SYNOPSIS ON

B Segment Cars
(THE RS. 300,000-550,000 CATEGORY)

SUBMITTED TO DELHI UNIVERSITY, NEW DELHI Submitted in the partial fulfillment of the Degree requirement towards the MASTERS OF BUSINESS ADMINISTRATION (MBA)

SUBMITTED TO M.J. GNDU Regional Campus Jalandhar

SUBMITTED BY MBA-IVth Sem. Univ. Roll No. 470195

SESSION (2006-2008)

________________College, Jalandhar

INTRODUCTION The initial reason for studying consumer perception, preference & behavior is to understand why consumer made the purchase decisions they did, and to enable marketers to predict how consumers would react to promotional messages. The marketing concept is built on the premise that marketers first identify consumer needs and then develop such products and services, which satisfy those needs. Marketers assume that if they know everything they could design marketing strategies and promotional messages, which would influence the consumer in the desired way. Consumer research is used to identify both felt and latent needs, to learn how consumers perceive products & brands & stores, what their attitude is before and after promotional campaigns and how and why they make their consumption decisions. It also helps in discovering which attributes are most important to the target market and integrating them into the product or service design. The Indian automobile industry is at the threshold of transition that will affect all the segments from two wheelers to tractors. This transformation has been necessitated by the entrance of international companies accompanied by the infusion of modem technology. In the coming years all segments in the industries will face challenges on account of either oversupply price wars or shift in consumer preferences. This likely to be felt more intensely in the passenger car segment than in the other segments of the industry.

ADVENT OF CARS IN INDIA From the singsong rhythm of the bullock cart to the jet-age, India has traveled a long way. An average Indians dream car may not be the design-savvy Honda or the stately limousine, but he sure can dream, and afford, the Maruti now. It was in 1898 that the first motorcar rode down Indias roads. From then till the First World War, about 4,000 cars were directly imported to India from foreign manufacturers. The growing demand for these cars established the inherent requirements of the Indian market that these merchants were quick to pounce upon. The Hindustan Motors (HM) was set up in 1942 and in 1944, Premier Autobackmobile (PAL) was established to manufacture automobiles in India. However, it was PAL who produced the first car in India in 1946, as HM concentrated on auto components and could produce their first car only in 1949. It was left to another company, Mahindra and Mahindra (M&M) to manufacture sturdier utility vehicles, namely the American Jeep. In the 50s, the Government of India granted approval to only 7 car dealers to operate in India - HM, API, ALL, SMPIL, PAL, M&M and Telco.

INDIAN AUTOMOBILE INDUSTRY

A well developed transport network indicates a well developed economy. For rapid development a well-developed and well-knit transportation system is essential. As India's transport network is developing at a fast pace, Indian Automobile Industry is growing too. Also, the Automobile industry has strong backward and forward linkages and hence provides employment to a large section of the population. Thus the role of Automobile Industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by the Automobile Industry. India

Automobile Industry includes the manufacture of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly divided into the Car manufacturing , two-wheeler manufacturing and heavy vehicle manufacturing units. The major Car manufacturer are Hindustan Motors, Maruti Udyog, Fiat India Private Ltd., Ford India Ltd ., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd.,Hyundai Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd., to name a few. Impact of Budget 2008 Mr. P. Chidambaram, the Finance Minister of India, presented the Union Budget for the financial year 2008-2009, in the parliament on 29th February, 2008. In what has been described as a budget that is expected to boost consumption, the Finance Minister mentioned significant decisions pertaining to the automobile industry, among other important industries, in India. The declarations made by the Indian Union Minister of Finance Mr. P Chidambaram, related the Indian automobile industry during the Union Budget of India 2008-2009 were expected to infuse growth in industry. The automobile industry was one of the focus areas of Budget 2008 due to the high growth in this industry and the much talked about launch of the cheap small car by Tata Motors, the Nano. The initiatives taken by the Ministry to propel growth of this industry were mostly in line with the pre-budget expectations. The reduction in excise duties was welcome by the Indian Automobile industry but it was quick to point out that the much talked about area of Automobile loan was not touched upon. The Indian automobile industry had mixed reaction towards the Finance Minister's policy for the financial year 2008-2009. The minister proposed reduction of excise duties on small cars from 16% to 12%. However this reduction is not expected to

