a project report on factors affecting brand loyalty for cars in ludhiana
TRANSCRIPT
INTRODUCTION
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CHAPTER- 1
The Automotive industry in India is one of the largest automotive markets in the world. It
had previously been one of the fastest growing markets globally, but is currently experiencing
flat or negative growth rates. India's passenger car and commercial vehicle manufacturing
industry is the sixth largest in the world, with an annual production of more than 4.9 million
units.
According to recent reports, India overtook Brazil to become the sixth largest passenger
vehicle producer in the world (beating such old and new auto makers as Belgium, United
Kingdom, Italy, Canada, Mexico, Russia, Spain, France, and Brazil). Throughout the course
the industry grew 16-18%, selling around three million units. In 2009, India emerged as
Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. In
2010, India beat Thailand to become Asia's third largest exporter of passenger cars.
As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive
vehicles were produced in India in 2010 (an increase of 33.9%), making the country the
second (after China) fastest growing automobile market in the world in that year. According
to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to
increase to 4 million by 2015, no longer 5 million as previously projected.
Eventually multinational automakers, such as, though not limited to, Suzuki and Toyota of
Japan and Hyundai of South Korea, were allowed to invest in the Indian market ultimately
leading to the establishment of an automotive industry in India. Maruti Suzuki was the first,
and the most successful of these new entries, and in part the result of government policies to
promote the automotive industry beginning in the 1980. As India began to liberalize their
automobile market in 1991, a number of foreign firms also initiated joint ventures with
existing Indian companies. The variety of options available to the consumer began to
multiply in the nineties, whereas before there had usually only been one option in each price
class. By 2000, there were 12 large automotive companies in the Indian market, most of them
offshoots of global companies.
The Premier Padmini was the Ambassador's only true competitor Exports were slow to grow.
Sales of small numbers of vehicle (Hungary). After some growth in the mid-nineties, exports
once again began to drop as the outmoded platforms handed down to Indian manufacturers by
multinationals were not competitive. This was not to last, and today India manufactures low-
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priced cars for markets across the globe. As of 18 March 2013 global brands such as Proton
Holdings, PSA Group, Kia, Mazda, Chrusler, Dodge and Geely Holding Group are shelving
plans for India due to the global economic crisis.
The automobiles sector is compartmentalized in four different sectors which are as follows:
Two-wheelers which comprise of mopeds, scooters, motorcycles and electric two-
wheelers
Passenger Vehicles which include passenger cars, utility vehicles and multi-purpose
vehicles
Commercial Vehicles that are light and medium-heavy vehicles
Three Wheelers that are passenger carriers and goods carriers.
The automobile industry is one of the key drivers that boost the economic growth of the
country. Since the de-licensing of the sector in 1991 and the subsequent opening up of 100
percent FDI through automatic route, Indian automobile sector has come a long way. Today,
almost every global auto major has set up facilities in the country.
Austria based motorcycle manufacturer KTM, the established makers of Harley Davidson
from the US and Mahindra & Mahindra have set up manufacturing bases in India.
Furthermore, according to internal projections by Mercedes Benz Cars, India is set to become
Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe.
As per the data published by Department of Industrial Policy and Promotion (DIPP), Ministry
of Commerce, Government of India, the cumulative FDI inflows into the Indian automobile
industry during April 2000 to October 2013 was noted to be US$ 9,079 million, which
amounted to 4% of the total FDI inflows in terms of US $. The production of compact
superbikes is also expected to take place in India. The country has a mass production base of
16 million two-wheelers and the several global as well as Indian bike makers are looking
forward to use it as an advantage in order to roll out sports bikes in the 250 cc capacity.
The auto sector is one of the biggest job creators, both directly and indirectly. It is estimated
that every job created in an auto company leads to three to five indirect ancillary jobs. India's
domestic market and its growth potential have been a big attraction for many global
automakers. India is presently the world's third largest exporter of two-wheelers after China
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and Japan. According to a report by Standard Chartered Bank, India is likely to overtake
Thailand in global auto-export market share by the year 2020. The next few years are
projected to show solid but cautious growth due to improved affordability, rising incomes and
untapped markets.
MARKET SIZE-
The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry
during the period April 2000 – August 2014 was recorded at US$ 10,119.68 million, as per
data by Department of Industrial Policy and Promotion (DIPP). Data from industry body
Society of Indian Automobile Manufacturers (SIAM) showed that 137,873 passenger cars
were sold in July 2014 compared to 131,257 units during the corresponding month of 2013.
Among the auto makers, Maruti Suzuki, Hyundai Motor India and Honda Cars India emerged
the top three gainers with sales growth of 15.45 per cent, 12 per cent and 11 per cent,
respectively. The three-wheeler segment posted a 24 per cent growth to 51,461 units on the
back of increased demands from the urban market. Total sales across different vehicle
segments grew 12 per cent year on year (y-o-y) to 1,586,123 units. Scooter sales have jumped
by 29 per cent in the ongoing fiscal, and now form 27 per cent of the total two-wheeler
market from just 8 per cent a decade back. The ever-rising demand for scooters, which has far
outstripped supply has prompted Honda to set up its first dedicated scooter plant in
Ahmadabad. Tractors sales in the country is expected to grow at a compound annual growth
rate (CAGR) of 8–9 per cent in the next five years making India a high-potential market for
many international brands.
INVESTMENTS-
To match production with demand, many auto makers have started to invest heavily in
various segments in the industry in the last few months. Some of the major investments and
developments in the automobile sector in India are as follows:
Ashok Leyland plans to invest Rs 450–500 crore (US$ 73.54–81.71 million) in India, by
way of capital expenditure (capex) and investment during FY15. The company is require
to manage Rs 6,000 crore (US$ 980.56 million) of assets in seven locations across the
world, for which maintenance capex is needed.
Honda Motors plans to set up the world's largest scooter plant in Gujarat to roll out 1.2
million units annually and achieve leadership position in the Indian two-wheeler market.
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The company plans to spend around Rs 1,100 crore (US$ 179.76 million) on the new
plant in Ahmadabad, and expand its range with a few more offerings.
Yamaha Motor Co has restructured its business in India. Now, Yamaha Motor India
(YMI) will take care of its India operations. “The restructuring is part of Yamaha’s mid-
term plan aimed at improving organisational efficiency,” as per Mr Hiroyuki Suzuki,
Chief Executive and Managing Director. YMI would be responsible for corporate
planning and strategy, business planning and business expansion, quality control, and
regional control of Yamaha India Business.
Tata Motors plans to use the 'hub-and-spoke' model in which India will be the key
manufacturing base while it will have mini-hubs in overseas markets. The company also
plans to set up mini hubs in potential markets like Africa, Middle-East and South East
Asia.
Hero Cycles through its unit OPM Global has acquired a majority stake in German
bicycle company Mitteldeutsche Fahrradwerke AG (MIFA) for €15 million (US$ 19.11
million). The company plans to invest an aadditional €4 million (US$ 5.09 million) as
capital expenses in restructuring the acquired company.
GOVERNMENT INITIATIVES-
The Government of India encourages foreign investment in the automobile sector and allows
100 per cent FDI under the automatic route. To boost manufacturing, the government had
lowered excise duty on small cars, motorcycles, scooters and commercial vehicles to eight
per cent from 12 per cent, on sports utility vehicles to 24 per cent from 30 per cent, on mid-
segment cars to 20 per cent from 24 per cent and on large-segment cars to 24 per cent from
27 per cent. The government’s decision to resolve VAT disputes has also resulted in the top
Indian auto makers namely, Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata
Motors announcing an investment of around Rs 11,500 crore (US$ 1.87 billion) in
Maharashtra.
The Automobile Mission Plan for the period 2006–2016, designed by the government is
aimed at accelerating and sustaining growth in this sector. Also, the well-established
Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays
a part in providing a boost to this sector. The Government of India-appointed SIAM and
Automotive Components Manufacturers Association (ACMA) are responsible in working for
the development of the Indian automobile industry.
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ROAD AHEAD-
The future of the auto industry depends on the positive sentiments and the demand for
vehicles in the market. With the festival season coming up, the Indian auto sector will see a
rise in demand which is expected to bring in major growth. An auto dealer survey by firm
UBS suggested that the Indian auto industry, riding on trends like the upcoming festival
season and decline in fuel price, will observe a 12 per cent y-o-y growth in FY15. Also,
keeping up with international trends, there is expected to be a surge in the number of hybrid
vehicles in the Indian auto sector in the years to come.
The world standing for the Indian automobile sector, as per the Confederation of the
Indian industry is as follows:
Largest three-wheeler market
Second largest two-wheeler market
Tenth largest passenger car market
Fourth largest tractor market
Fifth largest commercial vehicle market
Fifth largest bus and truck segment
However, the year 2013-2014 has seen a decline in the industry’s otherwise smooth-running
growth. High inflation, soaring interest rates, low consumer sentiment and rising fuel prices
along with economic slowdown are the major reason for the downturn of the industry.
Except for the two-wheelers, all other segments in the industry have been weakening. There
is a negative impact on the automakers and dealers who offered high discounts in order to
push sales. To match the decline in demand, automakers have resorted to production cuts and
lay-offs, due to which capacity utilization for most automakers remains at a dismal level.
Despite the comprehensive market being under extreme burden, the luxury car market has
observed a robust double-digit hike during the year 2013-2014, as a result of rewarding new
launches at compelling lower price points. Further, with the measured increases in the price
of diesel, the overall market continues to shift towards petrol-fuelled cars. This has lead to the
growth in sales of the 'Mini' segment of the PV market by of 5.5%
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SWOT ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY
STRENGTHS-
Investments by foreign car manufacturers.
Increase in export level
Low coast and cheap labor
Rise in the working and middle class income
Increasing demand for European quality
Expert skills in producing small cars- good for environment.
Large pool of engineers
WEAKNESSES
Low quality compared to other automotive countries.
Low labour productivity.
High interest rate and overhead level
Production costs are generally higher than some of the Asian states such as Chins.
Low investment in R & D area.
Local demand is still towards low cost vehicles, due to low income levels.
OPPORTUNITIES
Growing population in the country
Focus from the government in improving the road infrastructure.
Rising living standards.
Increase in income level.
Better car technology is demanded.
Rising rural demand.
The car is a status symbol.
Women drivers have increased.
THREATS
Less skilled labour.
Lack of technologies for Indian companies.
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Increase in import tariff and technology cost.
Smaller players that do not fulfill international standards.
Increased congestion in the urban areas.
Highlights of India's automobile industry 2014:
Overall growth was 9.8 percent by volume year-on-year (YoY) between January and
October.
Two-wheeler sector grew 12.9 percent.
Passenger car, medium and heavy commercial vehicle segments contracted by 0.8 and
6.5 till October.
LCV segment worst hit, with sales falling 18.9 percent YoY fall over 2013 till October.
Excise duty reduction on automobiles.
Competition Commission of India (CCI) fines 14 car-makers Rs.2,544.65 crore for
restrictive trade practices.
Diesel price de-regulated
Factors determining the growth of the industry
Fuel economy and demand for greater fuel efficiency is a major factor that affects
consumer purchase decision that will bring leading companies across two-wheeler and
four-wheeler segment to focus on delivering performance-oriented products.
Sturdy legal and banking infrastructure
Increased affordability, heightened demand in the small car segment and the surging
income of the Indian population
India is the third largest investor base in the world
The Government technology modernization fund is concentrating on establishing India as
an auto-manufacturing hub.
Availability of inexpensive skilled workers
Industry is perusing to elevate sales by knocking on doors of women, youth, rural and
luxury segments
Market segmentation and product innovation
DOMESTIC AND FOREIGN VEHICLE MANUFACTURERS-
Passenger Vehicles-
The domestic manufacturers of passenger vehicles are as follows-
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Maruti Udyog
Tata/ Telco
Mahindra & Mahindra
Hindustan Motors
Foreign competitors manufacturing locally including-
Hyundai
Ford
General Motors
Honda
Toyota.
Car demand has seen a turnaround since mid 2001. Thanks to heavy discounts and cheaper
finance. A large number of new models both locally assembled and imported have also
revitalized the market.
Commercial vehicles-
As the world’s third largest truck and bus market, India is increasingly becoming the hot spot
with growth opportunities for some of the biggest global commercial vehicles manufacturers.
This segment in India has shown great recovery after withstanding the effects of the global
economic crisis.
With economic revival, increasing public & private spending on infrastructure and higher
penetration of financing facilities, expected growth trend in each segment of commercial
vehicles will continue in the coming years.
Moreover, Light Commercial Vehicle (LCV) goods carrier is the fastest growing segment
that is estimated to register a sales growth of around 20% by 2015.
Commercial vehicles manufacturers in India include-
TAFE Tractors
Eicher Tractors
Hindustan Motors
Ashok Leyland
Volvo Buses
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Bharat Benz
Top 10 selling cars in 2014
Maruti Suzuki Alto - 242248 units
Maruti Suzuki Swift Dzire - 193680 units
Maruti Suzuki Swift - 185421 units
Maruti Suzuki WagonR - 146931 units
Hyundai Grand i10 - 95539 units
Mahindra Bolero - 92297 units
Hyundai Eon - 74349 units
Honda City - 71308 units
Maruti Suzuki Omni - 68246 units
Maruti Suzuki Celerio - 62765 units
Key Observations
The last year's top-selling car, Maruti Suzuki Alto, continued to rule the market this year
as well. The company sold a total of 242248 units which is about 23% more than the
second most selling car in India.
The country's largest selling carmaker once again dominated the sales chart with 6 of its
cars entering top 10 sellers of the year. In fact, Maruti retains all top 4 positions in the top
selling cars' list.
Despite having some really capable competitors like Honda Amaze, Hyundai Xcent and
Tata Zest in the entry-level sedan segment, Maruti Swift Dzire continued to dominate the
space. In fact, the Dzire has been the only sub-compact sedan in the top-10 selling cars of
the year. Selling a total of 1,93,680 units in last 11 months, the Dzire is the second most
selling car in the country today; and it will easily cross the 2 lakh mark by the end of this
year. Honda's first ever diesel car, the Amaze, did really well in the first half; but due to
production issues, the company failed to control the rising waiting period for its sub-
compact sedan. Despite all the issues, Honda managed to sell 60325 units of the Amaze
in the first 11 months of the calendar year.
India's most loved premium hatchback, the Maruti Suzuki Swift, kept the attendants busy
at all MSI dealerships across the nation. The Swift, till November, sold over 1.85 lakh
units, which makes it the third best-selling car of the year. This too will easily cross 2
lakh sales marks by the end of the year. Its closest competitor, Hyundai i20, couldn't even
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do 1/3rd of its sales in the year. But things might start changing from now onwards, since
the new-gen i20 has been claimed to have garnered over 56,000 bookings within 4
months of its launch.
The budget hatchback segment that currently is the largest contributor in the overall car
sales, has three Maruti Suzuki cars - Alto, WagonR and Celerio. Hyundai Eon is the only
non-Maruti vehicle to have been able to do well. Hyundai Eon at 74349 units is the 7th
largest selling car in the market.
