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A study of consumer behavior on small cars


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  • 1. A study of Consumer Behavior on SMALL CARS POST GRADUATE DIPLOMA IN MANAGEMENT (International business) 2008-2010 Institute of Finance and International Management Electronics city, BangaloreSUBMITTED TO: SUBMITTED BY: 1
  • 2. Table of Content 1. Executive Summary………………………………………03 2. Introduction………………………………………………..05 3. Overview of the Auto segment…………………………07 4. Review of Literature………………………………………12 5. Objective of the study……………………………………25 6. Scope of the study………………………………………..27 7. Research methodology………………………………….29 8. Finding and Analysis…………………………………….37 9. Cross Tabulation………………………………………….37 10. Conclusion…………………………………………. 49 Executive SummaryThe automobile industry today is the most lucrative industry. Due to the increasein disposable income in both rural and urban sector and easy finance beingprovided by all the financial institutes, the passenger car sales have increased atthe rate of 38% per annum in June 2006-07 over the corresponding period in thepervious year. Further competition is heating up in the sector with a host of newplayers coming in and other like Porsche, Bentley, Audi, and BMW all set toventure in the Indian markets. One factor that could help the companies in themarketing of their product is by knowing and creating a personality for theirbrands. 2
  • 3. Projectsformba.blogspot.comThis report attempts to answer some of the questions regarding brandpersonality of selected cars in India by conducting the market research. Thisreport is categorized into parts, deals with introduction to brand personality,companies selected, product and the industry.This personality sketching will help in knowing what a customer (or a potentialcustomer) thinks about a given brand of car and what are the possible factorsguiding a possible purchase. Similarly, the idea of measuring the customersatisfaction will serve the same purpose of determining the consumer behavior.Thus, by measuring the” willingness of existing users of a car to recommend it toothers” will help the car manufacturers to chalk out the entire Customer Behavior. The reports shall attempt to answer some of the questions regardingconsumer behavior and brand personality of selected cars in India by conductinga market research. The market research will be helpful for the new car entrantcompanies in India to find out the possible gaps between the customerexpectations and the present market offerings. This way these companies will beable to find their share in the ever-expanding Indian market pie.The research will track the customer satisfaction in the following two layers: • Product related Parameters • Dealers related parametersThe customer satisfaction index will be calculated for the car brands taken intoconsideration. 3
  • 4. Projectsformba.blogspot.comIt will be mainly a primary research and the information will be gathered fromboth primary and secondary research. The study will analyze the applicability ofexisting research concepts, theories, and tools for evaluating consumersatisfaction. 4
  • 5. Projectsformba.blogspot.comINTRODUCTIONIt is true fact that if you are satisfied you recommended to others. Word of mouthand customer satisfaction play a very important role in determining marketperception about an automobile. It is the market perception that determines thesuccess of a company and so it is very important for the car manufacturers tomeasure the “willingness of existing users of a product to recommend it toothers”. The same is a lot of interest to customers as well for it helps them makethe purchase decision.A car is one of the most significant purchases that an Indian household makesand this project addresses the most important question that perplexes carmanufacturers:“What makes the perfect car that influence will willfully purchase and satisfactionlevel?”The project highlights the factors that influence the buying decision of aconsumer.The factor under consideration would be:  Price  Income of the consumer  Features in the car  Safety standard  Warranty scheme  Finance facility 5
  • 6. Projectsformba.blogspot.comIs an Indian consumer ready for more? Which is the driving motive behind theeffective demand of the car? How the coming of new models like swift does isgoing to effect the buying decision of consumer and especially the Tata 1 lakhcar.In other words, from the spread of choices offered by various manufacturersunder various segments, of which one the customer will finally turn the ignition onand drive.Customer satisfaction index: some of the most advance thinking in the businessworld recognizes that customer relationships are best treated as assets, and thatmethodical analysis of these relationships can provide a road map for improvingthem“If you cannot measure it, you cannot improve it.” – Lord William Thomson Kelvin(1824-1907)“The fact that word of mouth sales are a big deal in this industry has also helped.Industry players and market surveys reveal that 20-30 percent of sales arethrough word of mouth”.For the purpose of the project has undergone through  Surveying the relevant consumer base through exhaustive questionnaire.  Understand the elements underplaying in each segment  Deducing A analytical overview through different statistical methods 6
  • 7. Projectsformba.blogspot.comRecommendation comes from satisfaction and satisfaction comes from Product Quality Service Quality Relationship QualityOVERVIEW OF THE AUTO SEGMENTIndians have emerged as avid car enthusiasts sporting their prized possessionsas status symbols and speed machines. Foreign car companies have discoveredthe Indian consumer as well as the R & D potential in the Indian technicalfraternity and are setting up manufacturing plants right and left across the countryat lower costs. The Indian automobile industry is currently experiencing anunprecedented boom in demand for all types of vehicles. This boom has beentriggered primarily by two factors:(1) increase in disposable incomes and standards of living of middle class Indianfamilies estimated to be as many as four million in number; and 7