bring down the price of Tata Nano. It is rather expected to add to the profitability of the project. The Indian three and two-wheeler sector were also offered similar reduction in excise duties. The excise duties on buses and chassis were also curtailed. Moreover, the excise duty on the hybrid vehicles was also curtailed from 24% to 14% in the Indian Union Budget 2008-2009. But no such reduction on excise duties in the big car segment or exports was announced, which was much on the wish list of the Indian car manufacturers. The industry fears that this would widen the gap between the Indian small car and big car segments. The automobile industry was quick to react to the cut on excise duty as offered in the Indian Union Budget 2008-2009 and said that the benefit of such reduction would be passed on to the customers. One of the main areas - the auto components, did not receive much attention, as was expected in the pre-budget analysis. The Indian automobile industry feels that this would become detrimental in the future course of time, since this may hamper the exports of hybrid cars from India. The Indian automobile manufacturers further feel that the farm loan waiver may add to their concern of auto loans, which is a major problem in this sector. The Indian two-wheeler market is registering a downturn and the farm loan waiver to the tune of Rs 60,000 crores may choke the liquidity of the market and the banks may be more than unwilling in forwarding auto loans. The automobile industry of India is convinced that the short term effect of reduction in excise duties will benefit the industry and the customer but its long term implications are still quite unclear Car Market in India Over the last few decades. the car market in India have been in a burgeoning stage with all types of cars flooding the market in order to meet the demands of Indian

customers who are increasingly exposed to state-of-the-world automobiles and want the best when it comes to purchasing a car. It is expected that by 2030, the Indian car market will be the 3rd largest car market across the globe. Small cars seem to be ruling the roost in the Indian automobile market with over 7.5 lakh small cars being sold in India in 2006-07. The main encouraging factors for the success story of the car market in India are the increase in the opportunity for new investments, the rise in the GDP rate, the growing per capita income, massive population, and high ownership capacity. The liberalization policies followed by the Indian government had been inviting foreign investors and manufacturers to participate in the car market in India. The recent trend within the new generation to get work in the software based sector has led to the rise in the income level and change in the lifestyle which has further led to the increase in the demand for different varieties of cars among them. Moreover, there are many financing companies providing easy car loans at reasonable interest rates and affordable installments. The car Market in India is crowded with all varieties of car models like the small cars, mid-size cars, luxury cars, super luxury cars, and sports utility vehicles. Initially the most popular car model dominating the Car Market in India was the Ambassador, which however today gave way to numerous new models like Maruti, Fiat, Hyundai, BMW, and many others. Moreover, there are many other models of cars in the pipeline, to be launched in the car market in India Automobile industry Contributes 17% of the total indirect taxes collected by the exchequer & is a driver of product and process technologies, and has become a excellent manufacturing base for global players, because of its

high machine tool capabilities Extremely capable component industry Most of the raw material locally produced

REVIEW OF LITERATURE According to an article entitled, Maruti to sell 6.5 lakh cars this year published by Business Standard (March 2007) Maruti Udyog Limited, is expected to sell 6.5 lakh units during this fiscal and maintained 54 per cent market share, a senior company official said on Wednesday. The company has sold 6.03 lakh vehicle till February and would easily cross 6.5 lakh units before the end of March this year, as against 5,61,822 sold last fiscal. Maruti was able to sustain its national market share at around 54 per cent so far during this fiscal, Shashank Srivastava, commercial Business Head (south) told reproters, in an informal chat. The market share in Tamil Nadu, which witnessed 37.5 per cent growth, had increased by two per cent to 48 per cent, so far this fiscal, which also contributed to sustain its national market share, Srivastava said. Srivastava, in Coimbatore connection for the inauguration of the Maruti Driving School, first in Tamil Nadu, said with 32 per cent growth, South logged in higher growth of Maruti sales, registering 53.4 per cent market share, due to good economic growth in the region. There was a big jump in exports to non-EU market, like Latin America, Indonesia, Egypt, Sri Lanka, totally around 50,000 units. On newly rolled out 'Estilo,' he said the response was very good, as sales clocked 20,000 units since its launch in November last. R K Parimoo, GM (sales support), Delhi, who was also present, said that the companay would open 50 driving schools within this calendar year.

