CHAPTER I

INTRODUCTION
1.1 INTRODUCTION

Today, business around the world recognizes that the consumer is the
king. Knowing why and how people consume products helps marketeers to
understand how to improve existing products, what types of product are
needed in the market place, or how to attract consumers to buy their
products1. The era of liberalization, privatization and globalization has
brought changes in society and lifestyle of people.

Marketeers can justify their existence only when they are able to
understand consumers wants and satisfy them. The modern marketing
concept for successful management of a firm requires marketeers to consider
the consumer as the focal point of their business activity. Although it is
important for the firm to understand the buyer and accordingly evolve its
marketing strategy, the buyer or consumer continues to be an enigma
sometimes responding the way the marketeer wants and on other occasions
just refusing to buy the product from the same marketeer. For this reason,

the buyers mind has been termed as a black box, which should be opened
by the seller to be a successful marketeer.

The study of consumer behaviour focuses on how individuals make

decision to spend their available resources (time, money, and effort) on
consumption related items. That includes what, why, when, where, how
often they buy it, how they evaluate it after the purchase and the impact of
such evaluation on future purchase. More than ever before, the need to
understand consumers and consumer behaviour has become a hot topic
around the globe, from boardroom and executive suites to universities and
hospitals2. The study of consumer behaviour also includes an analysis of
factors that influence purchase decisions and product use.

Understanding how consumers make purchase decisions can help

marketing managers in several ways. For example, if a manager knows
through research that fuel mileage is the most important attribute for a
certain target market, the manufacturer can redesign the product to meet that
criterion. If the firm cannot change the design in the short run, it can use
promotion in an effort to change consumers decision making criteria. For

example, an automobile manufacturer can advertise a cars maintenance-free

features while downplaying fuel mileage.

A product can exist in the market only if consumers perceive that it

will satisfy their wants. Moreover, a given product is perceived quite
differently, by different consumers. A child perceives colour television set,
as a source of pleasurable entertainment. A mother may view it as a baby
sitter and a teacher as a source of information for students. A father may
view it, as an over priced luxury that prevents him from buying new durable.
For many other consumers this simply does not exist. That is, it has never
entered their field of selective perception3.

Consumer satisfaction is a psychological feeling or belief that the

perceived performance exceeds the consumers expectations about a
product. Some products offer more satisfaction than the others. For example,
a house and a car provide more satisfaction than a toothbrush. A car satisfies
the need of owners for a means of transportation. They also obtain
psychological satisfaction from the possession of products like car.

1.2 TREND IN CONSUMER ATTITUDE IN INDIA

The passenger car industry in India has undergone a drastic change in
terms of consumer perception as well as technology. From an extreme
perception of cars being an ultimate luxury, today it has probably acquired
the status of an essential utility item to many city dwellers. In 1960's the cars
were very expensive and only the very rich could afford them. The styles
available were limited.

During 1970s a gradual metamorphosis resulted in the perception of

viewing cars in upper middle-class families in India.

The 1980's saw the emergence of the "one car for the family" concept.
Though the market did not offer much choice, style, orientation and design
became desirable attributes in the passenger car.

Maruti 800 was launched at a price of just Rs.48,000 in mid-1980. At

this price many urban based middle class consumers could dream to own a
first hand car.

In July 1991 with the advent of liberalization, restrictions and controls

were removed. In particular, the car market experienced the removal of

various entry restrictions imposed on by foreign companies. Seeing the

opportunities, the foreign players showed a keen interest in the Indian
Market4.

1.2.1 Types of Car Buyers

The buyers of car are classified in to the following four major groups
namely imported car buyers, luxury car buyers (Maruti 1000, Standard 2000,
Contessa Classic, Premier 118 NE), extended segment (Maruti 800 deluxe),
and utility car buyers (Maruti 800, Premier Padmini, Fiat, Ambassador).

1.2.2 Market Segmentation of Car buyers

The market segmentation of car buyers are broadly grouped in to

status buyers, luxury car buyers, family car buyers, upwardly mobile
professionals, utility or functional buyers, the sports buyers, organizational
buyers, car rental agencies, and taxi and tourist car operators.

1.2.2.1 Status Buyers:

The car is bought primarily as a status symbol.
Brand image is much associated with the car.

