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Project Report: After Sales service of Automobiles in India

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                        PROJ
                           JECT REPO
                                   ORT ON


    ...
Guide Copy




          A Study of Satisfaction level of consumers
         Towards ‘after-sales’ services of Automobiles...
Guide Copy




                                 CERTIFICATE


      This is to certify that the project report entitled “A...
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Project Report: After Sales service of Automobiles in India

  1. 1.        PROJ JECT REPO ORT ON ST TUDY O SA OF ATISFAACTIO LEV ON VEL O OF CON NSUMEERS T TOWARRDS ‘A AFTER R-SALE ES’ SER RVICES OF A S AUTOMMOBIL LES SU UBMITTED BY D Mr. Ankit Tr ripathi Semester IV , Cours :PGDBM se M Ro No.: P1058 oll Batch: 2010 B 0-12 MARKETIN M NG UNDER THE GUID DANCE OF PROF. JA P AYSHREE WASNI E IK Syden nham Inst titute of M Manageme Studie Resear And E ent es, rch Entrepren neurship Educatio on
  2. 2. Guide Copy A Study of Satisfaction level of consumers Towards ‘after-sales’ services of Automobiles This project report in the Area of Marketing Specialization based on the in-depth study of the project theme is submitted in March,2012 to the Sydenham Institute of Management Studies and Research and Entrepreneurship Education, B – Road, Churchgate, Mumbai – 400 020, in partial fulfillment of the requirements for the award of the diploma of Post Graduate Diploma in Business Management ( PGDBM ), recognized by Government of Maharashtra. Submitted By NAME: Ankit Tripathi ROLL NO. : P1058 Batch: 2010-2012 Through Name of the Guide :- Prof. Jayshree Wasnik
  3. 3. Guide Copy CERTIFICATE This is to certify that the project report entitled “A Study of Satisfaction level of consumers towards ‘after-sales’ services of Automobiles” is submitted in March,2012 to the Sydenham Institute of Management Studies and Research and Entrepreneurship Education, B – Road, Churchgate, Mumbai – 400 020,by Mr. Ankit Tripathi bearing Roll No. P1058 (2010 – 2012) in partial fulfillment of the requirements for the award of the diploma of Post Graduate Diploma in Business Management ( PGDBM ), recognized by Government of Maharashtra. This is a record of his own work carried out under my guidance. He has discussed with me adequately before compiling the above work and I am satisfied with the quality, originality and depth of the work for the above qualification. PLACE: MUMBAI. DATE: Prof. Jayshree Wasnik SIMSREE, 3rd Floor, B-Road ,Churchgate, Mumbai- 40020. Telephone No.: 022 – 61510721 E-mail - jayshree.wasnik@simsree.net
  4. 4. Guide Copy TABLE OF CONTENTS 1. Auto Industry in India ....................................................................................................1 1.1 Introduction..............................................................................................................1 1.2 Evolution..................................................................................................................1 1.3 Current Market Scenario..........................................................................................3 1.4 Classification of Market Segments ..........................................................................6 2. After Sales Service .....................................................................................................10 2.1 Definition ..............................................................................................................10 2.2 Importance of After Sales Service .......................................................................10 2.3 After Sales Service as Key to Customer Retention .............................................12 3. After Sales Service in Automobile Sector .................................................................15 3.1 Introduction ..........................................................................................................14 3.2 Nielsen Survey Result...........................................................................................14 3.3 Opportunity to Build or Break Loyalty ................................................................15 3.4 Some Initiatives by Car Manufacturers in India ...................................................16 4. Research Plan and Methodology .................................................................................18 4.1 Need for Study ......................................................................................................18 4.2 Objective of the project ........................................................................................18 4.3 Variables under Study...........................................................................................18 4.4 Data Collection .....................................................................................................19
  5. 5. Guide Copy 5. Research Findings and Analysis ..................................................................................20 5.1. Findings.................................................................................................................20 5.2. Analysis using SPSS .............................................................................................32 6. Observations ................................................................................................................35 7. Conclusion ...................................................................................................................37 8. Recommendations........................................................................................................38 9. Bibliography and References .......................................................................................39 10. Annexure....................................................................................................................40