According to an article entitled, How Nano can affect B, C segment car sales published by Sanjay Nigam, Hindu Businless Line (Mar, 2008) The Budget 2008 has reduced the excise duty for small cars and two-wheelers from 16 to 12 per cent, so a Maruti-800 customer should benefit by around Rs 10,000, reasons Mr Sanjay Nigam, Director-Automotive Business, Trilogy India, a US based company providing business solutions to auto OEMs. From the manufacturers point of view, its good news for Maruti, Tata and Hyundai and all those planning to launch small cars in the near future, he adds in a recent e-mail interaction with Business Line. But the excise duty on bigger cars continues to be at 24 per cent, which will cause more disparity between the prices of small and big cars. The demand for big cars may get impacted in the short-term, rues Sanjay. According to an article entitled, UK to tackle car industry challenges from India published by The Financial Express April 10, 2008. Britain has launched a study to identify measures to tackle the twin challenges of low-cost competition, to be faced by the UK's car industry from India and other countries, and to lower-carbon transport in order to remain competitive in the globalised world. "The UK's car industry is one of the most successful in the world, with a number of manufacturers currently enjoying record levels of production at their UK plants," Britain's Indian-origin Business Minister Shriti Vadera announcing the launched of the investigation said. "But the industry, like many others, is facing a number of challenges as it moves into the next decade, particularly in terms of reducing emissions and tackling a continued rise in competition from low-cost countries such as China, India and Eastern Europe

According to an article entitled, Future of Car Industry in India by Ashish Phanse (May 2008) published by Readers Choice. Post liberalization, many foreign manufacturers have lined up and have setup base in India. Other domestic manufacturers have also improved production levels and are in the race for producing better models as well. Some of the car manufacturers who have set up base in India are Audi, BMW, Chevrolet Fiat, Ford, Honda, Hyundai, Mahindra, Maruti, Mercedes, Mitsubishi, Skoda, Suzuki, Tata, Toyota, Volkswagen, and Volvo. Indias economic growth is booming currently. These manufacturers have set up manufacturing facilities in India, or are importing cars and spares to meet the demands of this growing market. Competition has forced manufacturers to be innovative and responsive to customer demands and needs. Now that India is not alien to quality and perfection, customer expectations have soared to higher levels. Depending upon customers needs, four segments - small, midsize, premium and sports utility vehicles currently represent the car market in the country. Currently, there is high demand for cars across all these segments. With the growing economy, people left with a lot of disposable income spend it towards meeting their mobility needs such as cars. Banks and other financial institutions have an assortment of vehicle loan schemes with attractive rates of interest and convenient instalments. These schemes encourage people to go in for loans to purchase cars of their choice. Additionally, a convenient union budget in the current financial year (2008-09) has worked in favour of the automobile sector, which has seen an uptrend in sales across various segments.

OBJECTIVES OF THE STUDY

To measure the consumer preference and expectation. To determine the price sensitivity and buying behaviour of consumer regarding purchase decision. To understand the level of awareness of different alternatives available in the market. To measure the satisfaction level of consumer regarding after sale services. To understand the role of influencers in making the purchasing decision.

RESEARCH METHODOLOGY

Research means a search for knowledge or gain some new knowledge and methodology can properly refer to the theoretical analysis of the methods appropriate to a field of study or to the body of methods and principles particular to a branch of knowledge. A Research methodology has a specified framework for collecting the data in an effective manner. Research methodology means a "defining a problem, defining the research objectives, developing the research plan, collecting the information, analyzing the information and presentation of findings." Such framework is called "Research Design". The research process that was followed by me consisting following steps;

A) Research Define The definition of problem includes the study of B Segment Cars (the Rs. 300,000- Rs.550,000 category).

B) Research Design A research design is the arrangement of conditions for the collection and analysis of data in a manner that aims to combine relevance to research purpose with economy in procedure. My research is descriptive in nature. So after careful relocation in the present study interviewed the residents of Jalandhar City. This

step of the study consists of developing the most efficient plan for gathering the relevant data. The following factors were under focus in the research plan:
a.

Data Design: It involves different aspects like the nature of data, the

data sources, the data frequency and the data tools.

b.

Nature of Data: The nature of data that has been used under project

is both primary and secondary in nature. The term data can be defined as facts, figures and information, systematically collected and presented for the purpose of drawing inferences. The first hand information bearing on any research, which has been collected by the researcher, or his agent or assistant is called primary data. The results based on primary data are bound to be empirical and of great utility. Once the primary data has been put to use, the original characters disappear and the data becomes secondary. The data which has already been collected, compiled and presented earlier by any agency, may be used for the purpose of investigation.
c.

Type of Research :

Survey is best suited for descriptive and

analytical research. Survey are undertaken to learn about people's knowledge, beliefs, preferences, satisfaction and so on and to measure these magnitudes in the general public. In the present study have done this survey for Descriptive and analytical research process. Descriptive research includes surveys and fact finding enquiries of different kinds. The main purpose is description of the state of affairs is noted down and analytical research used to analyze the material and facts. In this study exploratory as well as descriptive research is used.

