Annexture D

The Indian Institute of Planning & Management, New Delhi
THESIS PROJECT REPORT
THE INDIAN INSTITUTE OF PLANNING & MANAGEMENT

NEW DELHI
PROJECT REPORT ON:-

MEASURING SUCCESS OF NEW PRODUCT LAUNCHES IN
THE INDIAN AUTOMOBILE INDUSTRY
UNDER GUIDANCE OF:- MITESH GOYAL
SUBMITTED BY: -
Name SHASHI KANT MOURYA
Batch & Section FW-12/14, FWUM
Alumni ID FW/12-14/M-96/DELHI/ISBE
Specialization MARKETING
IIPM Centre DELHI
PGP/FW/2012-14 i ID NO.: FW/12-14/M-96/DELHI/ISBE

ABSTRACT
The automobile industry is one of India’s most vibrant and growing industries. This
industry accounts for 22 per cent of the country's manufacturing gross domestic product
(GDP). The auto sector is one of the biggest job creators, both directly and indirectly. It is
estimated that every job created in an auto company leads to three to five indirect ancillary
jobs.
India's domestic market and its growth potential have been a big attraction for many global
automakers. India is presently the world's third largest exporter of two-wheelers after
China and Japan. According to a report by Standard Chartered Bank, India is likely to
overtake Thailand in global auto-export market share by the year 2020.
The next few years are projected to show solid but cautious growth due to improved
affordability, rising incomes and untapped markets. With the government’s backing, and
trends in the international scenario such as the decline in prices of natural rubber, the
Indian automobile industry is slated to witness some major growth.
This project deals with a critical analysis of Indian automobile industry and its growth it
has shown in past years. Even though industry has been showing good growth in numbers
it is more important to see whether it is really moving up the ladder. The growth it shows
should be in terms of success of new product launches. So this project is to analyze the
success rate of new product launches and to see whether the growth shown in Indian
automobile industry is really due to new product launches and their success. Due to
exhaustive nature of the industry, the study would be confined to cars only. Now the
project deals with measuring success of new product launch for cars launched in the past
four years. Further, short listing of some car models have been done to make the study
more specific and effective.
PGP/FW/2012-14 ii ID NO.: FW/12-14/M-96/DELHI/ISBE

SIGNATORY PAGE
This is to certify that the project titled "Measuring Success of New Product Launches in
the Indian Automobile Industry" is an original work by Shashi Kant Mourya student
of IIPM. He has prepared and completed the said thesis successfully under my guidance.
The thesis has been completed to my satisfaction and I wish him all the best in his future
endeavor.
(MITESH GOYAL)
PGP/FW/2012-14 iii ID NO.: FW/12-14/M-96/DELHI/ISBE

PROJECT THESIS TOPIC APPROVAL

From:"Thesis mkt" <thesis.mkt@iipm.edu>
Date:Thu, Nov 27, 2014 at 12:39
Subject:Fw: Annexture B
Dear Student,
The topic of your thesis will be “Measuring Success of New Product Launches in the
Indian Automobile Industry”
Pls start working on the same & ensure that you collect relevant & updated information on
the same.
Student Name Shashi Kant Mourya

Thesis ID Generated: FW/12-14/M/96/Delhi/ISBE
IIPM Center Delhi
Specialization Area M
Topic Measuring Success of New Product
Launches in the Indian Automobile
Industry
Name of the Guide Mitesh Goyal
Phone No. 9250323140
Email camiteshgoyal@gmail.com
For all correspondence with me and your external guide, you should always mark a cc
mail to thesis@iipm.edu, mentioning your ‘thesis id’ in the subject of the mailer.
Best Regards,
Neena Rawat
Department of Academics(Thesis), IIPM Delhi
************************************************************************
The Indian Institute of Planning and Management
IIPM, Satbari-Chandan Haula, Bhatti Mines Road, New Delhi- 110074
PGP/FW/2012-14 iv ID NO.: FW/12-14/M-96/DELHI/ISBE

SYNOPSIS- ANNEXURE B
PGP/FW/2012-14 v ID NO.: FW/12-14/M-96/DELHI/ISBE

ACKNOWLEDGEMENT
This project is a great opportunity to express my heartily thanks to those people who
timely supported me a long way in the completion of thesis report.
First and foremost, I would like to express my sincere thanks to Mr. MITESH GOYAL the
manager of GOYAL MOTORS for his kind guidance and valuable suggestion for my
thesis.
I acknowledge gratefully, the assistance and co-operation of the management and
employee of GOYAL MOTORS NEW DELHI.
At the same juncture I would like to thank our college for their kind co-operation and
valuable suggestions till the complete this thesis.
I also express my sincere thanks and dedicate my work to my parents, family members
and friends who have been always a moral support and strong pillars at walks of my life
and at every stage with cheer enthusiasm.
PGP/FW/2012-14 vi ID NO.: FW/12-14/M-96/DELHI/ISBE

TABLE OF CONTENT
ABSTRACT
CHAPTER-1 INTRODUCTION 1
CHAPTER-2 RESEARCH OBJECTIVE & METHODOLOGY 11
CHAPTER-3 INTRODUCTION TO AUTOMOBILE INDUSTRY 13
CHAPTER-4 FINDINGS AND ANALYSIS 17
CHAPTER-5 SURVEY FINDING AND ANALYSIS 71
CHAPTER-6 CONCLUSION & RECOMMENDATIONS 91
BIBLIOGRAPHY 93
ANNEXURE 95
PGP/FW/2012-14 vii ID NO.: FW/12-14/M-96/DELHI/ISBE

CHAPTER-1
INTRODUCTION
On the canvas of the Indian economy, automotive industry occupies a prominent place.
Due to its deep forward and backward linkages with several key segments of the economy,
automotive industry has a strong multiplier effect and is capable of being the driver of
economic growth. A sound transportation system plays a pivotal role in the country's rapid
economic and industrial development. The well-developed Indian automotive industry
ably fulfils this catalytic role by producing a wide variety of vehicles: passenger cars,
light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps,
scooters, motorcycles, mopeds, three wheelers, tractors etc.
Automotive Industry comprises of automobile and auto component sectors and is one of
the key drivers of the national economy as it provides large-scale employment, having a
strong multiplier effect.1 Being one of the largest industries in India, this industry has been
witnessing impressive growth during the last two decades. It has been able to restructure
itself, absorb newer technology, align itself to the global developments and realize its
potential. This has significantly increased automotive industry's contribution to overall
industrial growth in the country.
The markets are changing day by the day and customers are becoming more and more
demanding. All businesses revolve around the customer, who has the first and foremost
priority in today’s time. He is the king. To succeed in today's competitive market,
companies must separate themselves from the crowd and rise above their competition. In
today's markets, only a few focused companies have been able to achieve and sustain
unique product, quality and service positions. Achieving and sustaining competitive
differentiation is the foremost challenge for the organizations around the world, and their
key to future survival and prosperity.
According to Kotler and Armstrong, companies must be customer focused. To be
successful with buyers, companies must bring more to the customer relationship than just
their standard product or service. They must create value with each and every customer
interaction. In order to do this, they must understand the consumer decision making of
1
http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-sectors/automobile.htm ,
retrieved on 28th September, 2010
PGP/FW/2012-14 1 ID NO.: FW/12-14/M-96/DELHI/ISBE

their customers. Companies must understand the method of buying for purchasing
different types of commodities/goods for different purpose/use can be quite different. In
other words, for instance, if one wants to buy a salt for own use, he/she would do short
shopping search like looking for special brand at a local grocery store and as soon as
he/she find interested brand you will make decision. In contrast for buying house/flat, car
for the family he/she would have different decision making process to procure mentioned
items. Consumer decision making, is the process in which individuals and groups are
affected when they evaluate, acquire, use or dispose of goods, services or ideas.
Consumer decision making is often complicated and not easy to comprehend, because
many factors influence the process. These factors vary from internal factors and external
factors. One cannot look at factors in isolation, one should attempt to have a holistic
approach as the literature suggest because many variables impact on single aspect of
decision-making.
It is true fact that if you are satisfied you recommended to others. Word of mouth and
customer satisfaction play a very important role in determining market perception about an
automobile. It is the market perception that determines the success of a company and so it
is very important for the car manufacturers to measure the “willingness of existing users of
a product to recommend it to others”. The same is a lot of interest to customers as well for
it helps them make the purchase decision.
OVER VIEW OF AUTOMOBILE INDUSTRY IN INDIA
From the singsong rhythm of the bullock cart to the jet-age, India has traveled a long way.
An average Indian’s 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 India’s 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.
The protectionist policies continued to remain in place. The 60s witnessed the
establishment of the two-three wheeler industry in India and in the 70s, things remained
much the same.
Since the 80s, the Indian car Industry has seen a major resurgence with the opening up of
Indian shores to foreign manufacturers and collaborators.
The 90s have become the melting point for the car industry in India. The consumer is king.
He is being constantly wooed by both the Indian and foreign manufacturers. Though sales
had taken a dip in the first few months of 1999, it is back to boom time. New models like
Maruti’s Classic, Alto, Station Wagon, Ford’s Ikon, the new look Mitsubishi Lancer are
all being launched with an eye on the emerging market.
In these last years of the millennium, suffice it is to say that Indian cars will only grow
from strength to strength.
Although India has been much discussed in recent years, and has been the recipient of
major foreign investment in its automotive industry, it has in many ways not received the
attention of the world’s other major developing country, China – but this is about to
change.
With the world’s second largest and fastest-growing population, there is no denying
India’s potential in both economic and population terms and the effect it will have on the
auto industry in the years to come. The country is already off to a good start, with a well-
developed components industry and a production level of one million four-wheeled
vehicles a year, plus a further five million two- and three-wheelers. India also has
substantial strength in mass production techniques and is particularly well served in the
fields of research and development and software design. Therefore, as always, the question
is when will expansion occur and to what level?
The implications, market drivers and scope of a future massive Indian vehicle market are
covered in the India Strategic Market Profile, a brand-new forecast of Indian automotive
and related activity to 2020. Based on Max Pemberton's unique relational long-term

forecasting model, it forecasts car and CV sales, demographics, materials usage, auto
industry employment, and explains their inter-relation with detailed analysis.
India is an emerging country with huge potential. The domestic economy is now growing
at around 7% per annum and India's growing importance in global terms is being
reinforced by rapidly rising exports. India's low cost but highly skilled manufacturing base
means that the country is also taking center stage as a favored location for global
outsourcing.
The automotive industry is at the center of India’s new global dynamic. The domestic
market is expanding rapidly as incomes rise and consumer credit becomes more widely
available. Manufacturers product lines are being continually expanded, as is the local
automotive manufacturing base. Expectations are high that India can develop as a global
hub for small car manufacture and as an outsourcing centre that offers the global
automotive industry solutions high up the automotive value chain. This management
briefing reviews the current status of and future prospects for India's automotive industry.
The Indian automotive industry has flourished like never before in the recent years. This
extra-ordinary growth that the Indian automotive industry has witnessed, is a result of a
two major factors namely, the improvement in the living standards of the middle class, and
an increase in their disposable incomes.
Moreover, the liberalization steps, such as, relaxation of the foreign exchange and equity
regulations, reduction of tariffs on imports, and refining the banking policies, initiated by
the Government of India, have played an equally important role in bringing the Indian
Automotive industry to great heights. It is estimated that the sale of passenger cars have
tripled compared to their sale in the last five years. Thus, the sale of cars has reached a
figure of 1 million users and is expected to increase further. It's also to be noted that the
demand for luxurious models, SUVs, and mini-cars for family owners, have shot up,
largely due to increase in the consumer's buying capacity.
The increased demand for Indian automobiles has resulted in a large number of multi-
national auto companies, especially from Japan, U. S. A., and Europe, entering the Indian
market and working in collaboration with the Indian firms. Also, the institutionalization of
automobile finance has further paved the way to sustain a long-term high growth for the
industry.

The basic objective of this market research report ""Indian Automobile Industry—Recent
Trends"" is to estimate the demand for automobiles from 2005 till 2012. The increasing
role of auto finance is also scrutinized by proving a series of surveys conducted across the
country covering all categories of private and commercial vehicles' finance. The report
also examines the region-wise demand and growth trends for the selected vehicles, and
how they influenced India's GDP growth.
It could be, arguably, a tipping point for the Indian auto industry. In February, France's
Renault and its Japanese affiliate, Nissan, announced plans to team up with Indian tractor
giant Mahindra & Mahindra to build the country's largest passenger car manufacturing
plant. The Rs. 4,000 crore ($902 million) facility in Chennai has started to turn out
400,000 cars a year from mid-2009 on. Industry rumors suggest that eventually the
number could double to 800,000. Were that to happen, it would almost match and thus
double the number of cars -- 1.1 million -- that the entire Indian auto industry now
produces each year.
Over the next three to four years, some Rs. 35,000 crore ($8 billion) may be invested in
building manufacturing capacity in India for another two million cars each year, with half
a million earmarked for exports. As a result, by 2010, India's capacity could triple to 3.1
million cars a year, making it the same size as China's market today. (By way of
comparison, in the U.S., auto makers sold 7.6 million cars in 2005, according to data
updated in January by the U.S. Bureau of Transportation Services.)
Thanks to low manufacturing costs combined with a robust and growing vendor base for
components, some observers believe India could emerge as a global hub, at least for small
cars. In fact, nine of the world's top 10 automobile companies have a presence in India.
Yet constraints are clearly present, such as poor road infrastructure and high taxes on
petrol. Also, growth is occurring against the backdrop of competitive pressures on auto
giants such as Ford and General Motors.
The biggest factor that is driving auto sales is India's rapidly growing domestic market,
encouraged by 9%-plus GDP growth and rising incomes across its much-touted 250-
million-strong middle class. Autopolis, a British consulting firm, predicts that the top six
global auto companies will lose market share to companies like FAW and SAIC in China
and India's Tata Motors, to name a few. A survey by the Economist expects 60% of the

incremental demand of 2.8 million vehicles to come from Asia by 2020, with China and
India topping the charts.
The high growth in the Indian economy has resulted in many foreign car manufacturers
entering the Indian market. Rolls Royce, Bentley and Maybach are examples of the few
high end automobile manufacturers to enter India in the recent years.
There were only a few handful of cars in the Indian market in the 1980s. Most of these
were outdated models like Hindustan Motors' Hindustan Ambassador (which is still
produced and sold). The only car with the latest technology then was the Maruti 800. It
became very popular because of the low price, high fuel efficiency and good reliability.
Since then the market has grown with over 20 manufacturers and hundreds of models and
variants. The Maruti 800 is at the lower end of the price range costing 200,000 Indian
rupees (approx US $4,000) and Bugatti Veyron at the other with a price tag of
125,000,000 rupees ($2.7 million) (import taxes and duties extra).
The Indian automotive industry has also greatly matured. The Tata Indica was
indigenously developed by Tata Motors. Another Indian manufacturer Mahindra &
Mahindra also came up with its own SUVs, the Scorpio and the Bolero. These cars have
proved very popular here and are also exported to the European markets. An electric car is
also manufactured by one of the local companies called REVA.
The passenger vehicle sales in India crossed the one million mark in 2005. This segment
grows at 10-15% annually. Around 85% of the cars sold in India are financed as against
the global average of 70%. In neighbouring China, only 15-20% vehicles are financed.
There are only three cars in India for 1000 people as compared to the other extreme 500
cars for 1000 people in the United States. Goldman Sachs has predicted that India will
have the maximum number of cars on the planet by 2050 overtaking the United States.
About two-thirds of the planned investments in the Indian passenger car industry -- about
Rs. 24,000 crore ($5.4 billion) -- will come from Tata Motors, Maruti and Hyundai and
other companies. The Tatas are expected to invest Rs 10,000 crore ($2.2 billion), and this
includes outlays for a new, low-cost car, a joint venture with Fiat and capacity for
commercial vehicles. Maruti plans to invest Rs. 4,000 crore ($900 million) in its plant in
Manesar near New Delhi, after which its capacity will increase from 600,000 cars to
900,000 cars. Hyundai is doubling its Indian capacity to 600,000 cars at a cost of Rs. 5,000

crore ($1.12 billion). Honda Motors will spend Rs. 1,800 crore ($400 million) to triple
capacity to 150,000 units by 2010. General Motors is investing about Rs. 1,300 crore
($280 million) in its second Indian plant in Pune, near Mumbai, where its capacity could
more than double to 140,000 cars in a year. Industry watchers expect it to produce its
economy car, Chevrolet Spark, at the facility.
India's passenger vehicle business has evolved from rather modest beginnings in the mid-
1950s, and was a near duopoly for more than three decades with two domestic
manufacturers -- Hindustan Motors and Premier Automobiles. The entry in the mid-1980s
of Maruti Udyog, a government-supported joint venture with Japan's Suzuki, triggered
consumers' imagination. It dominated the market for more than a decade. Real competition
emerged in the late 1990s when Hyundai of Korea introduced its Santro model, a
hatchback. Next came Indica, a diesel-driven small car from Tata Motors, India's largest
maker of commercial vehicles.
Meanwhile, multinationals such as Ford, GM and Peugeot had introduced some

international models through their Indian joint ventures. These could not meet the Indian
consumer's need for a low purchase cost, higher fuel efficiency, a comfortable ride in city
conditions and low maintenance costs. So the small car continued to rule the road. After a
while, Peugeot and Daewoo folded their Indian operations, while Fiat, Ford and GM
struggled to build a meaningful presence for almost a decade. After 2000, sales of Honda
and Toyota cars have climbed rapidly, but neither has a small car among its offerings. So,
even today, the top three players in the domestic market rule 85% of the Indian passenger
car market.
The Automotive Industry in India is one of the largest industries and a key sector of the
economy.
The Indian automotive industry started from 1991with the government’s de-licensing of
the sector and subsequent opening up for 100 per cent FDI through automatic route. Since
then many large global companies have set up their facilities in India taking the production
of vehicle from 2 million in 1991 to 9.7 million in 2006.
The reason behind the immense growth of the India Car Industry can be attributed to the
availability of car loans, affordable rates of interest, smooth repayment facilities and the
deductions offered to the customers by the retailers.