  6. 6. Guide Copy LIST OF TABLES Table 1 Distribution of domestic market share in Auto Industry........................................................... 3 Table 2 Market share in Passenger Car Industry in 2010 – 2011 ........................................................... 5 Table 3 What is your vehicle type? ....................................................................................................... 20 Table 4 Car Brand ................................................................................................................................. 21 Table 5 Regular Service Intimations ..................................................................................................... 21 Table 6 Ease of contacting service department ..................................................................................... 22 Table 7 Service Advisor's expertise ...................................................... Error! Bookmark not defined. Table 8 Appointment Availability ........................................................................................................ 23 Table 9 Ease of Checking in the vehicle ............................................................................................... 24 Table 10 Communication during WIP .................................................................................................. 25 Table 11 Availability of Spares ............................................................................................................ 25 Table 12 Punctual Delivery .................................................................................................................. 26 Table 13 Extra Work Communication .................................................................................................. 27 Table 14 Cross selling activities ........................................................................................................... 28 Table 15 Consumer Forum Awareness ................................................................................................. 28 Table 16 Unpleasant experience in service station ............................................................................... 29 Table 17 Resolution by service manager .............................................................................................. 30 Table 18 Escalations to Forums ............................................................................................................ 30 Table 19 Better Service over marginally better product ....................... Error! Bookmark not defined. Table 20 Better Service to higher variants- .......................................................................................... 31 Table 21 Chi-Square test (Service Intimations and Desired appointment time) ................................... 32 Table 22 Correlation (Unpleasant Experience and its Resolution by Manager) ................................... 33 Table 23 Correlation (Unpleasant Experience and Approached Forum) .............................................. 33 Table 24 Correlation (Timely Delivery and Providing better service to higher variants) .................... 34
  7. 7. Guide Copy Table 25 Correlation (Cross Selling and Unpleasant experience) ........................................................ 34 LIST OF CHARTS Chart 1 Pie chart showing distribution of domestic market share in Auto Industry .............................. 4 Chart 2 Market share in Passenger Car Industry in 2010 – 2011............................................................ 5 Chart 3 Box diagrams of a sedan (top), station wagon (middle) and hatchback (bottom) .................... 20 Chart 4 What is your vehicle type? ....................................................................................................... 20 Chart 5 Car Brand ................................................................................................................................. 21 Chart 6 Regular Service Intimations ..................................................................................................... 21 Chart 7 Ease of contacting service department ..................................................................................... 22 Chart 8 Service Advisor's expertise ...................................................... Error! Bookmark not defined. Chart 9 Appointment Availability......................................................................................................... 23 Chart 10 Ease of Checking in the vehicle ............................................................................................. 24 Chart 11 Communication during WIP .................................................................................................. 25 Chart 12 Availability of Spares ............................................................................................................. 25 Chart 13 Punctual Delivery ................................................................................................................... 26 Chart 14 Extra Work Communication .................................................................................................. 27 Chart 15 Cross selling activities............................................................................................................ 28 Chart 16 Consumer Forum Awareness ................................................................................................. 28 Chart 17 Unpleasant experience in service station ............................................................................... 29 Chart 18 Resolution by service manager .............................................................................................. 30 Chart 19 Escalations to Forums ............................................................................................................ 30 Chart 20 Better Service over marginally better product ....................... Error! Bookmark not defined. Chart 21 Better Service to higher variants- ........................................................................................... 31
  8. 8. Guide Copy ACKNOWLEDGEMENTS I wish to express my gratitude to my project guide “Ms. Jayshree Wasnik” for her valuable suggestions. Because of her guidance and help, I am able to complete this project report on “A Study of Satisfaction level of consumers towards ‘after-sales’ services of Automobiles” I would also like to thank the respondents of the survey for taking out valuable time to fill the survey. Ankit Tripathi
  9. 9. Guide Copy EXECUTIVE SUMMARY With the ever burgeoning middle class in India and rising incomes, the demand for automobiles in the country is on the rise. With almost all major players vying for the pie in the market, it is becoming a buyer’s market Companies have worked over-time to ensure that their product is best in the category and have concentrated heavily on the product. One aspect that has been ignored here is that when the sale is made, it is not just the product. They also sell service. With ever increasing competition and limited innovations on the product end, companies are now forced to consider the service aspect of their offering and focus more on adding value to the customer by providing superior service. The type of service could be pre or post sales. Pre sales service consists of Car Demo, Test Drive, Loan disbursement scheme etc. The Post or more popularly know as “After-Sales” service consists of regular maintainence and check-ups for the vehicle. Companies generally provide warranty support which is either limited by duration or the mileage The project aims to find out the satisfaction levels of consumers towards the service that is being offered to them in post-sales category. The study does not aim to compare services of different companies thereby declaring a winner, but it tries to bring out the common factors which companies lack in and need to improve upon in order to provide better customer service thereby leading to better customer retention and finally higher revenues