  • 8. The Indian governments liberalization measures such as relaxation of theforeign exchange and equity regulations, reduction of tariffs on imports, andbanking liberalization that has fueled financing-driven purchases. Industry observers predict that passenger vehicle sales will triple infive years to about one million, and as the market grows and customerspurchasing abilities rise, there will be greater demand for higher-end modelswhich currently constitute only a tiny fraction of the market. These trends haveencouraged many multinational automakers from Japan, U. S. A., and Europe toenter the Indian market mainly through joint ventures with Indian firms.India is increasingly becoming a global automotive hub both for the vehicles andcomponent industry. India is fast integrating itself into the world economy andopen to international automotive companies, who are increasingly investing inIndia.The Indian automotive and component industry is looking to increase the qualityof production from existing levels, to develop new products and to increaseexports. In the long run India is well set to become a key market for automotiveand component manufacturers in terms of local demand and as a base forexport.Additionally, companies such as GM, Daimler Chrysler, Toyota, Delphi andMICO/Bosch are utilizing India’s well developed IT / software capabilities andhave set up R&D hubs here for their global operations 8
  • 9. Projectsformba.blogspot.comDomestic and Foreign Vehicle Manufacturers:Passenger VehiclesThe main domestic manufacturers of passenger vehicles are as follows: • Maruti Udyog • Tata / Telco • Mahindra / Mahindra • Hindustan MotorsForeign competitors manufacturing locally including Hyundai, Ford, GeneralMotors, Honda, and Toyota.Car demand has seen a turnaround since mid 2001 thanks to heavydiscounts and cheaper finance. A large number of new models, both locallyassembled and imported, have also revitalized the market.In terms of volumes: • The A/B segments are where India’s strength and future lies. The A/B segment accounts for over 65% of the total passenger vehicles produced. Competition in this segment is stiff with Maruti the market leader with around 55% market share. New models from Telco (Indica), Hyundai (Santro) and Fiat (Palio) however are eroding Maruti’s long standing dominance in this segment. • The mid / luxury range is developing with the introduction of Ford (Ikon), Hyundai (Accent/Sonata) and Skoda (Octavia), although the volumes are not significant. 9
  • 10. • The UV segment remains sluggish with growth at just over 1%. The clear market leader, Mahindra (44% market share) posted increased sales of 9% in the first 3 quarters of 2002/03. Toyota and Telco domestic UV business remains flat.Commercial VehiclesThe main Indian companies in the Commercial Vehicle segment are: • TATA Engineering and Locomotive Company (TELCO) • Ashok Leyland • Bajaj Tempo Ltd • Eicher Motors Ltd • Swaraj MazdaThere is only one international company currently manufacturing CVs in India,Volvo but again volumes are not large. Other global players are active, althoughin partnership with one of the domestic manufacturers E.g.:- IVECO(manufacturing their range of trucks in association with Ashok Leyland.There has been a significant turn around in this segment over the last 18 monthswith over 30% growth being seen in terms of both production and sales.This sector has received a huge boost with India’s massive demand from theinfrastructure sector (particularly roads), cyclical fleet replacement by fleetowners and an upturn in the cement and steel sectors. 10
  • 11. Automobile Manufacturers Market Share Passenger Cars LCV 0.604 Mn 0.083 Mn Hyundai Bajaj 18% Tem po Eicher HM Tata Ashok 7% 8% 2% M&M 13% Leyland 30% Fiat 1% 4% Ford 3% HMMaruti 2% 55% Honda Tata Sw araj Toyota GM 2% 44% Mazda 0.3% Daimler 8% Chrysler Mitsubishi Skoda 1% 0.2% 1% 1% • Maruti (JV of Suzuki), leading the market, • Tata and M&M are the key players a) Followed by Hyundai and Tata, together hold close to 75% of market b) Daewoo stopped production, mainly due to financial issues 2 years back 11
  • 12. • Review of Literature 12
  • 13. Projectsformba.blogspot.comBrand PersonalityA brand is “a set of expectation and association evoked from a company orproduct. A brand is how your key constituents- customers, employees,shareholders etc. experience what you do.” Some brands are of such greatimportance to people, that we speak of them as a part of one’s life and identity,being used to express one. Some would say that these brands have their ownpersonality, the brand personality, which can be defined as “the set of humancharacteristics associated with a given brand”. Thus, it includes suchcharacteristics as gender, age and socioeconomic class, as well as such classichuman personality is both distinctive and enduring.Based on the premise that brand can have the personalities in much the sameway as humans, brand personality describe brands in terms of humancharacteristics. Brand personality is seen as valuable factor in increasing brandengagement and brand attachment, in much the same way as people relate andbid to other people. Much of the work in the area of brand personality is based ontranslated theories of human personality and using similar measures ofpersonality attributes and factors. Brand personality refers to the set of humancharacteristics we associated with the brand. A common way of determining thisis to reply on the metaphor: “If the brand was a person, what would he/she belike?” we then list and group the traits to describe the brand as, for example:caring, approachable and trustworthy. However, there is a lot more we can do.Because many people interact with brands as though they were other people, itis important to understand what a brand personality consists of, and how itscharacteristics can be used to affect the relationship between the brand and itsuser. Knowing and understanding the brand personality gives a good insight intothis relationship, and into peoples’ attitudes towards the brand, and is also asimportant guide to communicating the brand. 13
  • 14. Projectsformba.blogspot.comVALUES AND CHARACTERISTICSS OF BRAND PERSONALITYPeople’s personalities are determined largely through the value and beliefs theyhave, and other personality characteristics they develop. An example of value orbelief is honesty.Many people believe in being honest in everything they do and say. An exampleof characteristic is confidence. This is not a belief, but more of a behavior. Thereare, of course, many value/beliefs and characteristic that a person may have, butthere are some that are particularly likeable. It is these likeable values andcharacteristics that people are inevitably attracted. Examples of these includedependability, trustworthiness, honesty, reliability, friendliness, caring, and fun-loving.There are about two hundred words that describe personality characteristics, andthese can be used for putting personality into brands. To illustrate how peoplethink in personality terms when making judgments about brands, here are theresults of consumer research into how people feel about tow companies. Whenasked question: “if these companies are people, how would you describe them?”their replies were:Company A Company BSophisticated Easy goingArrogant ModestEfficient HelpfulSelf- centered CaringDistant ApproachableDisinterested InterestedThese two companies are actually competitors in a service industry. If you wereasked of these two companies you would like to be your fiends, you would 14