The constant changes in the existing car models with regard to design, innovation,
technology, and colors, have led to a fiercely competitive market. Now that technology
and innovation are not alien concepts for Indian car makers, Indian cars are becoming
increasingly sleek, stylish, and luxurious.
Fierce competition among the major car players can be witnessed in the Indian Car
industry. The India car industry is being dominated by the following major players:
Important Players in Indian Automobile Industry
o HINDUSTAN MOTORS
o MARUTI SUZUKI
o REVA ELECTRIC CAR CO
o DAIMLER CHRYSLER INDIA PRIVATE LTD
o FIAT INDIA PRIVATE LTD
o FORD INDIA LTD
o GENERAL MOTORS INDIA
o HONDA SIEL CARS INDIA LTD
o HYUNDAI MOTORS INDIA LTD
o TOYOTA KIRLOSKAR MOTOR LTD
o SKODA AUTO INDIA PRIVATE LTD
o AUDI AG
o BMW
o FORCE MOTORS
o NISSAN MOTOR CO. LTD
o TATA MOTORS
At present, India is the world's
 Largest tractor and three-wheel vehicle producer.
 Second largest two-wheel vehicle producer.
 Fourth largest commercial vehicle producer.
 Eleventh largest passenger car producer.

GROWTH DRIVERS OF INDIAN AUTOMOBILE MARKET
 Rising industrial and agricultural output
 Rising per capita income
 Favourable demographic distribution with rising working population and middle

class Urbanisation
 Increasing disposable incomes in rural agri-sector
 Availability of a variety of vehicle models meeting diverse needs and preferences
 Greater affordability of vehicles
 Easy finance schemes
 Favourable government policies
 Robust production
INDIA'S POSITION IN WORLD'S PRODUCTION
 Well-developed, globally competitive auto ancillary industry
 Established automobile testing and R&D centres
 Among one of the lowest cost producers of steel in the world
 World's second largest manufacturer of two wheeler
 Fifth largest manufacturer of commercial vehicles
 Largest manufacturers of tractors in the world
 Fourth largest passenger car market in Asia
 India is the second largest two-wheeler market in the world
 11th largest passenger car market in the world
 Expected to be the seventh largest auto industry by 2016
Following economic liberalization in India in 1991, the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and relaxed
restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti
Suzuki and Mahindra and Mahindra, expanded their domestic and international operations.

India's robust economic growth led to the further expansion of its domestic automobile
market which attracted significant India-specific investment by multinational automobile
manufacturers.2 In February 2009, monthly sales of passenger cars in India exceeded
100,000 units.3
2
Draft Automotive Mission Plan 2006-2016, Ministry of Heavy Industries & Public
Enterprises, Government of India, New Delhi, retrieved on 22nd September, 2010 from-
http://www.dhi.nic.in/draft_automotive_mission_plan.pdf
3 th
“Car sales rise 22% in Feb”, The Economic Times, (10th March, 2009), retrieved on 24
September, 2010 from- http://economictimes.indiatimes.com/News/News-By-Industry/Car-sales-
rise-22-in-Feb/articleshow/4247812.cms

CHAPTER-2
RESEARCH OBJECTIVE & METHODOLOGY

RESEARCH OBJECTIVE:
 To analyse the growth of Indian Automobile Industry.
 To measure the impact of new product launches in Automobile Industry”
RESEARCH METHODOLOGY:
Primary data:
For collecting primary data, senior officials of various companies were approached. We
personally visited them in their offices and explained them the purpose of interview and
took information from them regarding the issues that were not available in the printed
literature supplied by them.
1. Research approach: It means that what is the way by which we collected the
information. It is the process of observation and interviews from the consumers and
dealers. The approach undertaken by us was direct personal interviewing to the
customers.
2. Contact methods: Instruments or Data collection Forms : It is the method by which

data is gathered. It could be done through various instruments. But we have taken up
the questionnaire method. The purpose of questionnaire is that, we can know the
market share of the products and services offered by the companies, various other
attributes were also studied. It helps the respondent to clearly identify the attributes
and respond accurately and to the point.
3. Collection of information: The information was collected by interviewing executive

offers of the companies. They provided us with the relevant information regarding the
product and services offered to their customers. Some of them preferred to send
information either through fax or e-mails as it was not possible for them to spare time
from their busy schedules. This was the way by which information was collected.
4. Analysing the information: The data collected was carefully analyzed. We have done
the analysis of the information on the basis of making a comparative analysis of the
basis of the attributes ranked by the customers.

5. Reporting and conclusion: This is the most vital part of the work undertaken by us.
After collection and analysis of data, it was recorded in form as prescribed by the
institute. The major part of the report is the findings. The findings also include tabular
information, Graphs, etc. The report also mentions the limitations of the project
undertaken. Then conclusions have been drawn out of the findings and various
recommendations have been given in the end of the report.
Secondary data:
Secondary research was used to complete this thesis. The secondary research was carried
out through the use of books, internet websites, journals from SIAM, Annual reports of
companies and desk research to gather the information & apply the theories.
The sources from which secondary data was collected:
- Annual reports of the company.
- Newsletters (Interface) and In-house journals (Gatirang) of the Maruti Udyog

Limited.
- Brochures and detailed descriptive leaflets available with car dealers
- Newspapers (The Economic Times, Business Standard, Financial Express,

Hindustan Times, Times of India, etc)
- Magazines like Auto India, Over Drive, A & M, and Indian Auto.
- Published journals collected from CII regarding the industry.
- Website of the company - www.marutiudyog.com
These were the sources from which secondary data has been gathered. 60% of the
information presented in the project report was extracted from the above data sources.

CHAPTER-3
INTRODUCTION TO AUTOMOBILE INDUSTRY

HISTORICAL PERSPECTIVE
The first car ran on India's roads in 1897. Till the 1930s, cars were imported directly.
Embryonic automotive industry emerged in India in the 1940s. Following
the independence, in 1947, the Government of India and the private sector launched efforts
to create an automotive component manufacturing industry to supply to the automobile
industry. However, the growth was relatively slow in the 1950s and 1960s due
to nationalisation and the license raj which hampered the Indian private sector. After 1970,
the automotive industry started to grow, but the growth was mainly driven by tractors,
commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers
entered the Indian market ultimately leading to the establishment of Maruti Udyog. A
number of foreign firms initiated joint ventures with Indian companies.4
In the 1980s, a number of Japanese manufacturers launched joint-ventures for

building motorcycles and light commercial-vehicles. It was at this time that the Indian
government chose Suzuki for its joint-venture to manufacture small cars. Following the
economic liberalisation in 1991 and the gradual weakening of the license raj, a number of
Indian and multi-national car companies launched operations. Since then, automotive
component and automobile manufacturing growth has accelerated to meet domestic and
export demands.5
The Industries (Development and Regulation) Act was passed in 1951 to implement the
Industrial Policy Resolution of 1948. Under this Act no new industrial unit could be
established or substantial extension to existing plants be made without a licence from the
Central Government, and while granting licence for new undertakings, government could
lay down conditions regarding location, minimum size, etc., if necessary. This Act also
empowered the government to prescribe prices, methods and the volume of production and
channels of distribution.6 In the initial years after independence Indian automobile
4
"Timeline: India's automotive industry", BBC News, (3rd April 2007), retrieved on 25th
September, 2010 from- http://news.bbc.co.uk/2/hi/business/6478685.stm
5
Ruddar Datt and KPM Sundharam, Indian Economy, (S. Chand and Company Ltd., New Delhi,
th
58 Edition, 2008) p. 642
6
Id. 180

industry was plagued by unfavourable government policies. All it had to offer in the
passenger car segment was a 1940s Morris model called the Ambassador and a 1960s
Suzuki-derived model called the Maruti 800.7
The Congress Government led by Mr. Narasimha Rao announced the new industrial policy
in July 1991. The main aim of the new industrial policy was:-
1. To unshackle the Indian industrial economy from the cobwebs of unnecessary

bureaucratic control.
2. To introduce liberalisation with a view to integrate the Indian economy with the
world economy.8
Under the new industrial policy, industrial licensing was to be abolished except for a few
industries which included motor cars. The government decided in April 1993 decided to
remove motor cars from list of industries reserved for compulsory licensing.9 The basic
purpose behind such a step was to increase the flow of investment in these industries. The
demand for motor cars by the middle class is also growing, more especially when the
government is providing loans to business executives and other senior officials to buy
cars. To provide a boost to the motor car industry, the government decided to de-reserve
this item so that their production improves as a response to the market, instead of
remaining shackled by the bureaucratic process of licensing.
This paper analyses the behaviour of Indian automobile firms operating under regulated
and liberal economic policy regimes. Results from the analysis presented in this paper
reveal that the conduct and performance of firms in this sector differ significantly between
the regulated [1985-86 to 1990-91] and liberal [1991-92 to present] economic policy
regimes with respect to foreign equity participation, in-house R & D efforts, technology
imports, capital intensity, advertisement, exports, growth and profits.
PERFORMANCE OF AUTOMOBILE SECTOR POST

LIBERALISATION REGIME
Developing an appropriate public policy towards the industrial sector has been an
important task for Indian policy makers for a long time. When India moved away from an
7
http://www.iloveindia.com/economy-of-india/automobile-industry.html , retrieved on 27th
September, 2010
8
Supra note 5, at 182
9
Supra note 5, at 184

inward looking industrialisation strategy to a more ‘open’ economy in 1991, industrial

firms needed to restructure themselves to retain competitiveness. Much of these
restructuring is needed to correct the inefficiencies created by operating in a protected
market. The automobile sector has been a major candidate in the industrialisation process
since the beginning of planned development. The policy changes were in two doses and
took the form of partial de-regulations introduced in 1985 and Liberalisation measures
launched since 1991. The pre 1985 regime could be described as an era of strict controls
and regulations. The initial changes, introduced in 1985, eased the licensing requirements,
broad-based the classification of vehicles for issue of licenses, allowed selective expansion
of capacity and partially relaxed controls with regard to foreign collaborations, imports of
capital goods, raw materials and spares. Though these measures represented a "domestic
Liberalisation", the policy environment continued being geared towards imposing trade
and investment regulations, constraining the growth of big business houses and regulating
exchange rates. It was only after 1991 that notable broad-based changes in policy that had
far reaching implications actually came into being. These changes dispensed with the bulk
of controls and regulations and for the first time since independence assigned a central role
to market forces.
POLICY REGIMES, FIRM’S CONDUCT AND PERFORMANCE
The automobile industry in India grew under a highly regulated and protected economic
environment over the period 1950 to 1985. Automobile manufacturing firms were
subjected to strict product specific and capacity licensing and as a result very few firms
dominated all the products. These restrictions provided no motivation or incentive for the
firms to bring about technological up-gradation. The policy environment during the period
1985-86 to 1990-91 permitted a limited increase in technology inflow through various
modes. Inflow of technology from abroad brought about a shift in the technology frontier
as well as a change in the technological trajectories in which the firms had been operating.
However, partial relaxation of this kind failed to bring about a drastic change in the non-
competitive environment in which the firms had been operating for a long time
liberalisation of economic policies and the outward orientation introduced since 1991, on
the other hand, brought about a dramatic change in this industry. These policy measures
considerably transformed the environment in which the firms had been operating. As a
consequence, the industry witnessed the entry of new firms and adoption of strategies by

the already existing firms to introduce technological change and improve their
performance. The new players brought in modern engineering, efficient processes and
effective shop-floor layouts. The new manufacturing strategies include breaking up of the
plant into modules and cells; reduce the complexity of purchasing logistics, reduction of
inventories and product complexity, and creation of simpler processes by encouraging
flexibility and teamwork. These firms also make extensive use of CAD/CAM in their
plants.
On the whole, Indian Automotive sector grew at a much faster rate in the post 1991 era
[14.31 % per annum] when compared to [8.56 % per annum] the period of 1985-91.The
growth rate of all the sectors within the 4 wheelers and Commercial vehicles has been in
double digit with the LCV sector registering the maximum [of 19.93 % per annum] in
terms of the growth rate as well as increase over the earlier period. Medium and Heavy
commercial vehicles sector also registered a growth rate of about 11% per annum, which
is a 100% increase over the previous period, 1985-86 to 1990-91. In the 4-wheeled drives
sector Jeeps [other utility vehicles] experienced the maximum increase in growth [from
about 5.57 % per annum to 14.4 % per annum] between the two periods. The Car sector
also had an increase of about 2.5 percent in its growth rate over the two periods. This was
the only sector which had a double- digit growth rate during the first period [which can be
attributed to Maruti] and has improved its performance during the 1990s.
KEY RESEARCH HIGHLIGHTS
 Passenger car production in India is projected to cross three million units in 2014-
15.
 Sales of passenger cars during 2008-09 to 2015-16 are expected to grow at a

growth rate of around 10%.
 Export of passenger cars is anticipated to rise more than the domestic sales during
2008-09 to 2015-16.
 Turnover of the Indian auto component industry is forecasted to surpass US$ 50

Billion in 2014-15.10
10
http://www.siamindia.com/ , retrieved on 28th September, 2010

CHAPTER-4
FINDINGS AND ANALYSIS

India is emerging as one of the world’s fastest growing passenger car markets and second
largest two wheeler manufacturer. According to the International Yearbook of Industrial
Statistics 2008 released by United Nations Industrial Development Organisation
(UNIDO), India ranks 12th in the list of the world’s top 15 automakers. It is home to the
largest two wheeler manufacturer and fifth largest commercial vehicle manufacturer in the
world. The industry is producing about 19 lakh passenger vehicles, 4.5 lakh commercial
vehicles, 90 lakh two wheelers and 5 lakh three wheelers per annum.
In order to make India a power to reckon with in the automotive sector the government
launched the Automotive Mission Plan (AMP) 2006-2016. As per the AMP, it is estimated
that the total turnover of the automotive industry in India would be in the order of USD
122 billion - USD 159 billion in 2016. It is expected that in real terms, India would
continue to enjoy its eminent position of being the largest tractor and three-wheeler
manufacturers in the world and the world's second largest two-wheeler manufacturer. By
2016, India will emerge as the world's seventh largest car producer (as compared to the
eleventh largest currently) and retain the fourth largest position in world truck
manufacturing sector. Further, by 2016, the automotive sector would double its
contribution to the country's GDP from current levels of five per cent to 10 per cent.

