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Project Report
Marketing Mix of Automotive
Industry (Methodology Followed by
Kiran Udyog Pvt. Ltd.)
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Table of Contents
1. Overview of Automotive Sector
2. Objective of the Study
3. Chapter 1: Introduction
- Background
- History of Indian Automobile Industry
- Leading Players and Segments in which they operate
- Market Research
4. Chapter 4: Literature Review
- Company Profile: Kiran Udyog Pvt. Ltd.
- Customers
- Technology Used
- Marketing Mix
- Two wheeler in India
5. Chapter 3: Research Methodology
- Scope of the Study
- Sources of Data
- Questionnaire Design- Sampling Design
- Procedure for Data Collection
6. Chapter 4: Data Analysis
7. Conclusion
8. Bibliography
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OVERVIEW OF AUTOMOTIVE SECTOR
The industry is estimated to be a US$ 34 billion industry with exports contributing 5 per
cent of the revenues. The growth of the Indian middle class with increasing purchasing
power along with the strong growth of the economy over the past few years has attracted
global major auto manufacturers to the Indian market. Moreover, India provides trained
manpower at competitive costs making India a favoured global manufacturing hub. The
Indian automobile industry is going through a technological change where each firm is
engaged in changing its processes and technologies to maintain the competitive
advantage and provide customers with the optimized products and services. The de-
licensing of the sector in 1991 and the subsequent opening up of 100 per cent foreigndirect investment (FDI) through the automatic route marked the beginning of a new era
for the Indian automotive industry. Since then almost all the global major automobile
players have set up their facilities in India taking the level of production of vehicles from
2 million in 1991 to 10.83 million in 200708.
Stagnation of the auto sector in markets such as Europe, US and Japan on the other, have
resulted in shifting of new capacities and flow of capital to the Indian auto industry. The
Indian automobile industry has been growing at the rate of 1527 per cent over the past
five years. In two wheelers industry,
Indian companies are the largest manufacturers in the world. Bikes are a major segment
in the industry, the other two being scooters and mopeds. Moreover, Indian car makers
are earning acclaim worldwide. The home-grown automaker, Maruti Suzuki has emerged
as the fourth most reputed among auto companies in the world, even ahead of its parent
Suzuki Motor Co of Japan, according to the Global 200: The World's Best Corporate
Reputations list, compiled by US-based Reputation Institute.
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OBJECTIVE OF THIS STUDY
This study is done in keeping following objectives in view:
To find out the present status of the automobile industries in India.
To study the market research of the automobile industries.
To study the distribution and marketing strategy adopt by automobile industries.
To enhance our analytical skills in the field of practical application of Marketing
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CHAPTER 1: INTRODUCTION
Background
TheAutomotive industry in India is one of the largest in the world and one of the fastest
growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled
and 4 wheeled) and exports about 2.33 million every year. It is the world's second largest
manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's
passenger car and commercial vehicle manufacturing industry is the seventh largest in
the world, with an annual production of more than 3.7 million units in 2010. According
to recent reports, India is set to overtake Brazil to become the sixth largest passenger
vehicle producer in the world, growing 16-18 per cent to sell around three million units
in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of
passenger cars, behind Japan, South Korea, and Thailand.
As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million
automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the
country the second fastest growing automobile market in the world. According to the
Society of Indian Automobile Manufacturers, annual car sales are projected to increase
up to 5 million vehicles by 2015 and more than 9 million by 2020. By 2050, the countryis expected to top the world in car volumes with approximately 611 million vehicles on
the nation's roads.
A chunk of India's car manufacturing industry is based in and around Chennai, also
known as the "Detroit of India" with the India operations of BMW, Ford, Hyundai and
Nissan headquartered in the city. Chennai accounts for 60 per cent of the country's
automotive exports. Gurgaon and Manesar in Haryana are hubs where all of the Maruti
Suzuki cars in India are manufactured. The Chakan corridor near Pune, Maharashtra is
another vehicular production hub with companies like General Motors, Volkswagen,
Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Fiat and Force Motors
having assembly plants in the area. Ahmedabad with the Tata Nano plant, Halol with
General Motors, Aurangabad with Audi, Kolkatta with Hindustan Motors, Noida with
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Honda and Bengaluru with Toyota are some of the other automotive manufacturing
regions around the country.
TheIndian Automobile Industry is manufacturing over 11 million vehicles and exporting
about 1.5 million every year. The dominant products of the industry are two wheelers
with a market share of over 75% and passenger cars with a market share of about 16%.
Commercial vehicles and three wheelers share about 9% of the market between them.
About 91% of the vehicles sold are used by households and only about 9% for
commercial purposes. The industry has attained a turnover of more than USD 35 billion
and provides direct and indirect employment to over 13 million people.
The supply chain of this industry in India is very similar to the supply chain of the
automotive industry in Europe and America. This may present its own set of
opportunities and threats. The orders of the industry arise from the bottom of the supply
chain i. e., from the consumers and goes through the automakers and climbs up until the
third tier suppliers. However the products, as channelled in every traditional automotive
industry, flow from the top of the supply chain to reach the consumers.
Interestingly, the level of trade exports in this sector in India has been medium and
imports have been low. However, this is rapidly changing and both exports and importsare increasing. The demand determinants of the industry are factors like affordability,
product innovation, infrastructure and price of fuel. Also, the basis of competition is the
sector is high and increasing and the life cycle stage is growth. With a rapidly growing
middle class, all the advantages of this sector in India are yet to be leveraged.
Note that, with a high cost of developing production facilities, limited accessibility to
new technology and soaring competition, the barriers to enter the Indian Automotive
sector are high and these barriers are study. On the other hand, India has a well-
developed tax structure. The power to levy taxes and duties is distributed among the three
tiers of Government. The cost structure of the industry is fairly traditional, but the
profitability of motor vehicle manufacturers has been rising over the past five years.
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Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but
are recording profits after tax of about 6% to 11%.
The level of technology change in the Motor vehicle Industry has been high but, the rate
of change in technology has been medium. Investment in the technology by the
producers has been high. System-suppliers of integrated components and sub-systems
have become the order of the day. However, further investment in new technologies will
help the industry be more competitive. Over the past few years, the industry has been
volatile. Currently, Indias increasing per capita disposable income which is expected to
rise by 106% by 2015 and growth in exports is playing a major role in the rise and
competitiveness of the industry.
Tata Motors is leading the commercial vehicle segment with a market share of about
64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of
46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their
footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing
26% of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is
occupying about 58% of the three wheeler market.
Consumers are very important of the survival of the Motor Vehicle manufacturing
industry. In 2008-09, customer sentiment dropped, which burned on the augmentation indemand of cars. Steel is the major input used by manufacturers and the rise in price of
steel is putting a cost pressure on manufacturers and cost is getting transferred to the end
consumer. The price of oil and petrol affect the driving habits of consumers and the type
of car they buy.
The key to success in the industry is to improve labour productivity, labour flexibility,
and capital efficiency. Having quality manpower, infrastructure improvements, and raw
material availability also play a major role. Access to latest and most efficient technology
and techniques will bring competitive advantage to the major players. Utilizing
manufacturing plants to optimum level and understanding implications from the
government policies are the essentials in the Automotive Industry of India.