  • 15. Projectsformba.blogspot.comprobably choose company B, as did 95% of other respondents. It is not surprisingthat the service level of company B can be better experience for customers thanthat of company A. it is also easy to conclude that if customers consistentlyexperience these differences between the two companies, then the brand imageof company B will be much better than company A.A further point of interest arising out of this research is that people tend to preferbrands that fit their self-concept. Everyone has views about themselves and howthey would like to be seen by others. And they tend to like personalities that aresimilar to theirs, or to those whom they admire. Thus, creating brands withpersonalities similar to those of a certain group of consumers will be an effectivestrategy. The closer the brand personality is to the consumer personality (or onewhich they admire or aspire to), the greater will be the willingness to buy thebrand and deeper the brand loyalty.The Creation of Brand PersonalityBrand personality traits are formed and influenced by any direct or indirectcontact that the consumer has with a brand. A brand, unlike a person, cannotthink, feel or act. A brand has no objective existence at all; it is simply a collectionof perception on the mind of the consumer. Consumers accept the marketingactions to humanize brands. One explanation fort this can be found in thetheories of animism, which suggest that there exists need by people toanthropomorphize objects in order to facilitate interaction with the nonmaterialworld. Anthropomorphize occurs when human qualities are attributed to nonhuman objects, e.g. brands. Consumers easily assign personality quality toinanimate objects like brands in thinking about the brands as if they are humancharacters. 15
  • 16. Projectsformba.blogspot.comIn a direct way, personality traits are associated with a brand by the peopleassociated to that brand. One direct way to form and influence brand personalityis user imaginary. User imaginary is defined as the set of human characteristicsassociated with the typical or stereotype user of the brand. Associations with thecompany employees or CEO and the brand’s product endorsers are also directways by which brand personality traits are formed and influenced. Thepersonality traits that of the people associated with a brand are transferreddirectly to the brand. The theories of animism describe another processmechanism that directly explains the specific ways in which the vitality of thebrand can be realized (Fournier, 2004). Spokespersons that are used inadvertising can have personalities that fit those of the brand they advertise. Overtime, the personalities of the spokesperson are transmitted to the brand. Thebrand-person associations can also have a more personal nature. Brands can beassociated with person who use or used that particular brand, for example aclose friend or a family member. Also, brands received as gifts can also beassociated with the person from whom the gift was received. These personassociations serve to animate the brand as a vital in the minds of the consumers.Obviously, this aspect is much less under the control of the marketers.Indirectly, the brand personality is created by all the elements of the marketingmix. Betra, Lehman and Singh suggest that the personality of a brand is createdover time, by the entire marketing mix of the brand - “its price (high or low, odd oreven), retail store location (imaginary associations), product formulation(ingredients, benefits), and product form (solid/liquid. Etc.), packaging details(color, size, material, shape), symbol; used an all phases of the brandcommunication, sales promotion, and media advertising”.Another form of animism explains how brand personality is created in a moreindirect way. This form of animism involves complete anthropomorphization ofthe brand object itself. Human qualities of emotionality and thought aretransferred to the brand. This is achieved with the help of the marketing actions, 16
  • 17. Projectsformba.blogspot.comespecially advertising. For example, the brand character of M&M in the M&Mcommercials has the capacity to laugh and joke.One of the advantage of the brand personality is that based on their distinctivepersonalities, consumers are able to differentiate between brands. Anotheradvantage is that the consumer can interpret the brand’s image in such a waythat it is personally more meaningful. Brand personality encourages more activeprocessing on the part of the consumer. Thus, the consumer put more efforts increating and using the brand personality. A further advantage of brandpersonality is that life is given to a brand. By vitalizing a brand, anotherperspective of brand personality can be examined, namely the role of a brand asrelationship partner in a consumer-brand relationship. Next we will concentrateon these consumer-brand relationships.Whether the brand is a product or a company, the company has to decide whatpersonality traits the brand is to have. There are various ways of creating brandpersonality. One way is to match the brand personality as closely as possible tothat of consumers or to the personality that they like. The process will be  Define the target audience  Find out what they need, want and like  Build a consumer personality profile  Create the product personality to match that profileThis type of approach is favored by companies such as Levi Strauss, whoresearch their target audience fastidiously. For Levis the results is a masterbrand personality that is:  Original  Masculine 17
  • 18.  Sexy  Youthful  Rebellious  Individual  Free  AmericanA related byproduct brand personality (for a specific customer group) such asLevi’s 501 jeans is:  Romantic  Sexually attractive  Rebellious physically prowess  Resourceful  Independent  Likes being admiredBoth profile appeal mostly to the emotional side of the people’s minds- to theirfeelings and sensory function. This profiling approach aims to reinforce the self-concept of the consumers and their aspirations. The approach is ideal for brandsthat adopt a market-niche strategy, and can be extremely successful if a marketsegment has a degree of global homogeneity, as is the case with Levis.Non product related brand personalities drivers  User imaginary – user imaginary can be based on either typical users (people you see using the brand) or idealized users (as portrayed in advertising and else were). User imaginary can be powerful driver of brand personality, in part because the user is already a person and thus 18