Ever since its launch, the Grand i10 has been the top-selling Hyundai car in India. In fact,
the Grand i10 is the only non-Maruti vehicle that has managed to enter the list of top-5
selling cars of the year. Hyundai sold a total of 95539 units in the first 11 months of the
year, and will easy cross 1 lakh sales mark by the end of this year.
Despite being a 13 year old vehicle, Mahindra Bolero is still among the hot favourites in
semi-urban and rural markets of India. Though, the company has recorded a constant drop
in its sales over the years, it is still the top-selling vehicle in Mahindra's passenger car
division. Selling a total of 92297 units in first 11 months of 2014, the Bolero is the sixth
largest selling car in India.
Maruti Omni is among the oldest car in Maruti's current line-up, and has almost done its
life-cycle. But when you look at its sales, it still sells more units than several
contemporary cars; and that is essentially because of its practicality and affordability.
Available in three verisons - Cargo, Ambulance and Standard - the vehicle has once again
managed to stay in the top-10 selling cars of the year. MSI sold a total of 68246 units of
its van in 2014.
INFORMATION ON FEW TOP SELLING CAR BRANDS IN INDIA
Maruti Suzuki
Maruti Suzuki India Limited commonly referred to as Maruti and formerly known as
Maruti Udyog Limited, is an automobile manufacturer in India. It is a subsidiary of
Japanese automobile and motorcycle manufacturer Suzuki. As of November 2012, it had a
market share of 37% of the Indian passenger car markets. Maruti Suzuki manufactures and
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sells a complete range of cars from the entry level Maruti 800, Alto, to the hatchback Ritz,
Celerio, , A-Star, Swift, Wagon R, Zen and sedans DZire, Ciaz, Kizashi and SX4, in the 'C'
segment Eeco, Omni, Multi Purpose vehicle Suzuki Ertiga and Sports Utility vehicle Grand
Vitara.
The company's headquarters are at No 1, Nelson Mandela Road, New Delhi. In February
2012, the company sold its ten millionth vehicle in India.
As of 31 March 2014 Maruti Suzuki has 933 dealerships across 666 towns and cities in all
states and union territories of India. It has 3,060 service stations (inclusive of dealer
workshops and Maruti Authorised Service Stations) in 1,454 towns and cities throughout
India. It has 30 Express Service Stations on 30 National Highways across 1,436 cities in
India.
Service is a major revenue generator of the company. Most of the service stations are
managed on franchise basis, where Maruti Suzuki trains the local staff. Other automobile
companies have not been able to match this benchmark set by Maruti Suzuki. The Express
Service stations help many stranded vehicles on the highways by sending across their repair
man to the vehicle.
Maruti Exports Limited is the subsidiary of Maruti Suzuki with its major focus on exports
and it does not operate in the domestic Indian market. The first commercial consignment of
480 cars were sent to Hungary. By sending a consignment of 571 cars to the same country
Maruti Suzuki crossed the benchmark of 300,000 cars. Since its inception export was one of
the aspects government was keen to encourage. Every political party expected Maruti Suzuki
to earn foreign currency. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Nepal,
Sri Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the markets
served by Maruti Exports.
The Brand Trust Report published by Trust Research Advisory, a brand analytics company,
has ranked Maruti Suzuki in the thirty seventh position in 2013 and eleventh position in 2014
among the most trusted brands of India.
Bluebytes News, a news research agency, rated Maruti Suzuki as India's Most Reputed
Car Company in their Reputation Benchmark Study conducted for the Auto (Cars) Sector
which launched in April 2012.
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Hyundai
The Hyundai Motor Company is a South Korean multinational automotive manufacturer
headquartered in Seoul, South Korea. The company was founded in 1967 and, along with its
32.8% owned subsidiary, Kia Motors, together comprise the Hyundai Motor Group, which is
the world's fifth largest automaker based on annual vehicle sales in 2012. In 2008, Hyundai
Motor (without Kia) was ranked as the eighth largest automaker. As of 2012, the Company
sold over 4.4 million vehicles worldwide in that year, and together with Kia total sales were
7.12 million.
Hyundai is currently the fourth largest vehicle manufacturer in the world. Hyundai operates
the world's largest integrated automobile manufacturing facility in Ulsan, South Korea, which
has an annual production capacity of 1.6 million units. The company employs about 75,000
people worldwide. Hyundai vehicles are sold in 193 countries through some 6,000
dealerships and showrooms.
Hyundai Motor India Limited is currently the second largest auto exporter from India. It is
making India the global manufacturing base for small cars.
Hyundai sells several models in India, the most popular being the Santro Xing, i10, Hyundai
EON and the i20. On 3 September 2013, Hyundai launched its much-awaited car, Grand i10
in petrol and diesel variants. Other models include the Getz, Accent, Elantra, second
generation Verna, Santa Fe and the Sonata Transform. Hyundai has two manufacturing plants
in India located at Sriperumbudur in the Indian state of Tamil Nadu. Both plants have a
combined annual capacity of 600,000 units. In the year 2007, Hyundai opened its R&D
facility in Hyderabad, employing now nearly 450 engineers from different parts of the
country. Hyundai Motor India Engineering (HMIE) gives technical & engineering support in
vehicle development and CAD & CAE support to Hyundai's main R&D centre in Namyang,
Korea. In mid 2014, Hyundai launched Xcent, a sedan based on successful Grand i10.
Recently, on 11 August 2014, Hyundai India Motor Limited launched the Elite i20 in petrol
and diesel variants.
In 2007, Hyundai started its support engineering centre with CAD/CAE teams in Hyderabad,
India. Hyundai expanded its engineering activities in India with Vehicle Engineering team in
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2010. In 2011, Hyundai started its design activities at Hyderabad R&D Centre with Styling,
Digital Design & Skin CAD Teams and Packaging team . Indian engineers are heavily
involved in making of Indian vehicles like Grand i10, Elite i20 along with other Global cars.
On 23 April 2008, Hyundai Motor announced the beginning of a five-year project to turn
50 km² of infertile land into grassland by 2012. Hyundai is doing so with the help of the
Korean Federation for Environmental Movement (KFEM). The project, named Hyundai
Green Zone, is located 660 km north of Beijing. The goal of the project is to end the recurring
dust storms in Beijing, block desertification and protect the local ecosystem. Local weeds
will be planted in the region that have the ability to endure sterile alkaline soil. This is the
first environmental project of the company's social contribution programme. Hyundai also
made electric car concept i10 recently.
Mahindra and Mahindra
Mahindra & Mahindra Limited (M&M) is an Indian multinational automobile
manufacturing corporation headquartered in Mumbai, Maharashtra, India. It is one of the
largest vehicle manufacturers by production in India and the largest seller of tractors across
the world. It is a part of Mahindra Group, an Indian conglomerate.
It was ranked as the 10th most trusted brand in India, by The Brand Trust Report, India Study
2014. It was ranked 21st in the list of top companies of India in Fortune India 500 in 2011.
Its major competitors in the Indian market include Maruti Suzuki, Tata Motors, Ashok
Leyland, Toyota, Hyundai, Mercedes-Benz (Merc) and others.
Mahindra & Mahindra, branded on its products usually as 'Mahindra', produces SUVs, saloon
cars, pickups, commercial vehicles, and two wheeled motorcycles and tractors. It owns
assembly plants in India, Mainland China (PRC), The United Kingdom, and has three
assembly plants in the United States. Mahindra maintains business relations with foreign
companies like Renault SA, France.
M&M has a global presence and its products are exported to several countries. Its global
subsidiaries include Mahindra Europe S.r.l. based in Italy, Mahindra USA Inc., Mahindra
South Africa and Mahindra (China) Tractor Co. Ltd.
Mahindra started making passenger vehicles firstly with the Logan in April 2007 under the
Mahindra Renault joint venture. M&M will make its maiden entry into the heavy trucks
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segment with the Mahindra Truck and Bus Division, the joint venture with International
Truck, USA.
Mahindra produces a wide range of vehicles including MUVs, LCVs and three wheelers. It
manufactures over 20 models of cars including larger, multi-utility vehicles like the Scorpio
and the Bolero. It formerly had a joint venture with Ford called Ford India Private Limited to
build passenger cars.
Awards and Recognitions-
Bombay Chamber Good Corporate Citizen Award for 2006-07.
Business world FICCI-SEDF Corporate Social Responsibility Award 2007.
The Brand Trust Report ranked M&M as India's 10th Most Trusted Brand in its India
Study 2014 survey (from 20,000 brands analyzed).
Its Farm Equipment division received the Deming Prize in 2003.
Its Farm Equipment division received the Japan Quality Medal in 2007.
The US based Reputation Institute ranked M&M amongst the top Ten Indian companies
in its 'Global 200:The World's Best Corporate Reputations' list for 2008
Blue bytes News rated M&M as India's second Most Reputed Car Company (reported in
their study titled Reputation Benchmark Study) conducted for the Auto (Cars) Sector in
2012.
Toyota
Toyota Motor Corporation is a Japanese automotive manufacturer headquartered in Toyota,
Aichi, Japan. In March 2014 the multinational corporation consisted of 338,875 employees
worldwide and, as of November 2014, is the twelfth-largest company in the world by
revenue. Toyota was the largest automobile manufacturer in 2012 (by production) ahead of
the Volkswagen Group and General Motors. In July of that year, the company reported the
production of its 200-millionth vehicle. Toyota is the world's first automobile manufacturer to
produce more than 10 million vehicles per year. It did so in 2012 according to OICA, and in
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2013 according to company data. As of July 2014, Toyota was the largest listed company in
Japan by market capitalization (worth more than twice as much as #2-ranked SoftBank) and
by revenue.
The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's
company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a
department of Toyota Industries, it created its first product, the Type A engine, and, in 1936,
its first passenger car, the Toyota AA. Toyota Motor Corporation produces vehicles under 5
brands, including the Toyota brand, Hino, Lexus, Ranz, and Scion. It also holds a 51.2%
stake in Daihatsu, a 16.66% stake in Fuji Heavy Industries, a 5.9% stake in Isuzu, and a
0.27% stake in Tesla, as well as joint-ventures with two in China (GAC Toyota and Sichuan
FAW Toyota Motor), one in India (Toyota Kirloskar), one in the Czech Republic (TPCA),
along with several "nonautomotive" companies. TMC is part of the Toyota Group, one of the
largest conglomerates in the world.
Toyota, the largest car manufacturer in the world and one of the leading brands is known for
its reliability and quality in India. The Toyota Innova has been a best seller in the MUV
segment for a number of years now. In 2010, Toyota launched compact cars like the Etios
and the Liva which brought them a certain amount of success.
In 2011, the Toyota Group (including Daihatsu, Hino and Chinese joint ventures) fell to place
three with 8,050,181 units produced globally. According to an unofficial count, based on unit
production reported by major automakers, Toyota regained its top rank with 9,909,440 units
produced globally in calendar year 2012. On May 8, 2013, Toyota announced plans to
produce 10.1 million units in fiscal year 2013, which, if achieved, would make it the first auto
manufacturer to cross the 10-million-unit threshold.
On May 8, 2009, Toyota reported a record annual net loss of US$4.2 billion, making it the
latest automobile maker to be severely affected by the global financial crisis that started in
2007. Toyota's financial unit had asked for an emergency loan from a state-backed lender on
March 16, 2009, with reports putting the figure at more than A$3 billion. It said the
international financial situation was squeezing its business, forcing it to ask for an emergency
loan from the Japan Bank for International Cooperation. This was the first time the state-
backed bank has been asked to lend to a Japanese car manufacturer.
On May 8, 2013, Toyota Motor Corporation announced its financial results for the fiscal year
ended March 31, 2013. Net revenues totaled ¥ 22.0 trillion (+18.7%). Operating income was
¥1.32 trillion (+371%), net income ¥962.1 billion (+239%).
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Tata Motors
Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive
Company) is an Indian multinational automotive manufacturing company headquartered in
Mumbai, Maharashtra, India and a subsidiary of the Tata Group. Its products include
passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles. It
is the world's 17th-largest motor vehicle manufacturing company, fourth-largest truck
manufacturer, and second-largest bus manufacturer by volume.
Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar,
Lucknow, Sanand, Dharwad, and Pune in India, as well as in Argentina, South Africa,
Thailand, and the United Kingdom. It has research and development centres in Pune,
Jamshedpur, Lucknow, and Dharwad, India, and in South Korea, Spain, and the United
Kingdom. Tata Motors' principal subsidiaries include the British premium car maker Jaguar
Land Rover (the maker of Jaguar, Land Rover, and Range Rover cars) and the South Korean
commercial vehicle manufactuer Tata Daewoo. Tata Motors has a bus-manufacturing joint
venture with Marcopolo S.A. (Tata Marcopolo), a construction-equipment manufacturing
joint venture with Hitachi (Tata Hitachi Construction Machinery), and a joint venture with
Fiat which manufactures automotive components and Fiat and Tata branded vehicles.
Founded in 1945 as a manufacturer of locomotives, the company manufactured its first
commercial vehicle in 1954 in collaboration with Daimler-Benz AG, which ended in 1969.
Tata Motors entered the passenger vehicle market in 1991 with the launch of the Tata Sierra,
becoming the first Indian manufacturer to achieve the capability of developing a competitive
indigenous automobile. In 1998, Tata launched the first fully indigenous Indian passenger
car, the Indica, and in 2008 launched the Tata Nano, the world's most affordable car. Tata
Motors acquired the South Korean truck manufacturer Daewoo Commercial Vehicles
Company in 2004 and purchased Jaguar Land Rover from Ford in 2008.
Tata Motors is listed on the Bombay Stock Exchange, where it is a constituent of the BSE
SENSEX index, the National Stock Exchange of India, and the New York Stock Exchange.
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Tata Motors is ranked 314th in the 2012 Fortune Global 500 ranking of the world's
biggest corporations.
In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company
Trilix for €1.85 million. The acquisition formed part of the company's plan to enhance its
styling and design capabilities.
In 2012, Tata Motors announced it would invest around 6 billion in the development of
Futuristic Infantry Combat Vehicles in collaboration with DRDO.
In 2013, Tata Motors announced it will sell in India, the first vehicle in the world to run on
compressed air (engines designed by the French company MDI) and dubbed "Mini CAT.”
Honda
Honda Motor Co., Ltd is a Japanese public multinational corporation primarily known as a
manufacturer of automobiles, motorcycles and power equipment.
Honda has been the world's largest motorcycle manufacturer since 1959, as well as the
world's largest manufacturer of internal combustion engines measured by volume, producing
more than 14 million internal combustion engines each year. Honda became the second-
largest Japanese automobile manufacturer in 2001. Honda was the eighth largest automobile
manufacturer in the world behind General Motors, Volkswagen Group, Toyota, Hyundai
Motor Group, Ford, Nissan, and PSA in 2011.