  10. 10. Guide  Co opy  1. AUT INDU TO USTRY IN INDIA N 1.1. INT TRODUCT TION Circa 1 1895, the f first modern automobile rolled o n onto the st treets of M Mumbai (th hen Bombay It was o of the i y). one initial mode of horsel el less carriages, much p prior to Hen nry Ford’s e experiment of the icon Ford M nic Model – T. T Indian automobile industry h The e has come a long way since then. Today, it is one of th fastest g he growing ind dustries in t the world. T automo The obile industr is one of the major employmen and reven generato ry f nt nue ors for the c country. Alm all maj auto com most jor mpanies of t world ar vying for a space in t the re the Indian m market. The market is segmented on several basis viz. size of the car, heritag e d l ge, model t type, usage and perfo e distribution, etc. each enjoying a healthy a ormance, d and increasingly stiffer competitio day by day. From the point o view of this resear r on of f rch project, it is there efore vital t first stud the Indi automobile market in order to to dy ian t, understa its evolu and ution, the im mportant events, and th current m he market scenar In conte rio. ext of the pr roject we sh be limit hall ting our disc cussion to th passenger car industr only. he ry 1.2. EV VOLUTION N Fig1.1 Maruti 80 – Dawn o a new er 00 of ra The pas ssenger car i industry in I India can be practically divided int two eras: the Pre – e y to Maruti e and the P – Maru era. At th time of in era Post uti he ndependenc India virt ce, tually had n no home gr rown compa manufacturing auto any However, ma British a American omobiles. H any and compan had esta nies ablished thei subsidiari in India for assembl purposes. At this tim ir ies ly . me, the new governm of India adopted th License R as way fo wly ment a he Raj forward for t economy the y. This led to consolid d dation of the economy i the hands of the existing compan e in s nies, namely y
  11. 11. Guide Copy  2         Hindustan Motors,  Premier Automobiles and  Standard Motors. The industry didn’t see any other major competitor for almost three decades since then. As a combined effect of the License Raj, low demand for automobiles and lack of indigenous R & D, the Indian auto market hardly registered any progress till 1980. It was in early 1980’s that Maruti 800 project was initially launched. Its launch marked a beginning of a major revolution in the industry. The original car was intended to be a indigenously designed, economy car for the masses. However, this plan was soon dropped as political interference and engineering complications delayed the project. Very soon, company was suffering from bankruptcy. As a result, its assets were nationalized and the State owned Maruti Udyog came into being. This time around, the plan for indigenous development was abandoned and the company adopted the Joint Venture approach. Many leading foreign automobile companies were considered, and the Suzuki Motor Co. from Japan was finalized. It was chosen mainly because of its expertise in the small car industry, the range of available cars in its stable (which could be considered for future launch), and also because of attractive terms and conditions. Thus Suzuki came to own 26 percent in the JV, with permission to increase to 50 percent in the future. Thus the Maruti 800 was launched (loosely engineered on the Suzuki Alto platform), and it quickly captured the market. It further led to the launch of Maruti Omni van and Maruti 1000 models, which further enhanced Maruti’s share in the Indian market. The Maruti models were periodically upgraded, keeping in sync with international changes. In the first half of the 1990s, Maruti enjoyed around 60 percent of the market share in passenger cars. The launch of Maruti led to shake up among the competitors as well. Premier automobiles acquired rights from Fiat to manufacture Fiat 124 and Hindustan motors did the same with Vauxhall Motors for the Contessa. Many other small time automakers too acquired rights for several foreign cars. Premium automobiles in particular formed a number or JV with European companies to establish themselves in the upper segments. Ankit Tripathi P1058   
  12. 12. Guide Copy  3        With the liberalization of the economy came a demand from new companies, both local and international, to enter the Indian market. Tata Motors launched their first passenger car viz. Tata Estate. Hindustan Motors began manufacturing Opel Astra, a brand owned by General Motors. This marked a beginning of a flurry of cars emerging on the scene. By the turn of the century, many international companies had emerged on the Indian scene. Prominent amongst them were Hyundai, Toyota, Honda, Ford, Fiat, etc. Even luxury marquees like Mercedes – Benz and gained substantial visibility. Home grown companies such as Tata Motors and Mahindra and Mahindra too contested for a share in various segments. The later years saw another wave of foreign companies opening up factories, this time led by General Motors, Skoda, Nissan, Volkswagen, BMW, Audi, etc. The auto industry in India now is at par with international standards, with companies increasingly looking towards it as the future growth engine. 1.3. CURRENT MARKET SCENARIO The passenger car industry in India constitutes around 16 percent share of the Indian automotive market, and is a rapidly growing one, with a growth rate of 10 percent in the last year. Domestic Market Share in 2010 – 2011 Type of Vehicles Percent Share Domestic Sales Passenger 15.86 19,49,776 Vehicles Commercial 4.32 531,395 Vehicles Three Wheelers 3.58 440,368 Two Wheelers 76.23 93,71,231 Total 100 12,290,770 Table 1: Distribution of domestic market share in Auto Industry Ankit Tripathi P1058   
  13. 13. Guide Copy  4        Commercial  Three  Vehicles, 4% Wheelers, 4% Passenger  Vehicles, 16% Two Wheelers,  76% Graph 1.1.: Pie chart showing distribution of domestic market share in Auto Industry The passenger car segment has witnessed more than 30 launches in the past years as new brands and companies enter the scene. Also, the segment focus has shifted from being an internationally laggard one, to one being at par with it. Many companies such as Toyota, General Motors now launch their international car versions or upgrades in India rather than other markets. The passenger car segment is still dominated by Maruti Suzuki, which has a share of 47.68 percent in 2009 - 2010, though it represents a decline to that of previous year. It is followed by Hyundai Motors with a share of 18.89 percent, Tata Motors with 14.72 percent, etc. The next in line are Ford, General Motors, Honda, Toyota, etc. Ankit Tripathi P1058   
  14. 14. Guide Copy  5        Market Share in Passenger Car Industry in 2009 – 2010 (by sales numbers) Company Percent share Maruti Suzuki India 47.68 Hyundai India 18.89 Tata Motors 14.72 Ford Motors India 5.31 General Motors India 4.87 Honda Siel 3.20 Mahindra & Mahindra 2.12 Others 3.21 Total 100 Table 1.2.: Market share in Passenger Car Industry in 2010 – 2011 Honda  Mahindra &  General  Others , 3.21 Siel ,  Mahindra ,  Motors India  3.2 2.12 , 4.87 Ford Motors  India , 5.31 Maruti Suzuki  Tata Motors ,  India , 47.68 14.72 Hyundai India  , 18.89 Figure 1.2.: Market share in Passenger Car Industry in 2010 – 2011 Ankit Tripathi P1058   