Quality of engineering and attention to finishing are considered

as important which reflects looks and style.
Multiple car owners and light users, usually chauffeur driven.
Economy of operation and cost of maintenance are irrelevant to
the purchase decision.

1.2.2.2 Luxury Car Buyer

The Luxury segment buyers see the car as a measure of upper
class standards.
Recent entrants rather than higher quality of engineering or
brand image tend to be viewed favorably.
Emphasis on technology and add-on features.
Cost of maintenance and economy of operation are not major
selling constrains to this class of buyer. But time loss due to
breakdowns is a major irritant to the buyers of this segment.
1.2.2.3 Family Car Buyers

Family car buyers prefer comfortable and rather roomy cars.

Luggage space would be an important criterion.

Buyers would typically be upper middle class, thus, cost of

maintenance would be important.
Such cars would be used for long distance driving.

1.2.2.4 Upwardly Mobile Professionals

Performance of the car is most important.
This segment of buyers looks for trouble free driving and
operating convenience.
To a section of such buyers the car is meant for "stop gap
arrangement".

1.2.2.5 Utility / Functional buyers

Operating economy, durability, driving with convenience, and
ruggedness are desired attributes
Wish to have enough facilities in maintaining the car
Buyer is price sensitive
The car is mainly used for city driving
1.2.2.6 The Sports Buyers
Styling, ruggedness and maneuverability are very important
features.

The car would be used extensively on highways

Open hooded cars would be preferred
1.2.2.7 Organizational Buyers
Car choice is influenced by practical utility.
Ruggedness as opposed to fragility is important consideration.
Spaciousness is important, so is low downtime.
Mostly chauffeur driven cars.
1.2.2.8 Car Rental Agencies
Frequent long distance travel.
Comfort, minimum down time and low maintenance cost are
important factors.
Ruggedness, reliability, ease of repairs and servicing are also
desirable attributes.
1.2.2.9 Taxi and Tourist Car Operators
Fuel economy, low maintenance cost, ruggedness, and
spaciousness are essential attributes.
Frequently used in the highways car5.

1.3 IMPORTANCE OF PASSENGER CARS

The busy and sophisticated world is filled with people who strive to
keep them fit in the satellite living with numerous discoveries and inventions
thrown open to them to make their lives fast and comfortable.

The world started its civilization with palanquins and bullock carts for
transportation, continued with cycles and bloomed with the dawn of motor
vehicles to make the world a global village.

Distance has been conquered considerably by motor vehicles. There

are numerous vehicles that are produced and marketed in the society as per
the changing preference and needs of the consumers. The modern marketing
system is evolutionary rather than revolutionary. In the earlier stages of
civilization, human wants were few and people were satisfied with what they
possessed. At a later stage, the wants multiplied leading to the present trend
of faster and efficient means of transport and communication.

The overall economic development of a country is determined by

development in the manufacturing sector. Similarly, the quality of life to a
great extent depends upon the growth and development in consumer luxury

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goods segment. The passenger car segment in India in set to growth at a

reasonable rate in the future. Strong drives in the form of higher disposable
incomes, higher perpetration of fianc schemes, new model launches, and
changing consumer mindset are expected to push the demand further6. This
favourable shift in the buying potential, identified by Multi National
Companies has greatly encouraged them to make hurried entry into Indian
markets. As a result the Indian consumer is presented with a wide range of
brands and models of passenger cars.

In India, passenger cars once affordable for the rich only, are now
owned by middle class families also. A peep into the fast-changing income
demographics shows that the wealth profile of the households represents a
major change, where the number of the middle class will touch a whooping
28 million household by 2010. This change in income demographics will
have the percentages of the middle-class population rising to a smart 13 per
cent of the total population, and of this one-third will be from rural areas.
This is amply clear from the projected rise in demand for costly goods like
cars, which will witness a 20 per cent annual demand jump7. India today has
an estimated production of about 8 million cars8. Some 6, 00,000 new cars
are added to the Indian car park every year9.

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Today, the automobile industry is one of the largest industrial sectors

with a turnover that contributes to roughly 5 per cent of Indias GDP. More
importantly, it contributes to the employment of over 2 million persons
directly and to another 10 million indirectly. The industry is important for
national policy which contributes 19 per cent of indirect taxes10. The
government has decided to implement the National Automotive Testing and
R & D Infrastructure Project (NATRIP) at a cost of Rs.1,718 crore to
improve the global competitiveness of the Indian Automotive sector11.