The Indian automotive industry consists of the following five segments:
FIGURE: INDIAN AUTOMOBILE INDUSTRY
GROWTH POTENTIAL OF INDIAN AUTOMOBILE INDUSTRY
Automotive Industry offers huge growth potential in terms of sales volume (including
exports) and also immense employment opportunities. The likely future volumes of
different vehicle categories were estimated on the basis of projections made by iMaCS,
NCAER and AT Kearney. Value of projected domestic output was computed based on
historical average vehicle prices. Export potential was estimated on the basis of current
trends and possible opportunities in major export destinations.
Demand for after-market auto components and export output was also included in
computing growth potential of the industry. The unit value of different vehicle categories
in 2016 have been estimated keeping in view the need for compliance with emissions and
crash standards. The projected size in 2016 of the Indian automotive industry varies
between USD 122 billion and USD 159 billion including USD 35 billion exports.11 This
translates into a contribution of 10-11% to India’s GDP by 2016, that is, double the current
contribution. This would mean a domestic vehicle market of USD 82 billion to USD 119
billion by 2016, USD 12 billion exports of vehicles and tractors, USD 20-25 billion
component exports and more than USD 5 billion after market of components. Another
USD 2 – 2.5 billion in engineering services outsourcing opportunity is expected to
develop. The total size of the auto component industry in India is expected to become
11
http://www.acmainfo.com/ , retrieved on 27th September, 2010

USD 40-45 billion by 2016. This calls for a major focus and policy initiative to market
India as an attractive “Manufacturing Destination”
AREAS TO FOCUS
The future challenge for Indian automobile industry would be to develop a supply base
with emphasis on lower costs and economies of scale, develop technical and human
capabilities, overcome infrastructural bottlenecks, stimulate domestic demand and exploit
export and international business opportunities. The key to success is to achieve the
critical mass that would make India competitive and profitable for sustained investments.
Keeping these in view the identified challenges and interventions are in the areas of
competitiveness in manufacturing and technology; demand, brand building and
infrastructure; export and international business; environmental and safety standards, and
human resources development. A key deficiency that needs to be addressed for attaining
the vision is to improve competitiveness in manufacturing. Systemic deficiencies could be
overcome through a long-term and stable policy regime that will support the industry to
fulfill its’ potential.
Demand creation, brand building and infrastructure
In order to raise the contribution of automotive industry to GDP from 4.4% to 10%, there
has to be a focus both on the domestic market as well as exports. Domestically the focus
should be on developing and selling appropriate products for the large population of the
country. These products could include cost effective small carriers, strong, rugged, low
cost vehicle for the rural market, USD 300-350 motorbikes and small, safe four wheelers
for family transport. For exports, the focus should be on new geographies for growth
beyond traditional markets.
India’s GDP is expected to grow from USD 650 billion to USD 950 billion in 2010 and
USD 1390 billion in 2016. Automotive industry’s contribution in these years is expected
to rise from USD 34 billion to USD 69 billion and to USD 145 billion respectively. These
translate into a contribution to GDP to grow from the current 5.2% to 7.2% and 10.4% in
2010 and 2015. Secondly, the challenge lies in developing appropriate infrastructure to
sustain this growth. Also, important would be to establish brand image not only in the
domestic market but internationally also. An appropriate policy for attracting investment
would ensure realization of the potential. Government is aiming for creating suitable

stable, predictable, and sustainable policy environment and partnering with industry to
look beyond borders.
The Ministry of Heavy Industries, Government of India, announced its Auto Policy in
2002 (Government of India Auto Policy, 2002), which targets to establish a globally
competitive automotive industry in India, and ‘to double its contribution to economy by
2010’. This policy helped to reduce duties in the auto component sector to a large extent,
and automobile sector to some extent, along with supporting R&D initiatives. The
implementation of VAT in a few states in 2005-06 was also a major motivator for
industry. Finally, the Euro III emission norms introduced in 11 metro cities and Euro II
norms in rest of the cities in 2005-06, was a major initiative to make the industry globally
competitive.12
The automobile industry designs, develops, manufactures, markets, and sells the world's
motor vehicles. The automotive industry is one of the most important economic sectors by
revenue. In 2009, the automobile industry is expected to see a growth rate of around 9%,
with the disclaimer that the auto industry in India has been hit badly by the ongoing global
financial crisis.
The automobile industry in India happens to be the ninth largest in the world. Following
Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of
automobiles. Several Indian automobile manufacturers have spread their operations
globally as well, asking for more investments in the Indian automobile sector by the
MNCs.
12
Gitanjali Sen, Trade and FDI Related Reforms in the States, 1991-2007: the Case of
Maharashtra, (Academic Foundation, New Delhi, 2010) p. 80

INDUSTRY TREND ANALYSIS

India is poised to become a major Auto hub in the near future. Indian car industry is
changing rapidly, so is the mindset of Indian Consumers. The Indian buyer is no longer
satisfied owning a car just as a means of transport but looks forward to it being an
extension of his own lifestyle in the society. In every land the car is today the most visible
public statement about its owner’s economic and social position, status and lifestyle
aspirations. For them, the car ceases to be just a means of transport and becomes an
expression of their personalities and aspirations. The power, styling, colors and features of
cars increasingly shape the way people want to project themselves.
The Indian automotive sector is currently experiencing a major boom and there are many
international automakers which have identified the Indian market as a critical one. The
Indian consumer is also getting exposed to international cars and this has heightened their
expectations. This paper is an attempt to understand the factors that play a role in the
decision that a car buyer makes amidst the choices that he has. It looks into needs that
today’s car has to fulfill, be it in terms of styling, comfort features, usability, performance,
value for money or social status.
The passenger car market today is heavily weighted toward mid-to smaller-size vehicles
and this is unlikely to change fundamentally. Affordability and the shift toward consumer
versus institutional sales will continue to drive the development of smaller cars.
Compact, fuel efficient cars are becoming more and more relevant to new car shoppers
than ever before. First we have the burden of future economic uncertainty, constantly
wavering gas prices and the ever appealing lure of just downsizing your life. Recently, car
companies are coming up with their varied models of small cars. Indian market is a hot
spot for small cars. Giving a small car for an affordable budget is a tough job for any car
company. Thus, car companies usually go for cheap products to bring their cost down &
focus less on customer's safety.
Small cars, which range from Maruti 800 to Hyundai i20, constitute over 78 per cent of
the total car sales (1.5 million) in the country. India is one of the four key markets for
global car makers’ small car manufacturing and exporting hub. The others are Brazil,
Japan and Thailand.
There is a sharp contrast in the buying behavior of Indian Consumer compared to their

Western counter parts, yet there is no doubt that Indian car market is going to increasingly
resemble the latter. The fortunes of the automobile industry will continue to hinge on the
large, price sensitive customers, who will graduate to the higher end of the market over a
period of time. Until then, the small car will continue to drive demand and most of the car-
manufacturers are gearing up for this eventuality.
Upcoming & newly launched cars
The Indian auto market is expected to be flooded with a swarm of small cars manufactured
by both Indian and foreign car manufactures according to a survey conducted by auto
experts. Here is a list of the Upcoming Small Cars that are looking to enter the Indian auto
market.
Fiat Bravo
The Bravo is a hatchback from Italian car maker, Fiat. The small family car Bravo will be
imported by Fiat India as CUB (Completely built-up Units) from Italy. The Bravo will be
available in both Petrol and Diesel variants. The Petrol version will have a 1368cc, 4
cylinder with maximum power of 148 bhp and the diesel version will come with a 1910cc,
4 cylinder which can deliver 150bhp. The most important trait about the Bravo is noise is
well suppressed, whether it is wind noise, or engine noise. Fiat Bravo has a sleek
appealing exterior with a small rear screen and sharply rising waistline. Price Tag : Rs
17.5 Lakh

Hyundai i30
Sleek and sporty, the new i30 hatch from Hyundai is all set to arrive in India. After
receiving an overwhelming response to i10 and i20 hatchbacks in the country, Hyundai is
bringing in the i30. Hyundai claims ‘I’ stands for Inspiration, Intelligence and Integrity.
The car was designed at Hyundai’s European branch – Hyundai Motor Europe Design and
Technical Center in Russelsheim, Germany. Owing to this, the i30 showcases a true
European design both inside and outside. Hyundai is likely to equip i30 with a choice of
three petrol and two diesel engines. A choice of either a synchronous manual transmission
or and automatic transmission will also be offered. It is likely to come standard with air
bags and ABS for safety. Price Tag : Rs 8 Lakh
Maruti Suzuki Cervo
Maruti Suzuki is launching its new small wonder, Cervo, to the Indian market by the end
of this year. The Maruti Suzuki Cervo will stand against the Tata Nano and the upcoming
low-priced cars from Hyundai and Nissan. The Cervo will sport a Suzuki 660cc engine, as
against Nano’s 623cc engine. The 1-litre engine of the Cervo can generate about 60 bhp.
The car will be available in both 2WD and 4WD. The Cervo is likely to come with an
automatic gearbox. The sleek design and exquisite features of the Cervo will allure
customers once it is launched. Price Tag : Rs 1.5 Lakh

Mitsubishi Colt
The Indian car market is dominated by small cars and eyeing the potential of this segment
many car manufacturers are eager to launch small cars in India. The Japanese car
manufacturer Mitsubishi Motors is also thinking of entering the small car segment with its
car Mitsubishi Colt. The car is expected to make its debut in both petrol and diesel
versions. The petrol version will be powered by a 1.1-litre engine and the diesel version
will be fitted with a 1.5-litre engine. The engine for both the versions is said to be
developed by Mercedes. The interior will be spacious with a seating capacity of four.
Price Tag : Rs 5 Lakh
Nissan Pixo
The Nissan Pixo is Nissan’s answer to increasing fuel prices and greenhouse emissions.
Pixo is a five-door, four-seater car with a 1.0-litre fuel efficient engine that expels low
carbon dioxide emission. The new generation K Series engine borrowed from the Maruti
Suzuki A-Star will generate a power output of 66 bhp. It offers roomy interiors and
generous luggage space. The car also houses the best safety features like anti-lock brakes,
dual front airbags, and keyless entry. The Nissan Pixo with the best of engineering and
packaging, will soon enter the Indian car market. Price Tag : Rs 5 Lakh

Nissan Ultra Low Car (ULC)
The Nissan Ultra Low Car (ULC) will go on sale in 2011 in India. To launch this car,
Indian automobile maker Bajaj has joined hands with Renault and Nissan. The car would
initially come in petrol version and the diesel variant would follow soon. This car will
stand against the Tata Nano, which is so far the world’s lowest-priced car. The Nissan
Ultra Low Car will have a front engine unlike the Tata Nano. Price Tag : Rs 1.03 Lakh
Renault Sandero
The modern and economical hatchback Sandero built on the Logan platform will be
adorned with elegant and futuristic features. It will come with low and spacious boot to
ensure easy and comfortable storage. The car will be available in three variants-1.0-litre
petrol, 1.6-litre petrol, and 1.5-litre diesel. The car was originally designed to suit the
needs of South American car buyers but now it will enter the Indian car market with
everything that is essential to meet the Indian conditions. Equipped with all the upmarket
technologies, the Renault Sandero promises to be a runaway success in the domestic
market. Price Tag : Rs 5 Lakh

Toyota Yaris
The Toyota Yaris Hatch will be available with an engine option of 1-litre and 1.3-litre
VVTi petrol that will churn out 67 bhp and 86 bhp, and a 1.4-litre D4-D diesel engine that
will generate 89 bhp. The car will be refurbished according to the needs and aspirations of
Indian car buyers and will have ample legroom and headroom to ensure comfortable
seating even on long journeys. In India, the car will be pitted against Hyundai i20 and
Skoda Fabia. Price Tag : Rs 5.5 Lakh
Volkswagen Scirocco
This successful two-door hatchback is coming soon to scorch the Indian roads. Based on
the Golf platform, the Scirocco displays a broad and muscular look. The stunning car has a
road-hugging presence with huge 18-inch wheels, narrow grille, large air dam, and the
panoramic sunroof. Scirocco offers a good ride with a perfect blend of performance and
utility. In India, the car is likely to carry a 140bhp turbo-diesel engine.
Price Tag : Rs 30 Lakh

Volkswagen UP
The design of the UP concept car seems to be inspired by Volkswagen’s famous Beetle.
The Up will prove to be a tough competition to rivals like the Suzuki A-Star, Skoda Fabia,
and Fiat Grand Punto. The engine will be placed in the rear, like the Nano, resulting in
better interior space and comfort. In India, the car is likely to be launched with the two-
cylinder petrol and three-cylinder diesel versions. The UP will also have a rear-wheel-
drive configuration. Price Tag : Rs 3.4 Lakh
With economy coming up again, the spending power has again increased and the first
sector to show signs of great recovery is Automobiles. December month sales figures for
many Autos were significantly higher than the previous months and companies have
geared up with new models and releases to make good use of the feel good factor in the
market.

NEW TRENDS
ADVERTISING
Advertising is any paid form of non-personal presentation and promotion of ideas, goods,
or services by an identified sponsor.
KEY CONCEPTS OF ADVERTISING
 Advertising contains the key concepts of mass media.
 Advertising constructs messages.
 Advertising has its own codes and conventions.
 Advertising contains bias and ideology.
 Advertising is influenced by commercial implications.
 Advertising is interpreted differently by different people.
 Advertising is the reflection of the real world and influences one’s perception of
the real world.
 To create mediums to promote an issue influence perceptions.
 To understand the concept of the market segmentation.
 To design advertising using the codes and conventions of the medium.
 To utilize your knowledge of the course material.
 To understand the key steps for creating a promotional campaign.
MEDIA OF ADVERTISING
Selection of media is really a great problem before the advertiser. He has to keep thousand
things in his mind while selection one of these. There are many W’s in media planning
that are who, where, what, when e.g.
 Whom do we want to reach?
 Where are they located?
 What is the message?
 When do we run the ads?
Advertising message is disseminated through numerous and varied channels or media. The
major media in developed countries are newspapers and consumer magazines, television,
direct mail, radio, business publications, outdoor and transport advertising in addition, a
significant amount of advertising is invested in miscellaneous media, such as window
display, free, local newspaper and shopping news publications, calendars and even

sandwich boards. The recent trend is changing towards online media use in automobile
industry. The Tata people have done some commendable job with regards to the online
promotion of the car and have gone beyond the traditional methods of advertising and
promotion online. The Nano's overall marketing strategy will use conventional media in
an unconventional manner. There were no TV campaign, only innovative use of print,
radio and other media, particularly the web took place. The Tata team worked on Nano
news in papers, Nano breaks on radio, Nano appearing in the form of messages or ticker
news on TV, online Nano games, Nano chat rooms on the Net, Nano pop-ups on major
websites and Nano conversation on Facebook, Orkut and blog spaces to promote the car.
CHOICE OF ADVERTISING MEDIA

For the purpose of choosing the appropriate medium or media or advertisement, following
factors should be taken into consideration:
(i) Nature of Product: Nature of the product to be advertised has an important bearing on
the medium of advertisement. Product should be classified in to broad categories, namely,
consumer goods and industrial goods. Consumer goods can be advertised in newspapers,
magazines, radio, and television and through outdoor displays. But industrial goods can be
advertised profitably in the specialized trade, technical and professional journals.
(ii) Nature of Market: Nature and extent of market can be

determined by various factors like geographical region, size of
population and purchasing power of the population. The market
may be either local or national. Film advertising and outdoor
advertising are more suitable for local products. Newspapers are the
most suitable for advertising products, which can be sold
throughout the country.
(iii) Objective of Advertising: The objective of the advertising program is very important
to determining the choice of advertisement media. The objectives may be introduction of
new product, to increase demand of an existing product, or to avoid competition by the
rivals. If advertising is not to be carried on a mass scale to have big impact in the short and
long run, a combination of various advertising media may be chosen. Sometime

advertisements are inserted in the newspapers and magazines to complement the readers in
order to enhance the goodwill of the advertiser.
(iv)Circulation of Media: If the media have greater circulation, the message of the
advertiser will reach a larger number of people. It may be mentioned that newspapers have
the widest circulation, but other media have limited and selective circulation.
(v) Financial Consideration: The cost of advertising media is an important consideration
and it should be considered in relation to (a) the amount of funds available, and (b) the
circulation of the media. In the first instance, the amount of funds available may dictate
the choice of a medium or a combination of media of advertisement, and secondly, the
advertiser should try to develop some relationship between the cost of the medium and its
circulation. The cost-benefit analysis will enable the advertiser to take right decision in
regard to selection of the advertising media.
(vi) Type of Audience: If the message is to convey to illiterate or less literate people,
radio, television and cinema advertisement will serve the purpose in a better way.
Newspapers, magazines, displayed and direct mail are used to convey the message to the
educated people. Since different languages are popular in different regions, advertisements
in regional languages may be given to popularize the product.
(vii) Life of Advertisement: Outdoor display and magazines and direct mail have
sufficiently longer life but the life of newspaper, radio and television advertisements is
very short unless they are repeated regularly. Therefore, the advertiser should also take in
to consideration the duration for which he wants to create the impression in the minds of
the prospective customers.
(viii) Media Used by Competitors: The choice of advertising media also depends upon the
media used by the competitors. If a product is being advertised in a newspaper, the
producers of its substitutes will find it better to advertise them in the same newspaper.
This practice has become more common these days in order to fight competition in the
market.
Some of the media as used in the industry by other players include:
 Print Media
 Newspapers
 Magazines
 Direct Mail
 Audio and Visual Media

 Forms of Point of Purchase Advertisement

 Show Rooms Display
BRAND PERSONALITY OF CARS
Are you what you drive? That is what are companies seem to be asking and in the same
breath trying to convince you about. In other words, are you the Hyundai accent owner
who commands immediate respect wherever she goes (including fro the potential father-
in-law) or are you the suave executive from the Chevrolet ad who is ever ready to share a
moment with loved one? With a plethora of new models in the market, and generic
benefits (such as space or fuel efficiency) of a particular car segment hardly a
distinguishing factor between car models, marketer are increasingly differentiating on the
emotional pay-off a particular car model/brand provides to the customer. This, of course,
varies from the segment to segment and also on how long a particular model has been in
the market.
For instance, while advertising for entry level or smaller cars tends to focus more on the
rational or functional benefits of the vehicles, the differentiations is increasingly on the
emotional benefits when it comes to high end cars.
Generally, it has been seen as one move up the value chain, the differentiation is more on
the emotional pay-off. People buy car as an extension of their personality rather than just
features. A car, in India, helps build up show off, social esteem value. The advertising
would also vary according to the segment which one is targeting.
Car is the extension of the personality and our advertising shows the consumer to be
youthful, image-conscious and even bit a macho. Surely, image building does come higher
in the consumer’s scheme of priorities when buying a new car than ever before.
The importance of brand image has risen sharply in the last few years. At the segment
level, the increase in importance is greater for the mid-size cars, indicating the relevance
of brand among the more expensive market segments. The manufacturer need to focus
more on how consumers perceive them as offering exciting cars and being committed
towards them. Contemporariness of model has a big impact on purchase decision. The
perception of the car in terms of its performance and design, quality, sales, after sales, cost
of ownership, apart from brand image, all impact upon the purchase decision.
As long as advertising for cars is strongly differentiated and sharply positions the model
and at the same time satisfies a define need segment, it shall have the capability to break
the clutter and creates a unique and compelling reason for consumers to purchase.