  • 19. the difficulty of conceptualizing the brand personality is reduced. For example Charlie has a feminine, strongly independent brand personality driven by it user imaginary. The upscale personality of Mercedes and the sexy, sophisticated personality of Calvin Klein are similarly influenced by user imaginary.  Sponsorship – activities such as events sponsored by the brand will influence its personality. Swatch, for example, reinforces its offbeat, youthful personality will targeted sponsorships that have included the Freestyle Ski World Cup in Breckenridge, the first International  Age – how long a brand has been on the market can affect its personality. Thus new entrants such as Apple, MCI, and Saturn tend to have younger brand personalities than brand such as IBM, AT&T, and Chevrolets, and it as all too common far a major dominate brand to see as strongly and old fashioned, a brand for older people.  Symbol – a symbol can be powerful influence on brand personality because it can be controlled and can have extremely strong associations. Apples bitten apple, the Marlboro cowboy, the Michelin mans all helps to create and reinforce a personality for their brands. 19
  • 20. Projectsformba.blogspot.comWhy use brand personalityThe brand personality construct can help brand strategies by enhancing theirunderstandings of people’s perceptions of and attitude towards the brand,contributing to a differentiating brand identity guiding the communication effortand creating brand equality.  Enriching understanding The brand personality metaphor can help a manager gain an in-depth understanding of consumer perceptions and attitudes towards the brand. By asking people to describe a brand personality, feelings and relationship can be identified that often provide more insight than is gained by asking about attribute perceptions.  Contributing to a differentiating identity Strategically, a brand personality, as a part of a core or extended identity, can serve as the foundation for meaningful differentiations. Advertising agencies such as Young & Rubicam and Ogilvy & Mather routinely include a brand personality statement as a part of their brand positioning strategy.  Guiding the communication effort Tactically the brand personality concept and vocabulary communication the brand identity which richness and texture to those who must implement the identity building effort. Practical decisions need to be made about not only advertising but packaging, promotions, which events to associate with, and the style of person interactions between the customer and the brand. 20
  • 21.  Crating brand equity The brand personality creates brand equity. The self-expression model explains this. The model says that for certain groups of customers; some brands become vehicles to express a part of their self-identity. People express their own or idealized identity in a variety of ways, such as a job choices, attitudes, options, activities and lifestyles. Brand that people like, admire, discuss, buy and use also provide a vehicle for self-expression.Brand personality of carsAre you what you drive? That is what are companies seem to be asking and inthe same breath trying to convince you about. In other words, are you theHyundai accent owner who commands immediate respect wherever she goes(including fro the potential father-in-law) or are you the suave executive from theChevrolet ad who is ever ready to share a moment with loved one? With aplethora of new models in the market, and generic benefits (such as space orfuel efficiency) of a particular car segment hardly a distinguishing factor betweencar models, marketer are increasingly differentiating on the emotional pay-off aparticular car model/brand provides to the customer. This, of course, varies fromthe segment to segment and also on how long a particular model has been in themarket.For instance, while advertising for entry level or smaller cars tends to focus moreon the rational or functional benefits of the vehicles, the differentiations isincreasingly on the emotional benefits when it comes to high end cars.“Generally, it has been seen as one move up the value chain, the differentiationis more on the emotional pay-off. People buy car as an extension of theirpersonality rather than just features. A car, in India, helps build up show off, 21
  • 22. Projectsformba.blogspot.comsocial esteem value. The advertising would also vary according to the segmentwhich one is targeting,” he says. For instance, the Chevrolet Optra ad (whichdepicts a young husband driving his wife to see the moon on the occasion ofKarvachauth) shows an Optra consumer as someone who believes in familyvalues and indulging loves ones.“We find that typically profile of an Optra consumer is someone who is in the agegroup of 35-45years and has a chauffer. He buys a car not only for himself butalso for the family and tries to make up, for not being able to spend enough time,by indulging love ones,” points out dutta. The positioning goes well with thecompanies catch lines of “for a special journey called life”.High end car maker Skoda auto too, through its advertising, attempts to connectwith its consumer on emotional level. “Car is the extension of the personality andour advertising shows the consumer to be youthful, image-conscious and evenbit a macho. The campaign jointly made by Skoda’s marketing department andad agency IB&W not only communicates the quality of the brand but anappreciation for the finer things in life. The target Skoda consumer is a SEC A1,primarily male, businessman or someone in the senior management,” saysShashank vaid, manger (marketing), Skoda Auto India. Surely, image buildingdoes come higher in the consumer’s scheme of priorities when buying a new carthan ever before.The importance of brand image has risen sharply in the last few years. At thesegment level, the increase in importance is greater for the mid-size cars,indicating the relevance of brand among the more expensive market segments.The manufacturer need to focus more o how consumers perceive them asoffering exciting cars and being committed towards them. Contemporariness ofmodel has a big impact on purchase decision. The perception of the car in termsof its performance and design, quality, sales, after sales, cost of ownership, apartfrom brand image, all impact upon the purchase decision.” 22