Honda was the first Japanese automobile manufacturer to release a dedicated luxury brand,
Acura, in 1986. Aside from their core automobile and motorcycle businesses, Honda also
manufactures garden equipment, marine engines, personal watercraft and power generators,
amongst others. Since 1986, Honda has been involved with artificial intelligence/robotics
research and released their ASIMO robot in 2000. They have also ventured into aerospace
with the establishment of GE Honda Aero Engines in 2004 and the Honda HA-420 HondaJet,
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which began production in 2012. Honda has three joint-ventures in China (Honda China,
Dongfeng Honda, and Guangqi Honda).
In 2013, Honda invested about 5.7% (US$6.8 billion) of its revenues in research and
development. Also in 2013, Honda became the first Japanese automaker to be a net exporter
from the United States, exporting 108,705 Honda and Acura models while importing only
88,357.
General Motors- Chevrolet
General Motors Company, commonly known as GM, is an American multinational
corporation headquartered in Detroit, Michigan, that designs, manufactures, markets and
distributes vehicles and vehicle parts and sells financial services. General Motors produces
vehicles in 37 countries under thirteen brands: Alpheon, Chevrolet, Buick, GMC, Cadillac,
Holden, HSV, Opel, Vauxhall, Wuling, Baojun, Jie Fang, UzDaewoo. General Motors holds
a 20% stake in IMM, and a 77% stake in GM Korea. It also has a number of joint-ventures,
including Shanghai GM, SAIC-GM-Wuling and FAW-GM in China, GM-AvtoVAZ in
Russia, Ghandhara Industries in Pakistan, GM Uzbekistan, General Motors India, General
Motors Egypt, and Isuzu Truck South Africa. General Motors employs 212,000 people and
does business in more than 120 countries. General Motors is divided into five business
segments: GM North America (GMNA), Opel Group, GM International Operations (GMIO),
GM South America (GMSA), and GM Financial.
General Motors led global vehicle sales for 77 consecutive years from 1931 through 2007,
longer than any other automaker, and is currently among the world's largest automakers by
vehicle unit sales.
General Motors acts in most countries outside the U.S. via wholly owned subsidiaries, but
operates in China through 10 joint ventures. GM's OnStar subsidiary provides vehicle safety,
security and information services.
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In 2009, General Motors shed several brands, closing Saturn, Pontiac and Hummer, and
emerged from a government-backed Chapter 11 reorganization. In 2010, the reorganized GM
made an initial public offering that was one of the world's top five largest IPOs to date and
returned to profitability later that year.
In 2010, General Motors ranked second on the list with 8.5 million units produced globally.
In 2011, GM returned to the first place with 9.025 million units sold worldwide,
corresponding to 11.9% market share of the global motor vehicle industry. The top two
markets in 2011 were China, with 2,547,203 units, and the United States, with 2,503,820
vehicles sold. The Chevrolet brand was the main contributor to GM performance, with 4.76
million vehicles sold around the world in 2011, a global sales record.
In May 2013 during a commencement speech, CEO Dan Akerson suggested that GM was on
the cusp of rejoining the S&P 500 index. GM was removed from the index as it approached
bankruptcy in 2009.
On April 24, 2014, CNN Money reported that GM profits fell to $108 million for the first
three months of 2014. GM now estimates the cost of their 2014 recall due to faulty ignition
switches, which have been linked to at least 13 deaths, at $1.3 billion. Shares of GM were
down 16% for the year before the new announcement of GM's lower profits.
Renault
Renault S.A. is a French multinational vehicle manufacturer established in 1899. The
company produces a range of cars and vans, and in the past, trucks, tractors, tanks,
buses/coaches and autorail vehicles. In 2011, Renault was the third biggest European
automaker by production behind Volkswagen Group and PSA and the ninth biggest
automaker in the world by production in 2011. In 2013, 50.5% of the Renault brand sales
where outside Europe. In 2013, Renault had the lowest average CO2 emissions among
generalist brands in Europe, with 110.1g CO2/km.
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Headquartered in Boulogne-Billancourt, the Renault group is formed by the namesake
Renault marquee and subsidiaries Automobile Dacia from Romania and Renault Samsung
Motors from South Korea. Renault has a 43.4% controlling stake in Nissan of Japan, a 25%
stake in AvtoVAZ of Russia and a 1.55% stake in Daimler AG of Germany. Renault also
owns subsidiaries RCI Banque (providing automotive financing), Renault Retail Group
(automotive distribution) and Motrio (automotive parts). Renault Trucks, previously Renault
Vehicles’ Industrials, has been part of Volvo Trucks since 2001. Renault Agriculture became
100% owned by German agricultural equipment manufacturer CLAAS in 2008. Renault has
various joint ventures, including Turkish Oyak-Renault, Iranian Renault Pars, and Chinese
Dongfeng Renault. Carlos Ghosn is the current chairman and CEO and the French
government owns a 15% share of Renault.
As part of the Renault–Nissan Alliance, the company is the fourth-largest automotive group.
Together Renault and Nissan are undertaking significant electric car development, investing
€4 billion (US$5.16 billion) in eight electric vehicles over three to four years from 2011.
Renault is known for its role in motor sport and its success over the years in rallying and
Formula 1. Its early work on mathematical curve modeling for car bodies is also important in
the history of computer graphics.
Renault introduced a new line of eco-friendly derivatives in 2007 marked eco² based on
normal production cars. A minimum of 5% recycled plastic was used and at the end of the
vehicles life the remains are 95% reusable. Eco²'s CO2 emissions were not to exceed
140g/km, or are biofuel compatible. At the 2008 Fleet World Honours, Renault was
rewarded with the Environment Award. The chairman of Judges, George Emerson,
commented, “This was the most hotly contested category in the history of the Fleet World
Honours, such is the clamour for organizations’ green credentials to be recognized. There
were some very impressive entries, but the panel felt that Renault’s impressive range of low-
emission vehicles was the most tangible, and the most quantifiable.
Renault powered the winning 2010 Red Bull Racing team, and entered to a similar role with
its old team in December 2010, when sold the final participation on it to the investment group
Genii Capital, the main stakeholder since December 2009, ending Renault's direct role in
running a F1 team for the second time.
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As of 2014, the F1 involvement of Renault is centred in Renault Sport F1, which provides
engines and related elements to several client teams (Infiniti Red Bull Racing, Lotus F1
Team, Scuderia Toro Rosso and Caterham F1 Team).
Volkswagen
Volkswagen is a German automobile manufacturer headquartered in Wolfsburg, Lower
Saxony, Germany. Established in 1937, Volkswagen is the top-selling and namesake marque
of the Volkswagen Group, the holding company created in 1975 for the growing company,
and is now the biggest automaker in both Germany and Europe.
Volkswagen has three cars in the top 10 list of best-selling cars of all time compiled by the
website 24/7 Wall St.: the Volkswagen Golf, the Volkswagen Beetle, and the Volkswagen
Passat. With these three cars, Volkswagen has the most cars of any automobile manufacturer
in the list that is still being manufactured.
Volkswagen me Volkswagen is the founding and namesake member of the Volkswagen
Group, a large international corporation in charge of multiple car and truck brands, including
Audi, SEAT, Lamborghini, Bentley, Bugatti, Scania, and Škoda. Volkswagen Group's global
headquarters are located in Volkswagen's historic home of Wolfsburg, Germany.
Volkswagen Group, as a unit, is currently Europe's largest automaker. For a long time,
Volkswagen has had a market share over 20 percent.
In 2010, Volkswagen, posted record sales of 6.29 million vehicles, with its global market
share at 11.4%. In 2008, Volkswagen became the third largest automaker in the world, and, as
of 2012, Volkswagen is the second largest manufacturer worldwide. Volkswagen has aimed
to double its US market share from 2% to 4% in 2014, and is aiming to become, sustainably,
the world's largest car maker by 2018. Volkswagen Group's core markets include Germany
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and China’s "people's car" in German. Its current international slogan is "Das Auto" ("The
Car").
Volkswagen has produced four winners of the World Car of the Year award, making
Volkswagen winner of the most such awards of any automaker.
2009 - Volkswagen Golf
2010 - Volkswagen Polo
2012 - Volkswagen up!
2013 - Volkswagen Golf
Volkswagen has produced three winners of the European Car of the Year award.
1992 - Volkswagen Golf
2010 - Volkswagen Polo
2013 - Volkswagen Golf
In 2013, the Volkswagen XL1 became the most fuel-efficient production car in the
world, with a combined fuel consumption of 261 mpg.
Ford
The Ford Motor Company (commonly referred to as simply Ford) is an American
multinational automaker headquartered in Dearborn, Michigan, a suburb of Detroit. It was
founded by Henry Ford and incorporated on June 16, 1903. The company sells automobiles
and commercial vehicles under the Ford brand and most luxury cars under the Lincoln brand.
Ford also owns Brazilian SUV manufacturer, Troller, and Australian performance car
manufacturer FPV. In the past it has also produced tractors and automotive components. Ford
owns a 2.1% stake in Mazda of Japan, an 8% stake in Aston Martin of the United Kingdom,
and a 49% stake in Jiangling of China. It also has a number of joint-ventures, two in China
(Changan Ford Mazda and Ford Lio Ho), one in Thailand (AutoAlliance Thailand), one in
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Turkey (Ford Otosan), and one in Russia (Ford Sollers). It is listed on the New York Stock
Exchange and is controlled by the Ford family, although they have minority ownership.It is
described by Forbes as "the most important industrial company in the history of the United
States."
Ford introduced methods for large-scale manufacturing of cars and large-scale management
of an industrial workforce using elaborately engineered manufacturing sequences typified by
moving assembly lines; by 1914 these methods were known around the world as Fordism.
Ford's former UK subsidiaries Jaguar and Land Rover, acquired in 1989 and 2000
respectively, were sold to Tata Motors in March 2008. Ford owned the Swedish automaker
Volvo from 1999 to 2010. In 2011, Ford discontinued the Mercury brand, under which it had
marketed entry-level luxury cars in the United States, Canada, Mexico, and the Middle East
since 1938.
Ford is the second-largest U.S.-based automaker (preceded by General Motor) and the
fifth-largest in the world based on 2010 vehicle sales. At the end of 2010, Ford was the fifth
largest automaker in Europe. Ford is the eighth-ranked overall American-based company
in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion. In 2008,
Ford produced 5.532 million automobiles and employed about 213,000 employees at around
90 plants and facilities worldwide.
The company went public in 1956 but the Ford family, through special Class B shares, still
retain 40 percent voting rights Ford Motor Company sells a broad range of automobiles under
the Ford marquee worldwide, and an additional range of luxury automobiles under the
Lincoln marque in the United States. The company has sold vehicles under a number of other
marques during its history. The Mercury brand was introduced by Ford in 1939, continuing in
production until 2011 when poor sales led to its discontinuation. In 1958, Ford introduced the
Edsel brand, but poor sales led to its discontinuation in 1960. In 1985, the Merkur brand was
introduced in the United States to market products produced by Ford of Europe; it was
discontinued in 1989.
Ford acquired the British sports car maker Aston Martin in 1989, later selling it on March 12,
2007, although retaining an 8% stake. Ford purchased Volvo Cars of Sweden in 1999, selling
it to Zhejiang Geely Holding Group in 2010. In November 2008, it reduced its 33.4%
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controlling interest in Mazda of Japan to a 13.4% non-controlling interest. On November 18,
2010, Ford reduced their stake further to just 3%, citing the reduction of ownership would
allow greater flexibility to pursue growth in emerging markets. Ford and Mazda remain
strategic partners through exchanges of technological information and joint ventures,
including an American joint venture plant in Flat Rock, Michigan called Auto Alliance. Ford
sold the United Kingdom-based Jaguar and Land Rover companies and brands to Tata
Motors of India in March 2008.
FUTURE TRENDS IN AUTOMOBILE INDUSTRY-
As the auto-shows began in January 2014, the industry promised a blend of technology and
automotives. With the recession trend breaking its leashes form the past two years, 2014 is
expected to get back on track with the sales of automobiles in the country.
Almost Self-governing cars are predicted to be on the streets by 2020
More than half the cars on the streets are going to be powered by diesel by 2020
Industry watcher Gartner indicates that 30 percent of motorists want parking info. The
facility is likely to come up after glitches in the infrastructure catch up.
High Performance Hybrid cars are likely to gain greater popularity among consumers.
The Indian automobile industry has a prominent future in India. Apart from meeting the
advancing domestic demands, it is penetrating the international market too. Favoured with
various benefits such as globally competitive auto-ancillary industry; production of steel at
lowest cost; inexpensive and high skill manpower; entrenched testing and R & D centres etc.,
the industry provide immense investment and employment opportunities.
OVERVIEW OF THE AUTO SEGMENT-
Indians have emerged as avid car enthusiasts sporting their prized possessions as status
symbols and speed machines. Foreign car companies have discovered the Indian consumer as
well as the R & D potential in the Indian technical fraternity and are setting up manufacturing
plant rights and left across the country at lower costs. The Indian automobile industry is
currently experiencing an unprecedented boom in demand for all types of vehicles. This
boom has been triggered primarily by two factors:
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(1)Increase in disposable incomes and standards of living of middle class Indian families
estimated to be as many as 6 million in number; and
(2) The Indian government’s liberalization measures such as relaxation of the foreign
exchange and equity regulation, reduction on tariff on imports, and banking liberalization that
has fueled financing-driven purchases.
India is increasingly becoming a global automotive hub both for the vehicles and component
industry. India is fast integrating itself into the world economy and open to international
automotive companies, who are increasingly investing in India.
(3) Almost Self-governing cars are predicted to be on the streets by 2020.
(4) More than half the cars on the streets are going to be powered by diesel by 2020.
(5) Industry watcher Gartner indicates that 30 percent of motorists want parking info. The
facility is likely to come up after glitches in the infrastructure catch up.
(6) High Performance Hybrid cars are likely to gain greater popularity among consumers.
BRAND LOYALTY
It is where a person buys products from the same manufacturer repeatedly rather than from
other suppliers. Brand loyalty, in marketing, consists of a consumer's commitment to
repurchase or otherwise continue using the brand and can be demonstrated by repeated
buying of a product or service, or other positive behaviors such as word of mouth advocacy.
Brand loyalty is more than simple repurchasing Philip Kotler, again, defines four patterns of
behaviour:
1. Hard-core Loyals - who buy the brand all the time.
2. Split Loyals - loyal to two or three brands.
3. Shifting Loyals - moving from one brand to another.
4. Switchers - with no loyalty (possibly 'deal-prone', constantly looking for bargains or
‘vanity prone', looking for something different).
Brand loyalty is on the rise across the auto industry, as today's drivers are more likely to stick
with a name they know and like more frequently than they did in the past, according to a new
study by IHS Automotive.
Although there are a number of factors that can affect a brand's rating, those with a wider
product portfolio tend to have higher loyalty numbers because car buyers' needs change over
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time. For example, a speed demon may end up purchasing a minivan to ferry the kids to
school and soccer practice, or a truck owner may want to downsize to save on gas.
Customer awareness has been favoured by the globalization of competition, saturation of
markets, and information technological development. This has consequently resulted to large-
scale competition in the automobile industry. In this phenomenon, businesses have to build
their success on a long-term customer relationship with optimized product price and qualities.
The increase and retention of loyal customers has become a key factor for long-term success
of the businesses.
Thus, brand loyalty, is an important aspect and marketers have to create marketing strategies
that will appeal to the consumers at an individual level.
The main emphasis in marketing is winning new customers as well as retention of existing
ones. To achieve this, brand loyalty play a great role and has become of great interest for
researchers, business managers/owners. Customer loyalty determines how much of the
product is bought, how often and the repeat purchases made based in its features. The
features that a customer is keen on when making a purchase are multiple and are blended in
the product. The product is positioned and distinguished by way of some special offering to
establish it as a brand.
A customer is loyal towards a particular brand if the particular product has fulfilled all or
most of the requirements. From the customer's perspective, a brand provides a visual
representation of the differences between several products in a particular category. Brands
allow consumers to shop with confidence and have some expectations. A brand can signify
product quality as well as aid consumers in differentiating the product from competitive
offerings.
Brand loyalty has become an important concept in strategic marketing. Studies show that in
competitive repeat-purchase markets, loyalty is shaped more by the passive acceptance of
brands than by strongly held attitudes about them. For a brand to thrive or survive in the
market it must be effectively used by its customers. The understanding of the brand loyalty is
also essential for the automobile industry dealing with variety of features which are highly
competitive.
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There are several studies that have looked at the impact of satisfaction on loyalty. It was
revealed that there exists a direct connection between satisfaction and loyalty. The argument
brought forward is that satisfied customers become loyal and dissatisfied customers keep on
moving from one brand to another. This is because when a customer’s satisfaction is low,
they have the option to quit, seeking an alternative brand or going to a competitor.
After witnessing the worst ever sales of the last decade in 2013, this year was really a
challenge for all the carmakers in India. In fact, the first half of 2014 too didn't bring any
good news; but as soon as the second half began, things started changing and car sales started
growing. That said, the overall car sales in the year has not been that great, but it showed the
signs of revival.
Now that the 2014 is about to end, we bring you the list of top 10 selling cars of the year.
Since the carmakers haven't shared their December 2014 sales figures yet, we have included
the sales of the first 11 months (January 2014 - November 2014).
DEFINITION OF BRAND LOYALTY-
Aaker (1991) defines brand loyalty as a measure of the attachment that a customer has to a
brand. He argues that it reflects how likely a customer will be to switch to another brand,
especially when that brand makes a change, either in price or in product features. Therefore
the existence of brand loyalty assumes that the buyer has a choice between two or more
competing brands and has developed a preference from the options available to him. This
also means that brand loyalty does not occur in a monopoly environment – buyers who have
no choice in a product category cannot be said to be loyal to a seller’s goods if they have no
alternatives to turn to.
Aaker also makes the point that brand loyalty cannot exist without prior purchase and use
experience. Thus a buyer must have purchased and used a brand at least once before his
attachment to it can be determined. In this respect he differs with Schiffman and Kanuk
(2007) who recognise covetous loyalty, where no purchase occurs but the person has a strong
attachment towards the brand that develops from his social environment.
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Peter and Olson (2010) regard brand loyalty as an intrinsic commitment to repeatedly
purchase a particular brand. It is differentiated from repeat purchase behaviour because the
latter focuses only on the behavioural action without concern for the reasons for the habitual
response. From this definition it is clear that brand loyalty covers both the motivation of the
buyer as well as his actual behaviour when he selects a particular product over another.
Brand loyalty is a consumer’s conscious or unconscious decision that is expressed through
the intention or behaviour to repurchase a particular brand continually. Brand loyalty has
been proclaimed to be the ultimate goal of marketing (Reichheld and Sasser, 1990). In
marketing, brand loyalty consists of a consumer’s commitment to repurchase the brand
through repeated buying of a product or a service or other positive behaviors such as word of
mouth. This indicates that the repurchase decision very much depends on trust and quality
performance of the product or service (Chaudhuri and Holbrook, 2001)
Brand Loyalty is important to business because it has an impact on both current and future
revenues as well as the costs of selling products and services. As such, studies on brand
loyalty have attempted to classify and measure the various degrees or levels of loyalty and
their impact on buyer behaviour towards sellers’ products.
Brand Loyalty is important to business because it has an impact on both current and future
revenues as well as the costs of selling products and services. As such, studies on brand
loyalty have attempted to classify and measure the various degrees or levels of loyalty and
their impact on buyer behaviour towards sellers’ products.
Thus, brand loyalty is a function of both behaviour and attitudes. It is a consumer’s
preference to buy a particular brand in a product category. It occurs because consumers
perceive that the brand offers the right product features, image, or level of quality at the right
price. This perception becomes the foundation for new buying habits. Consumers will
initially make a trial product of the brand and, when satisfied with the purchase, tend to form
habits and continue to purchase the same brand because the product is safe and familiar
LEVELS OF BRAND LOYALTY-
According to McCarthy and Perreault (1993) there are five levels of brand loyalty.
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Brand Rejection, the lowest level, means that potential customers will not buy a brand
unless its image is changed, and overcoming a negative image can be both difficult and
expensive. At this level a brand is viewed as undesirable amongst potential customers who
may go out of their way to avoid it.
Brand Non recognition, the second level, is when final consumers don’t recognise a brand at
all, even though middlemen, for example, may use the brand for identification or inventory
control. Brand Non recognition implies customer indifference to the brand and thus a very
low chance of purchase.
Brand Recognition is the third level and occurs when a customer is aware that the brand
exists and views it as an alternative to purchase if the preferred brand is unavailable or if the
other available brands are unfamiliar to the customer.
Brand Preference, the next level, is where a customer definitely prefers one brand over
competitive offerings and will purchase this brand if available. However, if the brand is not
available he customer will accept a substitute brand rather than expend additional effort
finding and purchasing the preferred.
Finally, at the highest level, Brand Insistence is the degree of brand loyalty in which a
customer strongly prefers a specific brand, will accept no substitute and is willing to spend a
great deal of time and effort to acquire the brand. This is an ideal situation for any brand but
rarely achieved in reality where consumers are regularly faced with a host of competing
brands in most product categories.
Aaker identifies five distinct levels of brand loyalty, but uses buyer behaviour as the
determinant of loyalty strength.
At the lowest level is the switcher or price buyer, who is completely indifferent to the brand.
This buyer may purchase the brand if it is cheaper than other offerings but not because of any
attachment to it.
The second level consists of satisfied buyers who have no motivation to change from the
brand. The implication here is that their loyalty is weak and they may opt for a rival brand if
given a good reason.
The third level is made up of buyers who are satisfied but who also have switching costs,
such as the need to invest time, money and effort if they begin buying a rival brand. These
customers may buy the brand repeatedly but their loyalty can be tested by a competitor who
helps them overcome their switching costs.
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At the fourth level are buyers who like to brand and consider it a friend – these customers
are emotionally attached to the brand though they may be unable to identify a specific reason
for their liking. At this level customers are much harder to convert to rival brands based on
functional benefits like price or product features.
The fifth and highest level consists of committed customers who see the brand as an
expression of whom they are and who will also recommend the brand to others.
Consumers often change brands regardless of whether their experience with a vehicle was
positive or negative. Such shifts can be due to changes in the economy as well as changing
preferences among consumers. Arthur Henry, senior manager of market intelligence at Kelley
Blue Book, pointed out to increased fuel efficiency and higher wages for many Americans as
some of the reasons SUVs, for example, have become more popular in recent years.
Henry told 24/7 Wall St. that price is perhaps the most important factor in the consumer’s
decision making process when buying a car. In addition to price, Henry explained, consumers
look to reliability when selecting a vehicle.
“Brands that exude durability or reliability are seen as trusted brands and are very high in our
shopper loyalty metric,” said Henry. Six of the nine makes with the worst loyalty ratings had
more problems reported per 100 vehicles than the industry average of 133, according to car
rating company J.D. Power’s Vehicle Dependability study.
Two makes with low brand loyalty, Jaguar and Buick, were actually rated relatively well on
J.D. Power’s Vehicle Dependability study, with 132 and 112 problems reported per 100
vehicles, respectively. While Jaguar’s ratings are good and sales have actually been on the
rise, Henry explained that “it is very hard for shoppers to get back into Jaguar because of the
price point — [Jaguar] has the highest price point among luxury brands.”
Ferrell and Hartline (2008) take a more limited but similar view to brand loyalty as McCarthy
and Perrault. Instead of five levels of loyalty they recognise just three levels: Brand
Recognition is the lowest level, followed by Brand Preference and finally Brand Insistence.
Ferrell and Hartline do not consider a negative attitude towards a brand as an aspect of
loyalty and this explains why they omit brand rejection and non recognition from the various
loyalty levels.
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Kotler and Keller (2012) classify consumers into four brand loyalty groups in descending
order. Hard Core Loyals are consumers who buy one brand all the time. This means they do
not consider rival brands at all within a product category. Split Loyals are consumers who are
loyal to two or more brands and will therefore alternate their purchases between a set of
brands over time. Shifting Loyals are buyers who shift from favouring one brand to another.
This means they will stick to a particular brand for an extended period before changing to
another one and then buying it repeatedly over time. Lastly, switchers are consumers who
show no loyalty to any brand and purchase randomly within a product category.
While most authors agree that frequent purchase is one characteristic of brand loyalty, Kotler
cautions that what appear to be brand-loyal purchase patterns may reflect habit, indifference,
a low price, a high switching cost or the unavailability of other brands. In other words, buyers
may purchase a product repeatedly without any attachment to the brand or what it stands for,
for a whole range of reasons.
The various attempts to define groups of brand-loyal consumers reveal that consumers vary
widely in their attitudes and behaviour towards products and services. This may range from
active avoidance or indifference towards a brand at one extreme to accepting a brand as an
integral part of their lifestyle and a willingness to speak about a brand’s benefits to other
consumers.
To make matters worse, the entry luxury market is extremely competitive. Two brands —
BMW and Mercedes Benz — are among the largest players in the U.S. luxury car market,
which is extremely crowded. In other words, fierce competition may explain poor loyalty
among some luxury brands, rather than issues of quality.
A number of manufacturers have several car brands on this list. Dodge and Chrysler, for
example, are both owned by Fiat Chrysler Automobiles. According to Henry, consumers are
largely aware of this. “Shoppers do understand the concept that those two makes are
together,” and because they are aware of this, they may leave a brand, yet still knowingly buy
a car made by the same manufacturer. On the other hand, they may leave the manufacturer
altogether after a bad experience with one brand.
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Brand loyalty classifications also show the different value of groups of customers to a
company based on their loyalty levels. It is in the interest of the firm to use the tools at its
disposal in its marketing mix, such as price, product features and promotions, to try and move
its customers up through the various loyalty levels as one way of increasing its revenues and
lowering its costs.
FACTORS AFFECTING BRAND LOYALTY FOR CARS-
Popularity of the brand
After sale services
Affordability
Commencement year of the brand
Frequency in innovations
Uniqueness of the brand
Family size
Ease of location of the car
Mileage
Design and model
Advertisement
Economic recession
Interior designing of the car
Maintenance cost
Ease of location of the car
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 buyers seeks capability in
advertising, and fuel efficiency is relatively more important to them. Technology, innovation,
and good influence premium seek by mid-sized buyers. One reality for us in India is that the
marker is extremely price/ value conscious. While making purchases based on above, there is
rational side, which does have an impact on the decision, consumers would have to think as a
bevy of new models flood the Indian market
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Looking in more detail at the major factors that influence consumers' loyalty - not only to
retailers but also to suppliers in all sectors, including business to business (B2B) - the six key
areas of focus identified are-
1.Core offering-
The companies that boast the highest levels of fiercely loyal customers have built that loyalty
not on card programs or gimmicks, but on a solid, dependable, core offering that appeals to
their customers. These companies have focused intently on what they know appeals to the
type of customers they want to attract, and have determinedly concentrated on delivering
what is expected every time. North American retailer, Nordstrom (www.nordstrom.com), is
well known for the loyalty of its customers. It built this loyalty by understanding what its
customers wanted and then empowering its employees to deliver those needs consistently.
Clearly, the data from a good loyalty program should help the operator to improve this core
offering by tailoring and moulding it more closely to the customers' needs and desires.
Elements of the core offering that have a large role in building customer loyalty include:
Location and premises
Location and premises clearly play a part in engendering loyalty. The Three L's of retail -
"location, location and location" - are undoubtedly important, and attractive and
functional premises are equally so.
Service
Whether selling services or products, the level of service perceived by the customer is
generally key for generating loyalty. It can be argued that some customers buy only on
price, so all that is necessary to retain their loyalty is consistently low prices. To certain
extent that is true. But in most cases, any loyalty shown will be only to the prices instead
of the business. Should a competitor offer even lower prices, those customers are likely to
defect. Companies that have adopted a policy of everyday low prices (EDLP) can be
more vulnerable to competition than those who have built their customers' loyalty on
superior products or service.
The product or service-
The products or services offered must be what customers want. The days when businesses
could decide what they wanted to sell or supply, and customers would buy it, are long
past. The customers' needs and wants are now paramount. If you don't meet them,
someone else will.
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2. Satisfaction
Clearly, satisfaction is important; indeed essential. But, taken in isolation, the level of
satisfaction is not a good measure of loyalty. Many auto manufacturers claim satisfaction
levels higher than 90%, yet few have repurchase levels of even half that. The situation is
stacked against the business: if customer satisfaction levels are low, there will be very little
loyalty. However, customer satisfaction levels can be quite high without a corresponding
level of loyalty. Customers have come to expect satisfaction as part and parcel of the general
deal, and the fact that they are satisfied doesn't prevent them from defecting in droves to a
competitor who offers something extra.
The point is that, while high levels of customer satisfaction are needed in order to develop
loyal customers, the measure of customer satisfaction is not a good measure of the level of
loyalty. The two are not measuring the same thing.
3. Elasticity level
Elasticity expresses the importance and weight of a purchasing decision - effectively the level
of involvement or indifference. This applies to both the customer and the business.
Involvement
The customer's involvement in the category is important: the more important your
product or service is to the customer, the more trouble they have probably taken in their
decision to do business with you, and the more likely they are to stick with what they
have decided. Most customers would be highly involved in the category when choosing a
new car, a new jacket, or a bottle of wine. However, when choosing a new pair of
shoelaces, involvement is not usually high. Businesses dealing in commoditised products
and services cannot expect high involvement and need to earn loyalty in other ways.
Ambivalence
The customer's level of ambivalence is also important. Few decisions are clear cut. There
are usually advantages and disadvantages to be balanced, and vacillation is unstable.
Again, we see that the more commoditised a product or service, the more difficult it is to
cultivate loyalty. It is only when points of differentiation are introduced that the customer
has a valid reason for consistently preferring one particular supplier.
