Alkesh Dinesh Mody Institutefor Financial and Management Studies

Department of Mumbai University

Integrated Marketing Communication

Manage, Design and Monitor Ad Budget for Hyundai I20

Presented by

Name Roll No.Chintan Shah 11Rohit Sopori 13

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Executive Summary

The automobile industry one of the core sectors has undergone metamorphism with the advent

of new business and manufacturing practices in the light of liberalization and globalization. The

Indian automobile market is gearing towards international standards to meet the needs of

global automobile brands and become a global hub. As the market has become very

competitive there is a greater need to advertise your product in a right and sensible manner.

This project has been made taking into consideration the core steps followed in integrated

marketing communication. The motive of the project is to design, manage and monitor

advertising budget for a company and thus we have considered Hyundai India Motors as our

company for the same and the product taken is Hyundai’s i20 hatchback model.

The method considered for designing the advertising budget is “Percentage of Sales”.

Percentage of sales is a procedure used to set advertising budget based on pre determine

percentage of past sales or a forecast of future sales. This method of budget allocation is

popular with advertisers because of its simplicity and ability to relate advertising expenditures

directly to sales.

This project will also talk about managing the budget that is percentage of allocation of

budgeted amount for specific advertising mediums and monitoring the same using advertising

research methodologies.

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Table of Contents

Sr. No. Particulars Page No.

1 Background of Project 3

2 Automotive Sector in India 4

3 Hyundai Presence in India 8

4 Designing of the advertising budget 11

5 Managing the Ad Budget 13

6 Monitoring the Ad Budget 16

7 Conclusion 19

8 References 20

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Background of the project

This project takes into consideration i20 model of Hyundai India Motors and the sales figures

considered are from the “month of Launch i.e. Dec-2008 till May-2010”.

We have divided the budget designing process into 3 parts that is comparing the figures of

2008-2009. (Calculated annually as the car got launched in December 2008).

2009-2010. (Calculated annually from March 2009 – 2010).

2010-2011. (Assumed as figures available are till the month of May 2010).

Once the design of the advertising budget is made the second part of the project starts which

talks about managing the above mentioned budget for advertising. While managing this budget

due care has been taken in identifying the right advertising channels for the same and allocating

a certain percentage of the budgeted amount for individual advertising channels.

Monitoring the budget allocated for advertisements should go hand in hand with the second

part of this project which talks about managing the Budget. Monitoring will be done by taking

into considerations the basic steps followed in advertising research. Advertising research is a

specialized form of marketing research conducted to improve the efficiency of advertisement.

For our project we have considered customized research which is conducted for a specific client

to address that clients needs. Only that client has access to the results of the research. The

whole advertising research process is divided into 2 parts namely:

1. Pre-testing - Research that predicts in market performance of a head before it airs by

analysing audience level of attention, brand linkage and brand recall.

2. Post-testing - It provides either or continuous in market research monitoring a brand

performance, including brand awareness, brand preference, product usage and

attitudes. Overall advertisers use post testing to plan future advertising campaigns.

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Automotive Sector in India

India had its date with this wonderful vehicle first time in 1898. Then for the next fifty years,

cars were imported to satisfy domestic demand. Between 1910 and 20's the automobile

industry made a humble beginning by setting up assembly plants in Mumbai, Calcutta and

Chennai. The import/assembly of vehicles grew consistently after the 1920's, crossing the

30,000 mark in 1930. In 1946, Premier Automobile Ltd (PAL) earned the distinction of

manufacturing the first car in the country by assembling 'Dodge DeSoto' and 'Plymouth' cars at

its Kurla plant. Hindustan Motors (HM), which started as a manufacturer of auto components

graduated to manufacture cars in 1949. Thanks to the License Raj which restricted foreign

competitors to enter the Indian car market, Indian roads were ruled by Ambassador Car from

Hindustan Motors and the Fiat from Premier Auto Ltd. for many of the initial years.

In 1952, the GOI set up a tariff commission to devise regulations to develop an indigenous

automobile industry in the country. After the commission submitted its recommendations, the

GOI asked assembly plants, which did not have plans to set up manufacturing facilities, to shut

operations. As a result General Motors, Ford and other assemblers closed operations in the

country. The year was 1954 and this decision of the government marked a turning point in the

history of the Indian car industry. The GOI also had a say in what type of vehicle each

manufacturer should make. Therefore, each product was safely cocooned in its own segment

with no fears of any impending competition.