  15. 15. Guide Copy  6        1.4. CLASSIFICATION OF MARKET SEGMENTS A market segment consists of a group of customers who share similar sets of wants and demands. The marketer’s task is to identify such segments within the industry so as to decide which one to target. Segment marketing offers several benefits over mass marketing:  The company can create a more fine-tuned product or service offering and price it appropriately for the target segment  The company can more easily select the best distribution and communication channels  The company has a clearer picture of its competitors in the same segment In the context of the automobile industry, classifying market segments would be done on the following basis: 1. Based on the price of the car 2. Based on the length of the car 3. Based on the shape of the car 1.4.1. Based on the price of the car A – segment It is the entry level segment and it ranges upto Rs. 3 lakhs. Several cars in this segment are Maruti 800, Maruti Alto, Tata Nano, Hyundai Santro, GM Spark, etc. B – segment It ranges from Rs. 3 lakhs to Rs. 6 lakhs. Cars in this segment include Maruti Swift, Maruti Estillo, Hyundai Santro Xing, Tata Indica, GM Beat, Ford Figo, etc. There has been a rise in number of people who belong to the affluent middle class and wish to graduate to these cars which provide the extra glitz and glamour than an entry level car. These cars come with fancy things like power steering, power windows, pepped up engine and conform to the latest emission norms. The cars in the A and B segment are typically hatchbacks. Ankit Tripathi P1058   
  16. 16. Guide Copy  7        C – segment At this stage of lifestyle, cars cease to become a mode of transport and are representative of social status and repertoire. Thus people go for cars which are bigger in size, have a reputed brand image, and are more costly. Cars in segment are Honda City, Tata Indigo, VW Vento, Ford Ikon, Chevrolet Optra, etc. This segment ranges from Rs. 6 lakhs to Rs. 12 lakhs. D – segment The cars in this segment are a statement of luxury and come with a heavy price tag. Cars are usually customized and have a host of accessories fitted into it. This segment ranges from Rs. 12 lakhs and above. Recently, this segment has began to blossom in India, with many luxury marquees like Mercedes, BMW, Audi, Volvo, Skoda, etc coming on road. 1.4.2. Based on the length of the car. A segment – Cars that are less than 3.5 metres long B segment – Cars between 3.5 to 4 metres long C segment – Cars between 4 to 4.5 metres long D segment – Cars that are more than 4.5 metres long. Ankit Tripathi P1058   
  17. 17. Guide Co opy  8        1.4.3. B Based on the shape of t car. e the Figure 1.2.: Box d diagrams o a sedan ( of (top), statio wagon ( on (middle) an hatchba nd ack m) (bottom back :Hatch Hatchb hback is a ca which has two sections. One is t engine section and t ar s the the other is shared pas ssenger and cargo secti ion. These a usually five door c are cars where t the rearmos section (i.e. cargo area) is acces st ssible via a top-hinged liftgate wit a facility to th fold dow rear seat and enable flexibility within the shared pass wn ts y senger and c cargo volum me. Sedan/ S Saloon/ Not tchback Sedan o Saloon is a three-box car with th segmen namely A B & C. T or x hree nts A, These three a are the engi passeng and carg compartm ine, ger go ments respec ctively. The cargo comp partment is called as the boot a is the ba differen between a sedan and a hatchbac and asic nce d ck Ankit Tripathi P1058   
  18. 18. Guide Copy  9        Coupe :A coupe is usually manufactured on an existing sedan platform, but has a sporty look to it. Detailed definitions vary from manufacturer to manufacturer. Coupes designed these days are usually 2 – seater cars, thus distinguishing between them and a sedan Convertible Convertible is a car where the roof can retract or fold away that converts it from an enclosed car to an open air car. Mostly the high-end premium and expensive cars have such facility. Minivan / MUV : They are cars designed on a 1 – box or 2 – box approach, with maximum interior space being the topmost criteria. Station Wagon : A station wagon is a variant of sedan / saloon with an extended roof that covers the shared passenger and cargo compartment. The station wagon has a bigger cargo area, which is accessible via a 5th door i.e. a liftgate or tailgate. Sports Utility Vehicle / Offroader: They are similar to a station wagon but are built on light truck chassis. They generally have a 4 – wheel drive, making them suitable for both on – or off – road capability Ankit Tripathi P1058   
  19. 19. Guide Copy  10        2. AFTER SALES SERVICE 2.1 DEFINITION After Sales service can be defined as the Periodic or as-required maintenance or repair of equipment by its manufacturer or supplier, during and after a warranty period. It Refers to all measures of marketing, which are taken from manufacturers and retailers in order for a successful business transaction or sale to customers for their own products and binding them to their own services. Aftersales encourages repeat and additional purchases, increasing customer satisfaction and ensures long-term customer loyalty. Aftersales often achieves a higher margin than new business, and is a sustainable ways to increase customer value and profitability. The needs and demands of the customers must be fulfilled for them to spread a positive word of mouth. In the current scenario, positive word of mouth plays an important role in promoting brands and products. After sales service makes sure products and services meet or surpass the expectations of the customers. After sales service includes various activities to find out whether the customer is happy with the products or not. After sales service is a crucial aspect of sales management and must not be ignored. 2.2 IMPORTANCE OF AFTER SALES SERVICE After sales service should be an integral part of any companies’ sales strategy. A good After Sales service can with its excellence help you gain market share, reduce after-sales related overheads on products and services sold and most important of all key to customer retention. Most customers will not make a repeat purchase or continue with a company’s services in case of a bad experience. Many companies underestimate the potential After Sales has for giving you a competitive advantage. Customers expect a high-quality customer service, especially as they focus on Ankit Tripathi P1058   