Several studies have projected that auto sales will cross the million
marks by 201012. The Society of Indian Automobile Manufactures (SIAM)
estimates that between 2005 and 2010, about 60 new models of passenger
car and multi-utility vehicles are going to hit the Indian roads13.

Car buyers will be the major beneficiaries of the marketing war as

they will get technologically superior products at good terms and conditions.
Hence the study of perceptions, behaviour and level of satisfaction of
consumers of car appears to be a lucrative area for the further improvement
of the field. This study has made an attempt to examine the behaviour of car
users.

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1.4 PASSENGER CAR INDUSTRY-GLOBAL VIEW

Manufacture of car is one of the world's major industries, producing

more than 30 million cars every year. Japan and United States together
produce about half of the world's output. Other important car manufacturing
countries include Germany, France, Italy, Spain, Australia, The Czech
Republic, India, South Korea, Malaysia, Sweden, and the United Kingdom.

The origin of the car can be traced to Europe. But it became a first
major form of transportation in the United States. Today, the United States
has about 130 million cars more than that of any other country. In USA,
Australia, and France, there is approximately one car for every two persons.
The United Kingdom has approximately one car for every three and in Japan
one for every four persons.

The average number of motor vehicles for every 1000 persons in India
is reckoned as seven. On an average 61 people were killed or injured every
year for every 1000 motor vehicles in India14.

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1.5 INDIAN PASSENGER CAR INDUSTRY

The Indian passenger car industry was until the 80's the domain of the
Ambassador a product of Hindustan Motors. In 1983, Maruti Udyog Limited
started manufacturing small cars. The first car rolled out from Maruti's plant
at Gurgaon in December 1983, marking the beginning of a revolution in the
Indian automobile industry.

With liberalization leading to the entry of different car manufacturing

players into India, the passenger car market in the country has been poised
for major changes. There are three trends emerging in the market that are
likely to affect all the players.

The manufactures competing with each other in every market segment

offer a variety of models. The installed capacity has been doubled as much
as the projected demand by end of last Century.

The Indian car market is getting fragmented and the distinction

between the segments is getting blurred. The fragmentation is severe in the
small car segment where the number of models offered in the market has

14

increased to 16 and the number of variants to 34. Even the mid-size and
other segments have 18 models and 34 variants.

With the launch of TATA Indica, Maruti has been forced to cut back
prices for all their products by hefty amounts. The recent price reduction
marks the replacement of a cost plus pricing regime with that of a market
driven pricing mechanism15.

The operating margins of car manufactures are likely to improve due

to the growth in volumes and continued reduction in production overheads
(due to higher capacity utilization). Net profits are likely to grow on account
of higher volumes of lower interest, cost, and due to further repayment of
long term loans by most of the manufactures16.

1.6 AUTO INDUSTRY IN TAMIL NADU - A HISTORICAL

PERSPECTIVE

In 1898 the first motor car came to India. The automobile industry
took firm roots in the country with the setting up of assembly lines in
Bombay, Calcutta and Chennai with in the span of 10 years between 1910
and 1920. The import and assembly of motor cars witnessed a steady growth
crossing the 30,000 mark during 1930. With the assembling of Dodge

15

DeSato and Plymouth, Premier Automobiles Limited (PAL) acquired the

unique distinction of a pioneer in the manufacture of motor car in India in
1946, while the Birlas' Hindustan Motors (HM), which started off as an auto
component maker, also graduated to making cars in 1949.

With the centre deciding in 1954 to develop an indigenous automobile

industry, General Motors, Ford, and other assemblers had to close down
operations. The restrictive policy actually resulted in keeping the industry
thousands of kilometers away from the state of the art technology. For India,
the early 1980s brought a fresh breeze into the auto sector mainly with the
entry into car manufacture of the government itself with 74 percent stake in
Maruti Udyog Ltd (MUL) a joint venture with Suzuki Motors of Japan.
Maruti 800, popularly known as the people's car, was a watershed in India's
auto industry, registering a sales figure of more than 2,00,000 by 1999 from
a mere 1,200 units in 1984. MUL also has since diversified its portfolio by
inclusion of vans, multi-utility vehicles (MUVs) and mid-sized cars.