Also, no new entrant was allowed even though they had plans of a full-fledged manufacturing

program. The restrictive set of policies was chiefly aimed at building an indigenous auto

industry. However, the restrictions on foreign collaborations led to limitations on import of

technology through technical agreements. In the absence of adequate technology and

purchasing power, the car industry grew at a snail's pace in the 60’s. The demand for cars in

1960 was to the tune of 15,714. In the next two decades the number increased to 30,989 i.e. a

CAGR of only 3.5 per cent.

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The other control imposed on carmakers related to production capacity and distribution. The

GOI control even extended to fixation of prices for cars and dealer commissions. This triggered

the start of a protracted legal battle in 1969 between some carmakers and GOI. Simply put, the

three decades following the establishment of the passenger car industry in India and leading

upto the early 1980s, proved to be the 'dark ages' for the consumer, as his choice throughout

this period was limited to two models viz. Ambassador and Padmini. It was only in 1985, after

the entry of Maruti Udyog, that the car makers were given a free hand to fix the prices of cars,

thus, effectively abolishing all controls relating to the pricing of the end product.

In the early 80's, a series of liberal policy changes were announced marking another turning

point for the automobile industry. The GOI entered the car business, with a 74% stake in Maruti

Udyog Ltd (MUL), the joint venture with Suzuki Motors Ltd of Japan. The very face of the

industry was changed forever in 1983 with the entry of public sector Maruti Udyog in a joint

venture with the Suzuki Corporation of Japan. Car sales grew by 42 per cent yoy in 1985 after

Maruti 800 was launched. Thanks to MUL car sales registered a CAGR of 18.6 per cent i.e. from

1981 to 1990.

In 1985, the GOI announced its famous broad banding policy which gave new licenses to broad

groups of automotive products like two and four-wheeled vehicles. Though a liberal move, the

licensing system was still very much intact. MUL introduced 'Maruti 800' in 1983 providing a

complete facelift to the Indian car industry. The car was launched as a "people’s car" with a

price tag of Rs 40,000.

This changed the industry's profile dramatically. Maruti 800 was well accepted by middle

income families in the country and its sales increased from 1,200 units in FY84 to more than

200,000 units in FY99. However in FY2000, this figure came down due to rising competition

from Hyundai's 'Santro', Telco's Indica and Daewoo's 'Matiz'.

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MUL extended its product range to include vans, multi-utility vehicles (MUVs) and mid-sized

cars. The company has single handedly driven the sales of cars in the country cornering around

79.6% market share. With increasing competition from new entrants, this market share has

plummeted to almost 62% in FY2000.

A brief 3-year downturn till 1993 and car sales bounced back to register a 17 per cent growth

rate in 1997.Since then, the economy slumped into recession and sales of cars remained quite

stagnant FY97 and FY99. The Financial year 2000 has, however, been the turnaround year for

the Auto industry with the economy looking up. The automobile industry, crossed the half

million mark for the first time in FY2000. Overwhelmed by newer models from new and existing

players had led to an impressive shift from a constrained supply situation to a surplus one.

Within the past decade, about 30 models have entered the Indian market with a number of

models still awaiting launch.

The delicensing of auto industry in 1993 opened the gates to a virtual flood of international

auto makers into the country with an idea to tap the large population. Also the lifting of

quantitative restrictions on imports by the recent policy is expected to add up to the flurry of

foreign cars in to the country. The Indian Automobile industry registered one of the strongest

growth rates in FY’04. Aided by sustained economic recovery, the industry registered high

growth rates in all major segments.

The growth story was led by Medium and Heavy Commercial Vehicles (M&HCVs) registering a

40% growth while Light Commercial Vehicles (LCVs) recorded a 32% jump in total sales.

Passenger cars also registered an impressive 34% growth in FY’04 and total sales volume

crossed the 1 million mark for the first time. Interestingly, two wheelers registered the lowest

but healthy growth rate of 13% in FY’04. While motorcycle volumes tripped on a high base,

scooters registered a 10% growth after 4 years of continuous decline. Three wheelers grew by

23% in FY’04.

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Apart from strong economic growth in all sectors, low interest rate regime, normal monsoon,

continued infrastructure investment, fiscal measures like cut in excise duty (in case of cars), etc

provided impetus for the growth. The year also saw a sharp 56% rise in export volumes with all

the sectors registering more than 40% growth, signaling the rising international

competitiveness of the industry.

