A study of consumer perception of car market & buying behavior

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A study of Consumer Perception of Car
Market and Buying Behavior

A MINI PROJECT REPORT
Submitted by

(Reg.No: )

In partial fulfillment of the requirement for the award of the degree
Of
MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

DEPARTMENT OF MANAGEMENT STUDIES
ADHIYAMAAN COLLEGE OF ENGINEERING, HOSUR
ANNA UNIVERSITY – COIMBATORE



OCT 2010
BONAFIDE CERTIFICATE

This is to certify that the project report entitled “A study of consumer
perception of Car market & buying behavior” submitted by
………………. is a Bonafide record of the mini project done by him during
the academic year 2010-11,under my guidance and supervision in partial
fulfillment of DEGREE OF MASTER OF BUSINESS
ADMINISTRATION.



Acknowledgements

I proudly utilize this privilege to express my hearty thanks to our PRINCIPAL
………………………, Adhiyamaan College of Engineering, Hosur,for giving me
admission in this prestigious institution. My special words of thanks to
……………………….., DIRECTOR of Departement of Management Studies. I
would like to express my sincere gratitude to our HEAD OF THE DEPARTMENT
…………………………….. for his guidance and support and my faculty guide
…………………………., who helped me a lot in completing my mini project their
constant encouragement and suggestion.



Declaration

I hereby declare that this project report entitled “A study of consumer perception

of Car market &buying behavior” submitted to Department of Management
studies, ADHIYAMAAN COLLEGE OFFENGINEERING, HOSUR in partial
fulfillment of the requirement for the award of the Degree of MASTER OF BUSINESS
ADMINISTRATION is a original work done by me during the period of my study at the
college under the supervision and guidance of ……………………….. Faculty,
Department of Management Studies, Adhiyamaan College of Engineering, Hosur.

PLACE:

DATE:



Table of Content

1 Executive Summary
01
2 Introduction. 03

3 Overview of the Auto segment 09

4 Review of Literature 15

5 Objective of the study 24

6 Scope of the study 25

7 Research methodology. 26

8 Limitation of the study 33

9 Finding and Analysis 34
Cross Tabulation
10 Conclusion 53

11 Annexure 55

Executive Summary



The automobile industry today is the most lucrative industry. Due to the increase in
disposable income in both rural and urban sector and easy finance being provided by all
the financial institutes, the passenger car sales have increased at the rate of 38% per
annum in June 2005-06 over the corresponding period in the pervious year. Further
competition is heating up in the sector with a host of new players coming in and other
like Porsche, Bentley, Audi, and BMW all set to venture in the Indian markets. One
factor that could help the companies in the marketing of their product is by knowing and
creating a personality for their brands.

This report attempts to answer some of the questions regarding brand personality of
selected cars in India by conducting the market research. This report is categorized into
parts, deals with introduction to brand personality, companies selected, product and the
industry.

The automobile industry today is the most lucrative industry. Due to the increase in
disposable income in both rural and urban sector and easy finance being provided by all
the financial institutes, the passenger car sales have increased at the rate of 25% per
annum in June 2005-06 over the corresponding period in the previous year. Further
competition is heating up in the sector with a host of new players coming in and others
like Porches, Bentley, Audi, and BMW all set to venture in Indian markets. One factor
that could help the companies in the marketing of their products is buying Behavior of
the consumers. The Buying Behavior of the customers can be studied by knowing their
perceptions about the cars in the market and about the possible entrants in the market.
One such technique is by knowing and creating a personality for the brands.

This personality sketching will help in knowing what a customer (or a potential
customer) thinks about a given brand of car and what are the possible factors guiding a
possible purchase. Similarly, the idea of measuring the customer satisfaction will serve
the same purpose of determining the customer perception. Thus, by measuring the”
willingness of existing users of a car to recommend it to others” will help the car
manufacturers to chalk out the entire Customer Buying Behavior.



The reports shall attempt to answer some of the questions regarding brand
personality of selected cars in India by conducting a market research. The market
research will be helpful for the new car entrant companies in India to find out the possible
gaps between the customer expectations and the present market offerings. This way these
companies will be able to find their share in the ever-expanding Indian market pie.

The research will track the customer satisfaction in the following two layers:

• Product related Parameters

• Dealers related parameters

The customer satisfaction index will be calculated for the car brands taken into
consideration.

It will be mainly a primary research and the information will be gathered from both
primary and secondary research. The study will analyze the applicability of existing
research concepts, theories, and tools for evaluating consumer satisfaction.

INTRODUCTION



It is true fact that if you are satisfied you recommended to others. Word of mouth and
customer satisfaction play a very important role in determining market perception about
an automobile. It is the market perception that determines the success of a company and
so it is very important for the car manufacturers to measure the “willingness of existing
users of a product to recommend it to others”. The same is a lot of interest to customers
as well for it helps them make the purchase decision.

A car is one of the most significant purchases that an Indian household makes and this
project addresses the most important question that perplexes car manufacturers:

“What makes the perfect car that influence will willfully purchase?”

The project highlights the factors that influence the buying decision of a consumer.