Interestingly, the strategy marketer follow changes a bit when it comes to addressing the
smaller car category with the rational benefits of a brand tending to be the focal point of
the campaign. A buyer for a smaller car (sub Rs. 4 lac) looks for aspects such as reliability
and fuel efficiency. This changes as we move up since in case the consumer has been with
the category for a longer time and hence it is important to talk of an emotional pay off.
However in the small car segment, the rational benefits magic is not always applicable.
Take the case of Hyundai Santro, the advertising of which has evolved over the years from
initially conveying mainly the functional benefits of the model to connecting with the
consumer on an emotional level now.
Brand image is not driven by good advertising alone but is significantly impacted upon by
the cars performance and design, quality, and the cost of ownership. Among the three,
product quality has the highest correlation with brand image. Small car buyer seeks
capability in advertising, and fuel efficiency is relatively more important to them.
Technology, innovation, and good influence premium mid-size buyers. One reality for us
in India is that the market is extremely price/value conscious. While making purchases
based on above, there is rational side, which does have an impact on the decision on a
particular make and model of car. Be it rational or an emotional decision, consumers
would have to think as a bevy of new models flood the Indian market.
7 P's of Marketing on the Internet
The four P's - Product, Price, Place and Promotion have long been associated with
marketing, but things have changed on the Internet. So along with a change in the nature
of the four P’s there are three new P’s which are relevant to the internet marketer.
1. The Product on the Internet usually changes form online, and the user experiences
it electronically, in the form of text, images and multimedia. Physical goods are
usually presented in the form of a detailed online catalogue that the customer can
browse through. Technology allows the user to virtually touch and feel the product
on the Internet - rotate it, zoom in or zoom out and even visualize the product in
different configurations and combination. The example of the above can be seen at
dell.com where the company offers the user to virtually feel every aspect of their
product before they go into a buy decision. Content and software are two avatars of
digitized products that can be even distributed over the Internet. On the Internet, E-
marketing will be based more on the product qualities rather than on the price.

Every company will be able to bring down the cost of its products and hence
competition will not be on price. It will rather be on the uniqueness of the product.
To be able to attract the customers and retain them, the company will have to
provide nouvelle and distinct products that forces the net users to purchase and
come back for more.
2. The Price has been drastically changed over the Internet. It lets the buyer decides
the price. Also it gives the buyers information about multiple sellers selling the
same product. It leads to best possible deal for the buyers in terms of price. A
website named Priceline.com is extremely popular as its compares the price of
many airlines and offers the least price to the buyer. The very famous bazee.com
now known as ebay.in follows the same principles. Pricing is dynamic over the
Internet.
3. The Place revolves around setting up of a marketing channel to reach the customer.
Internet serves as a direct marketing channel that allows the producer to reach the
customer directly. The elimination of the intermediate channel allows the producer
to pass the reduced distribution cost to the customer in the form of discounts. Dell
Computers have used this strategy very effectively and hence they have been able
to reduce their prices of their laptops drastically and reaped huge profits.
4. Promotion is extremely necessary to entice the customer to its website, as there are
currently more than one billion web pages. Promoting a website includes both
online and offline strategies. Online strategies include search engine optimization,
banner ads, multiple points of entry, viral marketing, strategic partnership and
affiliate marketing. Presently, the cyberspace is already cluttered with thousands of
sites probably selling similar products. For the customers to know of the
Company’s existence and to garner information on the kind of products or services
that the company is offering, promotion has to be carried out. There can be traded
links or banner advertisements for the same. Also the traditional mediums like
print, outdoor advertising and television can be used to spread awareness. Email
campaigns and spamming the Chat rooms on almost every server has been
exploited to the maximum for the cause of promoting their website.
5. Presentation The presentation of the online business needs to have an easy to use
navigation. The look and the feel of the web site should be based on corporate
logos and standards. About 80% of the people read only 20% of the web page.

Therefore, the web page should not be cluttered with a lot of information. Also,
simple but powerful navigational aids on all web pages like search engines make it
easy for customer to find their way around. The principle of K.I.S.S ( Keep it
simple stupid ) is the most important factor that has to be considered while
presenting the online business
6. Processes Customer supports needs to be integrated into the online web site. A
sales service that will be able to answer the questions of their customers fast and in
a reliable manner is necessary. To further enhance after sales service, customers
must be able to find out about their order status after the sale has been made. For
e.g. FedEx (www.fedex.com), the overnight Courier Company allows its
customers to keep track of the parcel and they are well informed about the present
whereabouts of their package. Similar variants have been used by the Govt of India
for its Speed post and Registered Ad services where you can keep a track of your
post by entering the code that has been issued to you.
7. Personalization Using the latest software from Broad-Vision and others, it is
possible to customize the entire web site for every single user, without any
additional costs. The mass customization allows the company to create web pages
products and services that suit the requirement of the user. A customized web page
does not only include the preferred layout of the customer but also a pre selection
of goods the customer may be interested in. For e.g. Yahoo! (www.yahoo.co.in)
entered the Indian cyberspace and started its personalized services. A registered
user of Yahoo can now personalize the front page with all the information he
needs. He can read the news of the world, add a tax calculator, see the weather
forecasts of his city and listen to his favorite songs and all this simultaneously.
Internet Marketing Tactics
There are many different technologies to facilitate your Internet marketing strategy. Some
of the most common and effective tools are:
Search Engines and Directories: Search engines are one of the most popular means of
finding web sites, second only to following links on web pages.
Search engines help people find relevant information on the Internet. Major search engines
maintain huge databases of web sites that users can search by typing in keywords or
phrases.

Advertise your message. Web directories/search engines are information, gateways that
have high traffic and are good for displaying advertisement banners. They are used to find
Internet information and for this reason, appeal to broad target groups.
E-zines (Online magazines): These publications are focused on specific topics and may be
a way to reach a target audience interested in that subject. Some companies have gathered
the e-mail addresses of potential customers and used these lists to send out product
information specific to client interests.
Seven good reasons to establish an E-Zine
1. Establishes Trust
2. Brings Visitors Back
3. Establishes You as an Expert
4. Keeps Current & Potential Customers Up to Date on New Products & Services
5. Builds Relationships
6. Allows You to Build an Opt-In Email Marketing List
7. Keeps Your Website Fresh in Visitors' Minds
E-mail: Ethical methods of gathering e-mail addresses are through on-line registration
built into your corporate Web sites, or requests for information forms that request
submission to your opt-in lists.
An alternative is to purchase lists of customer e-mail addresses indexed by special
interests from a private company such as 'Postmaster Direct'.
Online customers are becoming increasingly selective about their relationships, the brands
they trust, and what they consider relevant. While most marketers are aware of privacy
issues and the risks of Spam, there is still need for improvement. Email marketing
campaign management is still fairly unsophisticated even at the largest of organizations.
Marketers have to think about the drivers of customer response and purchase. Over time,
as more is learned about your customer buying behavior, you can will isolate campaign
and program characteristics that drive your customer or visitor response and action.
Isolating the behavior of high value customers, business customers, or the minority of
customers who prefer to buy online will be critical. For example, new online buyers get
referrals when shopping online, while experienced frequent buyers prefer search engines.
Affiliate Marketing: Affiliate Marketing enables you to increase online sales by promoting
your products and services through a network of Affiliate sites on a payment-by-results
basis.

It also provides the opportunity to generate additional revenue by exploiting your site's
own content to promote the products and services of other online Merchants.
A Merchant recruits content sites to partner with them as Affiliates in exchange for
commissions. A common third party provider such as Commission Junction can be used.
The Merchant provides their advertising banners and links to their Affiliates and assigns a
commission for each click-through to their site, subscription to their service, or purchase
of their products that is generated from those links.
Affiliates place the tracking code for these ads and links on their Web sites. This allows
clickthrough's to be tracked online and commissions to be calculated. If a product or
service is purchased, the customer pays the Merchant directly and the Affiliate is paid a
commission for that transaction. The dating giant adultfriendfinder.com has used this
strategy to the maximum and has earned millions of dollars by proper implementation of
this strategy.
Banner Advertising: Banner advertising can play an extremely important role within your
website strategy. One can use banner advertising as a means of promoting it’s own
products and services, raising awareness, or as a way of generating revenue by selling
advertising space on your own website.

Purchasing Advertising: There are currently two widely recognized methods of purchasing
banner advertising. The rates for these are usually quoted on a cost per thousand basis or
(CPM). The rates you pay can vary tremendously as there is currently no standard price
model - so be prepared to negotiate!
 Pay-Per-Impression: This method of purchasing banner advertising is based on a
charge for the number of times someone sees your banner. There are no guarantees
as to how many visitors will come to your site as a result of seeing your banner;
you are simply paying for the number of times your banner is displayed. Websites
that offer such programs include paypopup.com and adclicksor.com
 Pay-Per-Visitor: This method of purchasing banner advertising is based on a
charge for the number of times someone visits your site as a result of clicking on
your banner. This is a better method of purchasing banner advertising as you are
only paying for results, although expect to pay a premium.
 Pay-Per-Click : The revenue model of the Internet giant google.com has its very
own service which offers certain share of the profit that it makes by the click-thru

that a website generates from its adsense codes. The revenue model is known as
google adsense and almost every successful website uses this model to make
profits. The Google adsense ads can be seen on websites like Times of India,
Moneycontrol.com, ManagementParadise.com and a lot many other reputed
websites.
 Branding. While CTR and cost per sale relate to direct marketing objectives,
another way of looking at banner ads is as "branding" tools. They create brand
awareness, and a brand image in the viewer's mind, whether or not the viewer
clicks on the ad. Branding is very difficult to measure, but can be very powerful.
The average click through ratio on banners is just under 1%, although with a well planned
and executed advertising campaign using effective banners you can increase this to as
much as 15%, but be prepared to work at it.
It is a good idea to have a number of different banner ideas so that you can carry out small
test marketing campaigns with each one until you find those that work best.
There are a number of key issues that must be considered when designing a successful
banner:
 It must have an attention-grabbing headline.
 It must be simple and get your point across.
 It must invoke action (i.e.: "Click here")
 It must download quickly.
 It must be placed effectively on a web site, Location, Location, Location
Any campaign is limited by the amount of advertising you can do depending on the size of
your budget. Therefore it is important that you target your market carefully so as to
maximize advertising spend on effective banner campaigns.
Rich Media Advertising: Looking for ways to make online advertising more compelling,
and hopefully thereby more acceptable, marketers have increasingly been turning to
streaming advertising.
In effect another kind of rich media advertising, streaming advertising comes in two basic
forms.
First, it can either be part of a streaming audio or video program on the web. With many
people now listening to web radio or watching web broadcasts, this makes perfect sense.
After all, everyone is accustomed to getting commercials on their TV or car radio.

The other channel for streaming advertising is essentially an infomercial. Consumers can
download a streaming clip for a product or service from a marketer's website.
Two new studies recently released suggest that the streaming advertising market is going
to boom now and in the years to come. The giant ad selling company mediaturf uses this
method for providing content to advertisers
Conferences: By their nature conferences are organized for special interests. Advertising
in conference literature, print and electronic, is an excellent way to contact target markets.
Collaborative Marketing: Team up with other business to:
 Cross-promote - e.g. setting up links from one corporate Web site to another or
offering special promotions in partnership with complementary goods or services.
 Advertise - share advertising.
 Participate in joint sponsorship of events, initiatives, informational Web
sites, mailing lists, bulletin board systems, directories, etc.
 Link exchange with trade/professionals associations to support credibility of firm,
provide further market information to customers, build their awareness and prepare
them for the action of purchasing.
Sales Promotion: Employing methods to stimulate sales through immediate or delayed

incentives to the customer. If the incentive is attractive, the price: value ratio is adjusted
favourably enough to affect a sale. This strategy should integrate with the overall
marketing mix to balance extra sales with long-term profit motives. Examples of sales
promotion strategies are:
 Sampling - offering product samples, electronically.

 Bonus offers - offering additional goods or services when making single purchases
(e.g. buy-one-get-one-free).
 Limited time offers - attracting visitors to return to a Web site.
 Games with prizes: Useful to keep people coming back to Web sites.
 Cross-product sampling: When a customer makes a purchase they have an opportunity
to try out another company’s product/service. Also, the customer may have the
opportunity to try out more than one company’s product/service while testing another.
Useful for complementary products/services.
 Feature pricing: providing special pricing to those that order electronically.

 Cross-promotions with other companies’ products/services - Buy a company’s

product/service and get a coupon for another company’s product/service.
Publicity: The goal of publicity is to have others talk about the small business or its
products. It can be inexpensive or even free and it may have the potential to generate far
more in sales than even a well executed advertising plan.
Promotional Publications: Facilitate customer education, with the intention of building
corporate image and even brand awareness, the small business may sponsor and/or publish
its own electronic magazine on the Web, e-mail, etc. These are useful in fields
where the customer needs information to develop sufficient knowledge for movement
through the first three stages of the sales process of awareness, interest, and desire.
Although time consuming, they replace or complement the print versions of
newsletters/corporate magazines/flyers.
Subscriptions: Business marketers may use their Web sites to encourage visitors to
subscribe to receive regular email messages from the company. These messages are called
digests or newsletters, and are a clever way for marketers to push product news to willing
customers.
Controlled-access Web pages: Clever business marketers may use their Web site to attract
new customers.
They might publish a Web page that allows customers to download a free trial version of a
software application that expires after a time if not paid for. Or, customers might receive
an e-mail message inviting them to visit a private Web page on the company’s intranet,
and giving them a password. The company, as a way of encouraging a sale, offers
customers who visit the page a prize or enticement of some sort.
Public Forums: These are often community-based or interest-based sites that allow visitors
to communicate with one another. An opportunity for small businesses to reach to their
intended target group via these forums is by posting messages or by sponsoring such a
forum. E-mail based forums appeal to a wider audience due to the greater use of this
application over Web-based forums. Web based forums are advantageous for their
superior display of advertising images/messages
Resellers: Some sites will remarket other companies’ products as intermediaries. The
companies that host these sites may have invested significant resources in making them

attractive to the target audience a small business is interested in attracted. By

piggybacking on another company’s efforts, cost-efficiencies may be realized by engaging
in a reselling arrangement.
E-mail Links: Visitors to a site should have the opportunity to correspond with the host of
that site, especially if out of the telephone area or time zone. E-mail links may be
strategically placed throughout the site to elicit response from visitors for at various
points. These are also useful for feedback on site maintenance problems.
On-line Surveys: Information may be collected on the visitors to a Web site through
registration forms, on-line surveys, or through tracking of areas of site they visit. These
websites also offer referrals wherein if you refer someone to their site and the person
becomes a member then you are paid commission on that.
Virtual Malls: Web based sites that allow companies to post their products or services for
sale long with other companies. These may be product specific, may be arranged by
complementary products, or may have products that are not related except by their
companies’ desire to attract a similar target audience.
Measurement: The Internet has the unique ability to provide marketers with detailed
information about the success of their Web marketing programs. Companies can track
visitors to their site and collect information about them from their “cookies,” then process
this information using Web site analysis software.
Cookies are a type of digital identification, which is read every time the user connects to a
public Web site. The Web site can collect some very basic information about the user (e-
mail address, time of day the site was accessed, which pages were visited) and use it to
create visitor profiles. Visitors can then be identified as “old” or “new” when they visit the
site.
Cookies are an essential part of many companies’ business strategies. The information
collected from them is used to measure site visitors, develop user profiles, and target
advertising — in much the same way that television allows advertisers to target their
message to a certain demographic.
Advertising on the Internet: emerging issues