  • 23. Projectsformba.blogspot.comAccording to Bhatia, as long as advertising for cars is strongly differentiated andsharply positions the model and at the same time satisfies a define needsegment, it shall have the capability to break the clutter and creates a unique andcompelling reason for consumers to purchase. “One good example of this is FordIkon- the josh machine made a tremendous impact on consumers in offering tosatisfy a clear need. You can see some more of this with a recently launchedpremium hatch back as well”.Interestingly, the strategy marketer follow changes a bit when it comes toaddressing the smaller car category with the rational benefits of a brand tendingto be the focal point of the campaign. “We have found that typically a buyer for asmaller car (sub Rs 4 lac) looks for aspects such as reliability and fuel efficiency.This changes as we move up since in case the consumer has been with thecategory for a longer time and hence it is important t to talk of an emotional payoff.A case in point is the Maruti 800 campaign in which the kids who is playing with atoy Maruti 800 exclaims to his dad (when asked how long will he keep on runningthe car), “papa ki Kara, petrol khatam hi nahin Honda.” The ad cleverly conveysthat the car just keeps going on and on. It ends with the voiceover telling us thatMaruti Suzuki is most fuel-efficient car.However in the small car segment, the rational benefits magic is not alwaysapplicable. Take the case of Hyundai Santro, the advertising of which hasevolved over the years from initially conveying mainly the functional benefits ofthe model to connecting with the consumer on an emotional level now. “When welaunched the Santro, we started with the positioning if the car being a completefamily car which was completely rational positioning. But then two thingshappened- the product found acceptance in the market and the competitioncame up with similar product in the market. 23
  • 24. Projectsformba.blogspot.comBrand image is not driven by good advertising alone but is significantly impactedupon by the cars performance and design, quality, and the cost of ownership.Among the three, product quality has the highest correlation with brand image.Small car buyer seeks capability in advertising, and fuel efficiency is relativelymore important to them. Technology, innovation, and good influence premiummid-size buyers. One reality for us in India is that the market is extremelyprice/value conscious. While making purchases based on above, there is rationalside, which does have an impact on the decision on a particular make and modelof car. Be it rational or an emotional decision, consumers would have to think asa bevy of new models flood the Indian market. 24
  • 25. Projectsformba.blogspot.comObjectives of StudyThe research objective is a statement, in as precise terminology as possible, ofwhat information is needed. The research objective should be framed so thatobtaining the information will ensure that the research purpose is satisfied.Research objective have three components.Research question –The research question specifies the information the decision making needs. Theresponsibility of the researcher is to make the researcher question as specificand precise as possible. The researcher question asks what specific informationis required to achieve the research purpose, or answer the research problem. Ifthe research questions are answered by the research, then the informationshould aid the decision maker.Development of hypothesis –A hypothesis is a possible answer to a question. Development of hypothesesimplies generating basically alternative answers to research questions. Theresearch determines which of these alternative answers is correct. It is notalways possible to develop hypotheses, but efforts should be made.Scope or boundaries of the research -Defining the scope of the research or the research boundaries ensures thedesired precision or accuracy of the result. 25
  • 26. Projectsformba.blogspot.comThe researcher’s responsibility is to restate the initial variables associated withthe decision problem, that is convert the research problem, in the form of one ormore key question formats- • How • What • Where • When • Why 26
  • 27. Projectsformba.blogspot.comObjectives of the ResearchThe research objectives for the project undertaken can be defined as follows: • To determine the demographic variables of the customers of different brands of cars. • Examine the customer perception about the cars. • To judge the satisfaction level of car owners of different brands. • The research tracks responses at following two layers 1. Product related parameters 2. Dealer related parameters • To analyze the psychographic variables of the customers of different brand of the cars.Scope of the studyIt is aimed to study the car market and buying behavior of the customer. Theproject is analyzed the demographic, psychographic and buying characteristics ofthe customers in buying the car. It includes the detailed study of customersfocusing on the various parameters that lead to identifying and understanding theperception of the customer in buying the car brands.Significance of the studyA brand is a set of expectations and associations evoked from company orproduct. A brand is how key constituents- customers, employees etc. 27
  • 28. Projectsformba.blogspot.comexperiences what you do. Some brands are of such great importance to people,that we speak of them as a part of one’s life and identity, being used to expressone. Some would say that these brands have their own personality, the brandperception, which can be defined as the set of human characteristics associatedwith a given brand.Because many people interact with brand as though they were other people, it isimportant to understand what a brand perception consists of, and how itscharacteristics can be used to affect the relationship between the brands and itsusers. Knowing and understanding the brand perception gives a good insight intothis relationship, and into peoples’ attitudes towards the brand, and is also animportant guide to communicating the brand.Like apparel and lifestyles brands, a car is extension of one’s perception. Peoplebuy cars which either matches their personalities or those which provide themopportunities of being perceived as somebody they aspire to be. This becomessignificant as consumers move up the value chain from small compact cars tomidsize and upwards. 28
  • 29. Projectsformba.blogspot.comResearch MethodologyA research process consists of stages or steps that guide the project from itsconception through the final analysis, recommendations and ultimate actions.The research process provides a systematic, planned approach to the researchproject and ensures that all aspects of the research project are consistent witheach other.Research studies evolve through a series of steps, each representing the answerto a key question. Research Project Steps 29