The factor under consideration would be:

 Price
 Income of the consumer
 Features in the car
 Safety standard
 Warranty scheme
 Finance facility

Is an Indian consumer ready for more? Which is the driving motive behind the effective
demand of the car? How the coming of new models like swift does is going to effect the
buying decision of consumer and especially the Tata 1 lakh car.

In other words, from the spread of choices offered by various manufacturers under
various segments, of which one the customer will finally turn the ignition on and drive.



Customer satisfaction index: some of the most advance thinking in the business world
recognizes that customer relationships are best treated as assets, and that methodical
analysis of these relationships can provide a road map for improving them

“If you cannot measure it, you cannot improve it.” – Lord William Thomson Kelvin
(1824-1907)

Clause 8.2.1 in ISO9000: 2000 states:

“As one of the measurements of the performance of the quality management system, the
organizations shall monitor information relating to customer perception as to whether the
organization has met customer requirements. The method for obtaining and using this
information shall be determined”

The requirement has been there in the QS9000 standard clause 4.1.6 which says:
“… Trends in customer satisfaction and key indicators of customer dissatisfaction shall
be documented and supported by objective information. These trends shall be compared
to those of competitors, or appropriate benchmarks, and reviewed by senior
management.”

There is obviously a strong link between customer satisfaction and customer retention.
Customer’s perception of service and quality of product will determine the success of the
product or service in the market.

With better understanding of customer’s perceptions, companies can determine the
actions required to meet the customer’s needs. They can identify their own strengths and
weaknesses, where they stand in comparison to their competitors, chart out the path
future progress and improvement. Customer satisfaction measurement helps to promote
an increased focus on customer outcomes and stimulate improvements in the work
practices and processes used within the company.



Customer expectations are the customer-defined attributes of your product or service. We
cannot create satisfaction just by meeting customer’s requirements fully because these
have to be met in any case. However falling short is certain to create dissatisfaction.

Major attributes of customer satisfaction can be summarized as:

 Product quality
 Product packaging
 Keeping delivery commitments
 Price
 Responsiveness and ability to resolve complaints and reject reports
 Overall communication, accessibility and attitudes

Values

+ Benefits -

Features - Attributes



We cannot begin to address the customer satisfaction issue we define the parameters and
measures clearly.

The customer satisfaction index represents the overall satisfaction level of that customer
as one number, usually as a percentage

The buying process involves the following steps:

Problem
Recognition

Information search

Evaluation

Decision

Dissatisfaction = Satisfaction =
Brand Rejection Post Purchase
Buy Brand Acceptance
Dissonance


“The fact that word of mouth sales are a big deal in this industry has also helped. Industry
players and market surveys reveal that 20-30 percent of sales are through word of
mouth”.

For the purpose of the project has undergone through

 Surveying the relevant consumer base through exhaustive questionnaire.
 Understand the elements underplaying in each segment
 Deducing A analytical overview through different statistical methods

Product Quality Service Quality
Recommendation comes from satisfaction and satisfaction comes from

Relationship
Quality


OVERVIEW OF THE AUTO SEGMENT

Indians have emerged as avid car enthusiasts sporting their prized possessions as status
symbols and speed machines. Foreign car companies have discovered the Indian
consumer as well as the R & D potential in the Indian technical fraternity and are setting
up manufacturing plants right and left across the country at lower costs. The Indian
automobile industry is currently experiencing an unprecedented boom in demand for all
types of vehicles. This boom has been triggered primarily by two factors:

(1) increase in disposable incomes and standards of living of middle class Indian families
estimated to be as many as four million in number; and



(2) The Indian government's liberalization measures such as relaxation of the foreign
exchange and equity regulations, reduction of tariffs on imports, and banking
liberalization that has fueled financing-driven purchases.

Industry observers predict that passenger vehicle sales will triple in five years
to about one million, and as the market grows and customer's purchasing abilities rise,
there will be greater demand for higher-end models which currently constitute only a tiny
fraction of the market. These trends have encouraged many multinational automakers
from Japan, U. S. A., and Europe to enter the Indian market mainly through joint ventures
with Indian firms.

India is increasingly becoming a global automotive hub both for the vehicles and
component industry. India is fast integrating itself into the world economy and open to
international automotive companies, who are increasingly investing in India.

The Indian automotive and component industry is looking to increase the quality of
production from existing levels, to develop new products and to increase exports. In the
long run India is well set to become a key market for automotive and component
manufacturers in terms of local demand and as a base for export.

Additionally, companies such as GM, Daimler Chrysler, Toyota, Delphi and
MICO/Bosch are utilizing India’s well developed IT / software capabilities and have set
up R&D hubs here for their global operations

Industry Size

 The domestic Indian passenger car market (including utility vehicles) totaled 900,000 units
(with a CAGR of 10 per cent over the past 4 years) while the exports were 130,000 million
units (with a registered CAGR of 68 per cent over the past 4 years) during financial year
2004



 The Indian two-wheeler Industry is one of the largest in the world, and is expected to
maintain robust growth in the future

 At the back of this phenomenal automotive growth is the success of the Indian auto
component industry. Presently a US$ 6.7 billion industry, it is expected to almost treble in
less than eight years time to US$ 17 billion by 2012

 India offers a distinct technological and cost-competitive advantage, which global Original
Equipment Manufacturers (OEMs) and automotive suppliers are leveraging for both
manufacturing and research facilities. The passenger car market is projected to grow at a
CAGR of 12.3 per cent over the next few years. Growth in the mid-size and premium car
segments is expected to outpace the overall market growth.