Internet might be a catchy advertising medium. But, there are quite a few issues that need
to be sorted out.
Advertising on the Net is slowly catching on. In developed economies, advertising on the
Net accounts for anything between seven and 7.5 per cent of the total advertising cake.
Fine, how large is online advertising in India?
Various estimates put the size of online advertising in India between Rs 24 crore and Rs
29 crore, which is much less than one per cent of the total advertising cake. Why is online
advertising so small in India? Why aren't the advertisers putting their money on Net
advertising? For instance, Hindustan Lever’s advertising budget is upwards of Rs 700
crore and out of this; the company spends not more than Rs 25 lakh on online advertising.
Is this because Net penetration in India is not deeper? Yes, to an extent.
Slow motion
However, this might not be the case for long. For, initiatives are on to increase the number
of Internet users. It is estimated that Internet subscribers will increase to around 35 million
by 2008 from the current figure of one million.
Not only that, a drive is on to make Internet more affordable. For instance, the Reliance
group is planning to set up 7,800 cyber kiosks in Madhya Pradesh and BSES is planning to
put up 1,000 cyber kiosks in Bombay. And the UK-based WorldTel, in partnership with
the Reliance group, is working at building 1,000 community Internet centres in Tamil
Nadu.
There is a question here, however. If numbers are the only factor, then how is that Net
advertising has picked up in Hong Kong, which boasts of 1.8 million Net users compared
to some 3.5 million in India. So, there are other reasons why online advertising is going
through a slow motion in India.
One such reason is this: there is no official organization in India that monitors and
regulates the online advertising industry. And there is no mechanism available for tracking
viewership of advertisements. Says Apurva Purohit, media director with the Mumbai-
based FCB-Ulka Advertising: "While television has two people meter services, Tam
(IMRB) and Intam (ORG-MARG), there is no possible mechanism to enable working out
optimized schedules on the basis of ad viewer ship rather than programme viewership."
True. Only such a mechanism can help to track ad viewership patterns much more
accurately and monitor television advertisements effectively. The very reason that ad
viewerships in online advertising are not monitored and audited is making quite a few

corporate advertisers go slow in latching on to the Internet medium. Says B

Venkataramanan, group media manager of the Mumbai-based Hindustan Lever: "I am
skeptical about the kind of figures most dot-coms come up with. So, we will be going
about online advertising in a planned way."
All these might become things of the past with quite a few studies on online advertising in
the pipeline. For instance, AC Nielsen is looking at rating Net advertisers and ORG-
MARG is planning to kick off its research on Net advertising.
The cost factor
Absence of a monitoring mechanism apart, online advertising has to live with another
hurdle. Many advertisers are not aware of the benefits online advertising can offer over the
traditional media. What needs to be done? The advertising industry should take efforts to
educate potential Net advertisers about the advantages of advertising on the Net.
Some steps have already been taken in this direction. For instance, advertising networks
such as Media2Net, Rightserve and Mediaturf are doing their bid to fuel online advertising
in India. Rightserve of Hughes Software is said to be spending nearly Rs two crore on
seminars, advertisements and road shows for creating awareness about the online
advertising concept.
There is another reason why advertising on the Net has not really picked up. And that is
the perception that advertising on the Net is expensive. Is this perception right?
Compare the cost of a banner advertisement on the Net with a television commercial.
Though the cost of an advertising campaign on the Net could be anywhere between Rs
15,000 and Rs 1.5 lakh, advertising in the press or television will cost upwards of Rs 50
lakh. Does this not make advertising on the Net cheap? No. For, whether advertising on
the Net is cost-effective or not depends on the value per advertising Rupee.
That means, it is essential to express advertising costs on the Net in terms of cost per
thousand (CPT). Here is what Amardeep Singh, a Mumbai-based media consultant with
Mediaturf.com, has to say: "A thirty- second television commercial will cost between Rs
250 and Rs 300 per thousand, while a ten-second banner on a reputed site such as
Rediff.com will cost as much as Rs 500 to Rs 1,000 per thousand."
The implication: value per Rupee spent on advertising is higher in the case of television.
That is efficiency is higher in the case of television advertising, while in absolute terms
advertising costs are lower as far as the Net is concerned.

Fine, but how are rates fixed for advertising on the Net? It is a difficult poser considering
the fact that rates for advertising on the Net have no rationale behind them. For instance,
Rediff.com just adopted the international rate charged by Yahoo.com. Other websites in
India just took the Rediff.com's rate as a benchmark and adjusted their rates accordingly.
But, the issue here is this: since the number of Net users in India is limited now, these
Indian rates are not justified.
What are the emerging trends as far as cost of online advertising is concerned? Currently,
rates for a simple banner advertisement on the Net need to come down. Already,
Mediaturf is working in this direction. It wants to bring down the cost of Net advertising at
least by 50 per cent. Mediaturf believes that when the rates come down, volumes should
go up.
And that has been the international experience. In the USA, when the rate for a full banner
advertisement fell from US $33.22 to US $30.52 per thousand impressions, online
advertising outlays too rose during the same period.
The wastage factor
There are other reasons why advertising on the Net is not currently seen by advertisers as
cost-effective. One of them is the quality of desired responses. In many cases, sums spent
on advertising on the Net have not been deployed properly. There are instances where
advertisements have just been lifted and put on the banner. Though there are many early
adapters in India, there is a big gap between these adapters and the mainstream users. And
most advertisers have too small budgets for advertising on the Net to be bothered about
wastages.
There could be wastages in online advertising, but one should not forget that interactivity
is the hallmark of online advertising and here it is possible to target the audience by
demography, psychography and technography. So, advertising agencies need to take into
account these factors while developing strategies.
But, wastages can be eliminated and online advertising can be made more effective
through various strategies. Some of them are: strategic tie-ups, sponsorships and banner
exchanges. For instance, the FMCG major Colgate-Palmolive has entered into a strategic
tie-up with the Calcutta-based FirstNet Solutions' portal Yantram.com for promoting its
Fresh Energy Gel toothpaste on the portal. And Coca-Cola has appointed Hungama.com,
an Indian portal for promotions and contests, as its e-marketing partner. Coca-Cola has
gone ahead and launched a new Web promotion dubbed Maaza Puzzle to promote its

popular brand Maaza and has also kicked off a series of e-promotions for the Hindi film
"Hum To Mohabbat Karega".
Meanwhile, tie-ups for banner exchanges are also taking place. For instance,
Bidorbuy.com has tied up with Indiacar.com and Intel has sponsored a festival section on
Satyam Online.
Targeting imperatives
Accurate targeting is another strategy to eliminate wastages in online advertising.
Currently, such targeting based on parameters such as geographic location and search
keywords is possible.
Yes, Satyam Online is offering customised solutions here and portals such as
Indiainfo.com and Rediff.com offer keyword targeting. It is possible now to measure
campaign performances on a real-time basis and make necessary changes. Ad networks
such as Rightserve are offering such services based on their continuous online reports.
Moreover, targeted advertisements based on the profile of users are also possible. To make
this possible, it is essential to have lists such as registered e-mail users and such lists can
offer profiles of users.
But the question is how many sites in India have a large base of registered users? Perhaps
Rediff.com has a base of eight lakh registered users and Jobsahead.com has a base of
about 1.50 lakh users.
Another way wastages can be eliminated is by having advertisements based on the content
of the site. Consider the example of an advertisement from Toyota Motor Sales on the
weather site Intellicast.com. This website for outdoor recreation enthusiasts has been
running a campaign for Toyota Motor Sales and this campaign depends on the weather. If
the weather is sunny, the solara is shown with the top down, and if it is cloudy or raining,
the top is shown up. How many such ads are visible on Indian websites?
Profiling tools too should help in cutting down wastages in online advertising. Mediaturf
has gone a step further by beta-testing an advertisement in a bid to gauge an user's
behaviour, the number of times he views an advertisement and his preferences in terms of
content when he is surfing on a site. Other waste-eliminating strategies for online
advertising are: contextual selling using demographic and psychographic data to match ads
with content that fits and dynamic customization or click stream analysis that helps to
modify advertisements in real-time.

Online Constraints
As efforts to eliminate wastages in online advertising take off; efforts are also needed to
eliminate the attendant constraints. In online advertising, one can stream audio and video
technologies together with faster bandwidths and delivery channels in a bid to present the
same idea with the use of sound, music and visual imagery and make interactions with the
banner possible.
But, this is not possible in India, thanks to the existing bandwidth problems. However,
soon bandwidth will cease to be an issue.
Despite the bandwidth constraint, the Coco-Cola television commercial is being aired in
Zeenext.com. This initiative has been taken by Mediaturf and a Bangalore-based software
programmer, who have found a way to use the Net to air commercials with the dial-up
mode and thus overcoming the bandwidth constraint. Anyway, with massive investments
coming in bandwidth, there could be a glut soon.
Sure, India has an advantage in online advertising, thanks to the fact that online
advertising depends so much on technology and software programming.
So, the days of innovative banners and convergence of real-time advertising are not far.
But, effective online advertising calls for skills in consumer and relationship management.
The prospects are of course bright for online advertising. E-commerce will only help the
spread of online advertising. Estimates are that in a couple of years online advertising
could touch Rs 300 crore, two per cent of the total adspend in the country. And Nasscom's
estimates are that online advertising could touch Rs 750 crore by 2002.
Product and service customization
Companies that have powerful brand awareness on the web all have sites that help
consumers do something – whether it’s configuring a computer system (www.dell.com)
on-line or offering personalized services like suburban railway pass ticket in Mumbai
(www.rediff.com). Consumer demand and expectations are forecast to drive made-to-
order or customized products with rapidly shrinking lead times. Products are configured,
as customers want them to be and provide a high level of reliability, excellent quality, and
longer life spans. For e.g. ‘Dell’ computer (www.dell.com) has become a leading company
in selling computers because of the customization facility it provided on its site. The
consumers could build the own computer by ordering the own configuration. For e.g. On
Nike’s site (www.nike.com), the customer can become a registered user and customize the

shoe of his choice. The customization highlights the value-for-money aspect and induces
the consumer to buy a product that meets his own requirement.
Understanding the Internet Customers
Now to be able to use the seven P’s effectively in order to achieve the predefined goals of
any organization it is imperative to understand the customers. Customization will only be
truly effective if we understand our customers and their true needs.
Before adapting marketing practices to the Internet, the marketer needs to
understand the characteristics of the online customers. The Net users can be
classified into five categories depending upon their intention of using the Internet.
The five categories of users are:
 Directed Information Seekers: They require specific, timely and relevant
information about the products and services being offered.
 Undirected Information Seekers: These users require something interesting and
useful. Something that can give them an edge, advantage, insight or even a
pleasant surprise.
 Bargain Hunters: They are of two kind. One who look for free items on the internet
and other who are seeking better deals, higher discounts etc.
 Entertainment Seekers: they see the Web as an entertainment medium of vast
breath and potential and want to explore the medium before the mass gets there.
 Directed Buyers: They want to buy something - now. They are sure what they
require and just log on to the Web to purchase the item.
The Evolving Value Propositions

The value propositions of goods and services offered in the physical world differ pointedly
from those in the digital world. The ultimate aim of the universal marketer is to provide a
complete end-to-end consumer experience---right from the promise to satisfy his need to
its delivery. But the physical world offers only “Point Solutions” which is basically a
solution of his needs in terms of functional benefits. A credit card, for instance, allows
consumers to satisfy the immediate necessity of setting a transaction. But today’s
consumers are also looking for process and relationship benefit---book referrals at no extra
cost or e-mail reminders. The physical world is not able to deliver these benefits because
of gaps in time, space and memory. The web, on the other hand provides all of these and
more (“reverse marketing, for example, where consumers seek out vendors rather than the

other way around”) by giving the company the ownership and control over all interactions
with the consumer.
The Evolving Risk Profiles
The on-line customer is not a fickle customer, but he is a risky proposition nevertheless.
This is because all his online experience will influence consumer perceptions about the
brand. If a consumer buys a product from a retailer and is involved in an unhappy
purchase experience at the store, he will punish the store. But if the same experience were
to occur to him at the company’s web site, the consequences would be disastrous for the
company if he were to share his experience though different user communities using a
combination of chat rooms and electronic mails.
The Evolving Supply Chain
The transformation being brought about the Web revolution is not limited to just the
consumer. The last few years have seen a flurry of suggested business models for doing
business in the Internet era. Will the Internet era signal the death of the retailer? Or will a
new intermediary come into existence? Technological innovations have made possible two
interesting developments---the Choice board system 2 and the Vertical Portal. Because
Choice boards are essentially design tools and conduits of information, companies that
produce the products need not control them. Dell uses a Choice board system to sell its
computers but there are others like Point.com that uses a Choice board to help customers
research and buy wireless phones and accessories. The market information that a Choice
board collects about customer preferences is absolutely enormous and if the manufacturing
company does not control it, the site offering the Choice board can emerge as a powerful
intermediary. Vertical portals armed with sophisticated search engines, which specialize in
a particular industry or product category, and provide customized information and
promote online community development are the next emergent intermediaries. The
sophistication and range of information collected on customer preferences will drive
emergent business models. The Web will thus facilitate the transformation of the
companies form transaction supporters to customer relationship managers.
Critical Success factors in E-Marketing
Having observed the evolving paradigms of business in the Internet era, there are five
critical success factors that the E-Marketer has to keep in mind.
 Attracting the Right Customer is the first crucial step. Rising digital penetration
would mean that the number of customer visiting particular sites would inevitably

go up. While the number of eyeballs or page views has so far been conveniently
used as a satisfactory measure by most web sites, it would be foolish to cater to the
whole spectrum of digital visitors. Content has to be very target specific. The
digital company has to select its target segment by finding out which section of
customers are the most profitable in terms of revenue transactions and who are the
customers who generate the maximum number of referrals. Here again it is
important to note that the majority of online customers are not seeking the lowest
price. Rather they are seeking convenience above everything else. The power of
customer referrals has never been so enormous, since word of the mouse spreads
faster than word of the mouth. E-Bay attracts more than half of its customers
through referrals. Not only do referred customers cost less to acquire than those
brought in by advertising or other marketing tools, they also cost less to support
since they use their friends who referred them for advice rather than using the
companies’ own technical desk.
 Delivering Content Value to engage the user’s interest is the critical importance in
retaining customer participation. This is because content serves as a powerful
differentiator. Content would include Product enhancements (Software patches for
glitches), personalized interactions (through customized navigation paths as seen
on the web sites of GM and Toyota) and Problem Resolution (updates of delivery
schedules and e-mail responses). Integral to the concept of delivering proper
content value is innovation. The retail financial services industry, for example, is
changing rapidly with multiple players jockeying for position. Product innovation
serves as a key tool to attract new customers.
Priceline.com, for example, has revolutionized the travel and related services business
by letting in a form of “buyer driven commerce”----Customers specify their desired
prices and competing companies then bid for customer requirements. Delivering
proper content to make existing customers in the traditional “brick” business switch to
Web-enabled transactions makes a lot of sense because in every conceivable case, the
cost of Web-Based transactions is an order of magnitude less than the traditional ways
and is decreasing at a faster rate. The cost of an Internet based banking transaction is
less than one-tenth the cost of a human teller transaction. It is keeping this aspect in
mind that Indian Banks have started toying with the idea of setting up Internet kiosks

to let their low-value customers settle their banking transactions at the kiosk nearest to
their place.
 Ensuring E-Loyalty is vital to the success of any online venture. This is because
acquiring customers on the Internet is enormously expensive and unless those
customers stick round and make lots of repeat purchases over the years, profits will
remain elusive. Contrary to the general view that Web customers are notoriously
fickle, they in fact follow the old rules of customer loyalty. Web customers stick to
sites that they trust and with time consolidate their purchases with one primary
supplier to the extent that purchasing from the supplier’s site becomes part of their
daily routine. The issue of trust is integral to the issues of privacy and security.
Companies like Amazon.com, which command amazing levels of consumer trust,
have used a variety of encryption tools ad simple ethical decisions like not
accepting money for publishers for independent book reviews to maintain the trust
of its customers.
 E-Learning to facilitate personalized interactions with customers has been the
biggest contribution of the Web to the marketing strategists. Customers in
traditional bricks-and-mortar stores leave no record of their behavior unless they
buy something—and even then the date might be sketchy. In the digital
marketplace, however technology has made the entire shopping experience a
transparent process. For example, if the customer exits the web-site when the price
screen appears, he is a price sensitive consumer. Such minute tracking of customer
behavior has major implications for the world of advertising. The Internet may soon be
used as a test bed for testing prototypes of marketing and advertising campaigns. By
monitoring pages selected, click throughs, responses generated, and other indicators,
the company would be able to discover which parts of a prospective campaign would
work, thus reducing the risk of a potential flop. This would make it possible for the
company to modify its product offerings much earlier than usual in the product life
cycle.
 Providing Digital value to the evolving consumer through his life cycle has
become possible because of customized interactions and emerging business

models. These models have often disturbed the traditional status quo and created
new rules of business. The sectors where new business models will emerge or have
emerged are the music industry, the financial services industry, the travel industry,
the relating segment and the publishing segment. Digital value is delivered to the
consumer by promising him convenience, allowing the customer to feel his
ownership of the Web experience, and giving the customer a sense of belonging
that traverses the physical boundaries.
Changing patterns of Marketing

Traditional Marketing V/s Internet Marketing
Marketing over the years more so recently has started being used interchangeably with
advertising. Now since the explosion of the internet; advertising paradigms have been
constantly changing.
The first Web advertisement was placed on the Hot Wired web site in October 1994.
AT&T, MCI, Sprint, Volvo, Club Med, ZIMA were the first to try it out and the Internet
advertising has come a long way since then. Here, I would attempt to compare Internet
Advertising with Traditional Advertising:
Let’s have a look:
Traditional Advertising:
 Traditional advertising is static.
 Space is not a restricting factor
 The proportion of advertising to editorial is high sometimes 50:50.
 Does not evoke immediate action.
 Response to the action is not immediate.
 Advertisements are passively received.
 Advertising does not always target a much focused audience.
 Advertisements are ubiquitous.
Whereas Internet Advertising :

 It is dynamic with multimedia- supporting text and graphics video sound all
together.
 Space is a problem, as regards size of the banners etc.
 A web page would be 91% editorial and 9% advertising.