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Hyundai Presence in India

Hyundai Motor India Limited was formed in 6 May 1996 by the Hyundai Motor Company of

South Korea. When Hyundai Motor Company entered the Indian Automobile Market in 1996

the Hyundai brand was almost unknown throughout India. During the entry of Hyundai in 1996,

there were only five major automobile manufacturers in India, i.e. MUL, HM, PAL, TELCO and

M&M. Daewoo had entered the Indian automobile market with Cielo just three years back

while Ford, Opel and Honda had entered less than a year back.

For more than a decade till Hyundai arrived, Maruti Suzuki had a complete dominance and

monopoly over the Passenger Cars segment because TELCO and M&M were solely Utility and

Commercial Vehicle Manufacturers.

HMIL's first car, the Hyundai Santro was launched in 23 September 1998 and was a runaway

success. Within a few months of its inception HMIL became the second largest automobile

manufacturer and the largest automobile exporter in India.

HMIL has two manufacturing plants in Sriperumbudur, Tamil Nadu capable of producing

600,000 vehicles annually.

As of July 2010, HMIL has 390 dealerships and 580 Hyundai Authorized Service Centers in 325

cities across India. HMIL also operates its own dealerships known as Hyundai Motor Plazas in

large metros across India. HMIL has the second largest sales and service network in India after

Maruti Suzuki.

During calendar year 2009, HMIL recorded combined sales of 559,880 vehicles with a 14.4

percent growth over calendar year 2008. It sold 289,863 vehicles in the domestic market

achieving a 18.1% growth rate compared to previous year. HMIL's overseas sales grew by 10.7

percent, with export of 270,017 vehicles

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HMIL currently exports vehicles to more than 110 countries across Europe, Africa, Middle East,

Latin America and Asia. It has been the number one exporter of passenger cars for the sixth

year in a row in India.

Manufactured locally

1. Hyundai Accent (Launched 1999)

2. Hyundai Santro Xing (Launched 2003)

3. Hyundai i10 (Launched 2007)

4. Hyundai i20 (Launched 2008)

5. Hyundai Sonata Transform (Launched 2009)

6. Hyundai Verna Transform (Launched 2010)

Facts About i20

The Hyundai i20 was designed in a Hyundai Designing Centre in Germany by a BMW designer:

Thomas Buerkle. The Hyundai i20 is a supermini/subcompact car, made its debut at the Paris

Motor Show in October 2008 and went on sale in December 2008 in India to fit between the i10

and i30. It is a Front wheel drive car. The car is mostly European because of its design and

designer.

Platform

The Hyundai i20 uses a completely new platform that was created at Hyundai's European

technical centre in Rüsselsheim to allow Hyundai to move into Europe's highly competitive

supermini segment. A 2,525 mm (99.4 in) wheelbase helps endow the i20 with a generous

passenger cabin. Suspension follows the supermini norm of MacPherson struts at the front and

a torsion beam rear end with rack and pinion steering.

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Engines

The i20 will debut in Europe with a total of seven engine options, all with four cylinders. Three

are petrol, including the recently designed 1248cc dohc 16 valve "Kappa" engine, while the rest

are diesel engines. Two of the diesel engines are 1396 cc units, one with 75 PS (55 kW; 74 hp)

and 220 N·m (160 lb·ft) and the other a 90 PS (66 kW; 89 hp) and 220 N·m (160 lb·ft) high

power unit. They are joined by two 1582 cc engines having the same dohc and 16-valve top end

architecture but delivering either 115 PS (85 kW; 113 hp) and 260 N·m (190 lb·ft) of torque or

128 PS (94 kW; 126 hp) and 260 N·m (190 lb·ft) of torque. All diesel engines and 1.2 and 1.4

petrol engines come mated to five-speed manual transmission, there is an option of a four-

speed automatic for some 1.4 petrol engined models, and the 1.6 is mated to a six-speed

manual transmission.

Specifications

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Vitals Hyundai i-20Engine 4-cyls in line

Power 79 bhp @ 5200rpm

Torque 11.4 kgm @ 4000rpm

Transmission 5 speed manual

Weight 1065 kg

0-100km/hr 15.21 sec

Fuel Efficiency 11.2 kpl

Designing of the advertising budget

Stage – 1 (08-09)

Even though the car was launched in the last month of 2008 for comparison sake we have

estimated the unit sales from March 2008 to March 2009. The figure that we got is by taking an

average of the available figures from December 2008 to March 2009.

Total Units from Dec 08 – Mar 09 = 4991units (Source: Volkswagens NSC Mumbai)

Average units for 12 months = 14973

Average on road price for i20 = Rs 575000.

Total Revenue = (No. of units) 14973 x (Average cost) 575000

= Rs 860.94 Crores

Assuming 0.2% as the advertising budget for i20 models from the total revenue it comes down

to Rs 1.72 Crores.

*The Budget Percentage of 0.2 is as per the information received from www.iims–

markathon.blogspot.com

Stage – 2 (09-10)

Total units from April 09 – Mar 10 = 42128units (Source: Volkswagens NSC Mumbai)

Average on road price for i20 = Rs 575000.

Total revenue = (No. of units) 42128 x (Average cost) 575000

= Rs 2422.36 Crores

Assuming 0.4% as the advertising budget for i20 models from the total revenue it comes down

to Rs. 9.68 Crores.

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Stage – 3 (10-11)

As the figures are available till the month of May 2010 for comparison purpose again we have

taken an average of the unit sales from April 2010 to March 2011.

Total Units from April10 – May10 = 10915

Average units for 12 months = 65490

Average on road price for i20 = Rs 575000.

Total Revenue = (No. of units) 65490 x (Average cost) 575000

= Rs 3765.67 Crores

Assuming 0.7% as the advertising budget for i20 model (the increase in the advertising budget

is subjected to the market research findings done by J.D.Power in 2009 which says that for the

car purchase, number of people using internet will rise from 26% in 2009 to 34% in 2010 –

Source - www.iims–markathon.blogspot.com) from the total revenue it comes down to Rs.

26.35 Crores.

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Managing the Ad Budget

Managing the advertising budget in literal sense means allocating the set advertising budget

sensibly to different advertising channels. Here we are managing the advertising budget set for

the year 2010 – 2011 which is 26.35 Crores.

Advertising Channels with Allocations

1. Newspaper – 40% (Rs. 10.54 Crores)

The reason for allocating 40% of the total advertising budget to newspapers is that it helps

in

Brand Building

Product Awareness

Detailed knowledge – company, dealership, product, benefits- if any.

Better brand and product recall.

As it is very necessary to keep reminding the consumers reguarding the company and its

products throughout the year, newspaper acts as a perfect medium for the same.

The allocations for newspaper have to be divided further sensibly taking many external or

internal factors into consideration. The factors can comprise seasonal or festival effects on

the consumer buying behaviour or it can be some government reforms which might directly

or indirectly influence the consumer buying behaviour.

2. Television – 30% (Rs. 7.9 Crores)

The reason for allocating 30% of the total advertising budget to television is because it helps

in

Brand Building

Product Awareness

Patent technology awareness

Special Features if any

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Audio visual media is always considered to be the most effective advertising channel as it

has a better recall level. Similar to newspapers the allocation of the budget should be done

sensibly taking various factors into consideration which can range all the way from festival

time to a specific time of the day when the viewership will be maximum in order to get a

better recall value. Precautions must be taken while deciding how to utilize the advertising

budget on television as it is one of the costliest and impactful means of communication.

Also due care must be taken while designing the theme of the advertisement as it might

play with consumer emotions or sentiments.

3. Magazines – 15% (Rs. 3.9 Crores)

The reason for allocating 15% of the total advertising budget to magazines is because it

helps in

Brand Building

Competitive advantage

Complete technical specifications

Reasons for making it a good purchase

Gives a very clear picture of how the product is better than its competitors

Today’s consumer prefers to do his homework well before making any purchase. There are

a lot of magazines related or non related to auto sector which should be constantly

upgraded with the concerned above mentioned product so that the consumer can read or

go through the information whenever required. It can be seen as a medium which can be

stored and revisited whenever required.

4. Internet & Advertising Innovations - 10% (Rs. 2 Crores for internet & 60 lakhs for

Advertisements)

The reason for allocating 10% of the total advertising budget to internet and advertising

innovation is because it helps in

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Brand Building

Brand Recall

To be considered as an innovator with all together a different advertising campaign

As mentioned earlier according to the J D Powers market research report, the number of

internet users is going to increase significantly. As internet now a days has become a

integral part of our lives it becomes very necessary as a company to capitalize on this

medium and that’s the reason why majority of the above mentioned allocations is internet

specific.

By advertising innovations, we want to convey a very deep still innovative message. As the

initiators of this project we have come up with an innovative advertising strategy which will

specifically focus on Brand as well as Product building.

We recommend that the product and the brand can be showcased with the help of a

Hydrogen Balloon which will fly over 4 major metro cities in India as a part of brand and

product awareness campaign.

5. Hoardings – 5% (Rs. 1.3 Crores)

The reason for allocating 5% of the total advertising budget to hoardings is because it helps

in

Brand Building.

Brand Recall.

Hoardings play an important role in building a brand and helping the consumers to recall it

better. The sole motive of hoarding campaign is that it helps the consumer to stay in touch

with the brand constantly.

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Balloon

Hoarding

Pre – Testing1

News paper

Magazines & Internet

Post – Testing1

Pre – Testing (T.V Ad)

Launch at Advertising

Post – Testing (T.V Ad)

Monitoring the Ad Budget

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A brief about the above tree diagram:

Assuming the advertising campaign starting for the financial year 2010-2011. As a part of brand

strengthening strategy advertising campaigns focus on brand building advertisements. The

same will be done by using a balloon with Hyundai logo and i20 picture on it and will be flown

across major 4 metros previously mentioned for 3 days at the initial part of financial year. Soon

after this campaign hoardings advertisements will proceed which will further strengthen the

brand. As the base for brand building is set its time now to position the product as well. The

same will be done with the help of newspapers and magazines. This stage will specifically make

our product stand out of the crowd and would provide reasons for the same.

Keeping the technological advances in mind advertising campaign will simultaneously kick off

on internet as well, so that the link between the product and brand remains with the consumer.

In order to relate in a better manner to consumer audio visual advertising campaign will start

off with a particular theme which can be product, brand or both specific. It is very important to

select such a theme which does not hurt customer’s sentiments and emotions. This advertising

campaign may not be the only decision making factor for the consumer but it is definitely one

of the very important factors to influence the decision.

The monitoring stage will be divided into 2 parts

1. Print & Visual Advertisement monitoring (Balloon, Hoardings, Newspapers,

Magazines, Internet)

2. Monitoring of Audio – Visual advertisement (T.V)

Phase 1

The initial objective of monitoring will be to check the effectiveness of visual advertisements

that is balloon and hoardings. Once the advertisement campaign kicks off pre testing will be

done to measure

Brand recall

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Product recall

Brand linkage

After the findings of pre testing are found to be upto the mark the next advertising campaign

via print media channel will start. This will include advertising through newspaper and

magazines. In the lateral stages of phase 1, post testing will be done with objectives of

measuring brand building, product awareness, detailed product knowledge, customer benefits

if any, brand and product recall.

The phase 1 pre testing will be done in the form of Questionnaire focused on brand and

product knowledge of the customer and how well can he relate both. The post testing of phase

1 will be a research through questionnaire again, which will be much more detailed and will

focus on the customer buying behaviour, his likes and dislikes about similar products and

insight about similar category product features.

Precaution needs to be taken as the findings should remain confined to a single party thus this

research work should be conducted by the company people itself. But in today’s’ world it

cannot be applied as a rule of thumb.

The reason for performing this continuous monitoring is because it helps the company to

understand weather, the things are moving as per plan or not, if at any stage the findings point

out that the objectives of advertisements are not being met, corrective actions have to be taken

immediately

Phase 2

In this phase monitoring will be done specifically for audio visual advertising campaign done via

television. Before the campaign kicks off for television, it is very important to do the pre testing

for the same. In pre testing a blue print of the TV advertisement can be shown to a random

sample and the same can be measured on different parameters such as

1) Brand Recall

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2) Product Recall

3) Brand linkage

4) Patent Technology, if any

5) New feature liked by the customer, if any

Once the advertisement is aired, the post testing starts. This post testing can be done in the

form of questionnaire or group discussions wherein a specific sample size or sample set is

defined and the following parameters such as Brand performance, Brand Preferences, Buying

attitudes, Brand awareness, same segment product usage, if any can be measured

The pre and post testing of audio visual media gives a better insight to any company as this

form of advertisement mostly relates to emotions and trends of the consumer. This is also an

effective way to understand weather the advertisement is conveying the set message. If found

at the pre testing stage that the message conveyed is getting deviated from the original track

corrective actions have to be taken immediately.

* The above figure showing the pattern of advertisements undertaken by companies are purely

assumed and in many ways stages can be interchanged according to individual company

preferences.

Conclusion

In the end we would like to conclude that designing, managing and monitoring of the

advertising budget collectively plays an important role in the success of the product. It is these

3 mentioned parameters which not only positioned and controlled the product in consumers

mind but also plays a decision making role.

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References

www.wikipedia.com

www.iims-markathon.blogspot.com

Volkswagens Nse

www.hyundai.co.in

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