Indian Automobile Industry



Automobile Industry in India is still in its infancy but growing rapidly. The opportunities
in the automobile industry in India are attracting big names with the big purse and they
are investing vigorously in infrastructure, design and development, and marketing.
Automobile industry in India is today poised for the big leap.

• India is the 2nd largest two wheeler manufacturer in the world
• Second largest tractor manufacturer in the world
• 5th largest commercial manufacturer in the world
• 3rd largest car market in Asia, surpassing China in the process

Automobile industry Contributes 17% of the total indirect taxes collected by the
exchequer & is a driver of product and process technologies, and has become a excellent
manufacturing base for global players, because of its

• high machine tool capabilities
• Extremely capable component industry
• Most of the raw material locally produced



• Low cost manufacturing base
• Highly skilled manpower
• Special capability in supplying large volumes



Domestic and Foreign Vehicle Manufacturers:

Passenger Vehicles

The main domestic manufacturers of passenger vehicles are as follows:

• Maruti Udyog
• Tata / Telco
• Mahindra / Mahindra
• Hindustan Motors

Foreign competitors manufacturing locally including Hyundai, Ford, General Motors,
Honda, and Toyota.

Car demand has seen a turnaround since mid 2001 thanks to heavy discounts and
cheaper finance. A large number of new models, both locally assembled and
imported, have also revitalized the market.

In terms of volumes:
• The A/B segments are where India’s strength and future lies. The A/B segment
accounts for over 65% of the total passenger vehicles produced. Competition in
this segment is stiff with Maruti the market leader with around 55% market
share. New models from Telco (Indica), Hyundai (Santro) and Fiat (Palio)
however are eroding Maruti’s long standing dominance in this segment.
• The mid / luxury range is developing with the introduction of Ford (Ikon),
Hyundai (Accent/Sonata) and Skoda (Octavia), although the volumes are not
significant.
• The UV segment remains sluggish with growth at just over 1%. The clear market
leader, Mahindra (44% market share) posted increased sales of 9% in the first 3
quarters of 2002/03. Toyota and Telco domestic UV business remains flat.



Commercial Vehicles

The main Indian companies in the Commercial Vehicle segment are:

• TATA Engineering and Locomotive Company (TELCO)
• Ashok Leyland
• Bajaj Tempo Ltd
• Eicher Motors Ltd
• Swaraj Mazda

There is only one international company currently manufacturing CVs in India, Volvo
but again volumes are not large. Other global players are active, although in partnership
with one of the domestic manufacturers E.g.:- IVECO (manufacturing their range of
trucks in association with Ashok Leyland.
There has been a significant turn around in this segment over the last 18 months with
over 30% growth being seen in terms of both production and sales.
This sector has received a huge boost with India’s massive demand from the
infrastructure sector (particularly roads), cyclical fleet replacement by fleet owners and
an upturn in the cement and steel sectors.



Automobile Manufacturers Market Share

Passenger Cars LCV

0.604 Mn 0.083 Mn

Hyundai Bajaj
18% Tem po Eicher HM
Tata Ashok 7% 2%
8% M &M
13% Leyland 30%
Fiat 1%
4% Ford
3%
HM
Maruti 2%
55% Honda Tata Sw araj
Toyota Mazda
GM 2% 44%
0.3% Daimler 8%
Chrysler Mitsubishi Skoda 1%
0.2% 1% 1%

• Maruti (JV of Suzuki), leading the market,
• Tata and M&M are the key players

a) Followed by Hyundai and Tata, together hold close to 75% of market
b) Daewoo stopped production, mainly due to financial issues 2 years back



Review of Literature

Brand Personality

brand is “a set of expectation and association evoked from a company or product. A
brand is how your key constituents- customers, employees, shareholders etc. experience
what you do.” Some brands are of such great A importance to people, that we speak of
them as a part of one’s life and identity, being used to express one. Some would say that
these brands have their own personality, the brand personality, which can be defined as
“the set of human characteristics associated with a given brand”. Thus, it includes such
characteristics as gender, age and socioeconomic class, as well as such classic human
personality is both distinctive and enduring.

Based on the premise that brand can have the personalities in much the same way as
humans, brand personality describe brands in terms of human characteristics. Brand
personality is seen as valuable factor in increasing brand engagement and brand
attachment, in much the same way as people relate and bid to other people. Much of the
work in the area of brand personality is based on translated theories of human personality
and using similar measures of personality attributes and factors. Brand personality refers
to the set of human characteristics we associated with the brand. A common way of
determining this is to reply on the metaphor: “If the brand was a person, what would
he/she be like?” we then list and group the traits to describe the brand as, for example:
caring, approachable and trustworthy. However, there is a lot more we can do.

Because many people interact with brands as though they were other people, it is
important to understand what a brand personality consists of, and how its characteristics
can be used to affect the relationship between the brand and its user. Knowing and
understanding the brand personality gives a good insight into this relationship, and into
peoples’ attitudes towards the brand, and is also as important guide to communicating the
brand.