The liberal licensing of auto industry in 1993 was another major

milestone which helped to attract several international players like Daewoo,

16

Hyundai, GM, Ford, Peugeot, Mitsubishi, Honda, Fiat, and others to the
country.

India's automobile policy which was not WTO compatible compelled

the Centre to revise its automobile policy in 2002 by withdrawing certain
conditions such as achieving 70 per cent local content requirement, and
upfront minimum capital investment of $50 million. In fact, the lifting of
quantitative restrictions on imports is expected to further boost to the auto
industry, bringing more international players.

1.7 STATEMENT OF THE PROBLEM

The study of consumer behaviour is not altogether a recent activity. It

was a relatively new field of study in the mid-to-late 1960s. It is not possible
to anticipate and react to consumers needs and desires without a complete
understanding of consumer behaviuor. Discovering consumers current
needs is a complex process but it can generally be accomplished by direct
consumer research.

Consumer behaviuor research goes far beyond these facets of

consumer behaviour. The consumers behaviour displayed in searching for,

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purchasing, using, evaluating, and disposing of products and services that

satisfy their needs. For example, a couple may experience dissatisfaction
with their choice of car, perhaps because of continuing service problems.
They may communicate their dissatisfaction to friends and, in turn, influence
their friends future car purchase. They may vow never to buy the same
make or model again, limiting their own future selection decisions. Each of
these possible consequences of consumers post-purchase dissatisfaction has
significant ramifications for car marketeers, who have to build post-purchase
strategies into their promotional campaigns. Now a day, car has become a
necessity and forms a part of life of even the middle class people. Therefore,
there is a significant scope to examine the perception and purchase
behaviour of the consumer of cars.

Hence, in the present study, the personal variables like age, income,
education, occupation and the like have been selected and the influence of
these variables on the consumers perception, their buying behaviour and the
decision process have been analysed.

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1.8 OBJECTIVES OF THE STUDY

The specific objectives of the present study are
1. To analyse the demographic profile of the sample respondents.
2. To examine the factors influencing the brand choice and choice of
dealership.
3. To evaluate the purchase behaviour of the consumer.
4. To identify and analyse the factors influencing the purchase of car.
5. To analyse the level of satisfaction among the respondents and factors
associated with level of satisfaction.
6. To offer a suitable suggestion to improve the consumer satisfaction
and choice of passenger car.

1.9 HYPOTHESIS

Based on the research objectives, the following null hypotheses were

formulated.

1. There is no significant difference between the demographic profile

and perception of the product (car).
2. There is no significant relationship between the frequency of changing
the car and the family income among the respondents.

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3. There is no significant relationship between the selected demographic

profiles and level of satisfaction.
4. There is no significant difference between consumers expectation and
satisfaction.
5. There is no association between brand of car owned and the problems
faced by the respondents.

1.10 SCOPE OF THE STUDY

Consumer behaviour is a Complex one. It differs from person to person as

well as product to product. This study aims at identifying the demographic
factors influencing the purchase of a four wheelers, analyse the purchase
behaviour of consumers and examine the level of satisfaction and factors
influencing the level of satisfaction. So this study is responsible for successful
survival by the manufactures for easy marketing of their four wheelers in
existing marketer or in a global market. It also helps the manufacturers for the
important areas of satisfaction about their products. Further this study also
helping the Government in formulating some policy or rules and regulations
regarding safety, security and comfort in four wheelers (cars).

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1.11 OPERATIONAL DEFINITION OF CONCEPTS

i. Four wheelers
Four wheelers mean a passenger car or a car used by the public for his
personal use.
ii. Car
Car is a type of four wheeler used by the people for his personal use.
iii. Passenger car:
Passenger car is a type of four wheeler used by the tourist car operators for
commercial purpose i.e. to carry passenger from one place to another for rental
basis. Maximum capacity for this type of passenger car is five.
iv. Luxurious car
Luxurious car is a type of four wheeler used by the high income group of
people. This type of car provides more comforts then other cars. These cars are
comparatively high in price.
v. Imported car:
Imported car is a type of car which is imported from other countries.
These type of cars are owned by some of the popular personalities like cine stars,
cricket players and political leaders.