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Both, Industry and Indian Government are obligated to intervene the Indian Automotive
industry. The Indian government should facilitate infrastructure creation, create
favourable and predictable business environment, attract investment and promote
research and development. The role of Industry will primarily be in designing and
manufacturing products of world-class quality establishing cost competitiveness and
improving productivity in labour and in capital. With a combined effort, the Indian
Automotive industry will emerge as the destination of choice in the world for design and
manufacturing of automobiles.
History of Indian Automobile Industry:
The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly,
but in very small numbers.
Embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra
was established by two brothers as a trading company in 1945, and began assembly of
Jeep CJ-3A utility vehicles under license from Willys. The company soon branched out
into the manufacture of light commercial vehicles (LCVs) and agricultural tractors.
Following the independence, in 1947, the Government of India and the private sectorlaunched efforts to create an automotive component manufacturing industry to supply to
the automobile industry. However, the growth was relatively slow in the 1950s and
1960s due to nationalization and the license raj, which hampered the Indian private
sector. After 1970, the automotive industry started to grow, but the growth was mainly
driven by tractors, commercial vehicles and scooters. Cars were still a major luxury.
Japanese manufacturers entered the Indian market ultimately leading to the establishment
of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian
companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for building
motorcycles and light commercial-vehicles. It was at this time that the Indian government
chose Suzuki for its joint-venture to manufacture small cars. Following the economic
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liberalization in 1991 and the gradual weakening of the license raj, a number of Indian
and multi-national car companies launched operations. Since then, automotive
component and automobile manufacturing growth has accelerated to meet domestic and
export demands.
Following economic liberalization in India in 1991, the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and relaxed
restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti
Suzuki and Mahindra, expanded their domestic and international operations. India's
robust economic growth led to the further expansion of its domestic automobile market,
which has attracted significant India-specific investment by multinational automobile
manufacturers. In February 2009, monthly sales of passenger cars in India exceeded
100,000 units and has since grown rapidly to a record monthly high of 182,992 units in
October 2009. From 2003 to 2010, car sales in India have progressed at a CAGR of
13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this
figure reaches 80% in Switzerland for example) this progression is unlikely to stop in the
coming decade. Congestion of Indian roads, more than market demand, will likely be the
limiting factor.
SIAM is the apex industry body representing all the vehicle manufacturers, home-grown
and international, in India.
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LEADING PLAYERS AND SEGMENTS IN WHICH THEY OPERATE
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MARKET RESEARCH
Market research often refers to either primary or secondary research. Secondary research
involves a company using information compiled from various sources, which is about a
new or existing product.. Primary market research involves qualitative research (such as
focus groups or one-on-one interviews) and quantitative research (such as surveys) as
well as field tests or observations conducted for or tailored specifically to that product.
Primary research, which is also called field research or original research, is useful for
finding new information and getting customers' views on products.
SCORPIO
Having defined the competitive framework, the next task undertaken was that of
analyzing the consumer. Consumer segments of B and C category car buyers were
analyzed in terms of their expectations from a car, their perceptions about cars and their
relationship. Proprietary techniques of research, of the advertising agency Interface
Communications, like Mind & Mood, ICON and VIP were used to understand this
consumer. The findings were:
Size matters- big size stands for status
Consumers seek latest technology
Imagery but at affordable prices
The sheer thrill and passion of driving an SUV
Power of the vehicle makes a statement
But along with the others, luxury was a very important parameter
International vehicles define imagery
SUVs like Pajero, Land Cruiser and Prado are seen as urban vehicles for the rich and
famous consumers aspire to own these vehicles as the imagery of these vehicles hasbecome very desirable.
Consumers want to consume premium imagery at prices affordable to them
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The Marketing Environment
Marketing environment consists of the actors and forces outside marketing that affect
marketing managements ability to build and maintain successful relationships with
target customers. The marketing environment offers both opportunities and threats. The
environment continues to change rapidly. The marketing environment is made up of
Micro-environment and Macro-environment.
The Micro environment consists of the actors close to the company that affect its ability
to serve its customers. These actors are: the company, suppliers, marketing
intermediaries, customer markets, competitors and publics.
The Macro environment consists of the larger societal forces that affect the
microenvironment. These forces are: demographic, economic, natural, technological,
political and cultural forces.
GM STUXX: THE DEMOGRAPHIC ENVIRONMENT
The demographic position will be on the United States. Since, the target market is for the
middle class; it will provide a boost for the 32% of the total population. This product willproduce a superior value to customers who always value the brand. Also, it will keep the
popularity of the product at their trend. In this case, more and more customers will be
able to keep this product if it satisfies their condition. Additionally, the middle class
group will be loyal to this product brand and as generation goes by; this product will be
there forever. On the other hand, this product is also designed for students, and working
class people. This is due to the fancy and environmental design.
Students will be so grateful to have fancy car while the working class group will tend to
afford such an affordable environmental car design.
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THE NATURAL ENVIRONMENT
This product is basically designed to reduce the carbon emission from fuels and help to
preserve our environment. It is very important to design such car to help decrease the rate
of carbon dioxide from the air and provide a better condition to tackle global warming.
This car will provide a boost to the natural environment because it is safer and has an
image to be friendlier to the environment itself. In this case, more and more people will
tend to buy such car to protect the environment by reducing the carbon emission to the
air.
THE ECONOMICAL ENVIRONMENT
The world is facing a shortage of fuel and it has become an economical crisis to every
country. This is evidence as the price of fuel is increasing and the probability of the price
of a barrel to increase at any day is very high. Therefore, this product will help customers
to save money because it consumes less fuel. The fuel consumption is one of the best
criteria based on this product. On the other hand, customers will be able to satisfy with
this kind of product because it is not too expensive and everybody has the privilege to
afford one. This product will satisfy the superior value of all different customers since it
has a very good design to solve to fuel shortage, less expensive, and can be affordable to
anyone.
THE TECHNOLOGICAL ENVIRONMENT
The fastest growing of information technology helps this product to be at its best. Its
design is basically provided with the help of information technology. Looking at its
design, this product benefits a lot from the technological sectors. This proves that this
product is favourable to the environment. Also, this product can be modified or even
upgraded to the standard where it will be suitable at any environmental condition. The
Information technology is very effective in letting this product to be very efficient. In this
case, it helps customers to satisfy this kind of product in this technological environment.
THE SOCIAL AND CULTURAL ENVIRONMENT
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It is believed that protecting the environment is a great concern. Therefore, this product is
purposely designed to be environmentally friendly. As a result, most people in the United
States and elsewhere are willing to offer such kind of product to save the environment. If
more and more people are keen to buy such kind of product then the environment would
be safe at any cost. Consequently, people will be more supportive to save what is best for
the communities and the environment.
SEGMENTATION
A market segment consists of a group of customers who share a similar set of wants. The
marketer does not create the segments; the marketers task is to identify the segments and
decide which one(s) to target. Segment marketing offers several benefits over mass
marketing. The company can create a more fine-tuned product or service offering and
price it appropriately for the target segment. The company can more easily select the best
distribution and communication channels, and it will also have a clearer picture of its
competitors, which are the companies going after the same segment.
In the context of automotive sector, we would be classifying it in the following ways:
BASED ON THE PRICE OF THE CAR
BASED ON THE LENGTH OF THE CAR
BASED ON THE USER SEGMENT
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TARGET MARKETS
The segment that gives the greatest opportunity to the marketer is called Target
Marketing.
VOLVO MOTORS
Volvo Motors develops its cars for buyer to whom automobile safety is a major concern.
Volvo therefore positions its as a safest a customer can buy.
HYUNDAI MOTORS
Hyundai marketing strategy is differentiated marketing. Its primary consumer target is
middle to upper income professionals who need true value for their money and
comfortable ride in city conditions. Its secondary consumer target is college students who
need style and speed. Its primary business target is midsized to large sized corporate that
want to help their managers and employees by providing them a car for ease of transport.
Its secondary business target is entrepreneurs and small business owners who want to
provide discounts to managers buying a new car.
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CHAPTER 2: LITERATURE REVIEW
Company Profile:
Kiran Udyog: A company with a vision " To Be A Global Supplier " Aims To Meet The
Stringent Demands Of Its Customers Both Domestic & International By Manufacturing
Of World Class Products. The Links In A Chain Of Development Mark The Realization
Of Our Ultimate Aspiration - Prosperity Through Partnership.
Established in 1984 with its Ist unit in Delhi, Kiran has come a long way in winning the
trust of major O.E.M's of the Indian Automobile Industry. With its continued
commitment in achieving the QCDD Targets, Kiran has created a distinct position for
itself on the Domestic Front.
Today group is operating six plants locating in Delhi & Gurgaon. Kiran is poised to make
a mark in the International Markets attracting customers from U.S.A, Europe, U.K. and
Japan by our high quality products produced from Latest & World class Production
facilities at Manesar Gurgaon.
Vision:
Cost Competitive Global Company
Customer Delight
Enhancing Stake Holders Value
Mission:
Latest Technology
Creativity & Innovation
Fast & Flexible
Adhering Quality Systems
Teamwork & Caring
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Individual Respect
Customers of Kiran Udyog Pvt. Ltd.
Name Customer Wise ProductsHonda Motorcycle & Scooter India Hubs, Wheel Assly, L Cover, Crank Case R
Sona Koyo Steering System Ltd. Pinion Housing, Case Steering Gear
GE, USA Motor Frame , End Shield ,Mid Shield
Maruti Udyog Ltd. (Suzuki Venture) Water Inlet, Cap, Arm shaft, Retainer Input,
Alternator/Compressor Brackets
Suzuki Motorcycler India (P) Ltd Cranck Case L & R, Cylinder Block, Hub RR,
& Sprocket RR
Tata Motor Ltd Cover, Rear Half, Lock Plate & Top Cover
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Technology Used by Kiran Udyog Pvt. Ltd.
Production & Workmanship Our aim is to meet the targets of our customers at all times
by providing world class quality products. Therefore we constantly intensify our
production forces ranging from importation of high precision manufacturing equipments
like Fully automatic Die Casting Machine & CNC Machines to optimization of the
production processes. This enables us to maximize our manufacturing technology and
production management.
Engineering Upgradation of company is considered to be a vital tool which provides
competitive advantage and our we follow the same policy. Our Design & Engineering is
the force, which plays an important role in striving us towards global excellence.
Our company endeavors to recruit high-caliber Engineering Professionals and creates an
atmosphere to realize the full potential of their experience & skill. With the strong back-
up of the sophisticated AutoCAD / CAM & Unigraphics software, a wide range of
projects came into existence.
With its continued efforts to keep abreast of the latest information & professional
knowledge and to strengthen technical exchange with domestic & internationalmanufacturers, Kiran is dedicated to excel in the automotive industry.
Quality:
Excellent & Consistent Quality is the cornerstone on which Kiran's reputation is built.
Great Importance is given to the expectations & requirements of customers and the
products are upgraded to provide maximum customer satisfaction.
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MARKETING MIX
The set of controllable tactical tools- product, price, promotion, and place (4 Ps) that the
firm blends to produce the response it wants, in the target markets.
A Marketing mix is the division of groups to make a particular product by pricing,
product, branding, place, and quality. Although some Day1 marketers have added other
P's, such as personnel, packaging and physical evidence, the fundamentals of marketing
typically identifies the four P's of the marketing mix as referring to:
"Marketing Mix" is set of correlated tools that work together to achieve company's
objectives, they are: product, price, promotion, place.
The set of controllable tactical marketing tools, product, price, place and promotion -
that the firm blends to produce the response it wants in the target market:
Product - A tangible object or an intangible service that is mass-produced or
manufactured on a large scale with a specific volume of units. Intangible products are
often service based like the tourism industry & the hotel industry. Typical examples
of a mass produced tangible object are the motor car and the disposable razor. A less
obvious but ubiquitous mass produced service is a computer operating system.
Price The price is the amount a customer pays for the product. It is determined by a
number of factors including market share, competition, material costs, product
identity and the customer's perceived value of the product. The business may increase
or decrease the price of product if other stores have the same product.
Place Place represents the location where a product can be purchased. It is oftenreferred to as the distribution channel. It can include any physical store as well as
virtual stores on the Internet.
Promotion Promotion represents all of the communications that a marketer may use
in the marketplace. Promotion has four distinct elements - advertising, public
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relations, word of mouth and point of sale. A certain amount of crossover occurs
when promotion uses the four principal elements together, which is common in film
promotion. Advertising covers any communication that is paid for, from television
and cinema commercials, radio and Internet adverts through print media and
billboards. One of the most notable means of promotion today is the Promotional
Product, as in useful items distributed to targeted audiences with no obligation
attached. This category has grown each year for the past decade while most other
forms have suffered. It is the only form of advertising that targets all five senses and
has the recipient thanking the giver. Public relations are where the communication is
not directly paid for and includes press releases, sponsorship deals, exhibitions,
conferences, seminars or trade fairs and events. Word of mouth is any apparently
informal communication about the product by ordinary individuals, satisfied
customers or people specifically engaged to create word of mouth momentum. Sales
staff often plays an important role in word of mouth and Public Relations
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PRODUCT
MARUTI SWIFT
European Styling. Japanese Engineering. Dream-Like Handling.
The new Swift is a generation different from Suzuki design. Styled with a clear sense of
muscularity, its one-and-a-half box, aggressive form makes for a look of stability, a sense
that it is packed with energy and ready to deliver a dynamic drive. Its solid look is
complemented by an equally rooted road presence and class- defining ride quality. New
chassis systems allow for the front suspension lower arms, steering, gear box and rear
engine mounting to be attached to a suspension frame. You get lower road noise, and a
greater feeling of stability as you sail over our roads with feather- touch ease.
TATA INDICA
Though a late entrant, the Indica quickly established itself as the benchmark for the
segment. By offering exciting features, the car changed the rules of the category in
Space, Power, Style, Safety and Economy for international market. The Indica ensured a
pleasant ride and handling experience as it had features like wide large tyres, generousleg room and independent front and rear suspension. It developed a new segment of
diesel small cars along with its petrol offering. The luggage space was also the best in its
class.