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4.The marketplace
The marketplace is a key factor in the development of loyalty. The elements most closely
involved are:
Opportunity to switch
If the number of competing suppliers is high and little effort is required to switch,
switching is clearly more likely. Conversely, the more time and effort invested in the
relationship, the more unlikely switching becomes. The level and quality of competition
has a significant effect on how easy it is for a customer to switch from any one particular
supplier. When competitors are offering very similar products at similar prices, with
similar levels of service, some means of useful differentiation has to be found in order to
give customers a reason to be loyal.
Inertia loyalty
This is the opposite of ease of switching. Most banks enjoy a high level of inertia loyalty
simply because it's often so difficult and time-consuming to change to a new bank and
transfer direct debits and standing orders.
5.Demographics
According to Jan Hofmeyr and Butch Rice, developers of The Conversion Model (which
enables users to segment customers not only by their commitment to staying with a brand but
also to segment non-users by their openness to switching to the brand), more affluent and
better educated customers are less likely to be committed to a specific brand. They say that
the commitment of less affluent consumers to the brands they use is often unusually strong -
possibly because they cannot afford to take the risk of trying a brand that might not suit them
as well. They also suggest that younger consumers are less committed to brands than older
consumers.
Interestingly, these differences carry over into cultural groups as well: they find that French-
speaking Canadians are more likely to be committed to a brand than English-speaking
Canadians, and Afrikaans-speaking South Africans are more likely to be committed than
English-speaking South Africans. In their excellent book, Commitment-Led Marketing, they
show how commitment norms for the most frequently used brand of beer vary from country
to country. At the two extremes we see both Australia and the UK (58%) and South Africa at
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83% - a considerable difference.
6.Share of wallet
As markets become saturated and customers have so much more to choose from, share of
wallet becomes increasingly important. It is cheaper and more profitable to increase your
share of what the customer spends in your sector, than to acquire new customers. After all,
that's what loyalty is really about. Totally loyal customers would give you a 100% share of
their spend in your sector.
7. Brand Name
Famous brand names can disseminate product benefits and lead to higher recall of advertised
benefits than non-famous brand names (Keller, 2003). There are many unfamiliar brand
names and alternatives available in the market place. Consumers may prefer to trust major
famous brand names. These prestigious brand names and their images attract consumers to
purchase the brand and bring about repeat purchasing behavior and reduce price related
switching behaviors (Cadogan and Foster, 2000). Furthermore, brand personality provides
links to the brand’s emotional and self-expressive benefits for differentiation. This is
important for brands, which have only minor physical differences and consumed in a social
setting where the brand can create a visible image about the consumer itself.
According to Kohli and Thakor (1997), brand name is the creation of an image or the
development of a brand identity and is an expensive and time consuming process. The
development of a brand name is an essential part of the process since the name is the basis of
a brand’s image. Brand name is important for the firm to attract customers to purchase the
product and influence repeat purchasing behavior. Consumers tend to perceive the products
from an overall perspective, associating with the brand name all the attributes and satisfaction
experienced by the purchase and use of the product.
8. Product Quality
Product Quality encompasses the features and characteristics of a product or service that
bears on its ability to satisfy stated or implied needs. In other words, product quality is
defined as “fitness for use” or ‘conformance to requirement” (Russell and Taylor, 2006).
Consumers may repeat the purchase of single brands or switch around several brands due to
the tangible quality of the product sold. Material is important in product quality because it
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affects the hand feel, texture and other performance aspects of the product. Further,
consumers relate personally to color, and could select or reject a product because of color. If
the color does not appeal to them or flatter their own color, they will reject the product.
Functional attributes in cosmetics include quick-dry, breathable, waterproof, lightweight, and
finally, durability. Perfectionist or quality consciousness is defined as an awareness of and
desire for high quality products, and the need to make the best or perfect choice versus
buying the first product or brand available (Sproles and Kendall, 1986). This indicates that
quality characteristics are also related to performance.
9. Price
According to Cadogan and Foster (2000), price is probably the most important consideration
for the average consumer. Consumers with high brand loyalty are willing to pay a premium
price for their favored brand, so, their purchase intention is not easily affected by price. In
addition, customers have a strong belief in the price and value of their favorite brands so
much so that they would compare and evaluate prices with alternative brands (Keller, 2003).
Consumers’ satisfaction can also be built by comparing price with perceived costs and values.
If the perceived values of the product are greater than cost, it is observed that consumers will
purchase that product. Loyal customers are willing to pay a premium even if the price has
increased because the perceived risk is very high and they prefer to pay a higher price to
avoid the risk of any change (Yoon and Kim, 2000).
Long-term relationships of service loyalty make loyal customers more price tolerant, since
loyalty discourages customers from making price comparison with other products by
shopping around. Price has increasingly become a focal point in consumers’ judgments of
offer value as well as their overall assessment of the retailer. Price communicates to the
market the company’s intended value positioning of its product or brand. Price consciousness
is defined as finding the best value, buying at sale prices or the lowest price choice.
10. Design
Design is visual appearance, which includes line, shape and details affecting consumer
perception towards a brand. Brands that supply stylish package attract loyal consumers who
are fashion conscious. Fashion leaders or followers usually purchase or continue to
repeatedly purchase their products in stores that are highly fashionable. They gain satisfaction
from using the latest brands and designs which also satisfies their ego. According to Sproles
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and Kendall (1986), status consciousness is generally defined as an awareness of new
designs, changing fashions, and attractive styling, as well as the desire to buy something
exciting and trendy.
11. Promotion
Promotion is a marketing mix component, which is a kind of communication with consumers.
Promotion includes the use of advertising, sales promotions, personal selling and publicity.
Advertising is a non-personal presentation of information in mass media about a product,
brand, company or store. It greatly affects consumers’ images, beliefs and attitudes towards
products and brands, and in turn, influences their purchase behaviors (Lovelock, 2010). This
shows that promotion, especially through advertising, can help establish ideas or perceptions
in the consumers’ minds as well as help differentiate products against other brands.
According to Clow (2010), promotion is an important element of a firm’s marketing strategy.
Promotion is used to communicate with customers with respect to product offerings, and it is
a way to encourage purchase or sales of a product or service. Sales promotion tools are used
by most organizations in support of advertising and public relations activities, and they are
targeted toward consumers as final users.
BRAND EQUITY-
Brand Loyalty is a key component of Brand Equity, which Stanton et al (1994) define as the
value a brand adds to a product. Aaker (1991) regards brand loyalty as one of five assets on
which brand equity is based and which add or subtract from the value provided by a product
or service to a firm and to that firm’s customers. Thus a brand which commands a high level
of loyalty amongst its customers will also enjoy positive brand equity.
Building a brand’s equity consists of developing a favourable, memorable and consistent
image, which is no easy task (Etzel et al, 2007). Although building brand equity is both
expensive and time consuming, firms that succeed in developing substantial equity reap
competitive advantages in the long run.
Firstly, brand equity creates a barrier for companies who want to enter a market with a
similar product.
Secondly, the recognition and favourable attitudes surrounding a brand with substantial
equity can facilitate its international expansion into new markets.
Lastly, brand equity can help a product survive changes in the operating environment, such
as a business crisis or a shift in consumer tastes.
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THE VALUE OF BRAND LOYALTY-
Having customers who are loyal to a company’s brands has several long term competitive
advantages to the firm. According to Aaker (1991) and Kotler (1997), brand loyalty enables a
firm to enjoy reduced marketing costs. Since it is cheaper to retain existing customers than to
attract new ones, companies with a loyal customer base can avoid having to incur extra
expenses by trying to appeal to new buyers. Secondly, companies benefit from greater trade
leverage when dealing with retailers because buyers expect to find its brands stocked at retail
outlets and may stop visiting shops which do not stock their favourite brands.
“Loyal customers provide a ready-made source of sales and constitute an important element
of maintaining or expanding market share and profitability,” says Jeffrey Anderson, director
of consulting and analytics for Experian Automotive.
Brand loyalty also helps a company attract new customers because a relatively large customer
base provides an image of the brand as an accepted, successful product. Potential customers
are therefore reassured that the brand is a safe purchase that will not let them down.
Another crucial advantage is that the company gains time to respond to competitive threats. If
a competitor develops a superior product loyal following will allow the firm time needed for
the product improvement to be matched or neutralised. The firm’s brand also provides a
defence against fierce price competition.
Lastly, brand loyalty allows a company to launch brand extensions more easily since the
brand name carries high credibility. As a result the trust that buyers already have in the brand
can be transferred to related products and services without having to persuade them to try an
unknown brand for the first time.
RELATION BETWEEN CONSUMER BEHAVIOUR AND BRANDING-
Consumer behavior has been very important to all branded companies in all over the world.
The behavior of the consumers remains not same in all the time the consumers behavior
change with the passage of time in future. The behavior of consumer is temporary for short
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time not permanently. The factors influences the consumer behavior are culture, family,
social, society, age, groups, friends, environment and psychological factors.
In the marketing context, the term „consumer ‟ refers not only to the act of purchase itself,
but also to patterns of aggregate buying which include pre-purchase and post-purchase
activities. Pre-purchase activity might consist of the growing awareness of a need or want,
and a search for and evaluation of information about the products and brands that might
satisfy it. Post-purchase activities include the evaluation of the purchased item in use and the
reduction of any anxiety which accompanies the purchase of expensive and infrequently-
bought items. Each of these has implications for purchase and repurchase and they are
amenable in differing degrees to marketer influence (Foxall 1987). Engel, et al. (1986, 5)
define consumer behaviour as “those acts of individuals directly involved in obtaining, using,
and disposing of economic goods and services, including the decision processes that precede
and determine these acts”. Simple observation provides limited insight into the complex
nature of consumer choice and researchers have increasingly sought the more sophisticated
concepts and methods of investigation provided by behavioural sciences in order to
understand, predict, and possibly control consumer behaviour more effectively
Gabbott(1994)and Mooij (2003)Gives their points that every consumer in the market has
perceived value when he purchased the same product mean every consumer’s shows different
behavior when they are purchasing the same product. It mean consumer behavior of every
individual is different from other depending on buying choice which is effected by their
social class, psychological factors, friends, family, groups and other personal factors.
For example one consumer purchase the car for status, 2Nd consumer purchase for taxi
business, 3 rd consumer purchases for quality and 4th consumer for other reason. It mean
every consumer have different thinking and perception when they are purchasing the same
product.
Kotler(2003) studies show that consumer behavior helps the companies to improve their
marketing strategies. He suggests that all the action that perform as a consumer is called
consumer behavior. In other words we can say that consumer behavior is the process of
searching, organizing, evaluating, disposing and the using of goods to satisfy their needs and
wants. Bhattacharya & Mitra(2012) “Consumer psychology is the study of the Interactions
between consumers and organizations that produce consumer products”.
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A consumer brand relationship also known as a brand relationship is a relationship that
consumers, think, feel and have with a brand. Brand relationship is interaction between a
brand and a customer. It reflects similar characteristics of relationships between people, such
as love, connection, interdependence, intimacy and commitment.
There are five various visions/roles of consumer when he purchase the branded
products.
1st when consumer purchases the product to solve the problem the consumer acting as a
problem solver,
2nd sometime consumer have some finance and when he thing how he spend the money in
market in this condition consumer act as a economic creature,
3rd sometime consumer visit the market just for experience or for the judgment of branded
products in this condition consumer act as a revolvers,
4th sometime consumer has store the information about branded products in their mind so in
this condition consumer act as a computer and
5th is when consumer visit the market for shopping in this condition consumer act as a
shopper. It means consumer shows different behavior in different condition consumer
behavior refer all the mental and physical activities that consumer performs to fulfill their
needs and wants and all these mental and physical activities use for the product.
Factors influencing consumer’s behaviour
1.Cultural factors:
Culture shows the collection of norms, values, beliefs, custom, behavior, and tradition of one
society or country. Culture is different from one society to other society or one country to
other country on the behalf of their norms, values, tradition, beliefs, custom, behavior and
their thoughts. For example the culture of Pakistan and India is different. International market
believes that people / consumer in a country will eat the same food and wear the same clothes
according to their culture. Therefore if an organization wants to be a market leader in
international market then organization must be design their products according to the other
countries culture not according to own culture and also adopt other’s countries culture to sell
the products.
Sub culture: the culture of a country or society has different subcultures. Under culture
there are smaller group of people or subculture. These groups include geographical
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regions, groups, nationalities and religions. The norms, values, clothes, behavior, talking
style, custom are also different in subcultures. It means the individual who live very close
to each other can be different on the behalf of their subculture.
Social class: the social classes have their own similar values, behavior, interests, and
style according to their rank. So companies should give the ranks of social classes by
seeing their clothes, income, home, gaming activities and entertainment. For example
upper class consumer prefer books, magazine, TV program and news, sub class consumer
like television and lower class consumer like films and support channels. The language
between social classes is also different. Therefore organization should be design the
products, advertize the products and communicate according to the class level
2. Social factors:
Social factors also influence our attitude and behavior directly or indirectly such as reference
groups, family and social roles and status affect our behavior.
Reference groups: groups that directly or indirectly influence the consumer behavior. In
reference groups those groups that directly influence the consumer behavior are called
membership group or primary groups such as friends, neighbors, family and coworkers.
People or consumers or also influence by religious, professional and trade union groups
these groups are called secondary groups. Some other groups that influence people are
aspirational groups. Aspirational groups are those groups a consumer want to become the
member of these groups.
Family: Especially the people of India prefer joint family system. It means the people of
India like to live within the family rather than individually. But in Europe people prefer
individual system. They are like to live individually rather than within the family. A
Family has a one big boss who runs the family and control the other factors mean he is
the king who has the authority to do anything and other member follow him. So in a
family one’s buying behavior strongly influence by other family members
Roles and status: Every consumer belongs to the many groups such as family groups,
religious groups, organizational groups and class. These groups help to define the roles
and status of the consumer. The CEO of the company has more status than a general
manager and the general manager has more status than a sales manager. So consumer
shows their behavior according to their roles status. For example a CEO of the
43
organization purchases the high price and high quality product and a sales manager
purchase the low price and low quality product. Therefore each roles and status strongly
influence consumer behavior.
3. Personal factors:
Age and stages of life cycle, occupation and economic circumstances and person’s
personality include in personal factors. These factors influence the buying decision of
consumer directly and it’s important for marketer’s to understand them closely.
Age & stages of life cycle: the growth of human body increase over the time
continuously. And the consumption level also increase or change with the growth of age.
For example the consumption level of 5 year old child has been less than 14 year old boy.
According to the growth of age the goods and services consume also change. Taste, food,
clothes and behavior change with increasing age of a person and responsibility also
increase when a person reached mature age. For example the financial burden has been
less of unmarried man than those with family.
Occupation and economic situation: the profession or jobs in which a person work will
strongly affect the goods and services consumed. For example an average job holder
person buy low quality and low cost clothes and a normal passenger car but on the other
hand a company president buy high quality and high cost dress suit and a luxury car.