  20. 20. Guide Copy  11        getting good value for their money and are willing to spend more with those that deliver the best. According to American Express Customer Service Barometer “buying decisions of 89 per cent of consumers are influenced by convenience and 90 per cent of them attach importance to value-for-money propositions, almost 90% of consumers make their purchases based on the quality of after sales customer service.” The process of managing products after they have been sold has many names, such as After Sales, Reverse Logistics, Returns/Service Management, After Sales Service, and Customer Care. Some Facts About After Sales Service: 1. 6% of all items sold are returned (Returns Logistics, 2009). 2. 68% of returns have no technical fault (Accenture report, 2007). 3. The average loss related to a return is E19 (Newgistics, 2007) 4. Processing returns costs four times as much as processing the original order 5. An average of one consumer phone call is made per return Today many companies operate in complex value networks, but they lack the end-to-end control and visibility to effectively manage the discrete activities that make up the process, and they do not know how well these activities are being performed. A number of solutions are now available for the after sales process using Cloud processes. Service providers using this technology are able to provide effective management of their after sales business process network with the help of automated procedures. Other benefits are continuous visibility of entire operation in real time and quick access to all important data pertaining to after sales management. The cloud process confers entire control in your hands and improves efficiency while saving cost, with les human involvement for administration purposes as the processes are streamlined. Ankit Tripathi P1058   
  21. 21. Guide Copy  12        The cloud process facilitates better planning of assets and displays excellent forecasting capabilities with efficient inventory management and finance management roles. The process is easily accessible through mobile and web interfaces which is a great advantage to the mobile customer. In today’s highly competitive world the cloud process has the power to make your after sales process a huge success. With its flexible qualities and intelligent features it enables company better detailing and increased customer retention 2.3 AFTER SALES SERVICE AS KEY TO CUSTOMER RETENTION Good after-sales service is the key to customer retention, with 77 per cent of Indian consumers asserting that they will not make a repeat purchase or continue with a company's services in case of a bad experience, says an American Express report. In order to attain new customers and retain the older ones, good customer service cannot be ignored as a majority (82 per cent) of Indian consumers value it the most while making a purchase. Customers want and expect high-quality service, especially as they focus on getting good value for their money in a difficult economic environment, and are willing to spend more with those that deliver excellent service -- suggesting substantial growth opportunities for businesses that get customer service right. As per the findings of the American Express Customer Service Barometer, 76 per cent of Indian consumers are ready to shell out 11 per cent more for excellent customer service. In fact, 67 per cent of consumers have paid more for a product or a service of a company with a good history of customer service. Moreover, 86 per cent of the consumers are ready to give a second chance to companies with a good track record even after a poor experience. While the buying decisions of 89 per cent of Indian consumers are influenced by convenience and 90 per cent of them attach importance to value-for-money propositions, Ankit Tripathi P1058   
  22. 22. Guide Copy  13        the majority of consumers (90 per cent) make their purchases based on the quality of customer service. The American Express Customer Service Barometer is a survey conducted in India and eleven other countries exploring attitudes and preferences toward customer service. Approximately 65 per cent of Indian consumers share the belief that companies have increased their focus on providing good customer service, compared to 49 per cent in Japan, 47 per cent in Mexico and 37 per cent in America, which seems to reflect the corporate mindset to retain customers as well. If the company is successful in satisfying its customers in terms of service, it gets the benefit of word-of-mouth publicity. About 95 per cent of consumers give positive reviews about companies in case of good service in contrast to 77 per cent who speak negatively after a poor experience. Ankit Tripathi P1058   
  23. 23. Guide Copy  14        3. AFTER SALES SERVICE IN AUTOMOBILE SECTOR 3.1 INTRODUCTION Cars happen to be an expensive object and for most it holds aspirational value. Having a car in household is a sign of good times. Naturally, one takes extra care to make sure that the product being delivered is upto the expectation of the customer. After Sales service in cars include the warranty on the car overall exlcuding some wearable items like tyres, body bumpers and internal accessories. Periodic servicing is offered by most car manufacturers for a limited time period/upper limit on mileage. In light of recent rush by automotive giants from across the globe, differentiation holds the key and After Sales service is one important aspect after the product itself by means of which the manufacturer can stand out and get noticed and thereby result in increased sales 3.2 NIELSEN SURVEY RESULTS A recent survey by Nielsen suggests that automakers have opportunities to improve their business performance in the short term by focusing more on the customers they already have. Especially in these tough times for the industry, one of the most powerful techniques for converting buyers into die-hard fans is providing exceptional after-sales service. Nielsen surveyed more than 1,800 customers who had purchased all the automotive brands sold in the India., to better understand their ownership and sales experience and to assess their brand loyalty. They asked owners to rate, on a scale of zero to 10, how likely they were to recommend their vehicle to a friend or colleague. By subtracting the percentage of "detractors" who gave scores between zero and 6, from the percentage of "promoters" who gave a score of 9 or 10, they calculated a "Net Promoter Score" (NPS). NPS is already used in dozens of industries to determine how deep loyalty to a particular company runs among its customers, and how it stacks up against its competitors when it comes to customer loyalty. Ankit Tripathi P1058   
  24. 24. Guide Copy  15        The NPS survey for automakers revealed two important findings. First, promoters are nearly 10 times more likely than detractors to repurchase or lease a vehicle of the same make or brand as their current one. Second, promoters are far more likely to recommend their vehicle brand to a friend. Each promoter provides nearly five purchase referrals, while each detractor dissuades two prospective buyers. Indeed, high NPS correlated with healthy new-car sales growth; name plates with lagging scores had flat or declining unit sales. 3.3 OPPORTUNITY TO BUILD OR BREAK LOYALTY High among the factors that create promoters—and help sustain their loyalty—is a strong after-sales service experience. The reason is simple: Dealer service is the key point of contact with customers at the critical time when most people are weighing their next vehicle purchase. Owners' brand enthusiasm tends to erode as the vehicle ages and the warranty expires. But it is precisely at this point—about four years after the initial sale— that the leaders capitalize on their loyalty advantage by using maintenance visits as opportunities to reinforce their ties with promoters and win over detractors. Excellent service not only reinforces relationships with customers who already feel loyal to a brand. It can also defuse ill will that causes disaffected customers to bad-mouth the brand. Indeed, the brand leaders excel especially at turning unplanned repair visits—those critical moments of truth on which a customer relationship can hinge—into opportunities to strengthen customer bonds. While most carmakers aim to ensure that the service experience does as little harm as possible, the leaders set out to surprise customers with ease and convenience when they expect it least and value it most. The power of nurturing promoters shows up dramatically in data showing how severe the damage can be when a repair experience doesn't go well. Overall, the NPS of loyalty leaders whose vehicles have not needed a repair is a stellar 85. It falls off to a respectable 77 when the vehicle needs a mechanic's attention. But among loyalty laggards, an unscheduled stop in the shop resulted in scores plummeting 29 points to a dismal 19. Ankit Tripathi P1058   
  25. 25. Guide Copy  16        Owners of those vehicles are angry, and they are going to tell their friends and colleagues about it. Ultimately, the biggest influence on customer loyalty and affinity for the nameplate is the quality of the vehicle itself. But a bad after-sales experience can erode it just as quickly. In the economy they face today, automakers need to rethink how they win and retain every customer they have. 3.4 SOME INITIATIVES BY CAR MANUFACTURERS IN INDIA Car manufacturers are increasingly focusing on expansive after-sales service facilities to hook customers The country’s largest car manufacturer, Maruti Suzuki India (MSIL), has initiated its largest service network expansion drive this financial year since its inception. In the course of the year, it intends to add 200 outlets to cater to demand across sectors. MSIL has 2,855 service centres across 1,363 cities. The number is set to cross the 3,000- mark by the end of 2010-11. The company also has customers in 2,900 talukas and 70 per cent of these have been covered under their rule of a service station every 25 km. As of date, the average distance to the closest MSIL service station in the remaining areas is 35 km. Hyundai Motor India (HMIL) has firmed up plans to open 130 additional facilities to service customers in 2011. This would increase the number of service points for Hyundai cars to 757. Toyota, set to foray into the intensely competitive small car segment with the Liva in April next year, is working on doubling its sales and service centres by the end of this year. TKM had 97 sales and service centres last year, which would increase to 150 by the end of this year. Of this, 135 centres would have workshops for maintenance activities. Among others, Toyota has developed a new dealership management system, which would enable the company to maintain a database for all its customers across the country. Ankit Tripathi P1058   
  26. 26. Guide Copy  17        General Motors India, aiming to treble sales in India by 2014 on the back of the six new models it has slated for launch, starting December 2012, is expanding the number of service facilities by 50 per cent to 300 by March 2013. GM is already offering three-year free maintenance for its small cars, the Chevrolet Beat, Spark and Aveo UVA, a first in the industry. Tata motors are expanding our after-sales network in tier-II and tier-III cities on the back of increasing demand. It has 800 service points for passenger vehicles across 500 cities and towns. Ankit Tripathi P1058   
  27. 27. Guide Copy  18        4. RESEARCH PLAN AND METHODOLOGY 4.1 NEED FOR STUDY In light of intense competition for customers in India, it is imperative for car manufacturers to hold that extra edge over their rivals. It has been observed that after sales service even though an integral part for a car manufacturer to establish their dominance in Indian markets is often ignored. The study is not comparative where we rate one manufacturer vis-à-vis another but to understand the general level of service that a customer expects and what is being delivered to him 4.2 THE OBJECTIVE OF THIS PROJECT  To find the current satisafaction level of consumers towards Automobiles  To find the awareness level of people towards after-sales services  To find the percentage of people who are well versed with the concept of consumer courts for arbitration issues  To understand if factors like warranty and after-sales service have bearing on customer choice for a product  To find if there is any relationship between price of a product and the level of after-sales service offered 4.3 VARIABLES UNDER STUDY The study will try to understand and gauge the different parameters to judge the likes/dislikes of car owners. The various parameters under consideration are  Regularity of updates  Ease of contacting service department  Service advisors functional knowledge Ankit Tripathi P1058   
  28. 28. Guide Copy  19         Availability of desired time-slot  Ease of checking in the vehicle  Communication during repairs/maintainence  Spare part availability  Delivery promise punctuality  Reasons for delaying service  Cross-sell attempts  Consumer Forum Awareness For this purpose, research methodology is implemented. This is implemented as described below: 4.4 DATA COLLECTION Primary Data: Structured Questionnaire Secondary Data: Online Database, Journals, Surveys Sample Unit: Respondents owning cars across subarban Mumbai. Sample Technique: Random sampling Sample Area: Mumbai Sample Size: 200 Statistical Tool: SPSS Ankit Tripathi P1058   
  29. 29. Guide Copy  20        5. RESEARCH FINDINGS AND ANALYSIS The following are the results of the questions asked to the respondents in the questionnaire (attached in the annexure section). The respondents were asked a range of questions in three distinct categories  Beginning from their vehicle type and Brand of the vehicle to understand the class of the respondent  Next, they were quizzed on various aspects concerning their overall experience with the service delivery of their car manufacturer  Finally, they were asked questions which judged if they were aware of consumer forums for welfare of consumers and if at all they felt the need to approach such forums 5.1 FINDINGS 1. What is your vehicle type? Vehicle Type Count Hatchback 102 Sedan 83 MUV 5 SUV 16 Vehicle Type SUV, 16 MUV, 5 Hatchback Hatchback,  Sedan 102 MUV Sedan, 83 SUV Ankit Tripathi P1058   