  • 30. Projectsformba.blogspot.comINTRODUCTIONThis chapter aims to understand the research methodology establishing aframework of evaluation and revaluation of primary and secondary research. Thetechniques and concepts used during primary research in order to arrive atfindings; which are also dealt with and lead to a logical deduction towards theanalysis and results.RESEARCH DESIGNI propose to first conduct a intensive secondary research to understand the fullimpact and implication of the industry, to review and critique the industry normsand reports, on which certain issues shall be selected, which I feel remainunanswered or liable to change, this shall be further taken up in the next stage ofexploratory research. This stage shall help me to restrict and select only theimportant question and issue, which inhabit growth and segmentation in theindustry.The various tasks that I have undertaken in the research design process are :  Defining the information need  Design the exploratory, descriptive and causal research.RESEARCH PROCESSThe research process has four distinct yet interrelated steps for researchanalysis 30
  • 31. Projectsformba.blogspot.comIt has a logical and hierarchical ordering:  Determination of information research problem.  Development of appropriate research design.  Execution of research design.  Communication of results.Each step is viewed as a separate process that includes a combination of task ,step and specific procedure. The steps undertake are logical, objective,systematic, reliable, valid, impersonal and ongoing.EXPLORATORY RESEARCHThe method I used for exploratory research was  Primary Data  Secondary dataPRIMARY DATANew data gathered to help solve the problem at hand. As compared to secondarydata which is previously gathered data. An example is information gathered by aquestionnaire. Qualitative or quantitative data that are newly collected in thecourse of research, Consists of original information that comes from people andincludes information gathered from surveys, focus groups, independentobservations and test results. Data gathered by the researcher in the act ofconducting research. This is contrasted to secondary data which entails the useof data gathered by someone other than the researcher information that is 31
  • 32. Projectsformba.blogspot.comobtained directly from first-hand sources by means of surveys, observation orexperimentation.Primary data is basically collected by getting questionnaire filled by therespondents.SECONDARY DATAInformation that already exists somewhere, having been collected for anotherpurpose. Sources include census reports, trade publications, and subscriptionservices. Data that have already been collected and published for anotherresearch project (other than the one at hand). There are two types of secondarydata: internal and external secondary data. Information compiled inside oroutside the organization for some purpose other than the current investigation.Data that have already been collected for some purpose other than the currentstudy. Researching information which has already been published. Marketinformation compiled for purposes other than the current research effort; it can beinternal data, such as existing sales-tracking information, or it can be researchconducted by someone else, such as a market research company or the U.S.government. Published, already available data that comes from pre-existing setsof information, like medical records, vital statistics, prior research studies andarchival data. Secondary source of data used consists of books and websitesMy proposal is to first conduct a intensive secondary research to understand thefull impact and implication of the industry, to review and critique the industrynorms and reports, on which certain issues shall be selected, which I feel remainunanswered or liable to change, this shall be further taken up in the next stage ofexploratory research. 32
  • 33. Projectsformba.blogspot.comDESCRIPTIVE RESEARCHSTEPS in the descriptive research:  Statement of the problem  Identification of information needed to solve the problem  Selection or development of instruments for gathering the information  Identification of target population and determination of sampling Plan.  Design of procedure for information collection  Collection of information  Analysis of information  Generalizations and/or predictionsDATA COLLECTIONData collection took place with the help of filling of questionnaires. Thequestionnaire method has come to the more widely used and economical meansof data collection. The common factor in all varieties of the questionnaire methodis this reliance on verbal responses to questions, written or oral. I found itessential to make sure the questionnaire was easy to read and understand to allspectrums of people in the sample. It was also important as researcher torespect the samples time and energy hence the questionnaire was designed insuch a way, that its administration would not exceed 4-5 mins. Thesequestionnaires were personally administered. 33
  • 34. Projectsformba.blogspot.comThe first hand information was collected by making the people fill thequestionnaires. The primary data collected by directly interacting with the people.The respondents were contacted at shopping malls, markets, places that werenear to showrooms of the consumer durable products etc. The data wascollected by interacting with 200 respondents who filled the questionnaires andgave me the required necessary information. The respondents consisted ofhouse wives, students, business men, professionals etc. the required informationwas collected by directly interacting with these respondents.DETERMINATION THE SAMPLE PLAN AND SAMPLE SIZETARGET POPULATION It is a description of the characteristics of that group of people from whom acourse is intended. It attempts to describe them as they are rather than as thedescriber would like them to be. Also called the audience the audience to beserved by our project includes key demographic information (i.e.; age, sexetc.).The specific population intended as beneficiaries of a program. This will beeither all or a subset of potential users, such as adolescents, women, ruralresidents, or the residents of a particular geographic area. Topic areas:Governance, Accountability and Evaluation, Operations Management andLeadership. A population to be reached through some action or intervention; mayrefer to groups with specific demographic or geographic characteristics. Thegroup of people you are trying to reach with a particular strategy or activity. The 34
  • 35. Projectsformba.blogspot.comtarget population is the population I want to make conclusions about. In an idealsituation, the sampling frames to matches the target population. A specificresource set that is the object or target of investigation. The audience defined inage, background, ability, and preferences, among other things, for which a givencourse of instruction is intended.I have selected the sample trough Simple random SamplingSAMPLE SIZE:This involves figuring out how many samples one need.The numbers of samples you need are affected by the following factors: •Project goals •How you plan to analyze your data •How variable your data are or are likely to be •How precisely you want to measure change or trend •The number of years over which you want to detect a trend •How many times a year you will sample each point •How much money and manpower you have 35