C) Sampling Design : It is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting items for the sample. The sampling plan or design calls for the following decisions:
d.

Universe: Research sample unit refers to the geographical area that in

the present study have covered while conducting the research. The universe of my study is Jalandhar City.
e.

Sample Unit: Who is to be surveyed ?

The target population must be defined that will be sampled. It is necessary to develop a sampling frame so that everyone in the target population has an equal chance of being sampled. The sample unit pertaining to my study is residents of Jalandhar City.
c.

Sample Size: How many people will be surveyed? This refers to number of respondents to be selected from the universe to constitute a sample. An optimum sample is one that fulfills the requirements of efficiency, reliability and flexibility. The sample size of 100 served the purpose of my study.

d.

Sample Method: The method used is Stratified Random Sampling technique.

D) Methods of Data Collection and analysis : The researcher can get two types of data: a) b) Primary Data Secondary Data

a.

Primary Data: Primary data is a data which did not exist earlier and is being collected by the researcher first time for its specific objectives. In other words, direct collection of data from the source of information, technology including personal interview, telephonic interviews, observation, Questionnaire and through schedules.

b.

Secondary data: Any data which have been collected earlier for some purpose are the secondary data. Indirect collection of data from sources containing past or recent past information like companys brochures, annual publication, books etc. Secondary sources used are: Text books Internet sites Newspaper articles Brouchers

Data Analysis and Interpretation : Data after collection have been processed and analyzed in accordance with the outline laid down in the research plan. Data obtained during the study have been systematically tabulated and interpreted with the help of tables or pie charts.

QUESTIONNAIRE I am a management student of Regional Campus GNDU Amritsar, conducting a Marketing Research on B Segment Cars (the Rs 300,000-550,000 category)as a part of our academics, kindly fill the response in a fair and frank manner.

1) Which brand of car you currently have ? a) Maruti b) Fiat c) Hyundai d) Chevrolet e) TATA

2) Which car model you currently have ? a) b) c) d) e) f) Alto WagonR Zen estilo Swift Spark Swift Dzire g) h) I) j) k) Indica Santro I10 Getz Palio stile

3) Rate the following factors on scale the way they influence your purchase decision for a car: 1 a) b) c) d) e) f) g) Safety Looks Reliability Price Power Mileage Interiors 2 3 4 5

4) How much you are ready to spend on buying car?

a) 2-3 lacs b) 3-4 lacs

c) 4-5 lacs d) Above 5 lacs

5) Which factor makes you to buy a car?

a) b) a) b) c)

Socio-economic factor Attitude Family influence Brand image Friends

6) Which version of the car would you like to purchase ?

a) b) c) d)

Petrol Diesel Gas Electricity

7) Do pre-buying offers like free acssesories,discounts,free insurance etc magnetize customer?

a) b) c) d)

Yes No Never Sometimes

8) Give points to the following features of a car according to their importance for you:

a) Power steering b) Power windows c) Automatic side view mirrors

d) Center locking system e) Audio player f) Rear defogger

9) Does the brand ambassador associated with particular car play an important role in making purchase decision?

Strongly Strongly Agree disagree

Somewhat agree

neither agree nor disagree

Somewhat disagree

10) Does advertisements play an important role in making purchase decision about a particular car?

Strongly Strongly Agree disagree

Somewhat agree

neither agree nor disagree

Somewhat disagree

11) Are you satisfied with your current car ? a) Yes b) No

If no,then why____________________________________________________________ 12) Which mode of advertisement influence you the most ?

a) b) c) d) e)

Magazine Television Road show Radio Internet

13) How often you change your car?

a) after 6 months

b) after 1 year c) after 2 years d) after 5 years 14) Which brand you prefer to buy in future ?

a) b) c) d)

Maruti Ford Hyundai TATA

e) f) g) h)

Chevrolet Mitsubishi Toyota Honda

15) Which type of would you like to buy in future ?

a) b) c) d) e)

MUV (multi utility vehicle) SUV (sports utility vehicle) Sedan Coupe Hatchback

PERSONAL INFORMATION
Name: _____________________________________________

Address:

_____________________________________________

Age / Sex / Occupation:

_____________________________________________

Contact No:

_____________________________________________

THANK YOU FOR TAKING THE TIME TO COMPLETE THIS SURVEY