The rigid 980 kgs steel body of the car was rigorously tested at India's first and only
crash test facility. A collapsible steering wheel, impact absorbing bumpers, anti-
submarine seats, crumple zones and side impact beams are just a few of the features that
make the Indica one of the safest cars on the roads today. Savings are ensured with the
fuel-efficient 1.4L diesel engine, while the 1.4L petrol engine is optimized for
performance.
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Indica features for international market:
Collapsible steering column
Side-impact beam
Energy-absorbing crumple zones in the front
Anti-submarine seats
Child-safety locks on rear doors
Laminated front and rear windshield glass
SCORPIO
Rational benefits: World class vehicle, good looks, car like comfort, great value
Emotional benefits: Ownership experience of thrill, excitement and power Relational
benefits: Young modern, premium, city companion / extension of lifestyle.
PRODUCT, SERVICES AND BRANDING STRATEGY
What is a Product?
Product is anything that can be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or need. Products include more than just tangible
goods. Broadly defined, products include physical objects, services, events, persons,
places, organizations, ideas or mixes of these entities. Services are a form of product that
consists of activities, benefits or satisfactions offered for sale that are essentially
intangible and do not result in the ownership of anything.
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Example: banking, hotel and airline.
Products, Services and Experiences
Today, companies are creating and managing customer experiences with their products.
Levels of Products and Services:
Product Planners need to think on three levels:
1. Core Benefit: This addresses the question What the buyer is really buying?. At this
level, marketers must define the core: problem-solving benefits or services that consumer
seeks.
2. Actual Product: At this level, the core benefits must be turned into actual products.
Product planners need to develop product and service features, design, quality level,
brand name and packaging.
3. Augmented Product: Finally at this level, the product planners must bundle the
products with services. They must build an augmented product by offering additional
consumer services and benefits.
Hyundai Santro
CORE PRODUCT
Core Product is the problem solving services or benefits that consumers purchase the
product for, and by applying this concept to Santro you can state that the core product is
speed, transportation, and freedom to go anywhere, easy traveling, and convenience.
ACTUAL PRODUCT
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Actual product meaning the products parts, quality, features, design, brand name and
other attributes received. Now, if we use these things and combine it with Santro we can
state that the actual product is: Santro, as the brand name, it matters little about the name,
because HYUNDAI is very famous already, people will recognize the brand in an
instance, and features such as the fact that the car is fully customizable, so you can add
most things to your car, i.e. Stereo, big speakers, rims for the tires, TV in seat etc., also
design, where you can choose between a lot of colours, seat colour, and fabrics, all the
things you can imagine. And of course the quality, the car will be regular HYUNDAI
standard, meaning quality will be the same as for any other car made by HYUNDAI,
which is high quality.
AUGMENTED PRODUCT
Augmented product is the additional consumer services and benefits built around the core
and actual product, as well as add value and differentiate the product from its
competition. The augmented product for Santro is after-sale services such as free yearly
check up, as well as a free oil check after 2 years, free installation of additional features
when you customize your car, and help with car insurance, and quick repair services.
PRODUCT CLASSIFICATIONS
GM STUXX
From the 4 product classifications, convenience, shopping, specialty and unsought, the
Stuxx is classified as a specialty good, since specialty goods are purchased infrequently,
and most of the times, buyers make special purchasing effort. By listing some of the
characteristics for specialty products we can say that substitutes are not accepted, and
that the product is infrequently purchased, and since our Stuxx is a GM we know that
there are some brand loyalty as well. And if we look at the strategy, we can note limited
distribution, and consumers might seek our product regardless of location.
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STAGES IN DEVELOPING PRODUCT AND SERVICE
ATTRIBUTES
PRODUCT ATTRIBUTES
Product attributes consist of several categories, such as Product quality, Product features,
Product style and design. For Stuxx product quality is the performance quality, because it
can be used a lot and still last for a long time (Durability). And as for Product style we
know that Stuxx offers many colours and many styles used to attract attention from
trendy consumers, and general consumers, the style however does not contribute to better
performance. For Product design, the car has a very special chassis that allows many
changes, making this a fully customizable car, where you are free to alter appearance,
features, construction, such as adding items on the back of the car, lowering the car
making it look more stylish like a race car.
BRANDING
There are several advantages for buyers when talking about branding, first of all product
recognition, everyone knows GM, so if they know GM, then they know Stuxx as well.
Quality on Stuxx is same standard as the rest of GMs cars. There are. But not only
buyers have advantages, no, sellers as well. Here are a few examples, basis for products
quality, provides legal protection, helps to segment the markets.
BRAND STRATEGY
A study of international brand names was done and a classification of brand names of
midsize cars and SUVs was done into groups.
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International brand naming trends and strategies were analyzed. New names were
generated. These brand names were researched massively first by qualitative techniques
and then by quantitative techniques.
The name that emerged as most popular, and which was also the most liked name
internally at Mahindra was
SCORPIO
BRAND ENDORSEMENT STRATEGY
The relation between Scorpio and the mother brand Mahindra was also deliberated upon.
The strategy chosen for Brand Endorsement was - Scorpio from Mahindra -shadow
endorsement, one which does not shout Mahindra.
The Mahindra brand image was not modern and young. There was a need to create a
strong distinct modern brand. Hence Mahindra as a Masterbrand could not contribute
towards enhancing the Value Proposition. Yet Mahindra had to provide source
reassurance. Also the distribution would be through Mahindra dealerships. Hence it
became a shadow endorser.
PACKAGING
Since product is a car, packaging might not be of much importance. Cars usually dont
come in a box. However, since Santro is made for students and older, they have decided
to make a big box, free of all charges, if the car is a gift for someones birthday. Santro is
a good choice as a first car; parents can easily buy it as a gift for their young
teenagers/students.
LABELING
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No labelling, however for curious users, there will be a small brochure about the
ingredients car parts, so they can see how exactly the car works, and what and where
the different parts are from.
PRODUCT SUPPORT SERVICES
As for product support services, there are 3 things to know: Assess the value of current
services and obtain ideas for new services. Assess the cost of providing the extra services
and putting together a package of services that delights the customers and yields profits
for the company. All these, are already applied to Santro if we look at Augmented
Product, which I wrote about earlier. Customers would be delighted about those extra
services, and might tell friends about them and in the end make more profit for the
company.
PRODUCT LINE DECISIONS (The Product Mix)
When it comes to product line decisions, and product mix to be exact; we will find that
there are 3 types, namely width, length and depth. As for Stuxx, it is definitely width,
because Stuxx is a different product line for GM.
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PRICE
MARUTI SWIFT
After launching cars for the masses since so many years, Indias largest automobile
manufacturer is now targeting the premium segment with their latest model from the
Suzukis stable. Pricing of this premium hatchback is start from Rs.4 lakh. This price
range would practically rip apart Hyundais offering in Getz, which is priced at a much
higher tag of Rs. 4.5 lakh. Both the companies are known for their value based offerings
and Maruti with their extensive service network and brand reputation for making reliable
cars should get the customers nod over their competition.
TATA INDICA
Tata Motors adopted a competitive pricing strategy for Indica in the global market. Prices
were fixed on the basis of the norms prevailing in the international market. Also the
prices offered by their competitors like Toyota, Ford, Fiat, were kept in mind while
deciding the prices.
