate depending on
the participant’s willingness to be sincere in responses. This could sometimes lead to
subjective analysis of the data collected.

16. 12
11. The Time Plan
The time plan to complete the research is demonstrated in table 4 below. This research will
follow a cross-sectional time frame as the research will be a snapshot of the situation studied.
Tables 4 The Time Plan
Activity September October November December January
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
Developing research topic
Developing research
proposal
Supervisors guidance
Supervisors approval
Presenting proposal
Submitting proposal
Data collection
Data analysis
Developing research
report
Approval from supervisor
Submission of report
VIVA defense
Final submission

17. 13
12. References
Garvin, David .A., (1987) "Competing on the Eight Dimensions of Quality", Harvard
Business Review, November-December
Gonzalez, M.E., Quesada, G. and Mora Monge, C.A. (2004). Determining the Importance of
the Supplier Selection Process in Manufacturing: A Case Study, International Journal of
Physical Distribution and Logistics Management, 34 (6), 492-504.
Hassan, S., Hamid, A.B.A., (2010) Factors Affecting Industrial Goods Buying Decision
Making in a Manufacturing Company, Journal of Marketing and Management, 1 (1), 1-20
Khan, LM., Ahmed, R. (2012), “A Comparative Study of Consumer Perception of Product
Quality: Chinese versus Non-Chinese Products,” Pak. j. eng. technol. sci. Volume 2, No 2,
118-143
Kuhn, Kerri, Frank Alpert and Pope, N., (2008), “Developing and Testing an Application of
Keller’s Brand Equity Model in a B2B Context,” Qualitative Market Research, Vol. 11, No.
1, 40-58.
The Institute for Construction Training and Development (2017). :: The Institute for
Construction Training and Development. [ONLINE] Available at:
http://www.cida.lk/sub_pgs/Search/Search_grade&MainfieldPD.php?dcode=5. [Accessed 18
October 2017]
Sallauddin, H. (1999). An Analysis on Marketing Mix Factors and Their Influences on
Consumer Decision Making. Unpublished Academic Dissertation, University of Technology,
Malaysia.
Schniederjans, M. J., Cao, Q., Schniederjans, D. and Gu, V. C. (2011). Consumer
Perceptions of Product Quality: Made in China. Quality Management Journal, Vol. 3, 52
Webster, F.E. (1991). Industrial Marketing Strategy (3rd ed.). NY: John Wiley and Sons,
Inc.