 Invokes immediate action as you at-least need to click on the ad.

 First response is immediate as when the user clicks, the person is directed to other
web page with more details.
 The user has high attention level and concentration while using the net, and hence
they notice the ad. (please refer the chapter)
 This can be much focused.
 Advertisements catch users when they are on the lookout for some thing. For
example the search is for travel on a search engine there are ads of travel agents on
the net.
Thus we see that advertising is changing and so are the rules for advertising on the
internet. So while designing or formulating any advertising strategy for a brand on the
internet a manager has to take in to account factors like: -
1. The Internet has made a huge impact on advertising. Companies should be careful
as regards joining the IT bandwagon. They should not advertise on the net just to
project themselves as a techno savvy company or maybe because their competitor
is doing the same thing. It should be a well-planned campaign full of specific
information and attention catching.
2. The 'net' charges are on the higher side (though there has been a steep decrease in
the rates in the last few months). Hence people would be wary of the fact that ads
consume a lot of online web time and hence they avoid clicking on average ads.
Therefore, advertises should be designed in such a fashion that they attract
attention and induce people to click on the net.
3. One more thing would be to generate 'search' specific advertising. This would
mean that if I give a search for books on the search engine, the ads displayed
would be related to the books.
4. Generally, people perceive the ads to be time consuming and full of unwanted
information. Care should be taken to design the ads in such a way that the
information they provide or the hyperlinks they provide to a site gives adequate
and specific information.
5. The ads and the subsequent information on the web site should be constantly
updated and highlighted in the ads and thus induce repeated clicks on the ad.

6. Last but not the least; the ads should be designed so as to attract attention of
maximum number of people and inducing them to click, failing to do so the
advertiser ends up defeating his own purpose.
The Channel Strategies for delivering Digital Value to customers

The Internet era has shown that companies have risked damaging relationships in their
physical chain to compete in the electronic channel. The ubiquity of the Internet the fact
that cross-linkages are possible to any degree, has meant that companies have usurped the
role of other value providers in the value chain to gain competitive advantage. When
companies pirate the value chain of the industry they are essentially eliminating layers of
costs that are build into the current distribution system. However pirating the value chain
does not mean that the number of intermediaries in the whole process would necessarily
decrease. The emerging economic structure of Electronic Commerce would mean that
profits would lie in the intermediate transactions rather than in the final sale of the good.
Companies would aim at cutting down their traditional margins (give up the cost plus
pricing structure) and aim at high inventory turnover. In retailing profitability is primarily.
The challenge will lie in managing these multiple channels of experience
It is likely that most companies will find that they will have to integrate several
distribution channels to provide the customer with a seamless purchase process. The key
challenge is thus to ensure that the personalized nature of the experience is not much
different across channels. Can an Internet bookseller allow its customers to experience the
same ambience on the net as it does in the bookstore or vice-versa? If it cannot then
companies will face friction among the alternative distribution channels and the already
established physical channel might complain about its profitability being affected by
digital purchases. This may be typified by friction between vehicle dealers and the
company over orders trough an auto company’s Web site. Complementary to the problem
of managing multiple channels of distribution is the development of infrastructure needed
to support such a distribution network. The billing system and pricing strategies have to be
properly frames and executed
Building Brands Online
Online has always taken a back seat to offline in brand building. Yet online offers the best
options for building a meaningful brand, options that didn't exist only a few years ago.

Companies without a solid digital brand strategy are literally being left behind as leaders
build new digital brands.
Reflecting on the current state of online advertising, the majority of online marketers are
doing a terrible job of building their digital brands. Advertisers are fighting tooth and nail
to produce the world's worst advertising, actually destroying their existing offline brands
in the digital realm.
For the most part, if one looks at ads that run during top TV programs or that appear in top
magazines, one will find quality in the advertising (even if the ads are a bit dry and
boring). But if one looks at a top web site and views a few dozen ads, it will be very
difficult to find quality advertising. In effect, the bulk of the ads online do more harm than
good to the brands they are trying to build.
In one industry after another, aggressive Internet upstarts are putting established brands at
risk, creating very strong brand recognition and enjoying explosive visitor growth. The
reason may have less to do with the established brands themselves than with their
managers.
Marketers know what a brand is in the physical world: the sum, in the consumer’s mind,
of the personality, presence, and performance of a given product or service. These "3 Ps"
are also essential on the World Wide Web. In addition, digital brand builders must manage
the consumer’s on-line experience of the product, from first encounter through purchase to
delivery and beyond. Digital brand builders should care about the consumer’s on-line
experiences for the simple reason that all of them—good, bad, or indifferent—influence
consumer perceptions of a product’s brand. To put it differently, on the Web, the
experience is the brand.
Consider an example. If a consumer buys lipstick from a retailer in the physical world and
has an unpleasant in-store experience, she is more likely to blame the retailer than the
manufacturer. But if the consumer purchases that same product from Procter & Gamble’s
Reflect.com Web site, her wrath is more likely to be directed at P&G. Thus the on-line
marketer’s objective shifts from creating brands—at least as defined in the off-line
world—to creating Internet businesses that can deliver complete, and completely
satisfying, experiences.
Yet many marketers, particularly those whose experience is limited to the off-line world,
lack a coherent framework and concrete methods for achieving the broader objectives of
on-line brand building. These marketers need an approach for aligning the promises they

make to consumers, the Web design necessary to deliver those promises on-line, and the
economic model required to turn a profit. These three elements—the promise, the design,
and the economic model—together form the inseparable components of a successful
Internet business, or what might be called a digital brand.
In one industry after another, aggressive Internet upstarts are putting established brands at
risk, creating very strong brand recognition and enjoying explosive visitor growth The
reason may have less to do with the established brands themselves than with their
managers.
Marketers know
what a brand is
in the physical
world: the Consumers Turning to Digital Brands sum, in
the consumer’s mind, of the personality, presence, and performance of a given product or
service. These "3 Ps" are also essential on the World Wide Web. In addition, digital brand
builders must manage the consumer’s on-line experience of the product, from first
encounter through purchase to delivery and beyond. Digital brand builders should care
about the consumer’s on-line experiences for the simple reason that all of them—good,
bad, or indifferent—influence consumer perceptions of a product’s brand. To put it
differently, on the Web, the experience is the brand.
Consider an example. If a consumer buys lipstick from a retailer in the physical world and
has an unpleasant in-store experience, she is more likely to blame the retailer than the
manufacturer. But if the consumer purchases that same product from Procter & Gamble’s
Reflect.com Web site, her wrath is more likely to be directed at P&G. Thus the on-line
marketer’s objective shifts from creating brands—at least as defined in the off-line

world—to creating Internet businesses that can deliver complete, and completely
satisfying, experiences.
Yet many marketers, particularly those whose experience is limited to the off-line world,
lack a coherent framework and concrete methods for achieving the broader objectives of
on-line brand building. These marketers need an approach for aligning the promises they
make to consumers, the Web design necessary to deliver those promises on-line, and the
economic model required to turn a profit. These three elements—the promise, the design,
and the economic model—together form the inseparable components of a successful
Internet business, or what might be called a digital brand.
How to Build and Manage Brands ?
How do marketers build and manage digital brands? The marketer’s first goal should be to
select the core promise for a truly distinctive value proposition appealing to the target
customers. Five of these promises are especially effective.
Digital brands that make tasks—from buying a book to searching for the best price—
faster, better, and cheaper offer the promise of convenience. Amazon.com, like most first-
generation electronic businesses, is fundamentally built on this promise.
Brands that make people feel like winners in whatever activities engage them offer the
promise of achievement. E-trade, for example, promises to help consumers manage their
finances successfully. It has gone beyond the basics—a portfolio of financial tools and
research—to offer many helpful innovations, such as securities-tracking and -alert
services.
Games and other activities designed to engage (and even thrill) consumers offer the
promise of fun and adventure. Often these activities make use of "immersive"
technologies, which, for example, allow electronic spectators of a marathon to hear a
runner’s heartbeat. Digital brands such as Quokka Sports are building their entire
businesses around immersive technologies.
Such companies as GeoCities (which helps consumers express themselves by building and
displaying their own Web pages) offer the promise of self-expression and recognition.
Clubs or communities offer the promise of belonging, as well as concrete advantages.
Women, for example, can exchange stories and tips with one another at the iVillage.com
site. Mercata.com provides a more tangible benefit by aggregating the purchasing power

of its community of users and thus helping them get better prices for a broad range of
merchandise.
From Promise to Delivery
The promises made by digital brands are not unique to the Internet, but the medium’s
interactive capabilities make it easier for digital brands to deliver on their promises
quickly, reliably, and rewardingly. They often do so with a scope that their landed
counterparts would be hard-pressed to match. In practice, this means that promises must
be translated into specific interactive functions and Web design features collectively
giving consumers a seamless experience. Such design features as one-click ordering and
automated shopping help deliver the promise of convenience; collaboration tools such as
chat rooms or ratings functions make it possible to realize the promise of belonging.
Managers shouldn’t underestimate the challenges of this translation process. What, for
instance, does it mean to build a digital brand around a promise of convenience in the
grocery industry? What kind of content, if any, do you need? And how about chat rooms,
personalization, one-click ordering, and collaborative filtering? Digital brand builders
can’t afford to fall short of what they have promised, since competitors are always a click
away, but they waste capital if they offer more than is necessary to make sales and keep
customers.
Technology dramatically differentiates digital brands—for both customers and
shareholders—in ways that will become increasingly clear as they enter their second and
third generations. To be certain of identifying all of the designs that make it possible to
deliver on a promise and to build a viable economic model, today’s digital brand builders
must explore at least six groups of design tools. These tools are sufficiently robust
technologically to help create a distinctive and relevant user experience, and they are
beginning to demonstrate their ability to make money for the digital brand builders using
them.
Personalization Tools
Tools such as the software that creates personalized interfaces between e-businesses and
customers hold tremendous promise for value exchange and contextual commerce. To be
sure, the value of personalization has yet to be fully demonstrated in practice. (Fewer than
15 percent of visitors to Yahoo! have chosen to set up a "My Yahoo!" page for
themselves.) Personalization tools also present risks, as well as real operational challenges,

such as managing privacy, intrusiveness, and opportunity costs. For that reason, many
practitioners still question the short-term return on investments in personalization tools.
Collaborative Tools
They facilitate word of mouth, or what might be called "branded person-to-person
communications"—for instance, the ratings that buyers offer sellers on eBay, the Lands’
End "shop with a friend" feature, Raging Bull’s discussion boards, and Pert’s viral
marketing (which encourages consumers to e-mail their friends instructions for obtaining
free Pert Plus samples). Collaborative tools such as consumer ratings, though essential for
content- and community-oriented digital brands, are underutilized.
Purchase-process Streamlining Tools
They eliminate such physical-world constraints as the need to walk into a store to purchase
a product. Amazon’s one-click ordering system, for example, eases transactions by sparing
repeat customers the inconvenience of inputting transaction data. Peapod’s shopping lists
save consumers time by recording the products they purchased previously. The fact that
most e-shoppers drop out of the buying process during the last clicks suggests that
improvements along these lines might be very worthwhile.
Self-service Tools
They allow customers to obtain answers and results without the delays and inconsistencies
that more often than not characterize human efforts to provide assistance. Such tools
include software for tracking orders, preparing statements, and changing addresses on-line.
Although incumbents often have difficulty integrating these Web-based tools with legacy
systems, the tools are indispensable for banks, retailers, and other e-businesses that handle
large volumes of transactions.
Do-it-yourself product design tools
They allow consumers to customize products and services, either with the help of
configuration options or from scratch. Dell Computer, for example, lets customers design
their own systems on-line by choosing from a range of options; customers of Music.com
and Listen.com can download the music of various artists onto a single compact disc. But
the need to create manufacture-to-order systems to capture the potential of these tools may
make them uneconomical in industries that, unlike software and music, are not based on
information.
Dynamic-pricing tools

They overthrow the tyranny of the fixed retail price, allowing prices to fit the particular
circumstances of individual transactions. Such tools, which come in many forms, include
eBay’s and uBid’s auctions and Priceline’s offer to "name your own price." Dynamic
pricing, a potential "killer application" in many categories, could permit customers to
make a wider variety of trade-offs between price and value than is possible in the current
world, where most sellers offer a single fixed price to all buyers.
Can a marketer be trusted with sensitive personal and financial information? Consumers
increasingly expect their identity and personal information to remain confidential when
they go on-line to shop, and that, coupled with fear of on-line fraud, is what stops many
consumers from even considering digital transactions.
Building Trust
Bringing the six elements of trust to your Internet value proposition, though, does not
automatically lead to deep, trusting relationships. That comes through a step-by-step
process in which the consumer and marketer exchange value. Each time the consumer
volunteers some personal information, the marketer rewards the consumer with a more
personalized service. This mutual give-and-take eventually leads to an advanced
collaboration based on trust.
The research has identified four stages of trust building:
Attraction
At the first stage, the consumer browses the site and even makes a transaction. No real
relationship exists between the marketer and the consumer, and none may be warranted.
The best strategy is to provide the consumer with information, without demanding any in
return. At first blush, this may seem like an imbalance between what marketers give and
what they get back. But what the consumer is giving the marketer is something quite
valuable: time and attention, along with a view of how the site is traversed.
The time and attention translates into the "mind share" needed to create a brand
preference. The average consumer on Ralston Purina’s Dog Chow Web site, which offers
no product for sale, spends more than six minutes per session learning how to care for
pets. That’s far more time—and concentration—than consumers devote to a 30-second TV
ad.
User-Driven Personalization
At the second stage, consumers start shaping Web pages to their specific tastes. For
example, CDnow customers can personalize their home pages with favorite artists and

wish lists. The company shows that it is willing to deliver some value to the consumer
before gaining financially. Charles Schwab now invites users to set up a personal page
through the MySchwab service, where users can not only track stocks but also get
customized sports news, weather information, and even cartoons. Users aren’t required to
open a Schwab account to do so.
Marketer-Driven Personalization
In the third stage, marketers begin using insights provided by consumers to beam
information back to them. Thus, CDnow uses its knowledge of consumers—developed at
the earlier stages of trust—to suggest products they might like which consumers then rate
as either on- or off-target. As the process continues, CDnow learns consumers’
preferences and zeroes in on what they really like. It is worth emphasizing that marketers
should rein in their urge to make immediate use of data and personalization technologies.
This approach takes patience, a trait lacking at many marketing organizations. Too often
they bombard consumers with promotional offers as soon as they get their hands on an e-
mail address. We suggest a gradual approach, as nothing aggravates many Internet users
more than unsolicited e-mail.
A best practice is to let the user set the pace of personalization and contact from marketers.
User-driven personalization should precede marketer-driven offers. Recent research by
Professor Youngme Moon of the Harvard Business School has shown that premature
personalization can backfire. Moon found that consumers were less likely to buy products
pitched to them through messages if the messages were based on information they had not
given to the marketer themselves. According to "Is Your Web Site Socially Savvy?" a
May–June 1999 Harvard Business Review article, consumers were more likely to buy
when the message was personalized and based on information they had volunteered.
Trust-Based Collaboration
At the final stage, the marketer and the consumer work together closely. The consumer
gives the marketer access to the most sensitive personal information (family, finances, or
health) and in turn gains customized experiences and consultative problem-solving
assistance. In our view, very few on-line marketers have reached this level of trust with
their consumers.
The pace of value exchange varies by industry and situation. For example, mortgage
shoppers may provide financial information in their very first interaction if they need a
quick answer. In other situations, the process moves more slowly. And because costs rise

as marketers go up the trust staircase, they must decide just how far they need to go to
create the most profitable relationships. Trust building at a basic level may be enough for
some marketers, particularly if greater trust does not bring greater spending by consumers.
Only by sustaining trust can marketers expect to establish enduring relationships with
consumers, and it is by keeping a central focus on that idea that marketers build a value
exchange that delivers consistent and progressive mutual benefits. With the six building
blocks of trust in place, marketers should be able to chart a course for building great on-
line businesses.
REVIEW & RESEARCH

Digital marketing is a term that has been around for quite awhile but hasn’t been very well
defined, encompassing things like banner advertising, search engine optimization (SEO)
and pay per click.
To clearly define what digital marketing is let’s talk about what it is not. For starters, it
does not include more traditional forms of marketing such as radio, TV, billboard and
print because they do not offer instant feedback and report. Sure, some people may
respond to a call to action from an advertisement in one of these mediums but there is no
way to know the exact number of people who saw or heard it. Such data is collected (and
still then just educated guesses) long after the initial ad impression is made. Yes,
convergence has made television at bit more interactive, with devices such as TiVo able to
record viewer statistics like those for Web sites, but there is still a long way to go. With
digital marketing, however, we’re already there.
At its heart, digital marketing centers around the Internet, which has become both a
communication vehicle and a very powerful marketing medium as the recent Doubleclick
acquisition by Google demonstrated. The Internet can be used both to push a message to
someone like email, IM, RSS, or voice broadcast, as well to “pull” content serving a
banner ad and Pay Per Click search terms. Digital marketing, therefore, can be thought of
as the combination of push and pull Internet technologies to execute marketing campaigns.
Because it is digital, a reporting engine can be layered within a campaign allowing the
organization see in real-time how that campaign is performing, such as what is being
viewed, how often, how long, as well as other actions such as responses rates and
purchases made. Please note that each digital marketing technology is different and they
cannot all provide the same types of reports. Also, digital marketing is constantly evolving
and new technologies are being created all of the time.

