Consumer Buying Behaviour

A Report On CONSUMER BUYING BEHAVIOUR IN SMALL CAR MARKET Submitted to: Prof. Dr. Somnath Chakraborty Faculty (Marketing Management II) Institute of Management Technology Raj Nagar, Hapur Road, Ghaziabad, U. P. -201001 Submitted By Abhishek Roy01 Akash Bhatt02 Amit Kumar Yadav05 Nalin Garg22 Anand Bhardwaj 07 Gaurav G Shinde36 Contents Introduction3 Report Purpose & Context4 Research Approach4 Response Rate4 Age Distribution5 Research Results:6 1. IMPORATNCE OF ATTRIBUTES6 2. FUEL PREFERENCE7 3. BRAND IMAGE8 4. INFORMATION SOURCES9 5. BRAND vs ATTRIBUTE10 6. NANO EFFECT11 Conclusion12

Appendix13 Introduction Indian Car market industry is booming. With the increase in per capita earning Indians are buying cars like never before. According to the Society of Indian Automobile Manufacturers, (SIAM) sales of passenger cars in India have exceeded the magical one million mark putting India among a select group of prosperous countries where passenger cars sell in such high numbers. Significantly while domestic car sales increased by 27. 4 per cent to 696,207 units from 541,491 units the previous year, exports rose 56 per cent to 1, 25, 327 units during this period.

Also for the first time in history of the industry, vehicles worth more USD 1 billion were exported. Most significantly, passenger car exports have nearly trebled in four years, from 28,122 units in 1998-99 to 71,653 vehicles in 2002-3. According to Jagdish Khattar president of Siam and managing director of Maruti Udyog Ltd, India’s largest carmaker, exports are further expected to rise by 15 to per cent in the current fiscal. Analysts say the news on the exports front is the most encouraging and by far the best thing to have happened to the Indian automobile industry.

This is because as more and more Indian-made cars flood foreign shores the low quality image associated with Indian products will ultimately fade, encouraging more automobile companies to look at India as a manufacturing destination that can cater to world wide markets. Nothing could be better in terms of foreign direct investment and employment. Till a few years ago a limited number of companies had actually set up substantial manufacturing facilities in India to cater exclusively to the domestic market. However, Hyundai Motor was the first global company to put its faith in Indian manufacturing to cater to global standards.

Given the background it becomes important for the car manufacturers to know the exact consumer preference and taste. It would help them to beat the competition and give an edge in the market. To be successful in the market, a brand needs to continuously be up to the mark of consumer expectation. An effective market survey of potential buyers would help them to align towards the consumer expectations. Report Purpose & Context This report details the results of a survey of existing and potential new car buyer behavior which was conducted among the executive class of various companies.

It aims to understand the importance of various attributes in the mind of the surveyed population. It also measures the effectiveness of the various sources of information and brand image comparisons of various players in the domain of small Car market in Indian passenger car industry. The report is divided into sections covering research methodology and analysis of results. Note that our comments on the findings are included at various points in the analysis, and are indicated with a bold letters. Research Approach Around 200 self-completion questionnaires were mailed to executives in various reputed organizations all over India.

The questionnaire was also made available on the internet to increase the reach. The questionnaire contained 09 questions, most of which required a ‘tick box’ for the respondents’ answers. Appendix contains the questionnaire. A personalized accompanying letter was also sent with the questionnaire. Response Rate A total of 111 replies were received. This particularly high response rate (50% plus) is achieved due to a number of factors, including: ? The importance of small car in the life of urban new generation. ?The use of a simple, well designed questionnaire. ?Excellent circulation within various groups of various companies. Personal Attention and follow ups by every member of the group. Age Distribution Figure 1 Age Distribution As from the above figure it can be seen, that the majority of the surveyed population lies in the age group 20-30 yrs. Hence it can offer a guideline to the various passenger car companies in India to understand the behavior of the young working population which can offer a tremendous potential for them in future. Research Results: 1. IMPORATNCE OF ATTRIBUTES Respondents were asked to record the importance of various attributes which they look for making decision to purchase a small car.

Nine different attributes were listed, and they were asked to rate the attributes according to the importance of each attribute as not at all important, not very important, quite important and very important. The bar chart below shows the details of the responses in more comprehensive manner: Figure 2 Attribute Preference Comments: Unlike the traditional important attributes like fuel efficiency and maintenance cost which occupies the mind in considering the purchase of small car, one important parameter which is now a days becoming very important for the young population is ‘Safety’.

Companies should focus in this aspect and should try to project itself as a safer car. 2. FUEL PREFERENCE Respondents were asked to record the fuel or fuel combinations which they prefer in a small car. Eight different fuel and fuel combinations were listed and they were asked to select the best choice for the fuel. The pie chart below shows the details of the responses in more comprehensive manner Figure 3 Fuel Preference Comments: Petrol + LPG/CNG is the most preferred fuel in the urban executive population due to increasing prices of petrol and pollution concerns.

Cars with both the inbuilt options can be very successful in cities like Delhi which Hyundai has done recently in its Santro model with both the options. However hybrid cars can also be tried to create a product differentiation. 3. BRAND IMAGE Respondents were asked to record the brand which comes to mind first while thinking of a small car. Four different brands were listed and they were asked to select the best choice for the brand. The pie chart below shows the details of the responses in more comprehensive manner Figure 4 Brand Image

Comments: Maruti being the oldest and most reliable brand in the Indian small car industry has an edge over others in terms of brand image. However Hyundai has also got a good share of mind in a very short span of time, specific brand image campaigns should be launched by other companies like Hyundai to increase the share of mind and positioning in the mind of consumers 4. INFORMATION SOURCES Respondents were asked to record the importance of various sources of information which they use for making decision to purchase a small car.

Seven different sources of information were listed, and they were asked to rate the sources of information according to the importance of each source as not at all important, not very important, quite important and very important. The bar chart below shows the details of the responses in more comprehensive manner Figure 5 Information Source Comments: The role of ‘traditional’ sources of information & ‘word of mouth’ factor and reliance on other peoples’ opinions is strong, especially among younger buyers, who probably have less experience or confidence in buying new cars.

While the popularity of Motor Shows/Expo and Television Ads is increasing rapidly in a short period of time due to successful events such as Auto Expo and penetration of television. 5. BRAND vs ATTRIBUTE Respondents were asked to match the various attributes with the brands matching to that particular attribute. Eight different attributes and four different brands were listed, and they were asked to match the attributes with the brands they think associated with the attribute.

The bar chart below shows the comparative analysis of the responses in more comprehensible manner Figure 6 Brand vs Attribute Comments: Maruti clearly dominates with the presence of most of the attributes which are important for the purchase of small car. However it is low in safety which has become a very attribute in the mind of people while considering the purchase of small car. 6. NANO EFFECT Respondents were asked to give their opinion about the change in pricing strategies of the other players in the small car market after the launch of TATA’s NANO.

Three options were given as Yes, No and can’t say about the enforcement of changing the pricing strategies of other players operating in small car market in India. The pie chart below shows the details of the responses in more comprehensive manner Figure 7 Nano Effect Comments: The Launch of TATA’s NANO has changed the dimensions of the entire passenger car in industry. In spite of NANO being launched in the Mini Car Segment, 77% of the respondents think that it will force the other player’s to change their prices in the small car market. Companies should look for more cost ffective solutions to counter this attack from Tata’s NANO. Conclusion: Vulnerability of Maruti: In terms of attributes, however it scores high on most of the parameters it has a very low image in terms of safety which holds a great importance in the mind of young working population of India while considering the purchase of small car. ?Maruti should launch Advertisement campaigns to position itself in the minds of people on the safety parameter. ?Other companies like Hyundai or GM may en-cash this weakness by projecting themselves as a safer brand as compared to Maruti.

Fuel Combinations: Since the prices of the petrol and diesel are rising day by day and environment concerns, hence there is need for the multi fuel vehicles in the market. Also the results of the survey are indicating the same thing, hence companies should focus on development of such cheaper and cleaner fuel alternatives along with the regular ones to grow with the change. Information Sources: It is clear from the survey that till today the most powerful source of information is positive ‘word of mouth’ hence companies should focus on building a positive word of mouth for themselves.

This can be done by providing better customer service, reliability and keeping on their commitments. Also the popularity of exhibitions such as Auto Expo in the urban cities, companies should focus on displaying their products in such exhibitions to capture the mind of urbanized population. Appendix Survey on Small Car Segment Questionnaire 1. Name : 2. Organization : 3. Your Age is within: 0 20-30 Yrs 0 30-40 Yrs 0 40-50 Yrs 0 50-60 Yrs 4. Please rate the following attributes as you would prefer while purchasing a small car AttributesNot at all importantNot very importantQuite importantVery important Fuel Efficiency0 0 0 Power0 0 0 0 Safety0 0 0 0 Aesthetics0 0 0 0 After Sales Service0 0 0 0 Size0 0 0 0 Maintenance Cost 0 0 0 0 Resale Value0 0 0 0 Finance Schemes0 0 0 0 5. Which fuel would you prefer in the car you are purchasing ? 0 Petrol 0 Diesel 0 LPG 0 CNG 0 Electric Power 0 Petrol+LPG/CNG 0 Diesel+LPG/CNG 0 Hybrid(Fuel+Electric) 6. Which is the one brand which occurs first to your mind while thinking of a small car 0 Maruti 0 Hyundai 0 TATA 0 GM 7. Please rate importance of the sources of information in your decision of buying a small car AttributesNot at all importantNot very importantQuite importantVery important Television Ads0 0 0 Car Magazines Ads0 0 0 0 Friends/Relatives/Colleagues0 0 0 0 Newspaper Ads0 0 0 0 Internet Ads/Websites0 0 0 0 Dealer Sales Staff0 0 0 0 Motor Shows/Expo0 0 0 0 8. Please rate the brands according to you with the most important attribute they are known for AttributesMarutiHyundaiTATAGM Fuel Efficiency0 0 0 0 Power0 0 0 0 Safety0 0 0 0 Aesthetics0 0 0 0 After Sales Service0 0 0 0 Size0 0 0 0 Maintenance Cost 0 0 0 0 Resale Value0 0 0 0 9. Do you think introduction of TATA’s Nano would force other players to change the pricing strategy of their models in small car segment ? 0 YES 0 NO 0 Can’t Say THANK YOU

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