  • 36. Projectsformba.blogspot.comSAMPLE SIZEI have targeted 100 people in the age group above 21 years for the purpose ofthe research. The sample size is influenced by the target population. The targetpopulation represents the Delhi regions. . The people were from differentprofessional backgrounds.The details of our sample are explained in chapter named primary researchwhere the divisions are explained in demographics section. 36
  • 37. • FINDINGS AND ANALYSIS • Cross TabulationQ1. Why you bought your present car? Please rank from the highest order ofpreference 1. Increase in disposable income 2. Better safety at roads 3. Family needs 4. Increase in family size 5. Suits your lifestyle and personality Motives For buying a car 40 35 39 30 25 20 23 Series1 15 17 10 12 5 9 0 Increase in Better safety Family needs Increase in Suits your disposable at roads family size lifestyle and income personality Motives Interpretation: As per the analysis shows, increase in disposable income seems to be the most important reason for buying a car. This trend is reflected in the growth of 37
  • 38. the Per capita Disposable income and consequently the growth of the Indian automobile industry. Similarly, the growing family needs like working partners, increasing family size, status, etc. add to the motives of buying a car.Q2. You decided to buy a car brand because of (rate best 3 factors from 1 to 3 inorder of your preference) 1. Affordable price 2. Technical superiority over competition 3. Comfort 4. Manufacturer’s image 5. Value for money 6. Safety 7. After sale services Product Specific Reasons for Buying a Car 2 10 32 Afforable prices Technical superiority Comfort Manufacturers image 28 Value for money Safety After sale services 7 9 12Interpretation:Indian market is still the hard nut to crack for most of the automobilemanufacturers. Though the Indian car industry is among the fastest growing carmarkets of the world still the Indian psyche is too complex for the manufacturersto understand. The most important reason for buying a car when it comes to B 38
  • 39. Projectsformba.blogspot.comand C segment cars seems to be ‘value for money’. 32% of the respondentssuggested that affordable prices are the most important factor while purchasing acar. This is the reason for sticking to a particular segment till the next substantialrise in the personal disposable income. This reason is followed by ‘Value formoney’ where the customers look for the best product, best services and bestrepute all bundled in one with the best deal they can strike.Product Satisfaction LevelQ3. Please rate your existing car in terms of understated Interior Design featureson a scale of 1 to 5 where1 Highly Dissatisfied2 Dissatisfied3 Neutral4 Satisfied5 Highly SatisfiedInterior Type 1 2 3 4 5Seats designLeg RoomDash BoardInterior ColourMusic SystemAdjustable Front seat Headrest 39
  • 40. Projectsformba.blogspot.comInterpretation:Interiors play a very important role in deciding the sale of a car. More plush,comfortable and exotic the interiors are more are the chances of its being popularamong the customers. For this reason manufacturers spend billions of dollarsevery year on R&D to continuously improve the interiors of their cars. Seats, legroom, dash board, armrests etc are few of the options which count for theinteriors. As the analysis show substantially high w.r.t. its counterparts on theaccount of music system installed. Similarly, TATA races far ahead as far as legroom is concerned. However, Maruti fares badly on this front. Overall, almost allcars get a mixed response in this segment as far as the interiors are concerned.Q5. Please rate your existing car in terms of following parametersParameter 1 2 3 4 5Fuel ConsumptionMileage ( Km/ltr)Pick UpStability at higher speedTop speed 40
  • 41. Projectsformba.blogspot.comInterpretation:The customer choice of the car highly depends upon the performance andmaintenance costs of the car. This is the reason why this class of parameter waschosen for this study. And the results show that Maruti fares the best car in itssegment as most fuel efficient car of all. Similarly, fares the best on the terms likemileage but it lags behind TATA pick up front. So this segment shows a mixedbag of response for the Fuel efficiency and mileage parameter. Fiat performsconsistently on all the parameters.Dealer Service Satisfaction LevelQ1. Please rate your Dealer on the understated parameters on the scale of 1 to 5where1 Highly Satisfied2 Satisfied3 Neutral 41
  • 42. Projectsformba.blogspot.com4 Dissatisfied5 Highly Dissatisfied 1 2 3 4 5Distance ( Proximity)Advertisements (Promotions)Technical FacilitiesCost of ServiceAvailability of SparesInformation ProvidedService TimeChargesStaffCar Handling ( Delivery & service)Assured Customer TransactionsAmbience of Service CenterFinance ( Credit) SchemesDealers are the middle men between a car manufacturer and its customers.Dealer thus becomes the most important link in joining the company to itscustomers as he is the person who will sell the product, will deliver it and willkeep on providing the after sales services to the customers as and whenrequired. So, it becomes necessary automatically to study dealer as a part ofcustomers’ satisfaction journey with the product called car! Why Maruti fares so well ahead of its competitors till date and its thelargest car company in India with the largest market share in A and B segment isbecause during the protected regime it build a dealers network so strong that itsyet very difficult for most of the competitors to set up a network as large asMaruti. So wherever you go its not difficult to find a Maruti service station and aMaruti dealer. This is how Maruti has maintained relationships with its customersand has been able to convert most of them into a repeat customer. So, dealernetwork is something of such importance that while studying the customer’ssatisfaction profile its almost impossible to ignore it. 42
  • 43. Projectsformba.blogspot.comInterpretation:While buying a car, dealers ‘choice play a very important role in deciding thecompany and model’s choice. So dealers act as influencers on the completebuying behavior of the prospective customers. Among all the listed factors Marutifares the best among all its counter parts in terms of dealer density which is quiteobvious. Also, the cost of service provided by Maruti dealers is the lowestfollowed by Tata Motors. Similarly, for all segment cars Maruti emerges out asthe clear winner among the four car companies studied all thanks to the vast,extensive and well managed dealer system.Q2. How do you rate the brand image of your car?1 2 3 4 5 Very Low Very High 43