The Creation of Brand Personality

Brand personality traits are formed and influenced by any direct or indirect contact that
the consumer has with a brand. A brand, unlike a person, cannot think, feel or act. A
brand has no objective existence at all; it is simply a collection of perception on the mind
of the consumer. Consumers accept the marketing actions to humanize brands. One
explanation fort this can be found in the theories of animism, which suggest that there
exists need by people to anthropomorphize objects in order to facilitate interaction with
the nonmaterial world. Anthropomorphize occurs when human qualities are attributed to
non human objects, e.g. brands. Consumers easily assign personality quality to inanimate
objects like brands in thinking about the brands as if they are human characters.

In a direct way, personality traits are associated with a brand by the people associated to
that brand. One direct way to form and influence brand personality is user imaginary.
User imaginary is defined as the set of human characteristics associated with the typical
or stereotype user of the brand. Associations with the company employees or CEO and
the brand’s product endorsers are also direct ways by which brand personality traits are
formed and influenced. The personality traits that of the people associated with a brand
are transferred directly to the brand. The theories of animism describe another process
mechanism that directly explains the specific ways in which the vitality of the brand can
be realized (Fournier, 2004). Spokespersons that are used in advertising can have
personalities that fit those of the brand they advertise. Over time, the personalities of the
spokesperson are transmitted to the brand. The brand-person associations can also have a
more personal nature. Brands can be associated with person who use or used that
particular brand, for example a close friend or a family member. Also, brands received as
gifts can also be associated with the person from whom the gift was received. These
person associations serve to animate the brand as a vital in the minds of the consumers.
Obviously, this aspect is much less under the control of the marketers.

Indirectly, the brand personality is created by all the elements of the marketing mix.
Betra, Lehman and Singh suggest that the personality of a brand is created over time, by



the entire marketing mix of the brand - “its price (high or low, odd or even), retail store
location (imaginary associations), product formulation (ingredients, benefits), and
product form (solid/liquid. Etc.), packaging details (color, size, material, shape), symbol;
used an all phases of the brand communication, sales promotion, and media advertising”.

Another form of animism explains how brand personality is created in a more indirect
way. This form of animism involves complete anthropomorphization of the brand object
itself. Human qualities of emotionality and thought are transferred to the brand. This is
achieved with the help of the marketing actions, especially advertising. For example, the
brand character of M&M in the M&M commercials has the capacity to laugh and joke.

One of the advantage of the brand personality is that based on their distinctive
personalities, consumers are able to differentiate between brands. Another advantage is
that the consumer can interpret the brand’s image in such a way that it is personally more
meaningful. Brand personality encourages more active processing on the part of the
consumer. Thus, the consumer put more efforts in creating and using the brand
personality. A further advantage of brand personality is that life is given to a brand. By
vitalizing a brand, another perspective of brand personality can be examined, namely the
role of a brand as relationship partner in a consumer-brand relationship. Next we will
concentrate on these consumer-brand relationships.
Whether the brand is a product or a company, the company has to decide what
personality traits the brand is to have. There are various ways of creating brand
personality. One way is to match the brand personality as closely as possible to that of
consumers or to the personality that they like. The process will be

 Define the target audience
 Find out what they need, want and like
 Build a consumer personality profile
 Create the product personality to match that profile



This type of approach is favored by companies such as Levi Strauss, who research their
target audience fastidiously. For Levis the results is a master brand personality that is:

 Original
 Masculine
 Sexy
 Youthful
 Rebellious
 Individual
 Free
 American

A related byproduct brand personality (for a specific customer group) such as Levi’s 501
jeans is:

 Romantic
 Sexually attractive
 Rebellious physically prowess
 Resourceful
 Independent
Both profile appeal mostly to the emotional side of the people’s minds- to their feelings
and sensory function. This profiling approach aims to reinforce the self-concept of the
consumers and their aspirations. The approach is ideal for brands that adopt a market-
niche strategy, and can be extremely successful if a market segment has a degree of
global homogeneity, as is the case with Levis.

Non product related brand personalities drivers

 User imaginary – user imaginary can be based on either typical users (people
you see using the brand) or idealized users (as portrayed in advertising and else
were). User imaginary can be powerful driver of brand personality, in part



because the user is already a person and thus the difficulty of conceptualizing the
brand personality is reduced. For example Charlie has a feminine, strongly
independent brand personality driven by it user imaginary. The upscale
personality of Mercedes and the sexy, sophisticated personality of Calvin Klein
are similarly influenced by user imaginary.

 Sponsorship – activities such as events sponsored by the brand will influence its
personality. Swatch, for example, reinforces its offbeat, youthful personality will
targeted sponsorships that have included the Freestyle Ski World Cup in
Breckenridge, the first International

 Age – how long a brand has been on the market can affect its personality. Thus
new entrants such as Apple, MCI, and Saturn tend to have younger brand
personalities than brand such as IBM, AT&T, and Chevrolets, and it as all too
common far a major dominate brand to see as strongly and old fashioned, a brand
for older people.