SCORPIO
Pricing Strategy: to be a premium brand yet having universal appeal. Scorpio was to
compete with the midsize cars like Hyundai Accent, Ford Ikon, Opel Corsa, Maruti
Suzuki Esteem on the one side and UVs like Toyota Quails, Tata Safari and the Tata
Sumo on the other. Scorpio adopted the penetrative pricing strategy positioned in the
psychological price barrier of Rs. 5 -7 Lakhs.
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PROMOTION
MARUTI SWIFT
When Maruti Udyog launched the Swift, the automotive industry was agog with
expectation that the car had the makings of a real winner. Three versions were launched
with the base variant carrying a retail tag of Rs 3.85 lakh, ex-showroom, New Delhi, and
this aggressive pricing only reinforced this feeling.
Event Organized By Maruti to Promote Swift:
Fever FM and Maruti Suzuki Swift organize a Night Rally for Delhi-ites
On March 24, 2009
In a co-operative marketing initiative, Fever FM and Maruti Suzuki Swift came together
to organize a Night Rally in Delhi. The Swift Night Life Rally was organized for the
Swift Life Club. The brand tied up with the station to extend the experience to the people
who were unable to participate in the activity.
Honda
Road Shows
The company plans to stage road shows, to display vehicles in the pavilions during
various college festivals and exhibition.
Hyundai
Television advertisements
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Advertisements to promote and market our product are shown on leading television
channels. Major music and sports channels promote and they reach out to the youth will
be promoted through Star, Zee, Sony and doordarshan etc as it has more viewers.
Radio
Radio is the medium with the widest coverage. Studies have recently shown high levels
of exposure to radio broadcasting both within urban and rural areas, whether or not
listeners actually own a set. Many people listen to other people's radios or hear them in
public places. So radio announcements are made and advertisements are announced on
the radio about the product features and price, qualities, etc.
Print Ads
Daily advertisements in leading newspapers and magazines are used to promote the
product. Leaflets at the initial stage are distributed at railway stations, malls, college
areas and various other locations.
Workshops and Seminars
Workshops and seminars are held in colleges and big corporate to make people aware
about the companies past performance and product features, its affordability and usage,
vast distribution network.
Banners, neon signs
Hoardings, banners, neon signs are displayed at clubs, discs, outside theatres,
highways and shops to promote its brand car.
Booklets and pamphlets
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Booklets are kept at car showrooms, retail battery outlets, etc for the customer to read.
These booklets provide information about its company; the products offered which suits
the customers need accordingly.
SCORPIO
Brand Promise: Luxury of a car. Thrill of an SUV this brand positioning addresses the
key consumer Insight and the product delivers the promise. The position is also a unique
proposition, which will help the brand have a distinct image in the consumers mind.
The baseline captures the essence of the brand, which is superiority and uncompromising
attitude. It also summarises the spirit behind the making of the Scorpio.
Media Strategy
Dramatic and high impact launch
High visibility
Push brand image even by the media vehicle
Building impact through multiple-media
PR, Mass Media, Direct Marketing, Events
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Public Relations
Pre-launch excitement and buzz was created by a full blown PR program. Media
coverage on the IDAM process, the people behind the Scorpio, the obsession, the world
class technology, etc set the tone for the hyped up launch. PR was also the first tool used
for launching the Scorpio. The coverage of the launch was massive. It got four cover
stories.
Mass Media
While the media targets would be achieved through the right selection of the media mix,
the Scorpio media posture was to ensure that Scorpio was present on the decided media
but with a difference. Scorpio would use media innovations to create differentiation on
the traditional media and do things in a bigger and better manner.
Customer Relationship Management (CRM)
CRM as a tool was used to create positive word-of-mouth, to monitor customer
experiences and generate referrals. A series of CRM activities were implemented with
regular direct communication, events and customer research. The CRM plan included a
welcome Pack on filling up Scorpio Club (Top Gear) form, satisfaction surveys,Events,
Festive offers, Rewards Program, etc.
TATA INDICA
More car per car is the famous tagline of this product. The Indicas positioning has
remained consistent with the brand's offering in an increasingly competitive market The
Indica is now synonymous with the word More, by encapsulating the inherent product
strengths and marrying them with the customer trait of desiring More.
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A promotion strategy for Indica v2 in international market is more or less same as that of
the Indian market. Media innovations have been a key to the success of the Indica.
Tata at 29th Bangkok International Motor Show 2008
The positioning was strengthened with the successful launch of the Indica V2, which
assumed the leadership position in the year of its launch.
The Indica v2 was launched in the international market only through the press medium,
with three diesel versions and a petrol version, and this campaign shattered many
automobile advertising myths. The car was launched without any television advertising,
but through high-impact newspaper ads, dominating the medium and delivering the
desired impact. Headlines such as Youll never have to suffer a small car again assisted
customers in distinguishing between their old choices and the Indica. This, in effect,
placed the Indica on the pedestal of leadership, set to change the rules of the game.
A recent campaign for the Indica V2 has helped in building the product on the rational
platform and adds an emotional layer. Anchored on the insight Its only human to want
more, the campaign revolves around interesting candid moments in the daily lives of
normal everyday people who desire more; be it a boy wanting the other boys bigger
lollipop, or a baby crying when her parents stop driving her around in the Indica V2. The
latest campaign moves to the Even more car per car positioning.
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PLACE
MARUTI SWIFT
The car manufacturing company, called Maruti Suzuki Automobiles India Limited, is a
joint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent
and 30 per cent stake respectively.
The Rs1,524.2 crore plant has a capacity to roll out 1 lakh cars per year with a capacity to
scale up to 2.5 lakh units per annum. The car manufacturing plant will begin commercial
production by the end of 2006.
The engine and the transmission plant has owned by Suzuki Power train India Limited in
which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog
holding the balance. The ultimate total plant capacity is three lakh diesel engines.
However, the initial production is 1 lakh diesel engines, 20,000 petrol engines and 1.4
lakh transmission assemblies.
TATA INDICA
Tata automobile group have a very large distribution network all over the world. Tata
Indica v2 is exported and assembled in many countries. South Africa has an assembling
unit for consumer vehicles. Other places where the companys products (Tata Indica) are
exported and in some assembled also are mentioned below:
Africa :- Algeria , Angola , Ethiopia , Ghana , Kenya , Mauritius , Sudan , Uganda ,
South Africa , Senegal etc.
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Europe: - Greece, Hungary, Italy, Malta, Portugal, Spain, Switzerland, UK and
Ireland.
CIS : - Belarus, Russia, Ukraine.
Asia: - Bangladesh, Malaysia, Sri-Lanka, Nepal, Bhutan.
Australia continent
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PEOPLE
There are various types of people in any Organization. The various types of people in
case of Toyota can be classified as Customers, Sales Executives, Society, Government,Competitors, and Media.
The most important out of these is our Customers. A customer can be any person who
purchases the product; he may or may not use that product for himself. A consumer is
one who actually uses the product himself. For example a father purchases Corolla for his
son. In this case the father will be the Customer and son will be the Consumer. The main
people involved in the purchase decision of the car are the Family Members. In a recentstudy conducted, it was found out that these days children play a major role in deciding
which car to buy for the family. The company has to seriously take into consideration all
these factors. Also the factors that whether one uses the car for travelling, office,
shopping or family/personal etc.