  • 44. Projectsformba.blogspot.comInterpretation:As per the analysis, Maruti is the car whose brand image is most preferred in themarket. This is because its known for its overall image. On the other side TATAis playing second role for the brand images of the car because of reason peopleconsider TATA as reliable and trustworthy which created a good platform forTATA. This can be attributed to the fact that both these cars are relatively new onthe block and market takes time to imbibe and give the brand an image. This isestablished by the fact that Maruti’s Wagon R and Swift are exactly the same asfar as the image is concerned.Q3. Will you recommend your car to your friends? • Yes • No 44
  • 45. Customers Ultimate Perception 80 73 70 60 50 Frequency 40 30 27 20 10 0 Yes No Customer Action ( Will you recommend your car to your friends?)Interpretation:It seems logical that satisfied customers will someday become loyal customers,in other words there is a positive correlation between customer satisfactionscores and customer buying behavior. If a customer rates the car very high insatisfying his or her needs, the car manufacturer should expect more referralsand this is reflected in the analysis that 73% customers say that they will refertheir car to their friends even if they move to other segment or other brand.Q4. Will you buy your new car in the • Same segment , same manufacturer • Same segment, different manufacturer • Upper segment, same manufacturer • Upper segment, different manufacturer 45
  • 46. Customer Perception 40 35 30 12 25 Values 7 C 20 6 B 15 7 23 10 17 17 5 11 0 Same Segment, Same Segment, Upper Upper same different Segment, Same Segment, manufacturer manufacturers Manufacturer Different Manufacturer Customer ActionsInterpretation:The analysis shows that most people when moving to upper segment will prefera different manufacturer. And the next striking finding is that the customers willprefer both same and different manufacturers. This behavior is complex tounderstand as this are the customers who have given whopping response forrecommending their car to their friends. It’s the reason why brand perception isso difficult to understand. 46
  • 47. Projectsformba.blogspot.comDemographics age group <21 21-35 36-55 >55 17 20 21 41I surveyed around 100 people who belonged to various age groups. The surveyof 4 age groups was done. The four age groups were:  Less than 21 years  21 -35 years 47
  • 48.  36-54 years  More than 55 yearsMONTHLY FAMILY INCOME monthly family income <50,000 50,001-1,00,000 1,00,001-2,00,000 >2,00,001 19 33 19 28We surveyed around 100 people who belonged to various monthly family incomegroups. The survey of 4 income groups was done. The four income groups were:  Less than 50000  50000 - 1,00,000  1,00,001 – 2,00,000  More than 2,00,001 48
  • 49. ConclusionTo conclude, the results show that the companies are playing on the peripheralcues to maintain their Total Relationship Management and connect to thecustomers both present and potential. The companies are operating in a highlyaggressive and competitive global market place and this climate has led to theemphasis on quality in all aspects. TQM focuses on integration and coordinationas well as the continuous improvement of all activities and processes. TotalRelationship Management (TRM) is a very recent marketing strategy andphilosophy. It focuses on and is concerned with all integrated internal andexternal activities within and between the organizations. These two terms areintegrated by the manufacturers by building good quality products and buildinggood relationship with dealers and enhancing service levels.However, when studied from the point of view of a customer there seems to beno major difference among the car brands in a segment as far as performance isconcerned. The brand perception is dependant mostly on the peripheral cuesdepending upon the nature and quality of the service provided along with thepricing, maintenance, availability of spare parts and related issues. So, aquestion arises here that is this the end of road for the branding of cars? Has thecommoditization of cars has started and its time that manufacturers must readthe writing on the wall? It seems so! It seems as an undercurrent sentiment isflowing and the perception of the customers is changing according to it.The study shows that brand perception is something which starts building upbefore a car is purchased and goes on with its use and is reflected in therecommendations the customer makes to his acquaintances for the same car.Also, its seen that the customer might not be using the car still he holds theperceptions about it. Brand personality of a car is enforced by the sellers in themindsets of the customers and the customers react to it by forming theirperceptions about the car and this reflects in the overall brand image of the car. 49
  • 50. Projectsformba.blogspot.comSo brand image and brand personality complement each other and the brandperception aids the building of brand image. Dealers, as per the study findings, play a very important role in building upthe brand perception of the cars. Since dealers are the connecting link betweenthe customers and the manufacturers thus becoming the most important link injoining the company to its customers as he is the person who will sell theproduct, will deliver it and will keep on providing the after sales services to thecustomers as and when required.So, it becomes necessary automatically to study dealer as a part of customers’satisfaction journey with the product called car! Their proximity to the customers,the service provided by them and the relationship maintained by them with thecustomers helps the car companies to establish and reinstate the brandpersonality communicated by them to the customers. Finally the major point that emerges out of this detailed study is a caution forthe car companies. It says that there is no doubt that Indian car market may begrowing with a double digit figure still the car companies have a long way totravel to convince their customers about the brand personality of their cars andhow it suits the prospective buyers. Simply because it simply is not a guaranteethat how so ever good the customer might be holding the brand perception andhow so ever good the brand image may be it is not a guarantee that it will convertinto sale. Cars just like clothes and accessories suit the style and persona of aperson and since all cars will become commodity someday the key to sell andexcel in the market will lie with a person who knows how to use the perceptionsof the customers to its use and sell the cars ‘coz ultimately only that car surviveswhich sells! 50