 Symbol – a symbol can be powerful influence on brand personality because it can
be controlled and can have extremely strong associations. Apples bitten apple, the
Marlboro cowboy, the Michelin mans all helps to create and reinforce a
personality for their brands.

Brand personality of cars

Are you what you drive? That is what are companies seem to be asking and in the same
breath trying to convince you about. In other words, are you the Hyundai accent owner
who commands immediate respect wherever she goes (including fro the potential father-
in-law) or are you the suave executive from the Chevrolet ad who is ever ready to share a
moment with loved one? With a plethora of new models in the market, and generic
benefits (such as space or fuel efficiency) of a particular car segment hardly a



distinguishing factor between car models, marketer are increasingly differentiating on the
emotional pay-off a particular car model/brand provides to the customer. This, of course,
varies from the segment to segment and also on how long a particular model has been in
the market.

For instance, while advertising for entry level or smaller cars tends to focus more on the
rational or functional benefits of the vehicles, the differentiations is increasingly on the
emotional benefits when it comes to high end cars.
“Generally, it has been seen as one move up the value chain, the differentiation is more
on the emotional pay-off. People buy car as an extension of their personality rather than
just features. A car, in India, helps build up show off, social esteem value. The
advertising would also vary according to the segment which one is targeting,” he says.
For instance, the Chevrolet Optra ad (which depicts a young husband driving his wife to
see the moon on the occasion of Karvachauth) shows an Optra consumer as someone who
believes in family values and indulging loves ones.

“We find that typically profile of an Optra consumer is someone who is in the age group
of 35-45years and has a chauffer. He buys a car not only for himself but also for the
family and tries to make up, for not being able to spend enough time, by indulging love
ones,” points out dutta. The positioning goes well with the companies catch lines of “for
a special journey called life”.

The importance of brand image has risen sharply in the last few years. At the segment
level, the increase in importance is greater for the mid-size cars, indicating the relevance
of brand among the more expensive market segments. The manufacturer need to focus
more o how consumers perceive them as offering exciting cars and being committed
towards them. Contemporariness of model has a big impact on purchase decision. The
perception of the car in terms of its performance and design, quality, sales, after sales,
cost of ownership, apart from brand image, all impact upon the purchase decision.”



According to Bhatia, as long as advertising for cars is strongly differentiated and sharply
positions the model and at the same time satisfies a define need segment, it shall have the
capability to break the clutter and creates a unique and compelling reason for consumers
to purchase. “One good example of this is Ford Ikon- the josh machine made a
tremendous impact on consumers in offering to satisfy a clear need. You can see some
more of this with a recently launched premium hatch back as well”.

Interestingly, the strategy marketer follow changes a bit when it comes to addressing the
smaller car category with the rational benefits of a brand tending to be the focal point of
the campaign. “We have found that typically a buyer for a smaller car (sub Rs 4 lac)
looks for aspects such as reliability and fuel efficiency. This changes as we move up
since in case the consumer has been with the category for a longer time and hence it is
important t to talk of an emotional pay off.

A case in point is the Maruti 800 campaign in which the kids who is playing with a toy
Maruti 800 exclaims to his dad (when asked how long will he keep on running the car),
“papa ki Kara, petrol khatam hi nahin Honda.” The ad cleverly conveys that the car just
keeps going on and on. It ends with the voiceover telling us that Maruti Suzuki is most
fuel-efficient car.

However in the small car segment, the rational benefits magic is not always applicable.
Take the case of Hyundai Santro, the advertising of which has evolved over the years
from initially conveying mainly the functional benefits of the model to connecting with
the consumer on an emotional level now. “When we launched the Santro, we started with
the positioning if the car being a complete family car which was completely rational
positioning. But then two things happened- the product found acceptance in the market
and the competition came up with similar product in the market.

Brand image is not driven by good advertising alone but is significantly impacted upon
by the cars performance and design, quality, and the cost of ownership. Among the three,
product quality has the highest correlation with brand image. Small car buyer seeks



capability in advertising, and fuel efficiency is relatively more important to them.
Technology, innovation, and good influence premium mid-size buyers. One reality for us
in India is that the market is extremely price/value conscious. While making purchases
based on above, there is rational side, which does have an impact on the decision on a
particular make and model of car. Be it rational or an emotional decision, consumers
would have to think as a bevy of new models flood the Indian market.



Objectives of Study

The research objective is a statement, in as precise terminology as possible, of what
information is needed. The research objective should be framed so that obtaining the
information will ensure that the research purpose is satisfied.
Research objective have three components.
Research question –

The research question specifies the information the decision making needs. The
responsibility of the researcher is to make the researcher question as specific and precise
as possible. The researcher question asks what specific information is required to achieve
the research purpose, or answer the research problem. If the research questions are
answered by the research, then the information should aid the decision maker.

Development of hypothesis –

A hypothesis is a possible answer to a question. Development of hypotheses implies
generating basically alternative answers to research questions. The research determines
which of these alternative answers is correct. It is not always possible to develop
hypotheses, but efforts should be made.