Some people may ask, what is the difference between digital marketing and Internet
marketing? The big difference is in the type of marketing techniques used. Internet
marketing, although using the digital Internet, focuses on every means of getting
information to potential customers about products and services a merchant is offering
using only the Internet. Digital marketing uses all the channels available in the digital
media to get information to customers, and it does not limit itself to the Internet.
Digital Marketing Media

The digital marketing sector uses many different digital marketing media channels, such
as:
 Cell phone Short Message Service (SMS) – text messages
 Really Simple Syndication (RSS) feeds
 Podcasts
 Voice Broadcast
 Video E-mails
 Banner ads on affiliate websites
 Outdoor digital displays
 Websites
 Blogs
Strategies for Digital Marketing
There are two basic digital marketing strategies used by current and potential customers.
These two types of digital marketing are called the “Push” and the “Pull.”
Their methodology for providing information to customers works as follows:
 Pull digital marketing – the customer seeks information about products and/or
services by visiting the company’s sources of information searching for the
specific product or service information. They are basically requesting to view this
specific content. These are typically located in websites, blogs, streaming audio
and video sources. Customers have found related information on other websites or
been directed to the company’s sources by a referring website to find the
information.
 Push digital marketing – customers are provided information by receiving or
viewing advertisements digitally, such as: SMS, RSS, cellphone calls, etc., as
subscribers of the latest product and service information provided by the company.

Both have their advantages and disadvantages. For example:

 Pull advantages – no restrictions on file size, no opt-in requirements, and low
technology requirements for the company.
 Pull disadvantages – marketing required, little tracking of visitors, and no
personalization to keep the visitors coming back.
 Push advantages – personalization of messages, high conversation rate, and
detailed tracking of customer choices.
 Push disadvantages – requires Can Spam Act 2003 compliance, most customers
must opt-in, can be blocked, simply opt-out, and requires delivery technology.
Marketing Solutions
Digital marketing solutions include the use of multiple channels of delivery, along with
the use of both Push and Pull digital marketing techniques. Both of these are used to
deliver messages and information about products and services to customers, along with
any others who submit inquiries.
Digital market campaigns have yielded greater conversion rates for affiliates than e-
marketing strategy alone, because it is not restricted to the Internet. It may seem to be hard
to believe, however, there are many people in this country who do not own a computer or
have access to the Internet. Although almost everyone has a cellphone, MP3 player, iPod,
and views outdoor digital displays.

Brand: Maruti Suzuki SX4
Another woman
The ad film opens on a lady A lady whose search for
disappointingly says, “They
asking, “Where have all the “men” has turned futile
don’t make men like they
men gone?” declares she's given up.
used to.”
The ad then shows clips of Cut to the shot of a lady An SX4 car comes to a halt
various SX4 cars being asserting, “Men. They’re next to where the four ladies
driven on the road. gone.” are sitting.
...The men amongst cars -

Seeing the car, one of them Voiceover: “Pure power,
Maruti Suzuki SX4. Men are
says, “Now, that’s a man.” pure style, pure muscle...
back.”

How Maruti have created deep segmentation within its small car offering
The above chart shows how different products in the same segment/sub segment have
been offered by the same company targeting different needs of the buyers. For ex: Maruti
offers a car, Alto which low on price, maintenance cost, style but is high on fuel
efficiency. When you compare this with Maruti swift, it is higher in price (in the small
car), technology, style, space and comfort, but lower in fuel economy. Maruti has a gamut
of cars in the small car market, as it has off late focused on creating new sub-segment or
creates deep segmentation within a segment.

SEGMENT INVASION PLAN – MARUTI UDYOG LIMITED
Higlighted colour indicates competition existed at the time when Maruti targeted the
segment
1. M-800 had dominated the Indian car market since it was launched in 1984.
2. Maruti introduced Maruti Zen into the market (in 1993) which catered as an entry
level car for the people who can afford to spend more (as compared to M-800),
with better features available. Maruti enjoyed being the only small car
manufacturer till year 1996, when Hyundai launched Santro.
3. In the mean while Tata also launched Indica, and there was a gradual decrease in
sales of M800. The introduction of new cars by competitors made the M-800 look
obsolete as it had not been changed in any major way for over a decade. Hence
Maruti launched Alto in the year 2000, trying to recover the lost market. Alto was
once again targeting the entry level low cost segment, but it gave features of a
good car. Within 18 months of the launch, the Maruti was able to regain its market
share and was once again in a position to hold entry level A-segment in its pocket.
4. Watching the dominance of Maruti in the A-segment, competitors focused on other

segments, Maruti also followed and launched its first Duo (dual fuel) car, Wagon R
duo in the year 2004. This car could be run on LPG along with petrol.
5. In an effort to move beyond the value for money or the basic utilitarian function of
a car, Maruti launched Swift in the year in 2005, to target the high end customers,

who are willing to pay more for a better styled, powered, fuel efficient, safe and
sporty car.
6. Maruti strengthened its position in the small car market by launching Ritz in the
year 2009 , which was targeting upper middle income group ,who were looking for
exciting looking , globally renowned car.
POSITIONING
Small cars have been positioned in India as city cars, which are easy to drive, give high
mileage, with low operational cost and low price. Because of the tremendous growth in the
small car market, various global car manufacturers are entering this market and thus
leading to growing competition. This has further led to each manufacturer positioning it,
better than the rest; by upgrading products, several versions, new technology, giving
discounts & offers, better financing options.
The table below shows customer focused value proposition, showcasing the reason why
the target market should buy their product.
Brand and Target Benefits Value Proposition Positioning

Company Customer (Point of difference) Image
Santro Environmentall Better power and Economical and Santro Eco –
Eco , y conscious fuel efficiency, environment An
Hyundai consumers who Better performance friendly small car environment
want an on city roads, less friendly car
economic and a maintenance costs,
safe small car spacious interiors
and more headroom
Swift, Customer Powerful, Styling A vehicle that Style, modern
Maruti seeking a and Handling, provide comfort , looks and
Suzuki stylish, Advanced features power and luxury in young
powerful and a small package attitude
premium car for
City driving
Spark, “Value for Low Maintenance A vehicle that “Big car
Chevrolet Money” cost, Extended provides good luxury at a
consumer warranty of spare mileage and extra Small car
parts, Good features at price”
mileage, High end competitive prices
Features
Indica , Small- car Spaciousness A small spacious car “More Car
Tata consumers who with no extra cost per Car”
Motors want a more

spacious car
Fabia, Customers World-class styling, A vehicle in the India’s #1
Skoda seeking a technology, luxury upper-end of the B- Super-hatch
luxurious small and safety features segment and lower
car end of the C-
segment. Dynamic
looks, compact yet
roomy, first-in-its
class features and
exemplary
performance
Alto, A first-time car Good performance, A trusted and India’s largest
Maruti buyer looking good fuel economy. reliable car with selling car.
Suzuki for the best Good in price as access to the largest “Your Sachha
affordable car in well as quality service network and Hamsafar”.
the market commanding the “Alto. Let’s
highest resale value go”.
Nano, A middle class Affordable price, An engineering The People’s
Tata family that very high fuel marvel in terms of Car
needs a car but efficiency cost , fuel and space
cannot afford efficiency
one
Positioning – Hyundai Santro Case – since launch
The table below represents the changes in the positioning strategy of Santro car by
Hyundai Motors. It shows that a company has repositioned its product about 5 times in
past ten years. The main factors were either competitors’ activities or changes in the
mindset of consumers. Each time the company has repositioned itself, they have changed
their ‘Target customers’ and has done a deeper penetration in segmenting its market.
Year Positioning Strategy Forces Target Consumers
1998 Family Car A car in competition with the best A 35-45 year
selling Maruti 800 and Zen. family person
2003 A smart car for The average age of a car owner had Age group of 25-30
young people declined from around 35-40 three years and First time
years ago, at that time, to 25-30, buyers.
primarily because of changing
lifestyles, cheap and easily
available finance, etc
2004 Focused on pride Changes in strategy and positioning Anyone for whom

that consumers will by rival competitors like Maruti buying a car was a
derive on buying the and Fiat. status symbol
car.
The tagline was
“Santro wale hain”
2005- Changed the tagline Income of middle class during that First Time Buyers
06 to “ First Car, First period as economy was growing
Choice” rapidly and they focused on new
buyers.
2008 Environment Idea of “Going Green” and saving Environment

friendly car – Santro environment was spreading and at Conscious and
Eco the same time demand for a people looking for
cheaper fuel was at maximum. cheaper fuel
Positioning of Various Small Car players based on POD (Point of Difference) & POP
(Point of Parity)
The figure below shows that majority of the cars fall in all the POP, as it’s the important
characteristic of that segment. In case of small cars, low price, fuel efficiency, low
maintenance cost and space. Whereas companies do target special buyers by offering
innovation like new style, features, or may be the car itself is environment friendly, it is
considered as a POD for that car. POD acts as a stimulating factor for a buyer to get
attracted toward a car, whereas absence of POP will make the buyer uninterested in that
car.

POD
POP
Perceptual Map – Maruti Udyog Limited
The above map shows the perceptions of the customers or potential customers. The map
shows the change in the perception of the various models of the cars based on the price
and benefits perceived by the consumer.
The observation from the map shows that, most of the cars which have low cost are being
perceived to have lower benefits as well, exception being Santro Xing, and Zen Estilo

which are believed to give more benefits compared to the cost incurred in buying those
cars. Same thing also applies to cars which are perceived to be higher on the cost side are
having higher benefits, exception being Hyundai Getz ,which despite being high on cost ,
still is perceived to have lower benefits.
Positioning Strategy of MUL : The line drawing from Maruti 800 to Maruti Swift shows
that Maruti has positioned its products across all range from low cost-low benefit
perception to high cost-high benefit perception. This shows the change in the positioning
strategy of Maruti, where it has moved away from the only low cost –low benefit (Maruti
800) model to other models as well.

CHAPTER-5
SURVEY FINDING AND ANALYSIS

Q. Which car / cars do you own?
Q. What is your annual income?
Parameters No. of Respondents
Below Rs 5 lakh. 27
Rs 5 lakh-Rs10 lakh. 21
Rs 10 lakh-Rs15 lakh. 32
Above Rs15 lakh. 20
Above Rs15
lakh. Below Rs 5
20% lakh.
27%
Rs 10 lakh-Rs15
Rs 5 lakh-Rs10
lakh.
lakh.
32%
21%

Q. Give your opinion by rating the various car-manufacturing companies on the

scale of 1 to 5, with respect to products and services provided by them. (1 -Highest,
5 - Lowest)
Parameters/Rating 1 2 3 4 5
Maruti Suzuki
Ford Motors Ltd.
General Motors India.
Honda Siel Ltd.
Hindustan Motors Ltd.
5 5
4.5
No. of Respondents
4 4
3.5
3 3
2.5
2 2
1.5
1 1
0.5
0
Rating
Maruti Udyog Ltd. Ford Motors Ltd. General Motors India.

Honda Siel Ltd. Hindustan Motors Ltd.

Satisfaction with respect to products and services

Hindustan
Motors Ltd.
4%
Honda Siel Maruti Suzuki
Ltd. Ltd.
19% 36%
General
Motors India. Ford Motors
25%
Ltd.
16%
Q. Which dealer did you purchased your vehicle from?
All the respondents have purchased the vehicles from Company Authorized dealers in
their respective location/area of residence.

Q. Why did you purchase your vehicle from this particular dealer?
Range of vehicles displayed 28
Availability of finance schemes 33
Convenient location 7
After sales service 32
Reasons to purchase vehicle from particular dealer?
Range of
vehicles
After sales displayed
service 28%
32%
Convenient
location
7% Availability of
finance
schemes
33%

Q. Whom did you involve in your purchase of your new vehicle?
No one else 20
Parents 6
Spouse 46
Friend 28
Others -
Reasons of purchase of new vehicle
No one else
Friend 20%
28%
Parents
6%
Spouse
46%

Q. What was your mode of payment?
Parameters
Cash 24
Bank draft 46
Cheque 21
Credit card 9
Mode of payment in respect of Purchase of Vehicle
Credit card
9% Cash
24%
Cheque
21%
Bank draft
46%

Q. Are you aware of the various finance options for car purchase? Comment.
All the respondents were made aware of the finance scheme by the respective dealer.
o It was their personal choice to decide of finance based on:
o Loan Sanctioned
o Monthly EMI Slected
o Term of the loan opted for.
Q. Tick Mark the various methods which you adopt before you final purchase
decision.
Referring to newspapers/ magazines 76
Getting information through T.V commercials 24

or radio advertisements
Direct visits to dealers/showrooms 100
Referring to company's catalogue 100
Consultation from friends and relatives 78

0
20
40
60
80
100
120
PGP/FW/2012-14
Referring to
newspapers/
76
magazines
Getting information
through T.V
commercials or
24
radio
advertisements
Direct visits to
78
100
dealers/showrooms
Referring to
company's
100
catalogue
Methods adopted before final purchase decision
Consultation from
78
friends and relatives
ID NO.: FW/12-14/M-96/DELHI/ISBE
HYPOTHESIS TESTING
Gender Profile of Respondents
Female
40%
Male
60%
Age Profile of Respondents
Above 40
yrs
20-25 yrs
9%
18%
36-40 yrs
23%
26-30 yrs
27%
31-35 yrs
23%
Gender Profile of Respondents
Female
40%
Male
60%

1. What’s the name of the brand Ad you have seen?
Indian 58
Foreign 42
Advertisments seen
Foreign
42% Indian
Indian Foreign
58%
Interpretation:
In this case we see that Indian brands generally use the media (TV, print) more to promote
their product as compared to foreign brands. This shows that Indian brands spend a lot of
money and try to come out with the advertisements that appeal to the customers.

Can you recollect the advertisement?
Partial 72
Full 28
Ad Recall
Full
28%
Partial
Full
Partial
72%

6. Comparison of Indian and foreign brands
Indian Foreign
Performance 42 58
Style 47 53
Handling 32 68
Brand name 37 63
Service 49 51
Comparision
80
68
70 63
58
60 53 49 51
47
50 42
37 Indian
40 32
30 Foreign
20
10
0
g
e
ce
e
le
in
ic
m
y
an
dl
rv
St
na
an
Se
rm
d
H
fo
an
r
Br
Pe
Interpretation:
The above information shows that Indian customers prefer foreign brands to Indian brands
in terms of performance, style, handling and brand name.