As this car falls into a segment where price range is between 9-11 Lacs, so the company
has to target those people who not only have the ability to spend that much amount ofmoney but are also willing to spend that much amount of money. Data regarding the
purchasing power of different classes of people is also very necessary. Customers tastes
and preferences have to be taken into consideration.
Next comes the Sales Executives who deal with the final customers and finish the sales
call. The Sales Executives play a major role. As the people of the organization they are a
window through which the customers interact with the company. They have to be trained properly through customized modules designed especially for them taking into
consideration the various factors.
Corolla Owners Profile
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Age: 25-45
Occupation: Business Class or High Level Service Executives
Social Class: These people (Lower Upper to Higher Upper Class) generally have an
existing C segment car before they purchase Corolla
Areas: Urban/ Sub Urban, major Cities/Towns
Income Level: More than Rs. 2 lacs p.m
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PHYSICAL EVIDENCE
The Physical Evidence is created by displaying physically the product. Along with that
creating an atmosphere for the customers where in they feel the presence of product.Toyota creates a powerful physical evidence for its customers through its Showrooms,
Hoardings, Logo etc. All the showrooms are designed on a common platform. The
interiors of all the showrooms across India are the same. The designs for the same are
created by a team of Professionals in this field. The designs are prepared very carefully
keeping into consideration various factors such as customers tastes and preferences,
likes and dislikes etc. You will always find a Toyota showroom having the Toyota Bill
Board outside with white base and red foreground. This creates a physical presence and
people can feel the product.
SCORPIO
Infrastructure
Thirty-five showrooms across the country were redone entirely with the same look and
identity and a dcor built around movement, technology and sportiness. The theme
focused on giving the customer a memorable experience. The showroom revamp was
centered on the intention to provide a uniform customer experience at all the touch points
and to provide the customer with a unique experience and not just a product.
Therefore the back office would remain outside the customers line of vision because the
customer would be concerned with the product and not with the paperwork.
PROCESS
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The various processes involved in getting available the product from the manufacturer to
the end consumer are to be efficiently performed by the company. The processes start
when the customer is contacted by the Sales Personnel of the Dealership or the customer
contacts the Dealership if he is interested to buy a Corolla. The data regarding the various
customers can be had from various sources of data available through different agencies
which specialize in providing data. After the call is made, an appointment is fixed. The
Sales Executive prepares for the meet. He collects all the possible information which
would be needed for the meeting i.e. data about the customer, details about the car,
maximum permissible discount structure, finance options, delivery terms, free
accessories which will be provided to the customer.
The sales personnel will find out that what is the present vehicle used by the customer,
his present buying power, satisfaction level, seriousness in buying etc. Along with that he
will also find out his exact needs, desired level of satisfaction, lifestyle patterns etc. Sales
personnel also ask certain questions through which he comes to know about the various
factors he wants to know. He asks both open as well as closed ended questions. With the
help of these questions, he can come to know the various reasons due to which he is
buying that car. These can be Performance, Safety, Comfort, Driving Pleasure,
Appearance etc.
These processes either lead to completion of sales call or sometimes unfortunately leads
to unsuccessful sales call which could not be competed.
DEALING WITH THE COMPETITION
Poor firms ignore their competitors; average firms copy their competitors; winning
firms lead their competitors PHILIP KOTLER
GENERAL ATTACK STRATEGY
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FRONTAL ATTACK: the attacker matches its opponents product, advertising, price
and distribution
DISTRIBUTION CHANNELS
SCORPIO
Since the Scorpio was targeted at an urban clientele it needed a stronger distribution
presence in Metros and urban areas. Hence, the distribution channel had to focus on
providing an appealing experience for modern car buyers and on offering international
standards of auto retail.
The Scorpio was launched in a phased manner - first in Metros Mumbai, Delhi,
Bangalore, Chennai. Twenty cities were included over a period of 4 months and within a
year 50 cities were covered. This ensured attention to main markets and to ensure that
initial production of the vehicle could match demand. Dealerships were revamped prior
to launch in a particular city.
The Marketing Distribution Channel of Toyota Kirloskar Motor India, the Manufacturer
of Corolla, is a Single Level Channel depicted:
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THE VALUE CHAIN
The Value-Chain Network within Stuxx is a significant medium for measuring the
products quality and performance, from Inbound Logistics-to- Operations-to- Outbound
Logistics-to- Marketing/Sales-to-Service. As a manufacturing firm, GM that produces
Stuxx manufactures the vehicle and then distributes it to its store all over USA. The
whole team network has a common purpose in operation and that is to produce and to sell
it to make the customer smiling when disembarking. This common belief has brought a
successful feedback to the overall sales and because providing the service for selling is
considered an important task by the employees at Stuxx, it has never failed. Stores are
designed so that accommodating a customer is luxurious but keeping his/her perception
to as not expensive-sense.
SWOT ANALYSIS OF MARUTI UDYOG LTD.:
STRENGTHS
WEAKNESSES
OPPURTUNITIES
THREATS
STRENGTHS
The Quality Advantage
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Maruti Suzuki owners experience fewer problems with their vehicles than any other car
manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No.1 in the
premium compact car segment and the Esteem in the entry level mid - size car segment
across 9 parameters.
The J.D. Power APEAL Study 2004 proclaimed the Wagon R no. 1 in the premium
compact car segment and the Esteem No.1 in the entry level mid - size car segment. This
study measures owner in terms of design, content, layout and performance of vehicles
across 8 parameters.
A Buying Experience like No Other
Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189 cities,
with a workforce of over 6000 trained sales personnel to guide our customers in finding
the right car. Our high sales and customer care standards led us to achieve the No.1
nameplate in the J.D. Power SSI Study 2004.
Quality Service across 1036 Cities
In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7
parameters: least problems experienced with vehicle serviced, highest service quality,
best in-service experience, best service delivery, best service advisor experience, most
user-friendly service and best service initiation experience.
92% of Maruti Suzuki owners feel that work gets done right the first time during service.
The J.D. Power CSI study 2004 also reveals that 97% of Maruti Suzuki owners would
probably recommend the same make of vehicle,
while 90% owners would probably repurchase the same make of vehicle.
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WEAKNESSES
Commodity price risk
MULs commodity price risk relates to higher cost due to change in price of input such
as Ferro-alloys (steel), non Ferro alloys (aluminium), plastic and rubber, which go into
the production of automobile.
In order to mitigate these risks, the company continues to attempt to enter into long term
contracts based on its projection of prices in a volatile commodity market, where your
company gives top priority to ensuring smooth availability of inputs, long term contracts
are helpful. They also help to minimise the impact of growing input price. Conversely,
long term contractor dilute the benefit if any, of a decline in input price.
Exchange Rate Risk
Your company is exposed to the risks associated with the fluctuation in foreign exchange
rates mainly on import of component & raw material and export of vehicles. Your
company has a well-structured exchange risk management policy. The company manages
its exchange risk by using appropriate hedge instrument depending on the prevailing
market condition and the view on the currency.
OPPURTUNITIES
Leading Growth
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As the market leader, your company led the growth in the passenger car sector last year.
Maruti's sales went up 30% to 4,72,000 units. This, as I said earlier, is the highest annual
sale since your company began operations 20 years ago. Maruti also gained market share,
mainly on account of its performance in the competitive A2 segment where it increased
its share from 40.3% in 2002-03 to 47.7% in 2003-04.
The record sales performance was reflected in the financials. Net Sales (excluding
excise) grew by 31% to Rs 93,456 million. Operating Profit Margin increased from 0.8
% in 2002-03 to 4.7 % in 2003-04. Profit after Tax jumped 270% to Rs 5421 million.
Your company is committed to motorising India. Towards this end, your company's
partnership with State Bank of India and its Associate Banks took organised finance to
small towns to enable people to buy Maruti cars.
THREATS
In the course of its business, MUL is exposed to a variety of market and other risks
including the effects of demand dynamics, commodity prices, currency exchange rates,
interest rate, as well as risk associated with financial issues, hazards event and specific
asset risk. Wherever possible, we use the instrument of insurance to mitigate risk.
Business risk
The automotive industry is very capital intensive. Such investment requires a certain
scale of operation to generate viable returns. These scales depend on demand. Maruti is
still depending mainly on the Indian market. Although 2004-05 was year of continued
growth for the Indian economy, whether this growth momentum will continue has to be
seen.
THREATS FROM COMPETITORS
Tata Motors Limited
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In the 2004 fiscal year, Tata Motors generated revenues of $3,542.2 million
(INR154,935.2 million). The company made a net profit of $185 million (INR8,103.4
million) in the 2004 fiscal year.
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General Motors Corporation
For the fiscal year ended December 2004, GM generated revenues of $193,517 million,
an increase of 4.3% from the previous year. The company reported a net income of
$2,805 million for fiscal 2004, down 26.6% from the previous year
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Two-wheeler in India:
Introduction:
The feeling of freedom and being one with the Nature comes only from riding a two
wheeler. Indians prefer the two wheelers because of their small manageable size, low
maintenance, and pricing and easy loan repayments. Indian streets are full of people of
all age groups riding a two wheeler. Motorized two wheelers are seen as a symbol of
status by the populace. Thus, in India, we would see swanky four wheels jostling with
our ever reliable and sturdy steed:Two wheelers in India are the second largest producer
and manufacturer of two-wheelers in the world. It stands next only to Japan and China in
terms of the number of two-wheelers produced and domestic sales respectively. Indian
two-wheeler industry has got spectacular growth in the last few years. Indian two-
wheeler industry had a small beginning in the early 50's. The Automobile Products of
India (API) started manufacturing scooters in the country. Bikes are a major segment of
Indian two wheeler industry, the other two being scooters and mopeds. Indian companies
are among the largest two-wheeler manufacturers in the world. In the initial stages, the
scooter segment was dominated by API; it was later overtaken by Bajaj Auto. Although
various government and private enterprises entered the fray for scooters, the only new
player that has lasted till today is LML. The motorcycle segment was initially dominated
by Enfield 350cc bikes and Escorts 175cc bike. The two-wheeler market was opened to
foreign competition in the mid- 80s. And the then market leaders - Escorts and Enfield -
were caught unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint
ventures. With the availability of fuel efficient low power bikes, demand swelled,
resulting in Hero Honda - then the only producer of four stroke bikes (100cc category),
gaining a top slot.
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The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and
Hero Honda brought in the first two-stroke and four-stroke engine motorcycles
respectively. These two players initially started with assembly of CKD kits, and later on
progressed to indigenous manufacturing. In the 90s the major growth for motorcycle
segment was brought in by Japanese motorcycles, which grew at a rate of nearly 25%
CAGR in the last five years. The industry had a smooth ride in the 50s, 60s and 70s when
the Government prohibited new entries and strictly controlled capacity expansion. The
industry saw a sudden growth in the 80s. The industry witnessed a steady growth of 14%
leading to a peak volume of 1.9mn vehicles in 1990. In 1990, the entire automobile
industry saw a drastic fall in demand. This resulted in a decline of 15% in 1991 and 8%
in 1992, resulting in a production loss of 0.4mn vehicles. Barring Hero Honda, all the
major producers suffered from recession in FY93 and FY94. Hero Honda showed a
marginal decline in 1992. The reasons for recession in the sector were the incessant rise
in fuel prices, high input costs and reduced purchasing power due to significant rise in
general price level and credit crunch in consumer financing. Factors like increased
production in 1992, due to new entrants coupled with the recession in the industry
resulted in company either reporting losses or a fall in profits.
Key players in the Two-wheeler Industry There are many two-wheeler manufacturers in
India. Major players in the 2-wheeler industry are Hero Honda Motors Ltd (HHML),
Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS).
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SEGMENTATION OF TWO WHEELER
A Two Wheeler Sector Sub-Segmenting in the three Segments.
1. Motorcycle
2. Scooter
3. Mopeds
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Growth Prospects and Key Drivers of the Indian Two Wheelers Industry
The growth witnessed by the Indian two wheeler industry indicates the growing demand
for low cost personal transportation solutions amongst the 300 million Indian middle
class consumers. Despite this spectacular growth rate, the two wheeler penetration
(number of two wheelers per 1000 inhabitants) in India remains lower than other Asiancountries. This fact provides an opportunity for continued growth in the market. India has
the lowest Penetration of two wheelers as compared to countries like Taiwan, Thailand,
Malaysia, Vietnam, Indonesia and China. In the present scenario, growth in the two
wheeler Industry will be driven by several factors:
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Rise in Indias Young Working Population:
With the rising levels of per capita income of people, the Indian two wheeler market
offers a huge potential for Growth. This growth is relevant in the light of the fact that 70
per cent of Indias population is below the age of 35 Years and 150 million people will
be added to the working Population in the next five years. The number of women in the
urban work force is also increasing; this will lead to the Growth of gearless scooters.
Rise of Indias Rural Economy and Growth in Middle Income Households:
The growth prospects of the Indian rural economy offer a significant opportunity for the
motorcycle industry in India. The penetration of motorcycles amongst rural households
with income levels greater than US$ 2,200 per annum has already increased to over 50
per cent. The current target Segment for two wheelers, i.e., households belonging to the
Income category of US$ 2,20012,000 is expected to grow at a CAGR of 10 per cent.
Greater Affordability of Vehicles
The growth in two-wheeler sales in India has been driven by an increase in affordability
of these vehicles. An analysis of the price trends indicates that prices have more or less
stagnated in the past. This has been part of the marketing strategy adopted by the
manufacturers to gain volume, as well as conscious efforts adopted to bring down costs.
The operating expenses of leading manufacturers have declined by around 15 per cent in
the last five years. With greater avenues of financing, the customers capacity to own a
two wheeler has improved.
Rapid Product Introduction and Shorter Product Life Cycle:
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The last five years have witnessed a sharp increase in new product launches in the two-
wheeler industry. It is estimated that close to 50 new products have been launched by
manufacturers during this period, filling up all price points and targeted at various
consumer segments.
Inadequate Public Transport Systems in most Urban Areas:
The economic boom witnessed in the country and the increased migration to urban areas
have increased the traffic congestion in Indian cities and worsened the existing
infrastructure bottlenecks. Inadequate urban planning has meant that transport systems
have not kept pace with the economic boom and the growing urban population. This has
increased the dependence on personal modes of transport and the two wheelers market
has benefited from this infrastructure gap.
Challenges faced by the industry
Despite the high growth achieved in the past and the high potential in the future, the two-
wheelers market faces some challenges.
Rising Customer Expectations
The growth witnessed by the Indian two wheeler industry has attracted a number of new
entrants to the market and it is expected that the Indian industry will become more
competitive in the future. The plethora of products introduced in the past has also raised
customer expectations with respect to reliability, styling, performance and economy.
Environmental and Safety Concerns:
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The increasing demand for two wheelers will need to be managed to address issues
relating to overcrowding of roads. Another problem is the insufficient infrastructure for
inspection to ensure adherence to emission norms. As the industry grows, it is important
to regulate the sale of used two wheelers in a more organised manner for which a
mechanism needs to be evolved. Unregulated sale of two wheelers, especially in the rural
areas, are likely to create issues related to emissions and safety of vehicles.
Creation of Distribution Infrastructure:
Leading companies need to ensure that on one hand they build adequate infrastructure in
terms of dealerships and servicing stations in the urban areas and on the other ensure that
their distribution infrastructure also reaches the rural areas
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Chapter 3
Research Methodology
3.1 Scope of the Study
Geographical Scope:
The study was conducted in Delhi. The areas covered in Delhi were:
Kalkaji, Munirka, R.K.Puram, Bersarai, Lajpat Nagar, South Extension, Defence Colony,
Yousuf Sarai, Bhikaji Kama Place, Vasant Kunj, Connaught Place, Karol Bagh,
Paharganj, Kamala Nagar, Model Town,Rohini, Rajouri garden, Patel Nagar, Paschim
Vihar, Jail Road, Nangal Raya, Janak Puri, Vikas Puri, Uttam Nagar, Laxmi Nagar,Shakarpur,Nehru Place, Shahadra, Mayur Vihar, Karol Bagh, Shankar Road,
Product Scope:
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The study was conducted for the Honda Motorcycle & Scooter India, Sona Koyo
Steering System Ltd., GE, Maruti Udyog Ltd. Suzuki Motorcycler India, Tata Motor Ltd.
3.2 Sources of Data:
Data was collected from both primary as well as secondary sources. First secondary data
was collected to know the current trends in the market, the various brands and their
handsets available in the market and the price ranges in which these handsets are
available.
This was followed by the primary survey to find out the market share of Sony Ericsson
and its competitor brands in different categories and the brand strategies being implied by
these brands. Also through the primary survey the retailer categories and characteristics
of retailers in these categories were identified and the characteristics of retailers in these
categories.
3.3 Questionnaire Design:
The questionnaire has been designed based on literature reviewed, as well as with thehelp of industry experts.
The questionnaire has been made to identify the market mix of Automotive Industry and
its competitors.
3.4 Sampling:
Sampling Design: The sample chosen from the retailers was based on the number of
retailers present in a particular area of Delhi. This was done on the basis of convenient
sampling.
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Sample Size: The sample size selected for conducting the study was of 100 retailers,
which was decided after consultation with industry experts
3.5 Procedure for Data Collection:
For the purpose of data collection both primary as secondary data would be used. For the
purpose of primary data collection study, dealers were administered with a questionnaire,
which had both structured as well as unstructured questions.
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Chapter 4:
Data Analysis
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FACTORS IMPORTANT IN A CAR PURCHASE
7%
7%
50%
12%
18%
3%3%
COST
STYLE
PERFORMANCE
PERFORMANCE ANDSTYLE
PERFORMANCE AND
COST
STYLE AND COST
STYLE COST AND
PERFOMANCE
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FACTORS IMPORTANT IN A CAR PURCHASE
0
10
20
30
40
50
60
70
80
90
1
ATTRIBUTES
PERCENTAGE
OFRE
SPONDENTS
PERFORMANCESTYLE
COST
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RESPONDENTS RANKING OF ATTRIBUTES
PREFERENCE RANK PREFERENCE POINTS
1 140
2 120
3 100
4 80
5 60
6 40
7 20
Attributes Preference Rank Preference Points
Performance 1.5 130
Cost 2.9 102
Low Maintenance 2.7 106
After Sales Service 3.4 92
Brand Name 3.8 84
Safety 4.4 72
Credit Facility 6.4 32
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0 20 40 60 80 100 120 140
PERFORMANCE
COST
LOW MAINTENANCE
AFTER SALES SERVICE
BRAND NAME
SAFETY
CREDIT FACILITY
PREFERENC
E
POINT
ATTRIBUTES
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SOURCES OF INFORMATION
0
5
10
15
20
25
30
35
40
1
SOURCE OF INFORMATION
NUMBER
OFRESPO
NDENTS
TELEVISION
MAGAZINE
FRIENDS
DEALERS
MECHANIC
OTHER CAR OWNERS
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0
10
20
30
40
50
60
70
80
PERCENTAGE OF
RESPONDENTS
1
INFLUENCERS
INFLUENCING FACTORS IN DECISION MAKING
FRIENDS
FAMILY
MEDIA
OTHERS
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CONCLUSION:
Indias expedition to become a global auto-manufacturing hub could be seriously
challenged by its inability to uphold its low-cost production base. A survey conducted by
the research, KMPMG firm reveals that the Indian auto component manufacturers are
increasingly becoming skeptical about sustaining the low-cost base as overheads
including labour costs and complex tax regime are constantly rising. The survey said
many executives believe that Indias cost advantage is grinding down fast as labour costs
are constantly increasing and retaining employees is becoming more and more difficult.
Increased presence of global automotive companies in the country was cited as one of the
reasons for the high erosion rate.
AUTOMOTIVE Indian auto businesses will only flourish if they boost investments in
automation. In the longer term, cost advantage will only be retained if Indian capital can
be used to develop low-cost automation in manufacturing. This is the way to preserve our
low cost. Global auto majors are also cynical about Indias low cost manufacturing base.
India taxation remains a big disadvantage. This is not about tax rates it is just about
unnecessary complexity. But some companies also believe there is scope for reducing the
cost of doing business. In spite of this there are opportunities to exploit lower costs right
across the board. Its true that labour costs are definitely increasing but they are still five
per cent of the total operational costs. The labour costs can be further reduced if
companies are successful in bringing down other costs like reducing power costs. Low-
cost base can never last long. The company said Indian industry has till now relied on
very labour intensive model but it would have to switch to a more capital intensive
model.
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BIBILIOGRAPHY
MARKETING MANAGEMENT BY PHILIP KOTLER
KIRAN UDYOG PVT. LTD. OFFICIAL WEBSITE: www.kiranudyogindia.com/
WIKIPEDIA
TOYOTA OFFICIAL SITE M
ARUTI OFFICIAL SITE
TATA OFFICIAL SITE
AUTOMOTIVE HYUNDAI OFFICIAL SITE
AUTO INDIA MAGAZINE
AUTODRIVE MAGAZINE
BBC NEWS SITE
INSIDETIME.COM
HERO HONDA OFFICIAL SITE
DOMAIN-B.COM
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