  30. 30. Guide Copy  21        2. Which brand of car you own? Brand Count Chevrolet 18 Fiat 5 Honda 25 Hyundai 35 Mahindra 14 Maruti 51 Nissan 5 Skoda 8 Renault 5 Tata Motors 18 Toyota 10 Volkswagen 12 Brand Volkswagen, 12 Chevrolet, 18 Toyota, 10 Chevrolet Fiat, 5 Fiat Tata Motors, 18 Honda Renault, 5 Honda, 25 Hyundai Skoda, 8 Mahindra Nissan, 5 Hyundai, 35 Maruti Maruti, 51 Nissan Skoda Mahindra, 14 Renault 3. Do you receive regular intimations through calls/sms for "service due" for your vehicle? Regular Count Intimations Yes 116 No 90 Ankit Tripathi P1058   
  31. 31. Guide Copy  22        Regular Intimations No, 90 Yes Yes, 116 No 4. How is the ease of contacting the service department to make an appointment? Appointment Count Ease Excellent 21 Good 125 Average 50 Poor 10 Appointment Ease Poor, 10 Excellent, 21 Excellent Average, 50 Good Average Good, 125 Poor Ankit Tripathi P1058   
  32. 32. Guide Copy  23        5. The service advisor's understanding of the work required when you booked the appointment? Knowledge Count level Excellent 23 Good 34 Average 135 Poor 14 Knowledge level Poor, 14 Excellent, 23 Excellent Good, 34 Good Average Average, 135 Poor 6. The availability of an appointment to suit you. Appointment Count Suitability Excellent 13 Good 124 Average 61 Poor 8 Ankit Tripathi P1058   
  33. 33. Guide Copy  24        Appointment Suitability Poor, 8 Excellent, 13 Excellent Average, 61 Good Average Good, 124 Poor 7. The ease of checking in at service reception on the day you brought your motorhome in for service/repair Check in ease Count Excellent 26 Good 133 Average 38 Poor 9 Check in ease Poor, 9 Excellent , 26 Excellent Average, 38 Good Average Good, 133 Poor Ankit Tripathi P1058   
  34. 34. Guide Copy  25        8. Communication during service/repairs to keep you updated on progress Communication Count during WIP Excellent 17 Good 76 Average 93 Poor 20 Communication during WIP Excellent, 17 Poor,  20 Excellent Good Good, 76 Average Average, 93 Poor 9. Availability of Spares Availability of Count Spares Excellent 67 Good 56 Average 73 Poor 10 Ankit Tripathi P1058   
  35. 35. Guide Copy  26        Availability of Spares Poor, 10 Excellent Excellent, 67 Good Average, 73 Average Poor Good, 56 10. Was your vehicle ready for collection at the agreed time? Punctual Delivery Count Yes 148 No 58 Punctual Delivery No, 58 Yes No Yes, 148 Ankit Tripathi P1058   
  36. 36. Guide Copy  27        11. If you were advised that further work was required at a later date were you were fully informed of the reasons why and either booked in for that work or advised that you would be contacted when the necessary parts arrived in stock? Extra Work Count communication Yes 123 No 83 Extra Work communication No, 83 Yes No Yes, 123 12. Do the customer service executives try to cross-sell other car accessories? Cross Sell Count Yes 128 No 78 Ankit Tripathi P1058   
  37. 37. Guide Copy  28        Cross Sell No, 78 Yes No Yes, 128 13. Are you aware of consumer forums by Ministry of Consumer Affairs? Forum Count Awareness Yes 116 No 90 Forum Awareness No, 90 Yes Yes, 116 No 14. Have you ever had an unpleasant experience at the service center ? Ankit Tripathi P1058   
  38. 38. Guide Copy  29        Unpleasant Count Experience Yes 53 No 153 Unpleasant Experience Yes, 53 Yes No No, 153 15. If yes, was it resolved by service center Manager? Resolution Count Yes 37 No 42 NA 127 Ankit Tripathi P1058   
  39. 39. Guide Copy  30        Resolution Yes, 37 Yes No No, 42 NA, 127 NA 16. In case of escalations, have you approached these forums? Escalation to Count forums Yes 14 No 77 NA 115 Escalation to forums Yes, 14 Yes No, 77 No NA, 115 NA Ankit Tripathi P1058   
  40. 40. Guide Copy  31        17. If given a choice, would you go for a product offering better service even though you might want a different product? Better Service score over Count marginally better product Yes 125 No 81 Better Service over marginally better  product No, 81 Yes Yes, 125 No 18. Do you believe that better service is provided by your car manufacturer for expensive variants? Better Service to higher Count variants? Yes 140 No 66 Ankit Tripathi P1058   
  41. 41. Guide Copy  32        Better Service to higher variants? No, 66 Yes No Yes, 140 5.2 ANALYSIS USING SPSS Here, we try and find out if some relationship exists between two given variables 1. Service Intimations and Desired appointment time Chi-Square Tests Asymp. Sig. (2- Value df sided) a Pearson Chi-Square 10.792 3 .013 Likelihood Ratio 13.733 3 .003 Linear-by-Linear Association 3.035 1 .081 N of Valid Cases 206 a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is 3.50. Since the value of Pearson Chi-Square is less than 0.05, we reject the null Hypothesis hence there is a strong co-relation between Service Intimations and providing the desired appointment time 2. Unpleasant Experience and its Resolution by Manager Ankit Tripathi P1058   
  42. 42. Guide Copy  33        Correlations Unpleasant_Exp Reolution_by_M erience anager ** Unpleasant_Experience Pearson Correlation 1 .730 Sig. (1-tailed) .000 N 206 206 ** Reolution_by_Manager Pearson Correlation .730 1 Sig. (1-tailed) .000 N 206 206 **. Correlation is significant at the 0.01 level (1-tailed). There is a strong positive correlation between the two variables. 3. Unpleasant Experience and Approached Forum Correlations Unpleasant_Exp Approached_For erience um ** Unpleasant_Experience Pearson Correlation 1 .304 Sig. (1-tailed) .000 N 206 206 ** Approached_Forum Pearson Correlation .304 1 Sig. (1-tailed) .000 N 206 206 **. Correlation is significant at the 0.01 level (1-tailed). There is a weak correlation between the two variables. Ankit Tripathi P1058   
  43. 43. Guide Copy  34        4. Timely Delivery and Providing better service to higher variants Correlations Timely_Delivery Partiality Timely_Delivery Pearson Correlation 1 -.013 Sig. (1-tailed) .424 N 206 206 Partiality Pearson Correlation -.013 1 Sig. (1-tailed) .424 N 206 206 Negative correlation between variables 5. Cross Selling and Unpleasant experience Correlations Cross_Sell_Atte Unpleasant_Exp mpts erience * Cross_Sell_Attempts Pearson Correlation 1 .162 Sig. (1-tailed) .010 N 206 206 * Unpleasant_Experience Pearson Correlation .162 1 Sig. (1-tailed) .010 N 206 206 *. Correlation is significant at the 0.05 level (1-tailed). Non significant positive co-relation Ankit Tripathi P1058   
  44. 44. Guide Copy  35        6. OBSERVATIONS  The mix of respondents was more in favour of Hatchback vehicles followed by Sedan, SUV and MUVtype of vehicles pointing to the fact that most respondents had cars in under 10lac range  A good mix of vehciular brands responses were obtained wherein as expected Maruti had the highest respondents followed by Hyundai, Honda and Tata Motors  When it came to regular intimations to customers on the pending service, a large chunk of 90 respondents ~45% said they did not get intimations  Whenever a customer wishes to make an appointment, in majority of cases the process is simple for him/her  Service Advisor’s knowledge in dealing with the customer has met with a mediocre response with almost 70% rating the expertise as average  In most of cases, the customers got the appointment slot that they desired  Customers seemed to be satisfied with the process of checking in the vehicle and completing formalities of leaving their vehicle at service center  Respondents have however complained that they were not updated constantly on the progess made on their vehicle  Majority of respondents having Maruti and Tata Motors seem highly satisfied with availability of spares  Punctual delivery of vehicle was being followed by majority of companies  For extra work involved the communication was on the poorer side with almost 42% respondents saying that they were not advised on it  Cross-selling other accessories seems to be a norm in most service centers  Almost 45% of respondents are unaware of Ministry of consumer affairs’ Forums  1/4th of respondents have had atleast one unpleasant experience at the service station  In half of the cases, the issue was resolved by the Manager  However, in others a very few actually went ahead to Consumer Forums Ankit Tripathi P1058   
  45. 45. Guide Copy  36         A sizeable chunk (62%) of respondents say that they are ready to let go of a marginally superior product if they are offered better service in the other  Almost 70% of respondents feel cheated in the sense that they believe that customers having better variants, models are served better than those not having them Ankit Tripathi P1058   
  46. 46. Guide Copy  37        7. CONCLUSION  There is a larger population of consumers which prefer the hatchback variants for traffic ridden Mumbai for multiple reasons which include ease of travel, lower fuel consumption and more options to choose from  Maruti still has the stronghold on Indian market but is closely followed by Hyundai, Honda, Tata Motors etc  Majority of Car Manufacturers have seemed to have gotten the service delivery right and in most of cases have facilitated easy appointment and timely delivery  Communication is one lacuna that the car companies must focus on. Customers feel that they are kept in dark about progress being made on their car  Even though the Ministry of Consumer Affairs has involved itself in aggressive advertising, it still has not penetrated the car owners to full extent with a large chunk still unaware of existence of norms for Car manufacturers as well  The car owners choose to resolve the issue either with the center manager or ignore the same. They are reluctant to take it ahead and make the issue noticeable  Customers need assurance and the very fact that they are ready to let go of a marginally superior product in leiu of better service reiterates the same point  Differentition seems prevelant in minds of customer when it comes to servicing Ankit Tripathi P1058   
  47. 47. Guide Copy  38        8. RECOMMENDATIONS  Service Advisor’s knowledge in dealing with customer’s queries id dealt with some issues. The advisors must thus be adequately trained in technical as well as soft-skills domain to counter customer’s queries in a more appropriate manner  Communication is another aspect that needs improvement. The customer can be given a rough schedule which shows the approximate time it would take to perform particular activity. Constant EOD updates by means of an SMS would keep the customer interested in case the vehicle is kept at service center for more than a day  Car accessories are pushed to customers in a very aggressive manner. Even though it seems to be important as additional revenue for service center, a more subtle approach can be used by giving free samples and honest recommendations  A feedback/suggestion matrix should be prominently displayed on the reception to let the customer know that car companies value their opinion and they should write to superiors in case of any issues  There is a large class of audience who seeks better service. Car manufacturers must take a notice of this aspect. General Motors is already having such a scheme for their customers by providing three years of maintainence free service  Customers need to be reassured that all service is carried on first come first serve basis and in no way is a higher model given precedence over a lower variant Ankit Tripathi P1058   
  48. 48. Guide Copy  39        9. BIBLIOGRAPHY AND REFERENCES Books: 1) Marketing Research by Malhotra N.K. , fifth edition 2) Marketing Management by Philip Kotler Websites: 1.http://www.businessweek.com 2. http://www.financialexpress.com 3. http://www.business-standard.com/ 4. Ministry of Consumer Affairs http://fcamin.nic.in/ Magazines: 1) Autocar India 2) Motoring Ankit Tripathi P1058   
  49. 49. Guide Copy  40        10. ANNEXURE Questionnaire 1. What is your vehicle type?  Hatchback  SUV  Sedan  MUV 2. Which brand of car you own?  Chevrolet  Fiat  Ford  Honda  Hyundai  Maruti  Mahindra  Nissan  Renault  Skoda  Tata Motors  Toyota  Volkswagen 3. Do you receive regular intimations through calls/sms for "service due" for your vehicle?  Yes  No 4. The ease of contacting the service department to make an appointment.  Excellent  Good  Average  Poor 5. The service advisor's understanding of the work required when you booked the appointment. Ankit Tripathi P1058   
  50. 50. Guide Copy  41         Excellent  Good  Average  Poor 6. The availability of an appointment to suit you.  Excellent  Good  Average  Poor 7. The ease of checking in at service reception on the day you brought your motorhome in for service/repair  Excellent  Good  Average  Poor 8. Communication during service/repairs to keep you updated on progress  Excellent  Good  Average  Poor 9. Availability of Spares  Excellent  Good  Average  Poor Ankit Tripathi P1058   
  51. 51. Guide Copy  42        10. Was your vehicle ready for collection at the agreed time?  Yes  No 11. If you were advised that further work was required at a later date were you were fully informed of the reasons why and either booked in for that work or advised that you would be contacted when the necessary parts arrived in stock?  Yes  No 12. Do the customer service executives try to cross-sell other car accessories?  Yes  No 13. Are you aware of consumer forums by Ministry of Consumer Affairs?  Yes  No 14. Have you ever had an unpleasant experience at the service center ?  Yes  No 15. If yes, was it resolved by service center Manager?  Yes  No 16. In case of escalations, have you approached these forums?  Yes  No Ankit Tripathi P1058   
  52. 52. Guide Copy  43         Not Applicable 17. If given a choice, would you go for a product offering better service even though you might want a different product?  Yes  No 18. Do you believe that better service is provided by your car manufacturer for expensive variants?  Yes  No Ankit Tripathi P1058   

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