7. Peoples loyalty towards the brands in purchasing their next car:
Brand change
different brand same brand

47% same brand
53% different brand
8. Peoples preference in choosing their cars in next purchase:
brand preference
40
34
35
29
30
25
19 18 India
20
Foreign
15
10
5
0
same brand different brand

9. Why do you go for this particular brand?
Attributes Indian Foreign Total
Brand 5 8 13
Looks/style 7 11 18
Performance 9 31 40
Price 19 10 29
Total 40 60 100
35
31
30
25
20 19
Indian
Foreign
15
11 10
10 8 9
7
5
5
0
Brand Looks/style performance price
Hypothesis:
 Ho: The attributes (Brand name, looks/style, performance and price) of foreign
brands, does not affect peoples selection of a particular brand when compared with
Indian brands

 H1: The attributes (Brand name, looks/style, performance and price) of foreign
brands, does affect peoples selection of a particular brand when compared with
Indian brands
Formula
Chi square= {(observed-Expected) ^2} / Expected
(O-E) (O-E)^2 {(O-E)^2}/E
.2 .04 .0076
.2 .04 .0055
7 49 3.06
7.4 54.76 4.72
.2 .04 .0051
.2 .04 .0037
7 49 2.041
7.4 54.76 3.14
Chi square Total, {(O-E) ^2} / E = 12.98
Degrees of freedom= (4-1)*(2-1) = 3
Table value of Chi Square for (3, 0.05) = 7.81
Since, calculated value (12.98) > table value (7.81) reject Ho.
There for, Accept H1.
That is,
H1: The attributes (Brand name, looks/style, performance and price) of foreign brands,
does affect peoples selection of a particular brand when compared with Indian brands.

10. With respect to your brand what does it convey to you.
Status 14 22 36
Luxury 9 12 21
Safety 5 7 12
Economy 13 18 31
Total 41 59 100
25
20
15
Indian
Foreign
10
0
Status Luxury Safety
Hypothesis:
 Ho: Indian Brands in terms of status, luxury, safety and economy do not appeal to
the Indian consumers as compared to Foreign brands.
 H1: Indian Brands in terms of status, luxury, safety and economy do appeal to the
Indian consumers as compared to Foreign brands.
Formula

(O-E) (O-E)^2 {(O-E)^2}/E
-0.76 0.578 0.039
0.39 0.152 0.018
0.08 0.006 0.001
0.29 0.084 0.007
0.76 0.578 0.027
-0.39 0.152 0.012
-0.08 0.006 0.0008
-0.29 0.084 0.005
Chi square Total, {(O-E) ^2} / E= 0.1096
Since, calculated value (0.1096) < table value (7.81) Accept Ho.
There for, Reject H1.
That is,
Indian players in terms of status, luxury, safety and economy do appeal to the Indian
consumers as compared to foreign brands.

11. Have you faced any problem with your brand?
Comfort 9 5 14
Handling 6 5 11
Performance 5 8 13
Service Quality 8 5 13
Availability and cost of spares 5 5 10
Total 33 28 61
10
9
8
7
6
Indian
5
Foreign
4
3
2
1
0
Comfort
Performance
Service
Handling
and cost of
Quality
Availability
spares
Hypothesis:
 Ho: Customers do not face more problems with Foreign brands as compared to
Indian Brands
 H1: Customer face more problems with Foreign brands as compared to Indian
Brands

Formula
(O-E) (O-E)^2 {(O-E)^2}/E
3.3 10.89 1.44
0.05 0.002 0.0004
-2.03 4.12 0.0586
0.97 0.940 0.134
-0.41 0.168 0.031
1.43 2.045 0.318
0.05 0.0025 0.0004
2.03 4.121 0.690
0.97 0.941 0.158
0.41 0.168 0.037
Chi square Total, {(O-E) ^2} E = 2.867
Since, calculated value (2.867) < table value (9.49) Accept Ho.
There for, Reject H1.
That is,
 Ho: Customers do not face more problems with Foreigns brands as compared to
Indian Brands.
INTERPRITATION:
On analyzing the entire questionnaire we come to known that in every way customer who
own Foreign Brands are far more satisfied than customers who own Indian Brands.
The reason being that the foreign Brands offer products that are more superior in terms of
tecnonology, quality, looks, style, performance etc., so people are willing to pay extra for

the same. In most of the questions asked the foreign brands are most preferred to own and
out beat the Indian Brands in all departments.
Customer who own Indian Brands are willing to change their Brand and go for a foreign
brand in their next purchase, this shows that these foreign brands are slowly eating into the
Indian car market and very soon may be in the next few years they will dominate, this
again will lead to tough competition among themselves with each foreign company
introducing new superior quality cars and fighting their way to become the leaders in the
Indian Car Market.
With many foreign Brands entering the Indian Car market and slowly capturing the
market, my study was to find out whether Foreign brands or Indian brands have more
brand equity in the Indian car market, and for knowing the same the Hypothesis
framed was:
 Ho: Foreign Brands do not have more brand equity as compared to Indian Brands
in the Indian car market.
 H1: Foreign Brands have more brand equity as compared to Indian Brands in the
Indian car market.
On doing the Hypothesis for three questions as shown above using Chi Square, we see that
the Foreign Brands are more preferred to the Indian customers, on the basis of the test
conducted and the results favoring the Foreign Brands, relating this to my main
Hypothesis I have come to the conclusion that:
Reject H0 and accept H1.
The study proved that Foreign Brands have more Brand equity and Indian Brands in the
Indian car market.

CHAPTER-6
CONCLUSION & RECOMMENDATIONS
India is one of the largest automobile markets in the world, with over 15 brands, each of
them fighting it out to become the market leader by producing better cars with superior
technology at competitive prices.
Among the brands in the Indian market, majority of them are foreign brands, leaving the
Indian brands to fend for themselves. These foreign brands offer the Indian consumers a
array cars that are of high quality and which easily out perform cars produce by Indian
brands in almost all departments be it performance, handling, technology, comfort looks
etc.
Foreign brands appeal to the customers more, it is for this reason that we see foreign
brands are beginning to dominate the Indian market and it will not be along when we find
that there will only be foreign brands in the Indian market.
To conclude, the results show that the companies are playing on the peripheral cues to
maintain their Total Relationship Management and connect to the customers both present
and potential. The companies are operating in a highly aggressive and competitive global
market place and this climate has led to the emphasis on quality in all aspects. TQM
focuses on integration and coordination as well as the continuous improvement of all
activities and processes. Total Relationship Management (TRM) is a very recent
marketing strategy and philosophy. It focuses on and is concerned with all integrated
internal and external activities within and between the organizations. These two terms are
integrated by the manufacturers by building good quality products and building good
relationship with dealers and enhancing service levels.
However, when studied from the point of view of a customer there seems to be no major
difference among the car brands in a segment as far as performance is concerned. The
brand perception is dependant mostly on the peripheral cues depending upon the nature
and quality of the service provided along with the pricing, maintenance, availability of
spare parts and related issues. So, a question arises here that is this the end of road for the
branding of cars? Has the commoditization of cars has started and its time that

manufacturers must read the writing on the wall? It seems so! It seems as an undercurrent
sentiment is flowing and the perception of the customers is changing according to it.
The study shows that brand perception is something which starts building up before a car
is purchased and goes on with its use and is reflected in the recommendations the customer
makes to his acquaintances for the same car. Also, its seen that the customer might not be
using the car still he holds the perceptions about it. Brand personality of a car is enforced
by the sellers in the mindsets of the customers and the customers react to it by forming
their perceptions about the car and this reflects in the overall brand image of the car. So
brand image and brand personality complement each other and the brand perception aids
the building of brand image.
Dealers, as per the study findings, play a very important role in building up the brand
perception of the cars. Since dealers are the connecting link between the customers and the
manufacturers thus becoming the most important link in joining the company to its
customers as he is the person who will sell the product, will deliver it and will keep on
providing the after sales services to the customers as and when required.
So, it becomes necessary automatically to study dealer as a part of customers’ satisfaction

journey with the product called car! Their proximity to the customers, the service provided
by them and the relationship maintained by them with the customers helps the car
companies to establish and reinstate the brand personality communicated by them to the
customers.
Finally the major point that emerges out of this detailed study is a caution for the car
companies. It says that there is no doubt that Indian car market may be growing with a
double digit figure still the car companies have a long way to travel to convince their
customers about the brand personality of their cars and how it suits the prospective buyers.
Simply because it simply is not a guarantee that how so ever good the customer might be
holding the brand perception and how so ever good the brand image may be it is not a
guarantee that it will convert into sale. Cars just like clothes and accessories suit the style
and persona of a person and since all cars will become commodity someday the key to sell
and excel in the market will lie with a person who knows how to use the perceptions of the
customers to its use and sell the cars ‘coz ultimately only that car survives which sells!

BIBLIOGRAPHY
Books
1. Marketing Management- V.S.Ramaswamy & S.Namakumary
2. Personnel Management- C.B.Mamoria
3. Gitanjali Sen, Trade and FDI Related Reforms in the States, 1991-2007: the Case
of Maharashtra, (Academic Foundation, New Delhi, 2010)
4. Ruddar Datt and KPM Sundharam, Indian Economy, (S. Chand and Company Ltd.,
New Delhi, 58th Edition, 2008)
Websites:
1. http://economictimes.indiatimes.com/News/News-By-Industry/Car-sales-rise-22-
in-Feb/articleshow/4247812.cms
2. http://imaginmor.com/automobileindustryindia.html
3. http://news.bbc.co.uk/2/hi/business/6478685.stm
4. http://www.acmainfo.com/
5. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aO9LxvSmKTzE
6. http://www.dhi.nic.in/draft_automotive_mission_plan.pdf
7. http://www.iloveindia.com/economy-of-india/automobile-industry.html
8. http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-
sectors/automobile.htm
9. http://www.rediff.com/money/2004/oct/23car.htm
10. http://www.siamindia.com/
11. http://www.wikinvest.com/industry/Auto_Makers
12. http://en.wikipedia.org/wiki/Automotive_industry
13. http://business.mapsofindia.com/automobile
14. www.maruti udyog.com

15. www.hindustan motors.com

16. www.baleno.com
17. www.general motors.com
18. www.apnacar.com
19. www.fordmotors.com
Magazines
20. The Economic Times
21. The Financial Express
22. Business Standard

ANNEXURE
SURVEY QUESTIONNAIRE
1. Which car / cars do you own?

____________________________________________________________
2. What is your annual income?

 Below Rs 5 lakh.
 Rs 5 lakh-Rs10 lakh.
 Rs 10 lakh-Rs15 lakh.
 Above Rs15 lakh.
3. Give your opinion by rating the various car-manufacturing companies on the scale
of 1 to 5, with respect to products and services provided by them. (1 -Highest , 5 -
Lowest)
 Maruti Udyog Ltd.
 Ford Motors Ltd.
 General Motors India.
 Honda Siel Ltd.
 Hindustan Motors Ltd.
4. Which dealer did you purchased your vehicle from?

_________________________________________________________
5. Why did you purchase your vehicle from this particular dealer?
 Range of vehicles displayed
 Availability of finance schemes
 Convenient location
 After sales service
6. Whom did you involve in your purchase of your new vehicle?
 No one else
 Parents
 Spouse

 Friend
 Others (Specify) ________________
7. What was your mode of payment?

 Cash
 Bank draft
 Cheque
 Credit card
8. Are you aware of the various finance options for car purchase? Comment.
_________________________________________________________
_________________________________________________________
9. Tick Mark the various methods which you adopt before you final purchase
decision.
 Referring to newspapers/ magazines.
 Getting information through T.V commercials or radio
advertisements.
 Direct visits to dealers/showrooms.
 Referring to company's catalogue.
 Consultation from friends and relatives.
 Any other means. (Specify)__________________.
10 What according to you are the important features that you would look for while
buying a car?
 Powerful engine
 Modern interior / exterior styling
 Good comfort
 Resale value
 Good value for money
 Safety features
 Low running costs
 Dealer network
11. Rank the above features of the car from 1 - 8. (1-Highest , 8-Lowest)
 Powerful engine ______

 Modern interior / exterior styling ______

 Good comfort ________
 Resale value ________
 Good value for money _______
 Safety features _______
 Low running costs ________
 Dealer network _________
12. What is the mileage of your car for city driving and highway driving?
CITY DRIVING HIGHWAY DRIVING
6 -8 km/h 10 -12 km/h
8 -10 km/h 12 -14 km/h
10 -12 km/h 14 -16 km/h
Above 12 km/h Above 16 km/h

13. What type of problems do you face with your vehicle? (Tick the relevant one)
 Brakes Yes / No
 Gear operation Yes / No
 Engine Yes / No
 Door troubles Yes / No
 Body rust / corrosion Yes / No
RESPONDENTS' NAME: _____________________________

ADDRESS: _________________________________________
DATE: _____________________________________________

QUESTIONNAIRE OF CUSTOMER
1. Name 2. Sex Male Female
3. Age 4. Marital Status Married Unmarried
5. Car driven currently
6. First Vehicle Purchased
7. Next vehicle plans (model of the vehicle)
8. Average time span for keeping the vehicle
9.Monthly Household income below 15,000 15,000- 40,000

40,000- 1,00,000 Above 1,00,000
10. Priority of factors for choosing a vehicle (Rate on a scale of 1-5, 1 lowest – 5 highest)
On road Price of the vehicle Vehicle Brand (Maruti, Toyota, Honda)
Influence of family /friends Maintenance Cost (fuel efficiency etc.)
Experts Opinion (Auto Magazines, journals, articles)
11. Driving Preference Self driven Chauffer driven
12. Most appealing form of Advertisement (Rate on a scale of 1 lowest to 5 highest)
Television News papers Magazines
Road shows Bill Boards (Hoardings)
13. Type of Showrooms Preference Multi Brands Single Brand
14. Type of Technology preference Completely Imported (C.B.U.)
Assembled in India (SKD/CKD) Made in India
15. Type of brand preference 100% Foreign (eg BMW, Mercedes)
Joint Venture Brand (Indian & Foreign) 100% Indian (eg Tata)
16. Mind made up about which car to buy At the Showroom
Before coming to the showroom After visiting the showroom

17. Preferred Segment of car A B C D E
18. Most attractive discount options (Rate on a scale of 1 lowest to 5 highest)

Free Insurance In Cash
Accessories Schemes (like gold coins, gift vouchers, etc.)
19. Pricing Options Preference

Low price by Manufacturer & no discounts by Dealers
Moderate price by Manufacturer, & good discount by dealers.
20. Additional features preference

Central locking Power Steering
Power Windows Music System
Air Conditioner Clutch Paddle Rest
Head light focus Adjustment Auto Sensitive Wipers
Any Other Suggestions :

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The Indian Institute of Planning & Management, New Delhi

THESIS PROJECT REPORT

THE INDIAN INSTITUTE OF PLANNING & MANAGEMENT

PROJECT REPORT ON:-

UNDER GUIDANCE OF:- MITESH GOYAL

PGP/FW/2012-14 i ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 ii ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 iii ID NO.: FW/12-14/M-96/DELHI/ISBE

PROJECT THESIS TOPIC APPROVAL

Student Name Shashi Kant Mourya

PGP/FW/2012-14 iv ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 v ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 vi ID NO.: FW/12-14/M-96/DELHI/ISBE

CHAPTER-2 RESEARCH OBJECTIVE & METHODOLOGY 11

CHAPTER-3 INTRODUCTION TO AUTOMOBILE INDUSTRY 13

CHAPTER-4 FINDINGS AND ANALYSIS 17

CHAPTER-5 SURVEY FINDING AND ANALYSIS 71

CHAPTER-6 CONCLUSION & RECOMMENDATIONS 91

PGP/FW/2012-14 vii ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 1 ID NO.: FW/12-14/M-96/DELHI/ISBE

OVER VIEW OF AUTOMOBILE INDUSTRY IN INDIA

PGP/FW/2012-14 2 ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 3 ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 4 ID NO.: FW/12-14/M-96/DELHI/ISBE

PGP/FW/2012-14 5 ID NO.: FW/12-14/M-96/DELHI/ISBE

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Meanwhile, multinationals such as Ford, GM and Peugeot had introduced some

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Important Players in Indian Automobile Industry

At present, India is the world's

 Largest tractor and three-wheel vehicle producer.

 Second largest two-wheel vehicle producer.

 Fourth largest commercial vehicle producer.

 Eleventh largest passenger car producer.

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GROWTH DRIVERS OF INDIAN AUTOMOBILE MARKET

 Rising industrial and agricultural output

 Rising per capita income

 Favourable demographic distribution with rising working population and middle

 Increasing disposable incomes in rural agri-sector

 Availability of a variety of vehicle models meeting diverse needs and preferences

 Greater affordability of vehicles

 Easy finance schemes

 Favourable government policies

INDIA'S POSITION IN WORLD'S PRODUCTION

 Well-developed, globally competitive auto ancillary industry

 Established automobile testing and R&D centres

 Among one of the lowest cost producers of steel in the world

 World's second largest manufacturer of two wheeler

 Fifth largest manufacturer of commercial vehicles

 Largest manufacturers of tractors in the world

 Fourth largest passenger car market in Asia

 India is the second largest two-wheeler market in the world

 11th largest passenger car market in the world

 Expected to be the seventh largest auto industry by 2016

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RESEARCH OBJECTIVE & METHODOLOGY

 To analyse the growth of Indian Automobile Industry.

 To measure the impact of new product launches in Automobile Industry”

2. Contact methods: Instruments or Data collection Forms : It is the method by which

3. Collection of information: The information was collected by interviewing executive

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The sources from which secondary data was collected: