Consumer Behaviour - A study of the relevance of consumer “perception” in the A2-segment of the Indian passenger car market

A study of the relevance of
consumer “perception” in the A2-
segment of the Indian passenger
car market
Group assignment for Consumer Behaviour

INDIAN INSTITUTE OF MANAGEMENT, BANGALORE

September 17, 2009
Authored by: Amardeep Verma (0910003) & Gopalakrishnan D (0910021)
Executive Post Graduate Programme (EPGP)

Table of Contents

INDIAN AUTO INDUSTRY OVERVIEW .............................................................................. 2
BRAND ANALYSIS .......................................................................................................... 4
A. SUB-COMPACT ................................................................................................... 5
B. COMPACT ........................................................................................................ 6
C. PREMIUM COMPACT ............................................................................................ 8
D. SUPER HATCH .................................................................................................... 9
APPLICATION OF CONCEPTS OF PERCEPTION TO BRANDS................................................ 10
CONCEPT #1: SENSATION .............................................................................................. 10
CONCEPT #2: ABSOLUTE THRESHOLD ................................................................................ 11
CONCEPT #3: DIFFERENTIAL THRESHOLD ........................................................................... 11
A study of the relevance of consumer “perception” in the A2-segment of the Indian passenger car market | 9/17/2009

CONCEPT #4: PERCEPTUAL SELECTION .............................................................................. 11
CONCEPT #5: FIGURE AND GROUND ................................................................................. 11
CONCEPT #6: GROUPING .............................................................................................. 11
CONCEPT #7: CLOSURE ................................................................................................ 12
CONCEPT #8: PERCEPTUAL INTERPRETATION ...................................................................... 12
CONCEPT #9: CONSUMER IMAGERY .................................................................................. 12
CONCEPT #10: POSITIONING BASED ON SPECIFIC BENEFIT......................................................... 12
CONCEPT #11: PERCEIVED QUALITY ................................................................................. 12
CONCEPT #12: PERCEPTION OF RISK ................................................................................. 13
MARKETING STRATEGY TO LAUNCH A NEW BRAND ........................................................ 13
STRATEGY FOR LAUNCHING IN SUB-COMPACT SEGMENT ........................................................... 13
STRATEGY FOR LAUNCHING IN PREMIUM-COMPACT SEGMENT .................................................... 14
REFERENCES ............................................................................................................... 15
EXHIBITS .................................................................................................................... 16
EXHIBIT 01: SALES OF CARS IN INDIAN INDUSTRY FROM 1997-98 TO 2008-09. ................................. 16
EXHIBIT 02: WALLET SHARE OF INDIAN CUSTOMERS FOR TRANSPORTATION ................................... 16
EXHIBIT 03: SALES OF CAR MANUFACTURERS IN INDIAN DOMESTIC MARKET FROM 2004-05 TO 2008-09 .. 17
EXHIBIT 04: SEGMENT-WISE DOMESTIC MARKET SHARE OF PASSENGER CARS IN INDIAN MARKET FROM 2004-05
TO 2008-09 ............................................................................................................... 17
EXHIBIT 05: MODEL-WISE DOMESTIC SALES OF A2 SEGMENT CARS IN 2008-09 ................................. 17
EXHIBIT 06: SUB-SEGMENTS OF A2 SEGMENT, NO. OF VARIANTS AND EX-SHOWROOM PRICES ............... 18
EXHIBIT 07: ADVERTISEMENTS OF ALL MODELS IN A2 SEGMENT .................................................. 19
EXHIBIT 08: POSITIONING DIAGRAMS ( => POSITIONING OF NEW PRODUCT) ............................... 27
EXHIBIT 09: PRICES AND CUSTOMER PERCEPTION OF VARIOUS ASPECTS OF CARS .............................. 35
EXHIBIT 10: PRODUCT FEEDBACK BY CONSUMERS ON WWW.MOUTHSHUT.COM .............................. 36

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A study of the relevance of consumer
“perception” in the A2-segment of the
Indian passenger car market
Group assignment for Consumer Behaviour

INDIAN AUTO INDUSTRY OVERVIEW

India is emerging as one of the world’s fastest growing passenger car markets. The Indian passenger

vehicle market, which constitutes around 80% of automobile sales, has immense growth potential as
passenger car stock stood at around 11 per 1,000 people in 2008. Rising per capita income and the
changing demographic distribution are conducive for growth. India has the highest proportion of
population below 35 years (70% potential buyers).
The total automobile industry in India is 10 million vehicles per annum. Passenger cars contribute to
approximately 16% of the total automobile sales. The total automobile sales have been growing at a
CAGR of 9% over the last decade whereas the passenger cars have managed to clock a growth of 12%
CAGR during the same period. The sales trend of passenger vehicles is as shown exhibit 01.
The reason for the wonderful growth of the passenger car industry has been the increase in the wallet
share of transportation for Indian consumers and the shift in the wallet share from basic necessity to
discretionary items over the last few decades. This trend is forecasted to continue (exhibit 02) as per
the study done by Mc.Kinsey Global Institute and hence the passenger car industry is poised for similar
consistent growth.
The passenger car industry in India is very competitive with almost every prominent global
manufacturer being present in the country. There are 18 passenger vehicle manufacturers as listed
below:
1. Maruti Suzuki
2. Hyundai
3. Tata Motors
4. Fiat
5. General Motors (Chevrolet)
6. Ford
7. Honda
8. Toyota
9. Mahindra & Mahindra
10. Skoda
11. Mercedes Benz (Daimler Chrysler)
12. BMW
13. Hindustan Motors
14. Volkswagen

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15. Nissan
16. Audi
17. Volvo
18. Porsche
The share of sales of the 13 prominent manufacturers, for the last 5 years, is given in exhibit 03.
Maruti Suzuki is the leading passenger car manufacturer in India with a market share consistently above
50% over the last few years followed by Hyundai and Tata Motors.
The passenger car industry is segmented into 6 segments, from A1 to A6, depending on the length of
the vehicle. This classification is done by SIAM, the Society of Indian Automobile manufacturers of
India. The classification criterion (in meters) for the various segments is as given below:

1. A1(Mini) : < 3.4 m
2. A2 (Compact) : 3.4 to 4.0 m
3. A3 (Mid-size) : 4.0 to 4.5 m
4. A4 (Executive) : 4.5 to 4.7 m
5. A5 (Premium) : 4.7 to 5.0 m
6. A6 (Luxury) : > 5.0 m
As we can see from the table in exhibit 04, the A2 segment sales comprise the majority of the
passenger market share. Moreover, the contribution of the segment has been increasing consistently
over the last 5 years from 60% in 2004-05 to 72% in 2008-09. Strong economic growth combined with
higher disposable incomes has driven the passenger vehicle sales in the A2 segment.
Hence, for our analysis, we shall study the various cars present in the A2 segment. The offerings from
the various manufacturers in the A2 segment are as given below:
1. Maruti Suzuki (6 models) – Alto, Zen Estilo, WagonR, A-star, Ritz, Swift
2. Hyundai (4 models) – Santro, i10, Getz, i20
3. Tata (1 model) – Indica
4. Fiat (2 models) – Palio, Punto
5. Chevrolet (2 models) – Spark, Aveo UVA
6. Ford (1 model) – Fusion
7. Honda (1 model) – Jazz
8. Skoda (1 model) – Fabia
There are a total of 60 different passenger cars offered by various manufacturers in the country of which
18 cars belong to the A2 segment itself which shows the intense competition present in the segment.
Apart from Maruti Suzuki Ritz, Honda Jazz and Fiat Punto, the remaining 15 models were in the
market in the last year. The 3 models mentioned here are the latest models launched in the A2 segment
in the Indian market after March 2009. The sales of the various models in the A2 segment for 2008-09
are shown in exhibit 05. The pie chart for the same is given below.

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A-Star Getz Aveo - UVA Fabia i20 Fiat Palio Fusion

Spark
Estillo Alto
Santro

i10 Wagon R

Swift
Indica

The top selling model in the A2 segment is the Maruti Alto followed by Maruti WagonR and Tata
Indica. In the following sections, we shall analyze each brand, understand the positioning of each with
respect to the other and understand how the concepts of “perception” are applicable to various brands.
Finally, we shall attempt to develop a suggested marketing strategy to launch a new brand in the A2
segment in the Indian passenger car market.

BRAND ANALYSIS

As the A2 segment is the biggest segment of the Indian passenger car industry hence the segmentation
within this segment is much finer and more complex than any other segment of the industry. The reason
for such fine segmentation is to serve the diverse needs of customer and tap the maximum opportunity
available to generate substantial volumes. We have tried to identify the sub-segment based on the price
of the entry level variant of the particular model as usually the entry level or the next variant is the top
selling variant for the particular model, and not the top variant.
Hence, there are 4 clear sub-segments in the A2 segment. The segmentation is done on the basis of the
clear price band differentials as each segment is targeted towards a different segment of customers. The
4 sub-segments and the respective price ranges (ex-showroom price) are as given below:
1. Sub-compact : < Rs.2.5 lacs
2. Compact : Rs.2.5 lacs to Rs.3.5 lacs
3. Premium compact : Rs.3.5 lacs to Rs.4.5 lacs
4. Super-hatch : > Rs.4.5 lacs
After obtaining the ex-showroom prices in Bangalore for these models, the various models in each of
the sub-segments and the price of the entry level variant are as per the table given in exhibit 06. The
broad requirements/ priorities of customers when choosing a vehicle in each of the sub-segment is as
follows:

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1. Sub-compact
a. Price
b. Fuel consumption
c. Brand reputation
d. Dealer satisfaction
2. Compact
a. Price
b. Brand reputation
c. Fuel consumption
d. Dealer satisfaction
3. Premium compact
a. Brand reputation

b. Price
c. Looks
d. Fuel consumption
4. Super-hatch
a. Looks
b. Brand reputation
c. Price
d. Comfort
The data with regard to the price has been obtained from the websites of the respective manufacturers
and that of the customer perception has been calculated through a combination of ratings in various
auto-magazines and the customer feedback available on the website www.mouthshut.com (exhibit 10).
The positioning diagrams for each sub-segment have been made by using the data collected (exhibit
08). The crude data collected, based on which the positioning diagrams are made, is given in exhibit
09. The perception maps have been prepared in the order of importance of parameter to the customers
in each sub-segment. Hence, the perception maps have been made only for the relevant factors for the
respective segment.
Even though there are many vehicles in each sub-segment, the target consumer for each model is
different. The latest advertisement of each model is given in exhibit 07. By analyzing each ad we can
understand the type of consumer being targeted by each company for its respective model(s). The
analysis of each model to understand its target segment and the company’s strategy with
the product is discussed below.

A. Sub-compact
a. Maruti Alto – “Let’s Go” – “Aapka Sachha Humsafar”
Targeting through ads and perception desired by company: This is the cheapest car
in the segment with no other model priced anywhere close. If we see the TV commercial, then
this stands out quite clearly as a new couple is depicted moving around the town in the car and
having fun. The ad also has an Indian touch with the background music being in Hindi.
Moreover, all the ads focus on high mileage of the product which is the second best in the
segment. Hence, the company desires to create an image of it as the most economical car to

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buy and maintain. This is targeted as the replacement for Maruti 800 which was the entry level
car in the market for a long time.
Target customer type: First time car buyer.
Target customer demographics: Lower middle class, new couple. Age group of 25-30
yrs.

B. Compact
a. Maruti WagonR – “For the smarter race”
Targeting through ads and perception desired by company: The TV commercial
depicts an aggressive man who acts smart in difficult situations. Moreover, he is tech savvy too.
In print ads the car is compared with electronic gadgets and claimed to be “smarter” than them.
Hence, this was meant for customers who are pragmatic rather than more inclined towards
aesthetic appeal and want a practical car which can be used for all family purposes. For this

very reason an LPG variant of the car was launched for customers who are concerned about the
fuel costs.
Target customer type: Individualistic and smart new generation.
Target customer demographics: Middle class. Maybe second time buyer. Age group of
25-35 yrs.
b. Maruti Zen Estilo – “Take a fresh view of life”
Targeting through ads and perception desired by company: The initial ads of this
model (before the recent facelift) were targeted towards the female buyers as the shape was
considered to be quite feminish. Moreover, the company had brought out colours like pink and
purple which were supposed to be preferred by female buyers. Hence, this product was meant
to be perceived as a product for women. But, now the product is targeted towards the young
city couple who want a “cute” car and desire fun.
Target customer type: Was targeted towards female drivers but now towards Young
couple.
Target customer demographics: Middle class. Maybe second time buyer. Age group of
25-35 yrs.
c. Maruti A-star – “Stop @ nothing”
Targeting through ads and perception desired by company: The launch of this
product was associated with a bollywood celebrity “Farhan Akhtar” who had become famous
after his movie where he acts as a rock star. Hence, the product was targeted towards the
typical youth who love rock music and want a stylish zippy car primarily for city use. For this
reason, the car comes with the latest K-series engine of Maruti Suzuki in order to cater to the
technology savvy consumers and also the car doesn’t have a large rear luggage space. Due to
the superior technology the car offers the highest mileage as compared to any petrol vehicle in
the Indian car market.
Target customer type: Youth who love zipping in city and are technologically savvy.
Target customer demographics: Middle class. Age group of 20-25 years.
d. Hyundai Santro – “First car. First choice”
Targeting through ads and perception desired by company: The car was the first tall
boy model in the Indian car market. It was initially targeted to the young middle class who
wish to associate themselves with energy and trend. It is visible from the fact that the brand

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ambassador for Hyundai is Shahrukh Khan who is a youth icon. The product was earlier linked
with bringing in and successfully marketing various new technologies to this country like the
Zip drive , eRLX engine etc. But, now the product’s targeting has shifted to the first time
buyer as comes our very clearly from the tag line of the product. Even the ad depicts a couple
proud of purchasing Santro as their first car. For the same reason, the car was launched with a
stripped down variant (without AC and Power steering) in order to position it low on the
entry level price. Subsequently the economical LPG variant was recently launched.
Target customer type: First time buyer looking for a popular car.
Target customer demographics: Middle class. Age group of 25-35 yrs.
e. Hyundai i10 – “Catch the i”
Targeting through ads and perception desired by company: The i10 was launched by
Santro in order to take the place that Santro had in the Indian market so that Santro could be

introduced as the entry level car offering from Hyundai for the first time buyers. Hence, even
though the pricing of the base model is kept in this sub-segment, there are 9 variants with
various “first-in-class” features like sunroof which is primarily meant for product to be
perceived as a superior product. It also comes with a technologically superior engine (Kappa
engine) which was introduced to attract the technologically inclined consumers. The “i” stands
for innovative, intelligent and inspiring which is the image that the company wants the product
and its customers to be associated with. The TV commercial for i10 shows Shahrukh Khan
challenging his professor on automotive concepts by showing the vehicle. This also clearly
brings out the technological prowess of the vehicle which the company wants the market to
perceive.
Target customer type: Repeat buyer who is inclined towards technology and styling.
Target customer demographics: Middle class (targeted to upper also). Age group of 20-
30 yrs.
f. Tata Indica – “More car per car” – “Changes everything”
Targeting through ads and perception desired by company: This car was launched
for consumers who are more focused on economy and space rather than quality and
performance. It is the cheapest diesel vehicle available in the Indian market which makes the
car economical to purchase and use. The tag line clearly communicates the essence of having
more space inside the car which was a major USP of the product. Tata introduced the Xeta
variant with smaller engine to price it closest possible to the Maruti Alto and make it the car
for the first time buyer which it introduced the Vista with latest design and engines in order to
position it to the upper middle class segment of the society.
Target customer type: Xeta for the first time buyer and Vista for the repeat buyer who is
willing to spend more for better technology and contemporary looks.
Target customer demographics: Xeta for the lower middle class and Vista for the middle
class. Age group of 25-45 yrs.
g. Chevrolet Spark – “Full of life”
Targeting through ads and perception desired by company: The TV commercials
and the print ads of the product showcase the product as being lively, interactive and bubbly.
The ad showcases a young college going boy who tries to impress girls by using the car while
the car itself gets excited and starts winking. In order to make the customer perceive the
product as being economical, the product was sold at the psychological prices of below 3 lacs

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(i.e. 2.99 lacs) for some time. The company also gives 3 year warranty and 3 year complete
free service (including labour and parts) to its customers. Recently the LPG variant was also
launched.
Target customer type: Young, bubbly college going crowd.
Target customer demographics: Upper middle class college goer. Age group of 20-25
years.
h. Fiat Palio – “The drive of the new generation”
depicts a young guy chasing a train on a parallel road to keep in sight with his better half while
bringing back the nostalgia of the song “Mere sapnon ki rani……” in order to give it the Indian
touch. The ad hence also focuses on the superior performance of the vehicle without making
much noise by not intervening with the song. Fiat is known for its superior diesel engine

technology and it is what the company wants the consumers to perceive through
advertisements which claim the same (“Multijet diesel”).
Target customer type: Customer who wants superior diesel technology at an affordable
price.
Target customer demographics: Middle class. Age group of 25-35 yrs.

C. Premium Compact
a. Hyundai Getz – “Gets you everywhere” – “Drive global”
Targeting through ads and perception desired by company: Even this product is
targeted to the modern youth who want sufficient space in the car which was promoted as the
USP thru various commercials of the product. The product is positioned as a successful car in
Europe and positioned to customers who want a product which has proven its mettle in foreign
markets. In the initial phase, the car was launched to position it in the upper spectrum of the
A2 segment in terms of price but soon the poor market response (due to the showcased USP
which was not unique neither was the styling contemporary) forced the company to introduce
a cheaper model with a smaller engine.
Target customer type: Upper middle class buyer who loves partying with friends and is
looking for more space in the interior.
Target customer demographics: Middle class. Age group of 25-35 years.
b. Chevrolet Aveo UVA – “Bada dil, badi car”
Targeting through ads and perception desired by company: All the TV commercials
and print ads for this model focus on the cabin space of this product as compared to other
models inn the segment. One of the ad shows a mega size chimpanzee trying to sit in the car
while another ad shows an entire football team fitting inside the car to reach the venue for the
match. This is also clearly evident from the tag line for the product which is mentioned above.
Target customer type: Upper middle class buyer who likes Chevrolet brand and
particularly wants extra space in a hatchback.
Target customer demographics: Upper middle class. Age group of 25-45 yrs.
c. Fiat Punto – “A bold new drive”
Targeting through ads and perception desired by company: The TV commercials
and print ads for this product focuses on the personality of the product and the owner as being
bold. The ad portrays a confident and bold individual, and hence focuses more on the bold

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looks of the model. The entire focus of the promotions is to make the customers perceive that
the product has bold looks and hence is suited for individuals who are confident and bold in
nature. In a way it wishes to challenge the personality of an individual who is seeing the
advertisement.
Target customer type: Buyer who wants to make a style statement and feels that he has a
bold personality.
Target customer demographics: Upper middle class. Age group of 25-45 years.
d. Maruti Swift – “You’re the fuel”
Targeting through ads and perception desired by company: All the advertisements
of this product focuses on portraying the product as being peppy to drive. The TV commercial
depicts a young couple having fun and feeling thrilled by taking a drive in the vehicle. Hence,
the product is targeted towards the urban vibrant couple who enjoy going out on quick rides.

The product was very competitively priced as compared to its counterparts offered by
competitors. The looks and the peppiness of the engine are the main strengths which made the
product a huge success in the market. Diesel engine was introduced a few years back in this
model which added to the thrill of driving this vehicle and helped carry on the peppy image in
the minds of consumers.
Target customer type: Urban young couple who love peppy rides
e. Maruti Ritz – “Live the moment”
depicts the various features of the product which contribute to the overall aesthetic appeal.
The ad showcases an individual who takes a drive away from a corporate life to a scenic
location in order to enjoy the moment in which he is living. The car is positioned to those who
are technologically inclined as the vehicle comes fitted with the latest K-series engine from
Maruti. The ads focus a lot on the individual and encourage enjoying each and every moment.
The car embodies this spirit and supposedly helps an individual in living the present moment.
Target customer type: Urban working population who wish to truly enjoy every moment
and not lead a monotonous life.

D. Super hatch
a. Hyundai i20 – “i got it all” – “the uber cool is here”
Targeting through ads and perception desired by company: This comes under the
category of super-hatches wherein the customer prefers a hatchback design even though it is as
costly as an entry level sedan. The ad shows a high profile person being tracked by helicopters
and how using this car he is able to deceive them. The ads also portray the product as being
cool and contemporary. The tag line describes the product as being amazingly chic and stylish.
It also tries to leverage the superior brand image of the “i”- series products launched thru i10 in
India.
Target customer type: Customer who likes to be seen as cool and wants to make a style
statement.
Target customer demographics: Upper middle class/ high class. Age group of 25-45 yrs.

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b. Skoda Fabia – “Because you’re special”
depicts a young guy purchasing a new Fabia car. As soon as he sits in the car, the world outside
him starts treating him like a king by welcoming him on red-carpet and showering flowers on
him. As soon as he shuts off the engine, the ambience again turns to normal. Hence, the car
depicts that Skoda Fabia customers will have a royal feel on driving this vehicle. Even the print
ad shown in the exhibits depicts the “royal” treatment part of ownership of the vehicle.
Target customer type: One who likes to be treated as special and wants to be respected like
a “king”.
Target customer demographics: High class. Age group of 25 to 45 yrs.
c. Ford Fusion – “The no-nonsense car”
Targeting through ads and perception desired by company: This car is positioned to

consumers who frequently go on wild trails and outstation trips. The ad depicts the capability
of the car to be able to accommodate all items required for a picnic/ trekking trip and also
shows the capability of the vehicle to move over uneven terrain. The tag line wishes to make
the customer perceive that the car is very practical rather than being flashy. The car is typically
a cross over between an SUV and a car.
Target customer type: Family person who wants a car for both daily commuting and
outdoor trekking trips.
Target customer demographics: High class. Age group of 35-45 yrs.
d. Honda Jazz – “One life. Why so serious?”
Targeting through ads and perception desired by company: This is the costliest
hatch-back car in the Indian market and hence is purely targeted to buyers who buy a hatch
because they appreciate Honda’s quality. The ad depicts a young couple moving around the
city and all other car owner feeling envious on seeing the car. Moreover, the ad also shows the
unique versatility of the rear seats to be able to accommodate any kind of item which would
not be possible to carry in other cars. The ad purely focuses on the concept of breaking out of
seriousness of life and enjoying the car. The company wants the car to be perceived as “fun for
the young”.
Target customer type: A person who wants to have fun, is concerned about the utility of
the car in helping him transport weird items (like flowerpot shown in ad) and wants to be
envied by the onlookers.
Target customer demographics: High class. Age group of 25-35 yrs.

APPLICATION OF CONCEPTS OF PERCEPTION TO BRANDS

Concept #1: Sensation
The concept of sensation is quite applicable to this industry as all manufacturers focus on TV and print
advertising as the prime media to reach the target audience. Most of them particularly rely on “sonic
branding”. For example, nowadays Maruti Suzuki ends all its TV commercials with a part of the jingle
which was the corporate ad for the company. Hence, even if one is not viewing the ad, the jingle makes
us remember the brand only by hearing and reinforces the brand in our minds.

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Concept #2: Absolute th reshold
The ads for all models undergo a change once every 3 to 6 months. This is to bring novelty factor to the
ad and gain attention of the target consumers. Once the same ad is played repeatedly for a long time the
consumers start ignoring it as they no longer “see” them. Changing the ad (without changing the theme)
provides the necessary sensory input to catch the attention of the audience.

Concept #3: Differential Threshold
In order to keep the models alive, car manufacturers keep making cosmetic changes to the product from
time to time. But, at the same time they take care of this fact that the change is not drastic and the new
upgrade should evolve similar product associations to avoid confusing the consumer. This is evident
from the Zen Estilo ad in exhibit 07 wherein the ads for old and new model are shown but only the

target consumer can identify the cosmetic change without Estilo losing its identity. This strategy is also
employed while increasing the price of the products. The price increases for a Rs.3-4 lac car are in the
range of Rs.5,000 each year so that consumers do not notice the price increase. Similarly the
technological improvements which lead to significant change in the performance (noticeable) are
highlighted in ads like the introduction of the K-series engine by Maruti which makes a substantial
improvement in mileage of the car which can be measured by the consumer.

Concept #4: Perceptual Selection
In order to catch the attention of target consumers, car companies employ a wide variety of tactics. For
example, they use danglers on the outside mirror of old cars mentioning “buying of old car and
upgrading to new car”. Hence, they try to target old car customers as they feel that they must be having
a “need” to get their car exchanged with a new one and try mediums which tries to grab the selective
attention of target consumers.

Concept #5: Figure and Ground
This is an important factor in the success or failure of particular ads. Usually the car manufacturers avoid
celebrities unless the brand is either unknown or very new to the market. This happened with Maruti
when Amitabh Bachhan was hired for the Versa ad and instead of showcasing the strengths of the
product, the customer’s mindshare and attention was taken over by the celebrity leading to failure of
the commercials and eventually the product. Since then Maruti has avoided any celebrity and focuses on
showcasing the unique aspects of the products in its ads to make the product as the “figure” and the
theme of the ad as the “ground”.

Concept #6: Grouping
The ad for each product runs on a particular theme, for example Maruti Swift has theme of “fun and
joy”, Skoda Fabia has the theme of “royal treatment”, Hyundai Santro has the theme of “first car choice”,
Fiat Punto showcases the user as being “bold”. Hence, on seeing the ads, consumers associate the
products with their respective choice and themes and prefer the brand/product whose theme matches
their preferred or targeted lifestyle.

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Concept #7: Closure
Closure theory is used by marketers by using sonic branding or by using symbols. An example of sonic
branding is the way all Maruti Suzuki ads end in a jingle which is a small part of the corporate ad of the
company. This helps customers associate the product especially the new ones with the company.

Some brands like the Fiat Punto have a symbol for the particular model which itself is sufficient to
communicate the attributes and associations with the model in any part of the world. The same is

depicted above.

Concept #8: Perceptual interpretation
This tool is also used much by brand marketers in order to play with customer perceptions. For
example, there was a stereotype in the Indian market that small cars will always be cheap. But, with the
launch of Honda Jazz at Rs.7 lacs, the company wants to break this stereotype and wishes to position its
product to the high class individuals who can use this small flexible car when having fun. Similarly, Zen
Estilo used the stereotype of launching the product in striking colours like pink and purple in order to
make the product appeal to female users as such colours are often correlated with females in our
society.

Concept #9: Consumer Imagery
All the ads which we have discussed earlier in our brand analysis focus on showing an individual or a
celebrity or a situation. This is shown in order to capitalize and help in correlating his image with the
image closest to what he is or what he wants to be in the ads. Due to closer association, the company
targets the specific consumers with matching associations. For example Hyundai Santro = Young
couple’s first car, Maruti Swift = Young bubbly couple, Fiat Punto = Bold individual etc. Umbrella
positioning also has effect on the success of the product. For example, any inexpensive product from
Maruti would be a success, any product from GM in India is considered unreliable and costly to
maintain, any product from Fiat is expected to have after sales service issues.

Concept #10: Positioning based on specific benefit
This is used by products which have a clear distinction with the competing products. For example,
Indica is sold as “more car per car” which emphasizes on the superior interior space of the car, Aveo
UVA is also sold as “bada dil, badi car: which too essentially emphasizes at the superior interior space of
the car as compared to the competitor’s offerings.

Concept #11: Perceived Quality
Over the years, Honda has built an image of superior quality of its products. Even with the launch of
Honda Jazz, Honda did not want to lose the image it had created in minds of consumers. Hence, by
positioning its price as proxy for quality, Honda has positioned Jazz as the costliest car in the segment.
Similarly all Japanese cars are selling well in India (Suzuki, Honda and Toyota) as compared with

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American cars (GM, Ford) as Japanese vehicles are perceived of higher quality and lower maintenance
as compared to their American counterparts.

Concept #12: Perception of risk
This is a critical factor in the purchase of a product like car as it is a big ticket item and hence consumers
minimize the risk by various means like seeking more info through internet, purchasing based on
previous brands, purchasing by brand image (that is why Fiat and GM are struggling in India) etc. in
order to reduce the customer’s perceived risk all manufacturers offer warranty on their products for
atleast 2 years. Some companies like GM offer the same for 3 years in order to boost customer
confidence in their brand (due to poor perceived image) while others offer to extend warranty at an
additional nominal cost.

MARKETING STRATEGY TO LAUNCH A NEW BRAND

On analyzing the positioning diagrams and the customer preferences, we can position any new product
in such a way that the product attains a unique position and the target segment customers can easily
identify themselves with the product.
We assume that the new product which is going to be launched is not from the stable which has the best
brand reputation, but it is at 4 as compared to 5 (best in the segment). On analyzing the positioning
diagrams and the market trends, we conclude that the potential for success is there only in 2 sub-
segments i.e. the sub-compact and the premium compact, and not the compact and the super-hatch.
The reason for this is that these 2 sub-segments are relatively uncluttered and the price positioning does
suit the preference of the Indian consumer who is quite value conscious. The compact sub-segment is
overcrowded and hence it will be difficult for a product to find a unique positioning, while the prices of
the super-hatches interferes that of the sedan segment which a value conscious consumer will go for
rather than buying a hatchback car at the price of a sedan.
The marketing strategy for the 2 sub-segments will be as follows:

Strategy for launching in sub-compact segment
1. Product – Highly economical product which delivers superior fuel consumption than Maruti
Alto. Even the service charges of the dealer need to be economical as the customer is looking
for value for money rather than special treatment.
2. Price – Rs.1.9 lacs
3. Place – Use the existing distribution channels
4. Promotion – Following will be the points for promoting the product:
a. Low price of Rs.1.9 lacs
b. Fuel efficiency must be atleast 20 kmpl and the comparative maintenance costs must be
worked out and shown lower than Maruti Alto.
c. The standard warranty on the vehicle must be for 3 years with unlimited mileage as few
customers are unlikely to use it for long drives. This will help in boosting the brand
reputation and in reducing the risk perception of the consumer.

13

d. The customer can be sold some concept like packaged services (while purchasing
vehicle or during service) in order to portray high service assurance at fixed costs.
e. The vehicle can be targeted to the rural areas thru opinion leaders bank managers and
panchayat heads in order to render more credibility of the brand.
f. The ads must position the product as the “first time car” and showcase a small and
lower middle class nuclear family which helps them fulfill small wishes with the joy of
moving together.
g. In order to bring compulsion from the family of the target consumers, the product ads
must be brought out on family channels like Zee TV, Star Plus.
h. The product must also be promoted by having kiosks outside the banks as such
customers would physically visit banks for their financial transactions.

Strategy for launching in premium -compact segment

1. Product – The product should have contemporary design and should deliver higher fuel
efficiency than the best in the sub-segment (maybe 17 kmpl)
2. Price – Rs.3.8 lacs
3. Place – Use the existing distribution channels
4. Promotion - Following will be the points for promoting the product:
a. The advertisements must showcase the looks and styling of the car in order to appeal
the product to the consumers. It must also emphasize the superior technology of the
engine which helps deliver the superior mileage.
b. As the brand reputation is not assumed to be the best hence the product must be
supported by comprehensive warranty in order to reduce the customers’ perceived
risk. The standard warranty on the vehicle must be for 3 years.
c. The product must be promoted towards the urban young middle class (age of 25-35
yrs) as their disposable incomes would be higher but looks will enhance their status
more than fuel efficiency factor.
d. The product can be showcased and promoted at prominent malls and within corporate
campuses in cities.
e. The ads must be brought pout on lifestyle channels for young generation like Zoom,
MTV etc and also on popular websites like Yahoo, Google etc. so that it catches the
attention of the target audience.

14

REFERENCES

1. Book on “Consumer Behaviour and Branding” by Prof.S.Ramesh Kumar, 2009 edition

2. Book on “Consumer Behaviour” by Leon G.Schiffman and Leslie lazar Kanuk, Ninth impression

3. Mc.Kinsey Global Institute report (www.mckinsey.com)

4. Crisil Research, Society of Indian Automobile Manufacturers

5. Websites:
a. www.marutiudyog.com
b. www.hyundai.co.in

c. www.chevrolet.co.in
d. www.tatamotors.com
e. www.fiat-india.com
f. www.hondacarindia.com
g. www.skoda-auto.co.in
h. www.india.ford.com
i. www.mouthshut.com
j. www.google.co.in

15

EXHIBITS

Exhibit 01: Sales of cars in Indian industry from 1997 -98 to 2008-09.

Passenger Vehicles (PVs)
18,00,000
16,00,000
14,00,000
12,00,000
10,00,000
8,00,000

6,00,000
4,00,000
2,00,000
-

Exhibit 02: Wallet share of Indian customers for transportation

16

Exhibit 03: Sales of car manufacturers in Indian domestic market from
2004-05 to 2008-09

Cars — Player-wise domestic market share (%)
(Units) 2004-05 2005-06 2006-07 2007-08 2008-09
1 BMW India Pvt Ltd - - - 0.2 0.2
2 DaimlerChrysler India Ltd 0.2 0.2 0.2 0.2 0.3
3 Fiat India Ltd 0.7 0.1 0.2 0.3 0.7
4 Ford India Ltd 3.0 3.1 3.7 2.6 2.1
5 General Motors India Ltd 1.9 1.3 1.6 3.8 3.8
6 Hindustan Motors Ltd 1.8 1.7 1.2 0.9 0.6
7 Honda SIEL Cars India Ltd 4.3 4.6 5.5 4.9 4.1
8 Hyundai Motors India Ltd 17.3 17.9 18.1 18.0 20.0

9 Mahindra & Mahindra Ltd - - - 2.2 1.1
10 Maruti Suzuki India Ltd 50.9 51.7 51.0 51.4 52.2
11 Skoda Auto India Pvt Ltd 0.9 1.1 1.2 1.2 1.1
12 Tata Motors Ltd 17.7 17.1 16.6 13.8 13.2
13 Toyota Kirloskar Motor Ltd 1.3 1.1 0.7 0.6 0.7
Source: CRISIL Research, SIAM

Exhibit 04: Segment -wise domestic market share of passenger cars in
Indian market from 2004 -05 to 2008-09

Passenger cars — Segment-wise domestic market share (%)
Segment 2004-05 2005-06 2006-07 2007-08 2008-09
A1: Mini 14.2 10.1 7.4 5.8 4.0
A2: Compact 60.5 64.9 69.9 71.4 72.6
A3: Mid-size 21.8 21.6 18.3 18.8 19.8
A4: Executive 2.8 2.6 3.8 3.5 2.8
A5: Premium 0.7 0.7 0.6 0.5 0.7
A6: Luxury 0.0 0.0 0.0 0.1 0.1
Grand total 100.0 100.0 100.0 100.0 100.0
Source: CRISIL Research, SIAM

Exhibit 05: Model -wise domestic sales of A2 segment cars in 2008 -09

Passenger cars — Model-wise domestic sales
Player Model 2008-09 % contr
1 Maruti Suzuki India Ltd Alto 2,12,568 24.0%
2 Maruti Suzuki India Ltd Wagon R 1,34,768 15.2%
3 Tata Motors Ltd Indica 1,11,253 12.6%
4 Maruti Suzuki India Ltd Swift 1,10,071 12.4%
5 Hyundai Motors India Ltd i10 1,06,095 12.0%
6 Hyundai Motors India Ltd Santro 91,478 10.3%

17

7 Maruti Suzuki India Ltd Estillo 32,694 3.7%
8 General Motors India Ltd Spark 32,528 3.7%
9 Maruti Suzuki India Ltd A-Star 21,295 2.4%
10 Hyundai Motors India Ltd Getz 9,436 1.1%
11 General Motors India Ltd Aveo - UVA 7,299 0.8%
12 Skoda Auto India Pvt Ltd Fabia 5,798 0.7%
13 Hyundai Motors India Ltd i20 4,993 0.6%
14 Fiat India Ltd Fiat Palio 3,527 0.4%
15 Ford India Ltd Fusion 2,141 0.2%
8,85,944 100%

Exhibit 06: Sub-segments of A2 segment, no. of variants and ex -showroom

prices

No. of Base
Player Model
variants price

SUB- COMPACT
1 Maruti Suzuki India Ltd Alto 4 2,26,279
COMPACT
2 Tata Motors Ltd Indica 12 2,57,360
3 Hyundai Motors India Ltd Santro 5 2,63,999
4 Maruti Suzuki India Ltd Estilo 4 3,16,035
5 Maruti Suzuki India Ltd Wagon R 7 3,16,650
6 General Motors India Ltd Spark 7 3,19,838
7 Hyundai Motors India Ltd i10 9 3,31,738
8 Fiat India Ltd Fiat Palio 7 3,38,488
9 Maruti Suzuki India Ltd A-Star 3 3,44,650
PREMIUM COMPACT
10 Hyundai Motors India Ltd Getz 6 3,99,000
11 General Motors India Ltd Aveo - UVA 3 3,99,938
12 Fiat India Ltd Punto 8 4,02,293
13 Maruti Suzuki India Ltd Swift 8 4,05,355
14 Maruti Suzuki India Ltd Ritz 7 4,18,683
SUPER-HATCH
15 Hyundai Motors India Ltd i20 9 4,80,241
16 Skoda Auto India Pvt Ltd Fabia 8 4,87,920
17 Ford India Ltd Fusion 3 5,94,000
18 Honda SIEL Jazz 3 7,15,000

18

Exhibit 07: Advertisements of all models in A2 segment

1. Maruti Alto – “Let’s Go” – “Aapka Sachha Humsafar”

2. Maruti Zen Estilo – “Take a fresh view of life”

19

3. Maruti WagonR – “For the smarter race”


20


21
5. Maruti Swift – “You’re the fuel”
4. Maruti A-star – “Stop @ nothing”

8. Hyundai i10 – “Catch the i”
6. Maruti Ritz – “Live the moment”

7. Hyundai Santro – “First car. First choice”


22

9. Hyundai Getz – “Gets you everywhere”

10. Hyundai i20 – “i got it all” – “the uber cool is here”

11. Tata Indica – “More car per car” – “Changes everything”

23

13. Fiat Punto – “A bold new drive”
12. Fiat Palio – “The drive of the new generation”


24

14. Chevrolet Spark- “ Full of life”

15. Chevrolet UVA – “Bada dil. Badi car”

16. Ford Fusion – “The no nonsense car”

25

17. Skoda Fabia – “Because you’re special”

18. Honda Jazz – “One life. Why so serious?”


26


27
A. Sub-compact
Exhibit 08: Positioning Diagrams (
=> Positioning of new product)


28


29
B. Compact sub-segment


30


31
C. Premium compact sub-segment


32


33
D. Super-hatch sub-segment


34

Consumer Behaviour - A study of the relevance of consumer “perception” in the A2-segment of the Indian passenger car market

Consumer Behaviour - A study of the relevance of consumer “perception” in the A2-segment of the Indian passenger car market

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