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vi. Jeep
Jeep is a type of four wheeler normally used by the people residing at hill
stations.
vii. Light motor vehicle passenger
Light motor vehicle passenger is a type of motor vehicle used by the
travel agencies to carry more number of passenger. Minimum and Maximum
passenger carrying capacity is 9 to 14.
viii. Light motor vehicle commercial
Light motor vehicle commercial is a type of vehicle used for the purpose
of carrying goods from one place to another place.
ix. Bus
Bus is a heavy vehicle used for the purpose of carrying more number of
persons.
x. Truck
Truck is a heavy commercial vehicle used for the purpose of carrying
goods in more quantities from one place to another place.

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1.12 GEOGRAPHICAL COVERAGE

The present study covers all the four taluks of Kanyakumari district, viz,
Vilavancode, Kalkulam, Thovalai and Agasteeswaram.

1.13 LIMITATIONS

There are several limitations associated with this study:

1. The study covers only Kanaykumari district. Hence the findings of
the study are entirely applicable to this district only.
2. The study is based on the perceptions of the consumers. Their
attitudes may change with the change of times. Therefore, the
responses reflect their contemporary views on the prevailing
conditions.
3. The study has been undertaken on 300 respondents. As the sample
size is limited, the results of the study cannot be generalized.
4. The higher number of samples on all the car segments could not
have been obtained. Cost and time constraints did not allow for
more extensive data collection.

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1.14 CHAPTER SCHEME

The present study Consumer Behaviour towards Four Wheelers

A Study with reference to Kanyakumari District has been divided into
seven chapters.

Chapter I introduces the subject and deals with trends in consumer

attitude in India, importance of passenger cars, global view, Auto industry in
Tamil Nadu, statement of the problem, objectives of the study, limitations of
the study and chapter scheme.

Chapter II reviews the past literature and discusses the methodology

adopted for the present study. Further, it describes the profile of the study
area.

Chapter III explains the various theoretical concepts on consumer

behaviour, consumer decision making and consumer satisfaction.

Chapter IV provides the demographic profile of the consumer and

choice of passenger car.

Chapter V analyses the purchase behaviour of the consumer.

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Chapter VI examines the level of satisfaction and factors associated

with level of satisfaction.

Chapter VII presents the summary of findings, suggestions and

conclusion.

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REFERENCE
1.

Roger D. Blackwell, Paul W. Miniard and James F. Engel,

Consumer Behaviour 9th ed., Vikas Publishing House, New Delhi,
2002, pp.7-10.

2.

Roger D. Blackwell, et.al., Ibid., pp.50-51.

3.

Peter D. Bennett and Harold H. Kassarjian, Consumer Behaviour,

Prentice Hall of India Pvt., Ltd., New Delhi, 1987, p.53.

4.

Anoop Babani (1999), "Business India Index", Business India, Issue

No.557, July 12 25.

5.

Courtesy, CII (1999), "Gearing Up, A Special features on the Indian

Automobile Industry", The Financial Express, April 29.

6.

Sindhu Nair, Indian Automotive Industry; A booming buyers

market, Motor India, Sep 2004, pp. 52-54.

7.

Shukla, R.K., and Bennychan, K.J., A Pitch NCAER Analysis,

Pitch, Vol. 11, Issue 11, Aug 15th Sep 15th, 2005, pp.48-58.

8.

Murad Ali Baig, Past Trends and Future Projections, Business

India, 23rd Dec 2002 5th Jan 2003, pp. 106-117.

9.

Eliot Lobo, The Futures 2K, Business India, 10th 23rd June 2002,
pp.33-34.

10. Sumantran, V., Players Plan Expansion, The Hindu Survey of

Indian Industry 2005, pp. 281-285.
11. Rs.1718

crore

NATRIP

to

improve

auto

sectors

global

competitiveness cleared, Report on Auto Industry, Industrial

Herald, August 2000, p.53.

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12. Murad Ali Baig, Op.Cit., pp. 106-117.

13. Aarti Kothari, Maruti does a different jig and ends up changing
itself and the auto market in turn, Business World, Vol.25, Issue 14,
23rd 29th August 2005, pp.40-42.
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No.557, July 12 25.
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Analysis, July 08, pp.7 & 8.