Therefore marketers should try to identify the high occupational groups and provide high
quality product and services and also identify the low average occupational groups and
provide goods and services according to their level. The economic situation of any
country also strongly influences the buying behavior of consumer. Mean the consumer
choice strongly affect by economic circumstances. If the living standard of the people is
high then they also purchase good food, clothes and other things. It also influence by the
income level, political satiability, import and export and currency value.
Personality: each person has different personality characteristics and traits. That makes a
person unique. Personality created by the set of inner characteristic and psychological
traits that both determine and reflect how a consumer will respond or react in a certain
situation.
According to the Freudian theory he suggests that personality is developing by unconscious
needs or biological drives.
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Human personalities have the combination of different traits and all these traits are qualitative
nature. And these traits strongly affect on consumer buying behavior or choice. The major
consumer traits are bellow:
Consumer innovativeness and related traits
Cognitive personality traits
Consumer materialism to compulsive consent
4.Psychological factors: The two major psychological factors that highly affect on consumer
behavior are:
Motivation: motivation word is derived from “motive”. And the meaning of motive is
needs, wants and the desire of a person. It means that the behavior a consumer or person
shows because of some reason it is called motivation. Motivation occurs when a need
aroused and consumer wish to satisfy. The human requirements are called need. There are
two main types of needs. 1st primary needs and 2nd secondary needs. So it’s important for
marketers to understand the needs and motivate the consumer. Abraham Maslow
describe the certain needs into hierarchy of needs and tell us why people trying to satisfy
certain needs in a certain situation.
Maslow's Hierarchy of Needs:
1. Psychological needs
2. Safety needs
3. Love / belonging needs
4. Esteem needs
5. Self actualization
Consumer skills and knowledge: consumer knowledge and skills is important factor that
strongly influences the consumer choice because consumers firstly prefer those products
about they have some information.
It is necessary for all marketers to give the proper information to consumer about their
products through the learning theories
How Maruti became market leader? A success story
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COMPANY PROFILE Very often, there is an analogy drawn between the state of the great
Indian roads and the pace of economic development in the country. Needless to say, it’s not a
very pleasing comparison. So the average Indian customer who rides the roads of India is
naturally extremely cautious when it comes to investing in a vehicle. Only those rough and
tough enough to survive the potholes and nightmarish surfaces can pass muster. In such a
scenario, a foreign company launching a car in the Indian market was bound to be looked
upon with skepticism and suspicion, more so, if it had South Korean origins. South Korean
companies were perceived not to be quality oriented. The failure of Korean companies like
Lucky Gold star (later to be re-launched as LG, which is another marketing success) and the
bad word of mouth for Daewoo led to this perception.
MARUTI TOOK THE INITIATIVE AND GAINED
In the late 1990s, car manufacturers like Ford, General Motors, and Fiat were faring
miserably in the Indian market. Maruti had a market share of a whopping 79 per centin the
passenger car segment. Daewoo and Telco were creating hype over the impending launches
of their cars Matiz and Indica, respectively. In such a scenario, the top management of
Hyundai Motor India Ltd, which has South Korean origins, had a tough decision to make. It
was a big gamble to go ahead with the launch of the small car –Santro. The Hyundai
management stuck to a simple strategy – launches a quality product in the most promising
segment with the latest technology and price it aggressively. In the pre-launch period in
late1997, the company commissioned market research project to understand the Indian
consumer psyche and specify a benchmark for the pricing policy.
The results of this survey and the actions taken thereafter had a bearing upon the success of
the product later on. The Indian consumers showed an immense dislike to the shape of
Santro. One consumer even likened it to a “funeral hearse”.
A second important result was that Hyundai is an unknown brand with almost zero brand
equity amongst Indian consumers. The company immediately undertook the initiative of
reshaping and customising the car for the Indian customer. The tall rear end was reduced and
made more aesthetically appealing. The Santro was all set for the Indian launch.
MARUTI-MARKETING GENIUS
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Here came the most important aspect of the launch – the marketing strategy. This was a
factor that could make or mar the success of the Santro. Hyundai tied up with the advertising
agency Saatchi and Saatchi, who hit upon a novel strategy. Bollywood star Shahrukh Khan
was roped in to be the brand ambassador. A three-pronged strategy was designed to attract
the consumer: Educate Indian Consumers about Hyundai
• Create hype and expectations about the Santro
• Explain the virtues of the Santro the TV & Press Campaign broke in June 1998. The initial
TV spots and the press campaign showed Shah Rukh Khan being approached by a Hyundai
official to advertise the Santro. Shah Rukh was not convinced about Hyundai and he was
shown to ask all questions a normal Indian consumer is expected to ask. What is Hyundai?
Why should I advertise for the Santro? Will it match customer service expectations? What
about dealer networks? How can an international car meet the requirements of Indian roads?
As the campaign went through all of these questions, the Hyundai official answered Shah
Rukh Khan. By the time the car was actually launched, ShahRukh Khan proclaims, “he is
convinced”. He declares that he is now ready to advertise the Santro since he is certain that
the Santro is the car for India. This high profile campaign backed by some very innovative
media buying, which went for maximum coverage with the minimum budget, broke all
grounds in terms of creating consumer expectations and hype in the market. Along with the
Advertising Campaign, the Sales Team worked burning midnight oil in creating the dealer
network across the length and breadth of the country. The wide dealer network would prove
to be invaluable in ensuring that the Santro would be available to anyone who wants to buy it.
An important pre-requisite for the dealer network was a fully functional workshop area with
imported international standard equipment and engineers trained in Hyundai’s parent training
centre in South Korea and localized training provided in the Chennai Plant.
ARRIVAL OF SMALL CARS IN INDIAN MARKET WAS THE BEST THING TO
HAVE HAPPENED TO MARUTI
The race for Indias small-car market has begun. But only those among the big four who get
all their strategies right will win this unforgiving contest. The prize: not just the largest
automobile segment, but also survival in this market. They are lined up for the last lap. With
Market India becoming a minefield for the world’s largest auto-makers, the Formula I have
become brighter than the red lights that have stopped them in their tracks so far--only the
small car will enable endurance. Bumper-to-bumper, therefore, the combatants are
accelerating towards the small-car segment. Amounting to 60 per cent of the Rs 14,500-crore
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automobiles market, and hitherto monopolized by the Rs 8,454-crore Maruti Udyog with its
Maruti 800 and Zen, it’s the final frontier between survival and extinction. So far,
accustomed as they are to the priorities of the customer in the developed markets, the global
auto-makers have taken many wrong turns in India. Only now, after many knocks, crashes,
and repair jobs, are they back on track, heading towards their destination. But neither the road
nor the end-point of their journey is wide enough for all of them. At a projected 6-lakh unit
by 2000, demand for cars is still 25 per cent less than the number of F-150 pick-up trucks
sold by the $153.62-billion Ford Motor Co. in 1997.But the importance of India on the world
auto map is strategic. With an estimated total capacity of 58 million units a year, the global
auto industry is racing far ahead of the demand of 45 million units. Markets in North
America, Europe, and Japan—which account for 74 per cent of the demand--have become
saturated. Global car-manufacturers will need to plant their feet in a low-cost, young, stable
market to sell their products to create a global supply-base for cars and components. The first
wave of manufacturers simply failed to make a splash in India. They were revving up for a
growth that never happened. Their entry reasoning: since India had been a small-car market
for years, it was only a matter of time before it enlarged to accommodate bigger, luxury cars.
That the logic was flawed has now become evident. India is still a small-car market for
anyone who wants both revenues and profits.
Not surprisingly, Ford (which launched the 1,300-cc petrol and the 1,800-ccdiesel Escort in
1996), the $178.17-billion General Motors (which entered with the1,600-cc Opel Astra in
1996), and the $72-billion Daewoo Groups Rs 963.37-croreDaewoo Motors (which launched
the 1,498-cc Cielo in 1995) are limping at the starting-block. None of the 3 has managed to
chalk up sales of more than 18,000 units a year. Even Maruti Udyog--a joint venture between
the $12.12-billion Suzuki Motor Corporation of Japan and the Government of India--has been
unable to grow the luxury segment. At 18,000 units in 1997-98, its 1,300-cc Esteem luxury
cars sales fell by 28 per cent. Explains B.V.R. Subbu, 43, Director (Sales & Marketing),
Hyundai Motor India: "Traditional mid-car buyers are turning to small cars; they are waiting
for new technologies." Within 8 months of the 1,468-cc Citys launch in January,1998, the
$48.87-billion Honda Motor has sold 4,180 cars in the Indian market, which his more than
the combined sales (3,317 units) of the Astra and the Escort. But despite Hondas initial
success, the luxury-car segment has plateaued, and there seems to beroom for just one player.
In the past 3 years, the segment has shrunk in value, dashing car-makers hopes of rebuilding
their futures in India. Naturally, the only safe haven that remains is the small-car segment,
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which is 2.45 lakh units in size. And the only segment expected to grow at 15 per cent a year
for the next 5 years. The new millennium cannot but belong to the small car. However,
economics of upstream manufacture will only ensure survival. Sophisticated downstream
skills are essential to make inroads into the tough Maruti Udyog territory.
BUILDING COMPETITIVE STRATEGIES
But strategies, like cars, must feed on volumes. And how much is the sub-compact segment
likely to yield in 1998-99? Maruti Udyog expects the sales of the Zen to cross the 1-lakh-unit
mark. Assuming that at least a third of the small-car owning population--which includes
customers who have been using the Maruti 800, say, for at least 3 years--graduates to a sub-
compact, that means a market for at least another 1lakh car. Even if the 2-lakh mark is not
breached in the next 5 months, 1999-2000will be the Year Of The Upgrade, the economy
permitting. Which is why the second wave is focused on the small segment--from the mini to
the sub-compact to the small car? On that relatively stable bandwagon is perched the goliath,
Maruti Udyog, newcomers--the $28-billion Hyundai Motor of South Korea and the Rs
7,450.34-croretelco--and one revitalised company, Daewoo Motors. By drawing on their
intrinsic strengths, each is evolving a unique strategy to overtake competition. BT test-drives
the strategic responses of the second wave and assesses their chances of survival.
In less than two decades, India has ascended the ladder of global competitiveness and
improved its business environment for investors through a consistent focus on economic
reforms. Even more creditable is the fact that this growth comes on the back of an ever-
strengthening social infrastructure supported by vibrant democracy. India today is the hotbed
of entrepreneurial activity. Wealth creators and world-beaters are visible in sectors after
sector.
India’s economy has more than doubled in real terms since reform began in 1991. Consumer
demand, increasing three to five times faster than the economy, reflects the aspirations of a
vibrant, growing and young middle class; India is home to 20 per cent of the world’s
population under the age of 24. With more than 200 television channels offering a window to
the world, Indians are perhaps the most rapidly evolving consumers across the globe.
Successful economic reforms, favourable media disposition and an overall positive economic
scenario have placed a spotlight on the country. Indian companies are making overseas
acquisitions, capital markets are booming, FIIs are pumping money in, FOREX reserves are a
record high and the political economy has gained credibility in the global investor community
49
and world media. Innovative products, innovative processes, innovative manufacturing
methods are enticing foreign investors and multinationals to India. What is `India for the
world? It is a millennia-old civilisation. It is also the world’s premier IT services provider.
The worlds back office A global R& D hub. Emerging small-car hub, Repository, arguably,
of the world’s largest number of engineers, doctors, accountants, and so on. To bring it all
down to a single idea – India is ready with various touch points: from nation branding to
product branding.
Car manufacturers everywhere are struck by India’s engineering and design capabilities.
Toyota is planning to set up a research centre in India. Daimler Chrysler and General Motors
have done that already and Honda Siel, Ford India, Ashok Leyland and Maruti Suzuki spend
millions of dollars on research and development activities and it plans to make India a hub for
Suzuki’s small cars. India may never become a purely export-driven manufacturing country
like Malaysia or Korea or Thailand. Going forward, India is yet better placed as a low cost-
manufacturing base.
MARKETING STRATEGIES OF HONDA
The path to writing "Driving Honda: Inside The World's Most Innovative Car
Company" began with a question that perplexed was: If globalization was supposed to be
such a boon to multinationals, why are so many large manufacturers struggling to make
money outside of the home markets?
Few global manufacturers would admit it publicly, but in many private conversations with
executives I heard some version of this statement: "We're selling more products than ever in
China and South America and other emerging markets, but our profit margins there are
minuscule to flat, when they even exist."
To address this puzzle, I sought to find companies that could serve as successful models for
multinationals operating in a globalized commercial environment; I hoped to identify the
characteristics that make an individual business more likely to generate high profit margins,
innovate, behave in socially responsible ways, and be strategically creative wherever it
establishes a foothold. Almost immediately, Honda Motor Co. fit the bill.
50
To begin with, Honda has looked outward from its home shores well before other
manufacturers considered making or even selling products overseas. As long ago as the
1950s, when Honda was only a few years old, the company's founder, Soichiro Honda,
bemoaned the limited growth opportunities in "little Japan," declaring that Honda Motor must
"maintain an international viewpoint" and perceive the rest of the world as its potential
customer base and factory footprint.
It's no surprise, then, that Honda began selling motorcycles in the U.S. as early as 1959 and
autos a few years later. Nor that Honda stunned the auto industry with its 1974 Civic, the first
car to meet stringent U.S. Clean Air Act emissions standards even as the large American
automakers and Toyota were claiming it was impossible to economically produce an engine
that lived up to the act's goals. Or that Honda became the first non-domestic automaker to
successfully manufacture cars in the U.S. when it opened its Anna plant in 1982.
Honda's aggressive early globalization strategy in the U.S. was followed by similar
successful forays in other parts of the world: It was the first Japanese company to produce
cars in China and its earnings record in India and Southeast Asia and other far-flung
regions is the envy of the auto industry.
In large part because of its approach to global operations, Honda, a relative industrial newbie,
has a lot to boast about: By a large margin, Honda is the preeminent engine maker in the
world with an output of more than 20 million internal combustion motors annually; Honda
has never posted a loss in its history, and its automobile operating profit ratios of about 5%
consistently top the industry; Honda's stock price has nearly doubled since September 2008,
when the global economy collapsed; and Honda vehicles are the most durable and long-
lasting of any automaker, with 75% of its cars and trucks sold in the last 25 years still on the
road.
What then has made Honda excel so adeptly as a global multinational? The secret
strategic sauce that distinguishes Honda from other manufacturers can be broken down
into five ingredients:
1. Don't globalize, localize.
51
Unlike Toyota and most other multinationals in any industry, Honda is not a top-down
company, controlled by headquarters. Instead, Honda manufacturing subsidiaries virtually
everywhere around the world operate as autonomous companies, designing and producing
vehicles based on local conditions and consumer behavior.
In "The Machine That Changed the World," the landmark book about automobile lean
manufacturing, the authors praised Honda's localization strategy for "its conviction about
doing it all in one place" - in other words, combining engineering, design, and manufacturing
functions in each of its large local facilities. By contrast, virtually all industrial companies
keep R&D and other technical and design functions close to home, where they can be
managed by executives who are miles removed from local preferences and circumstances.
2. Embrace paradox.
Honda is a questioning, knowledge-rich organization, which demands that its workers at all
levels continually poke holes in the status quo. They do that through daily, often spontaneous
meetings known as "waigaya" during which decisions, large and small, are reevaluated and
turned on their head in hopes of finding a better strategic or tactical choice.
Throughout its relatively short history, Honda has welcomed paradox as a way to promote
critical thinking and reassess the so-called common wisdom, shaping new responses to
ingrained expectations. As one Honda executive put it: "Waigaya means perpetual
dissatisfaction. At our company, self-satisfaction is the enemy." The value of this system to a
multinational organization is immeasurable.
Nothing is more important for global companies today than having the dexterity to be
simultaneously local and international, to swiftly respond to regional preferences while
scaling operating tactics and manufacturing improvements around the world. And as Honda's
success in the international arena demonstrates, this capability is directly linked to
unremittingly reexamining with every new automobile model - more broadly, with every new
undertaking what is already believed to be true.
3. Robots? Not so fast.
52
Even as most major industrial corporations view robots and other forms of automation as the
best way to reduce costs and maintain productivity, Honda prefers a different path. Honda's
factories are purposefully the most labor intensive in the auto industry, employing robots only
in areas that are dangerous or otherwise obviously less fit for humans than machines.
Honda believes that assemblers become disengaged and their enthusiasm for their jobs and,
by extension, local innovation is muted by the presence of machines whose sole purpose is to
build cars cheaper and faster than humans.
As Honda sees it, that output and quality standards are too often set to the levels that the
technology can achieve and rather than the boundless creativity of human imagination.
Consequently, to enhance performance in a local facility, a new piece of equipment would
have to be purchased, instead of a new potentially revolutionary process invented. "Once you
automate, you're incapable of further improvement," said Sean McAlinden, chief economist
at the Center for Automotive Research, paraphrasing Honda's perspective.
4. Put an engineer in the hot seat.
Since Honda's founding in 1949 all of the company's CEOs (including the father of the
company, Soichiro Honda) have been engineers, veterans of Honda's prized autonomous
research and development unit. That's an extraordinary record: Conventional wisdom among
multinationals holds that the most effective chief executives are specialists in marketing,
sales, or perhaps accounting - anything but engineering.
As a result, even CEOs in technologically based industries, like pharmaceuticals or computer
hardware and software, tend to know little about designing or manufacturing the products that
they sell or managing the global supply chain or factory footprint. That's often why CEOs
favor centralization in which their most loyal lieutenants near headquarters oversee
distributed operations, acting as both a trusted proxy and informant for the chief executive.
Reared in R&D, Honda CEOs' strengths lie in product and process innovation, primarily in
designing new vehicle models and features and in conceiving fresh techniques for building
them faster and better.
Consequently, their success as managers is measured not by quarter-to-quarter results but
instead by how well they cultivate individual creativity throughout the organization and how
53
well they disburse Honda's unique corporate culture to its decentralized localization strategy
to produce continuous innovation.
5. Focus on factory flexibility.
Unlike other manufacturers, Honda can seamlessly produce multiple autos on a single
assembly line, one after another, and switch a line over to a newly designed vehicle within
hours. By contrast, it can take months for Honda's rivals to retool a factory for a new vehicle.
One way Honda achieves this is through in-house engineering co-located at each major
production facility, serving as an independent operation that is focused solely on local needs.
Any problems that arise in the flexible factory can be addressed immediately by this team -
which at most companies resides near headquarters and reports to corporate top executives -
ensuring that the steady stream of automobiles going through the line is not impeded.
Such an efficient and nimble factory is the Holy Grail for all manufacturers and Honda has
earned high marks from auto analysts for its ability to deftly navigate this challenge. In
globalization terms, the advantage Honda gains is in being able to alter production and
capacity of individual models at a moment's notice, depending on local sales trends and the
success of competitive brands.
Honda invented the flexible factory through an innovation known as synchronized
engineering: all of the vehicles coming into a factory's assembly zones share common
designs, such as similar locations and installation techniques for functions like brakes or
transmission. As a result, assemblers are agnostic about which car they are building because
in the factory only small variations differentiate, say, an Odyssey from an Accord V6.
54
OBJECTIVE OF THE STUDY
1. To study brand loyalty of a consumer towards a car brand
55
CHAPTER- 2
2. To study relationship of branding and consumer behaviour
3. To study various determinants of brand loyalty among consumers.
4. To determine critical factors responsible for the success of new product in Indian
automobile industry.
56
RESEARCH METHODOLOGY
A research process consists of stages or steps that guide the project from its conception
through the final analysis, recommendations and ultimate actions. The research provides a
57
CHAPTER- 3
systematic, planned approach to the research project and ensures that all aspects of the
research are consistent with each other.
Research studies evolve through a series of steps, each representing the answer to a key
question.
I propose to first conduct a intensive secondary research to understand the full impact and
implication of the industry, to review and critique the industry corms and reports, on which
certain issues shall be selected, which I feel remain unanswered or liable to change, this shall
be further taken up in the next stage of exploratory research. This stage shall help me to
restrict and select only the important question and issue, which inhabit growth and
segmentation in the industry.
The various tasks that I have undertaken in the research design process are:
Defining the information need
Design the exploratory, descriptive and casual research.
RESEARCH PROCESS
The research process has four distinct yet interrelated steps for research analysis.
It has a logical and hierarchical ordering:
Determination of information research problem
Development of appropriate research design
Execution of research design
Communication of results
Each step is viewed as a separate process that includes a combination of task, step and
specific procedure. The steps undertake are logical, objective, systematic, reliable, valid,
impersonal and ongoing.
EXPLORATORY RESEARCH
The method I used for exploratory research was
Primary data
Secondary data
PRIMARY DATA
New data gathered to help solve the problem at hand. As compared to secondary data which
is previously gathered data. An example is information gathered be a questionnaire.
Qualitative or quantitative data are newly collected in the course of research. Consists of
58
original information that comes from people and includes information gathered from surveys,
focal groups, independent observations and test results Data gathered by the researcher in the
act of conducting research. This is contrasted to secondary data which entails the use of data
gathered by someone other than the researcher information that is obtained directly from
first-hand sources by means of surveys, observations or experimentation.
Primary data is basically collected by getting questionnaire filled by the respondents.
SECONDARY DATA
Information that already exists somewhere, having been collected for another purpose is
called secondary data or information. Sources census reports, trade publications, and
subscription services. Data that have already been collected and published for another
research project (other than the one at hand). There are two types of secondary data: Internal
and External secondary data. Information compiled inside or outside the organization for
some purpose other than the current investigation. Data that have already been collected for
some purpose other than the current study, researching information which has already been
published. Market information compiled for purposes other than the current research effort; it
can be internal data, such as existing sales-tracking information, or it can be research
conducted by someone else, such as a market research company or the U.S. government.
Published is already available data that comes from pre-existing sets of information, like
medical records, vital statistics, prior research studies and archival data.
Secondary source of data used consists of books and websites
My proposal is to first conduct a intensive secondary research to understand the full impact
and implication of the industry, to review and critique the industry norms and reports, on
which certain issues shall be selected, which I feel remain unanswered or liable to change,
this shall be further taken up in the next stage of exploratory research.
DESCRIPTIVE RESEARCH
Steps in the descriptive research:
Statement of the problem
Identification of information needed to solve the problem
59
Selection or development of instruments for gathering the information
Identification of target population and determination of sampling plan
Design of procedure for information collection
Collection of information
Analysis of information
Generalizations and/or predictions
DATA COLLECTION
Data collection took place with the help of filing of questionnaires. The questionnaire method
has come to the more widely used and economical means of data collection. The common
factor in all varieties of the questionnaire method is this reliance on verbal responses to
questions, written or oral. I found it essential to make sure the questionnaire was easy to read
and understand to all spectrums of people in the sample. It was also important as researcher
to respect the samples time and energy hence the questionnaire was designed in such a way,
that its administration would not exceed 4-5 minutes. These questionnaires were personally
administered.
The first hand information was collected by making the people fill the questionnaires. The
primary data collected by directly interacting with the people. The respondents were
contacted at shopping malls, markets, places that were near to showrooms of the consumer
durable products etc. the data was collected by interacting with 100 respondents who filled
the questionnaires and gave me the required necessary information. The respondents
consisted of house wives, students, business men, professionals etc. the required information
was collected by directly interacting with these respondents.
DETERMINATION THE SAMPLE PLAN AND SAMPLE SIZE
TARGET POPULATION
It is a descriptive of the characteristics of that group of people from whom a course is
intended. It attempts to describe them as they are rather than as the describer would like them
60
to be. Also called the audience to be served by our project includes key demographic
information (i.e.: age, sex etc.).The specific population intended as beneficiaries of a program
.This will be either all or a subset of potential users, such as adolescents, women, rural
residents, or the residents of a particular geographic area. Topic areas: Governance,
Accountability and Evaluation, Operations Management and Leadership .A population to be
reached through some action or intervention; may refer to groups with specific demographic
or geographic characteristics. The group of people you are trying to reach with a particular
strategy or activity.
The target population is the population I want to make conclusions about. In an ideal
situation, the sampling frames to matches the target population. A specific resource set that is
the object or target of investigation. The audience defined in age, background, ability, and
preferences, among other things, for which a given course of instruction is intended.
I have selected the sample trough simple random sampling.
SAMPLE SIZE
This involves figuring out how many samples one need.
The numbers of samples you need are affected by the following factors:
Project goals
How you plan to analyze your data
How variable your data or are likely to be
How precisely you want to measure change or trend
The number of years over which you detect a trend
How many times a year you will sample each point
How much money and manpower you have
SAMPLE SIZE
I have targeted 100 people in the age group above 21 years for the purpose of the research.
The sample size is influenced by the target population. The target population represents the
Ludhiana regions. The people were from different professional backgrounds.
61
CHAPTER- 4
1.RESPONDENTS OF THE STUDY
62
GENDER No. of respondents PercentageMale 70 70%Female 30 30%Total 100 100%
70%Males
30% Females
Fig. 1.1 depicting the number of respondents us-ing cars
Analysis- Study reveals that out of 100 respondents, 30 females and 70 males are using cars.
Interpretation- Majority of respondents use cars to live their lives with ease.
2. Car preference
63
Car preference No. of respondents PercentageMultinational companies 30 30%Indian companies 60 60%Not a factor 10 10%TOTAL 100 100%
Indian com-panies60%
Multinational Companies
30%
Not a factor10%
Fig. 2.1 depicting the car's preference as marked by respondents
Analysis- Study reveals that 10% of the respondents prefer the cars of multinational as well as Indian companies. 30% of the respondents prefer cars manufactured by multinational companies whereas, 60% of the respondents prefer cars manufactured by Indian companies.
Interpretation- Majority of respondents thinks that cars manufactured by Indian companies are likely to give more satisfaction than the satisfaction derived from the cars manufactured by multinational companies.
3. Most trusted brands
64
Car brands No. of respondents using following car brands
Percentage
Maruti Suzuki 35 35%Honda 20 20%Hyundai 17 17%Toyota 11 11%Mahindra & Mahindra 9 9%Others 8 8%TOTAL 100 100%
35%
20%17%
11%
9% 8%
Fig. 3.1 depicts the most preffered car brand preffered by the repondents.
Maruti SuzukiHondaHyundaiToyotaMahindra and MahindraOthers
Analysis- Study reveals that the most preferred Indian car is Maruti Suzuki which is preferred by 35 persons out of 100. Honda is preferred by 20 respondents, Hyundai is preferred by 17 respondents, whereas Toyota is preferred by 11 and Mahindra and Mahindra by 9 percent of the respondents. There are 8 respondents who do not prefer any of these cars. They prefer luxury cars.
Interpretation- Majority of Indian population prefer Maruti Suzuki to be the most trusted and most preferred brand. It is because of its overall image. On the other side, Honda is playing second roll for the brand images because people consider the brand to be more reliable and trust worthy which created good brand image for both Maruti Suzuki as well as Honda.
4. Various factors affecting brand loyalty and their comparison with different car brands.
65
Table shows the response obtained from respondents about the affordable price as the factor affecting brand loyalty.
Car BrandNo. of respondents who voted affordable price as 1st
preference
Percentage
Maruti Suzuki 8 47.05%Honda 4 23.53%Hyundai 3 17.64%Toyota 1 5.88%Mahindra and Mahindra 1 5.88%TOTAL 17 100
Maruti suzuki Honda Hyundai Toyota Mahindra & Mahindra
0123456789
Fig.4.1, depicts the number of respondents who ranked affordable price as their 1st preference
Analysis- Study reveals that Maruti Suzuki is best known for its affordable price and Honda on the second number. 47% of the respondents agreed that Maruti Suzuki comes in affordable price as compared to other brands.
Interpretation- Majority of respondents buys the Maruti Suzuki car for its affordable price and feels Honda to be its big competitor.
Table shows the response obtained from respondents about the technical superiority as the factor affecting brand loyalty.
66
Car brand No. of respondents who voted technical superiority as their 1st preference
Percentage
Maruti Suzuki 4 25.0%Honda 3 18.75%Hyundai 4 25.0%Toyota 3 18.75%Mahindra and Mahindra 2 12.5%TOTAL 16 100%
Maruti Suzuki Honda Hyundai Toyota Mahindra & Mahindra
0
5
10
15
20
25
30
Fig.4.2, depicts the no. of respondents who voted technical superiority as their 1st preference
Analysis- The number of respondents who voted technical superiority as a best factor of the brand image is same in case of Maruti Suzuki and Hyundai. Out of 16 respondents 25% of the respondents voted that Maruti Suzuki and Hyundai stands best for technical superiority.
Interpretation- Majority of respondents buys Hyundai and Maruti Suzuki for its good technical superiority.
Table shows the response obtained from respondents comfort as the factor affecting brand loyalty.
Car brand No. of respondents who Percentage
67
voted comfort as their 1st
preferenceMaruti Suzuki 3 23.07%Honda 3 23.07%Hyundai 3 23.07%Toyota 2 15.38%Mahindra and Mahindra 2 15.38%TOTAL 13 100%
Analysis- Many respondents gave best rating to the comfort level offered by the particular car brand. 13 respondents out of 100 responded that the comfort level offered by their car is best. Out of these 13, respondents of Maruti Suzuki, Honda and Hyundai are highly satisfied.
Interpretation- We can easily interpret that, manufacturers are offering highly satisfied comfort level, in their cars, to the customers which pays great attention towards brand loyalty among customers.
Table shows the response obtained from respondents about the affordable price as the factor affecting brand loyalty.
68
Maruti Suzuki Honda Hyundai Toyota Mahindra & Mahindra
0
5
10
15
20
25
Fig.4.3, depicts the no. of respondents who voted comfort as their 1st preference
Car brand No. of respondents who voted manufacturer’s
image as their 1st preference
Percentage
Maruti Suzuki 5 29.41%Honda 4 23.52%Hyundai 3 17.6%Toyota 4 23.53%Mahindra and Mahindra 1 5.88%TOTAL 17 100%
Maruti Suzuki Honda Hyundai Toyota Mahindra & Mahindra
0
5
10
15
20
25
30
35
Fig.4.4, depicts the no. of respondents who voted for manufacturer's image as their 1st preference.
Analysis- The number of respondents who voted manufacturer’s image as a best factor of the brand image is high in case of Maruti Suzuki. Honda is big competitor of Maruti Suzuki and Toyota. Out of 17, 29% of the respondents feel Maruti Suzuki to be a good brand in terms of brand image and 23% feels that Honda has good brand image.
Interpretation- Majority of companies are good for its brand image because their particular car models. They stand high in case of brand image.
Table shows the response obtained from respondents about the affordable price as the factor affecting brand loyalty.
CAR BRAND No. of respondents who voted value for money as
Percentage
69
their 1st preferenceMaruti Suzuki 3 27.27%Honda 3 27.27%Hyundai 2 18.18%Toyota 2 18.18%Mahindra and Mahindra 1 9.09%TOTAL 11 100%
Maruti Suzuki Honda Hyundai Toyota Mahindra & Mahindra
0
5
10
15
20
25
30
Fig.4.5, depicts the no. of respondents who voted value for money as their 1st prefernce.
Analysis- 11 respondents voted value for value of money as their 1st preference in buying the car. Out of 11, 3 respondents voted for Maruti Suzuki and 3 for the Honda. Hyundai and Toyota gives same satisfaction in case of value for money.
Interpretation- Car brands such as Toyota, Mahindra & Mahindra are costly and does not provide as much satisfaction to the customers as the Car Brands Maruti Suzuki and Honda does.
5. Reasons for buying the car
70
Increase in disposable in-
come
Better safety at roads
Family needs Suits lifestyle and personality
As a mode of concenience
0
5
10
15
20
25
30
Fig. 5.1 depicts the reasong for buying a car
Analysis- Study reveals that out of the 100 respondents, 28% respondents bought the car due to the family needs such as increase in size of family or due to any other reason of family. 20% respondents bought the car due to increase in disposable income, better safety at roads and as a mode of convenience. Last but not the least, 12% respondents bought their present brand car due to their lifestyle and personality.
Interpretation- Majority of people buys the respected car brands due to family needs or increase in disposable income. Buyers of luxury cars buy the particular car brand to suit their lifestyle and personality.
6. Other benefits availed from the particular car brand
71
Benefits No. of respondents PercentageImage of the product 70 70%Identification with other users 5 5%Other benefits 25 25%
70%
25%
5%
Fig. 7.1 depicts the other benefits that buyers normally look for in particular car brand
Image of the product
Identifiication with other users of the brand
Others benefits
Analysis- Study reveals that 70% of the respondents look for image of the brand while buying the car. 25% of the respondents try to identify with other users of the brand before buying a car. And 5% respondents look for other benefits.
Interpretation- Majority of the respondent, while buying a car, looks for the image or market share of the car. They buy that brand which is mostly preferred by other persons or the brand which is more reputed in the market.
8. Buying a car in the future
72
Yes40%
No30%
May be30%
Fig. 8.1 depicts the respondent's perception about buy-ing a car of the same brand in the future
Analysis- Study reveals that 30% of the respondents said that they may or may not buy the car of same brand in the future. 40% of the respondents are loyal towards their specific car brand and they would prefer to buy the same car brand in the future. 30% of the respondents are not loyal they will not buy the car of the same brand.
Interpretation- Majority of the respondents are loyal towards their car brand and are wholly satisfied with it in consideration to value for money, after sale services provided by the companies or technology of the car.
9. Buying decision affected by the brand name of a car
73
Buying decision affected by the car brand
No. of respondents Percentage
Yes 28 28%No 5 5%Sometimes 60 60%Never 7 7%
Yes, it effects28%
No, it does not5%
Sometimes60%
Never7%
Fig.9.1, depicts whether brand name of car effects the buying decision
Analysis- Study reveals that, out of 100 respondents, 28% the respondents thinks that the brand name of the car brand really effects buying decision. 60% of the respondents said that buying decision will get effected by the brand of the car and 5% of the respondents responded that brand of the car do not affect the buying decision.
Interpretation- Majority of the respondents said that brand of the car sometimes effect their buying decision and sometimes it does not.
10. Respondents will buy new car in which of the following manner
74
5% 14%
41%
40%
Fig.10.1, depicts the level of brand loyalty where the respondents are asked to mention if they will buy new car
Same segment, same manufac-turerSame segment, different manu-facturerUpper segment, same manufac-turerUpper segment, different manu-facturer
Analysis- Study reveals that, 40% of the respondents will not by the car of their current brand. They would prefer to buy the car from other brand which will belong to same segment. 41% of the respondents are loyal and they would buy the car of same brand in the near future which will belong to upper segment. 5% of the respondents will buy the car of same brand which will belong to same segment.
Interpretation- According the above chart, out of 100, 46% of the respondents are loyal towards their brand and are wholly satisfied with it.
11. If the brand of the car is out of stock
75
Out of stock situation’s remedies No. of respondents PercentageDelay purchase till next time 25 25%Purchase another car from same brand 40% 40%Purchase car of different brand 35% 35%
Purchase car of dif-ferent brand
35%
Purchase another car from the same brand
40%
Delay purchase till next time
25%
Fig.11.1, depicts the situation where the brand of the car you wish to purchase is out of stock
Analysis- Study reveals that, out of 100 respondents, 25% of the respondents will delay the purchase till next time if the car they wish to purchase is out of stock. That means they are loyal towards that particular brand. 35% of the respondents are not loyal towards their brand hence will buy the car of different brand. 40% of the respondents are also loyal and hence will buy the different car from the same brand if the car they wish to purchase is out of stock.
Interpretation- 65% of the respondents are loyal towards their particular car brand. It shows that they are highly satisfied with their car brand.
76
12. Recommendation to family or friends
Recommendation to family/friends
No. of respondents Percentage
Yes 76 76%No 24 24%
Yes76%
No24%
Fig.12.1, depicts whether a respondent will recommend his car to his friends/ relatives
Analysis- Study reveals that 76% of the respondents will recommend their car brand to their relatives and friends whereas 24% of the respondents will not recommend their car irrespective of the reason behind it.
Interpretation- Majority of the respondents will recommend their car brand to their family members and their friends.
77
13. Reasons for recommending the car to family and friends.
Reasons No. of respondents PercentageBrand is value for money 15 21.42%You are wholly satisfied 18 25.71%Reflects your personality 10 14.28%Technology 16 22.85%Service quality 11 15.71%Total 70 100%
26%
30%12%
12%
20%
Fig.13.1, depicts the reasons for recommending car to friends / relatives
The brand is value for moneyYou are wholly satisfied with your car brandIt reflects your personalityTechnologyService quality
Analysis- Study reveals that, 26% of the respondents will recommend their car to others because the brand of the car which they currently own is value for money. 30% of the respondents will recommend the car because they are wholly satisfied with their current car brand. 12% of the respondents will recommend because their current car reflects their personality and also due to the level of the technology used in the car.
Interpretation- Majority of the respondents will recommend the car to their relatives or friends because they are wholly satisfied with it and the brand is value for money.
78
79
CHAPTER- 5
FINDINGS
Study measured the factors influencing the brand loyalty under the context of cars in
Ludhiana. It can be seen that youth’s brand choice is driven by a number of factors such
as price, stylish appearance, quality aspects, promotion and advertisement, features, third
party recommendations, brand image, celebrity endorsement and post purchase services.
The customer satisfaction of Maruti Suzuki consumer is remarkable in comparison of
other competitors.
Maruti Suzuki is most preferred car brand by 35% of the respondents because of its
affordable price, after sale services, quality, brand image, value for money.
Irrespective of price the technology and speed are most preferred element.
Respondents using Maruti Suzuki, Honda and Mahindra are getting the value of their
money.
People think that Maruti Suzuki has a wide variety of cars to choose.
People consider Hyundai as biggest competitor of Maruti Suzuki.
Respondents are aware of other brands of cars as well, and brand image is also a key
point to affect the purchase decision of the customers.
Majority of respondents thinks that cars manufactured by Indian companies are likely to
give more satisfaction than the satisfaction derived from the cars manufactured by
multinational companies.
Majority of people buys the respected car brands due to family needs or increase in
disposable income. Buyers of luxury cars buy the particular car brand to suit their
lifestyle and personality.
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CHAPTER-6
RECOMMENDATIONS
As price is most preferred attribute, so prices of product should be reduced as to make
price competitive.
The company should promote its brands so that the target consumers hear its name about
the technology.
After sales service should be improved, by the arrangement of authorized service centers
and dealers
More advertisement should be given on television, newspapers etc. and based on
children’s and family members.
The Company should provide promotional schemes & discount scheme to satisfy the
consumers.
Companies have to implement good customer relationship management strategy that
enhances customer satisfaction level.
Companies need to undertake R&D to improve the existing feature that will help in
increasing the customer satisfaction.
The companies should promote about the entire feature offered by them.
A majority of the respondents give opinion that they are satisfied in the factors, services
and design of the product of the company should taken not only the existing standard but
also enhance them.
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CHAPTER- 7
LIMITATIONS OF THE STUDY
All the research projects are hindered in their smooth flow unforeseen problems. The
problems arise in the form of constraints by budget, time and scope of the study. The current
project was also faced by certain problem. Some of the problems faced in course of the
research are as follows-
A strong unwillingness on the part of the owners of various cars, to participate and aid the
research
The boredom and wavering concentration that set in among the respondents while
answering the long questionnaire: thus in turn led to the difficulty of preventing
incomplete questionnaires.
Sampling error- the research includes a sample size of 100 customers which is not enough
to determine the brand loyalty of the consumers for buying the cars. Since it is ot a census
survey there is always a chance of error while extrapolating the results of a sample study
over the population especially in those researches where the qualitative aspects are
concerned. So it’s always doubtful to map the qualitative aspects using a quantitative
measure.
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85
CHAPTER- 8
CONCLUSION
The main emphasis in marketing is winning new customers as well as retention of existing
ones. To achieve this, brand loyalty play a great role and has become of great interest for
researchers, business managers/owners. Customer loyalty determines how much of the
product is bought, how often and the repeat purchases made based in its features. The
features that a customer is keen on when making a purchase are multiple and are blended in
the product. The product is positioned and distinguished by way of some special offering to
establish it as a brand.
Brand loyalty has become an important concept in strategic marketing. Studies show that in
competitive repeat-purchase markets, loyalty is shaped more by the passive acceptance of
brands than by strongly held attitudes about them. For a brand to thrive or survive in the
market it must be effectively used by its customers. The understanding of the brand loyalty is
also essential for the automobile industry dealing with variety of features which are highly
competitive.
Factors affecting brand loyalty includes popularity of the brand, after sale services,
affordability, and commencement year of the brand, frequency in innovations, uniqueness of
the brand, family size, ease of location of the car, mileage, design and model, advertisement,
economic recession, interior designing of the car, maintenance cost, ease of location of the
car etc
Consumers may repeat the purchase of single brands or switch around several brands due to
the tangible quality of the product sold. Material is important in product quality because it
affects the hand feel, texture and other performance aspects of the product. Further,
consumers relate personally to color, and could select or reject a product because of color. If
the color does not appeal to them or flatter their own color, they will reject the product.
Functional attributes in cosmetics include quick-dry, breathable, waterproof, lightweight, and
finally, durability.
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Customers have come to expect satisfaction as part and parcel of the general deal, and the
fact that they are satisfied doesn't prevent them from defecting in droves to a competitor who
offers something extra.
Consumer behavior has been very important to all branded companies in all over the world.
The behavior of the consumers remains not same in all the time the consumers behavior
change with the passage of time in future. The behavior of consumer is temporary for short
time not permanently. The factors influences the consumer behavior are culture, family,
social, society, age, groups, friends, environment and psychological factors.
Each person has different personality characteristics and traits. That makes a person unique.
Personality created by the set of inner characteristic and psychological traits that both
determine and reflect how a consumer will respond or react in a certain situation.
Nothing is more important for global companies today than having the dexterity to be
simultaneously local and international, to swiftly respond to regional preferences while
scaling operating tactics and manufacturing improvements around the world. And as Honda's
success in the international arena demonstrates, this capability is directly linked to
unremittingly reexamining with every new automobile model - more broadly, with every new
undertaking what is already believed to be true.
Brand commitment is found in consumers who are “attached to brands, form close
relationships with them and have a general desire to maintain this close relationship,
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CHAPTER-9
ANNEXURE
QUESTIONNAIRE-
Name: ______________________________________
Age: ______________________________________
Occupation: _________________________________
Gender: Male Female
1.Do you own a car?
a. If yes, how many ________
b. No
2.You prefer a car manufactured by
a. Multinational companies
b. Indian companies
c. Not a factor
3.Which Company car you own?
a. Maruti Suzuki
b. Honda
c. Hyundai
d. Toyota
e. Mahindra and Mahindra
g. any other, mention _____________
4. You decided to buy a car brand rank them in order of preference. Rank 1 is to the
highest and so on.
FACTORS MARUTI
SUZUKI
HONDA HYUNDAI MAHINDRA
&
MAHINDRA
ANY
OTHER
Affordable
price
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Technical
superiority
Comfort
Manufacturer’s
Image
Value for
money
Safety
After sales
Services
5. What according to you is the reason for buying the car??
a. Increase in disposable income
b. Better safety at roads
c. Family needs.
e. Suits your lifestyle and personality
f. as a mode of convenience
6.Rank them in the order of preference. 1 being the highest and 5 being the lowest.
Factors Highly
Dissatisfied
Dissatisfied Neutral Satisfied Highly
Satisfied
Interior
Designin
g
Speed
Economy
Looks
Durabilit
y
7. Apart from the direct benefit of the particular car brand, what else do you look for?
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a. Image of the product
b. Identification with other users of the brand
c. Others, mention ____________________________
8. Does a brand name of a car effects your buying decision?
a. Yes it effects
b. No it does not
c. Sometimes
d. Never
9. Do you think you would be buying a car of the same brand in the near future?
a. Yes
b. No
c. May be
10. What is the reason for the delay between the purchase decision and actual
purchase?
a. Financial constraints
b. Waiting for more innovative product
c. Waiting for market responses
11. Will you buy your new car in the
Same segment, same manufacturer
Same segment, different manufacturer
Upper segment, same manufacturer
Upper segment, different manufacturer
12. Do you agree “I trust the brand”?
a. Very disagree
b. Disagree
c. Fair
d. Agree
e. Very agree
13. What will you do if the brand of the car you wish to purchase is out of stock?
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a. Purchase a different brand
b. Purchase another car from the same brand
c. Delay purchase till next time.
14. Will you recommend your car to your friends?
Yes
No
15. Why would you recommend it your friends?
a. The brand is value for money
b. You are wholly satisfied with your car brand
c. It reflects your personality
d. Technology
e. Service quality
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S. Ramesh Kumar- Consumer behaviour and branding: Concepts, Readings and cases- the
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