Scope or boundaries of the research-

Defining the scope of the research or the research boundaries ensures the desired
precision or accuracy of the result.
The researcher’s responsibility is to restate the initial variables associated with the
decision problem, that is convert the research problem, in the form of one or more key
question formats-
• How • What • Where • When • Why
Objectives of the Research



The research objectives for the project undertaken can be defined as follows:

• To determine the demographic variables of the customers of different brands of
cars.
• Examine the customer perception about the cars.
• To judge the satisfaction level of car owners of different brands.
• The research tracks responses at following two layers

1. Product related parameters
2. Dealer related parameters

• To analyze the psychographic variables of the customers of different brand of the
cars.

Scope of the study

It is aimed to study the car market and buying behavior of the customer. The project is
analyzed the demographic, psychographic and buying characteristics of the customers in
buying the car. It includes the detailed study of customers focusing on the various
parameters that lead to identifying and understanding the perception of the customer in
buying the car brands.



Research Methodology

A research process consists of stages or steps that guide the project from its conception
through the final analysis, recommendations and ultimate actions. The research process
provides a systematic, planned approach to the research project and ensures that all
aspects of the research project are consistent with each other.

Research studies evolve through a series of steps, each representing the answer to a key
question.

Research Project Steps



INTRODUCTION

This chapter aims to understand the research methodology establishing a framework of
evaluation and revaluation of primary and secondary research. The techniques and
concepts used during primary research in order to arrive at findings; which are also dealt
with and lead to a logical deduction towards the analysis and results.

RESEARCH DESIGN

I propose to first conduct a intensive secondary research to understand the full impact and
implication of the industry, to review and critique the industry norms and reports, on
which certain issues shall be selected, which I feel remain unanswered or liable to
change, this shall be further taken up in the next stage of exploratory research. This stage
shall help me to restrict and select only the important question and issue, which inhabit
growth and segmentation in the industry.
The various tasks that I have undertaken in the research design process are :
 Defining the information need
 Design the exploratory, descriptive and causal research.

RESEARCH PROCESS

The research process has four distinct yet interrelated steps for research analysis
It has a logical and hierarchical ordering:
 Determination of information research problem.
 Development of appropriate research design.
 Execution of research design.
 Communication of results.



Each step is viewed as a separate process that includes a combination of task , step and
specific procedure. The steps undertake are logical, objective, systematic, reliable, valid,
impersonal and ongoing.

EXPLORATORY RESEARCH

The method I used for exploratory research was

 Primary Data
 Secondary data

PRIMARY DATA

New data gathered to help solve the problem at hand. As compared to secondary data
which is previously gathered data. An example is information gathered by a
questionnaire. Qualitative or quantitative data that are newly collected in the course of
research, Consists of original information that comes from people and includes
information gathered from surveys, focus groups, independent observations and test
results. experimentation.
Primary data is basically collected by getting questionnaire filled by the
respondents.

SECONDARY DATA

Information that already exists somewhere, having been collected for another purpose.
Sources include census reports, trade publications, and subscription services. Data that
have already been collected and published for another research project (other than the one
at hand). There are two types of secondary data: internal and external secondary data



DESCRIPTIVE RESEARCH

STEPS in the descriptive research:

 Statement of the problem

 Identification of information needed to solve the problem

 Selection or development of instruments for gathering the information

 Identification of target population and determination of sampling Plan.

 Design of procedure for information collection

 Collection of information

 Analysis of information

 Generalizations and/or predictions

DETERMINATION THE SAMPLE PLAN AND SAMPLE SIZE

TARGET POPULATION
It is a description of the characteristics of that group of people from whom a course is
intended. It attempts to describe them as they are rather than as the describer would like
them to be. Also called the audience the audience to be served by our project includes
key demographic information (i.e.; age, sex etc.).The specific population intended as
beneficiaries of a program. This will be either all or a subset of potential users, such as
adolescents, women, rural residents, or the residents of a particular geographic area.
Topic areas: Governance, Accountability and Evaluation, Operations Management and
Leadership. A population to be reached through some action or intervention; may refer to
groups with specific demographic or geographic characteristics.
I have selected the sample trough Simple random Sampling



SAMPLE SIZE:

This involves figuring out how many samples one need.

The numbers of samples you need are affected by the following factors:

•Project goals

•How you plan to analyze your data

•How variable your data are or are likely to be

•How precisely you want to measure change or trend

•The number of years over which you want to detect a trend

•How many times a year you will sample each point

•How much money and manpower you have

SAMPLE SIZE

I have targeted 100 people in the age group above 21 years for the purpose of the
research. The sample size is influenced by the target population. The target population
represents the Delhi regions. . The people were from different professional backgrounds.

The details of our sample are explained in chapter named primary research where the
divisions are explained in demographics section.

SAMPLING TECHNIQUE

Simple random sampling technique has been used to select the sample
A simple random sample is a group of subjects (a sample) chosen from a larger group (a
population



ERRORS IN THE STUDY
Interviewer error

There is interviewer bias in the questionnaire method. Open-ended questions can be
biased by the interviewer’s views or probing, as interviewers are guiding the respondent
while the questionnaire is being filled out. The attitudes the interviewer revels to the
respondent during the interview can greatly affect their level of interest and willingness
to answer openly. As interviewers probing and clarifications maximize respondent
understanding and yield complete answers, these advantages are offset by the problems
of prestige seeking, social desirability and courtesy biases.

Questionnaire error

The questionnaire designing has to careful so that only required data is concisely reveled
and there is no redundant data generated. The questions have to be worded carefully so
that the questions are not loaded and does not lead to a bias in the respondents mind

Respondent error

The respondents selected to be interviewed were not always available and willing to co
operate also in most cases the respondents were found to not have the knowledge,
opinion, attitudes or facts required additionally uninformed response errors and response
styles also led to survey error.

Sampling error

We have taken the sample size of 100, which cannot determine the buying behavior of
the total population. The sample has been drawn from only National Capital Region.



Research Design

Research design is a conceptual structure within which research is conducted. A research
design is the detailed blueprint used to guide a research study towards its objective. It is a
series of advanced decision taken together comprising a master plan or a model for
conducting the research in consonance with the research objectives. Research design is
needed because it facilitates the smooth sailing of the various research operations,
thereby making research as efficient as possible yielding maximum information with the
minimum effort, time and money.

RESEARCH DESIGN

EXPLORATORY CONCLUSIVE
RESEARCH RESEARCH
DESIGN DESIGN

DESCRIPTIVE CAUSAL
RESEARCH RESEARCH



Limitations of the study

• All the research projects are hindered in their smooth flow by some unforeseen
problems. The problems arise in the form of constraints by budget, time and scope
of the study. The current project was also faced by certain problem. Some of the
problems faced in the course of the research are as follows:

• A strong unwillingness on the part of the owners of various cars, to participate
and aid the research.

• The boredom and wavering concentration that set in among the respondents while
answering the long questionnaire: thus in turn led to the difficulty of preventing
incomplete questionnaires.

• Sampling error: the research include a sample size of 100 customers which is not
enough to determine the brand perception of the consumers for buying the cars.
Since its not a census survey there is always a chance of error while extrapolating
the results of a sample study over the population especially in those researches
where the qualitative aspects are concerned. So it’s always doubtful to map the
qualitative aspects using a quantitative measure.



FINDINGS AND ANALYSIS

Cross Tabulation

Q1. Why you bought your present car? Please rank from the highest order of preference

1. Increase in disposable income
2. Better safety at roads
3. Family needs
4. Increase in family size
5. Suits your lifestyle and personality

Motives For buying a car

40

35
39
30

25

20
23
Series1
15

17
10
12
5 9

0
Increase in Better safety Family needs Increase in Suits your
disposable at roads family size lifestyle and
income personality
Motives



Interpretation:

As per the analysis shows, increase in disposable income seems to be the most
important reason for buying a car. This trend is reflected in the growth of the Per
capita Disposable income and consequently the growth of the Indian automobile
industry especially in the B and C segment cars. Similarly, the growing family needs
like working partners, increasing family size, status, etc. add to the motives of buying
a car.

Q2. You decided to buy a car brand because of (rate best 3 factors from 1 to 3 in order of
your preference)
1. Affordable price
2. Technical superiority over competition
3. Comfort
4. Manufacturer’s image
5. Value for money
6. Safety
7. After sale services



Product Specific Reasons for Buying a Car

2
10

32

Afforable prices
Technical superiority
Comfort
Manufacturer's image
28
Value for money
Safety
After sale services

7

9
12

Interpretation:

Indian market is still the hard nut to crack for most of the automobile manufacturers.
Though the Indian car industry is among the fastest growing car markets of the world still
the Indian psyche is too complex for the manufacturers to understand. The most
important reason for buying a car when it comes to B and C segment cars seems to be
‘value for money’. 32% of the respondents suggested that affordable prices are the most
important factor while purchasing a car. This is the reason for sticking to a particular
segment till the next substantial rise in the personal disposable income. This reason is
followed by ‘Value for money’ where the customers look for the best product, best
services and best repute all bundled in one with the best deal they can strike. This
explains the reason for the stagnant or sudden growth in sale of B and C segment cars just
before budget and near occasions like Diwali.

Product Satisfaction Level

Q3. Please rate your existing car in terms of understated Interior Design features on a
scale of 1 to 5 where
1 Highly Dissatisfied



2 Dissatisfied
3 Neutral
4 Satisfied
5 Highly Satisfied

Interior Type 1 2 3 4 5
Seats design
Leg Room
Dash Board
Interior Colour
Music System
Adjustable Front seat Headrest

Interiors for Segment B cars

100%

3 3 3 3 3 3
3

80% 1 1 1 1
1 3
4

4 4 4 Adjustable Front Seat Headrest
4
4
Level of satisfaction

4 Music System
60% 4 Interior Colour
Dash Board
3 3 Leg Room
3 4
3 4 Seat Design
3
40%

4 4
4 3
3 4 4

20%

4 4 4 4 4
3 3

0%
Maruti Maruti Maruti Indica Aveo Santro Getz
Estilo Wagon Swift V2 Cars
R

Interpretation:



Interiors play a very important role in deciding the sale of a car. More plush, comfortable
and exotic the interiors are more are the chances of its being popular among the
customers. For this reason manufacturers spend billions of dollars every year on R&D to
continuously improve the interiors of their cars. Seats, leg room, dash board, armrests etc
are few of the options which count for the interiors. As the analysis show Getz scores
substantially high w.r.t. its counterparts on the account of music system installed.
Similarly, Indica V2 races far ahead as far as leg room is concerned. However, Wagon R
fares badly on this front. Overall, almost all cars get a mixed response in this segment as
far as the interiors are concerned

Customer Satisfacton based on Interiors of Cars

100%
3 3 3 3 3 3 3
Satisfaction level ( in %age)

80% 3 3 3 4 5 4
5

4 4 4 4 Adjustable Front Seat Headrest
4 4
60% 4 Music System
Interior Colour
3 4 4 5 5 Dash Board
5 3
40% Leg Room
Seat Design

4 4 4 5
5 5 5
20%

4 4 4 4 4 4 4

0%
a
m

o

t

na
go

ra

en
in
en
ee

pt
di

er
ar

cc
al
st

O
In

V
M

A
B
E

go
di
In

Cars' Interior Parameters

Interpretation:

As one can see most of the respondents are quite happy with the interiors of their
respective cars. However, one striking point observed here are that almost every car fares



neutral on the adjustable front seat headset. These cars have more leg room, come with
attached music systems (Verna fares the best among all cars on this front) combined with
luxury features like TV screens, armrests at the back seat etc.

Q4.Please rate your existing car in terms of understated Safety features on a scale of 1 to 5

Safety Parameters 1 2 3 4 5
Crossbar under Dashboard
Air Bags
Anti Lock Breaking System
Aerodynamic Shape
Intensity of front lights

Customer Satisfaction on the Safety Parameter

100%

90% 3
Customer Satisfaction Level ( %age)

3 4
4 5 4 4

80%

3
70%
3
3 5
60% 4 4 4 Intensity of front light
Aerodynamic Shape
50% 4 ABS
Air Bags
3
40% 3 Crossbar under Dashboard
3 4 3 4
30%
1 3
1
1 1
20% 1 1

10% 3 3 3 3
3 3 3

0%

Estilo Wagon Swift V2
(9) R(23)
Safety Parameters of Different cars



Interpretation:

As can be noted Maruti Swift and Indica V2 fight neck to neck on almost every front,
with Indica marginally better in features like crossbars under the dashboard and Anti
Brake systems. Most of the cars in this segment fare relatively similar and very close to
each other on most of the fronts.

Customer Satisfaction Level on Safety Parameters

100%

90% 3 3 4 4 4 4
5

80%
Customer satisfaction level

3
70% 3 3 3 4 4
3
60% Intensity of front light
Aerodynamic Shape
5
50% 4 4 4 ABS
4 4 4
Air Bags
40% Crossbar under Dashboard

30% 1 1 3 4 4 4
3

20%

4 4
10% 4 4 4 4 4

0%

Esteem Baleno Indigo Indigo Optra Accent Verna
Marina
Cars' Safety Parameters

Interpretation:

As one can see most of the respondents are quite happy with the safety parameters of
their respective cars. However, one striking point observed here are that almost every car
fares neutral on the safety parameters.

Q5. Please rate your existing car in terms of following parameters
Parameter 1 2 3 4 5
Fuel Consumption



Mileage ( Km/ltr)
Pick Up
Stability at higher speed
Top speed

Customer Satisfaction Level on the Fuel Efficiency

100%

90%
Customer Satisfaction Level ( %age)

3 3
3 4 4 4
4
80%

70%
3
4
3
60% 4 5
4 5 Stability at higher speed
Pick up
50%
Mileage
4 Fuel Consumption
40%
3
4
4 3
30% 3 4

20%
4
3
10% 3 3 3 3 3

0%

Estilo Wagon Swift V2
(9) R(23)
Cars' Fuel Efficiency Parameters

Interpretation:

The customer choice of the car highly depends upon the performance and maintenance
costs of the car. This is the reason why this class of parameter was chosen for this study.
And the results show that Maruti’s Wagon R fares the best car in its segment as most fuel
efficient car of all. Similarly, Wagon R fares the best on the terms like mileage but it lags
behind Hyundai’s Santro on pick up front. So this segment shows a mixed bag of
response for the Fuel efficiency and mileage parameter. Indica V2 performs consistently
on all the parameters and Getz fares really well on pick up whereas it fares badly on fuel
consumption. Considered this condition for Getz it should be seen as a red signal for the
manufacturers so that Getz does not end up being like Fiat’s Palio famous as a car for
‘drinking petrol.



Customer Satisfaction Level on the basis of Fuel Efficiency

100%

90%
Customer Satisfaction Level ( in %age

4 4 5 5 5 5 5
80%

70%

60%
3 4 4 Stability at higher speed
terms)

5 5 5 5 Pick up
50%
Mileage
Fuel Consumption
40%
3 3
3
30%
3 3 3 3

20%

3 4
10% 3 3 3 3 3

0%

Marina
Car's Fuel Efficiency Parameters

Interpretation:

Segment C cars are known as hybrid car segment between the B segments fuel efficiency
with the luxury of the D class. Checking the same it seems that most of the cars in this
segment are placed much closed to each other with very little difference here and there.
Most of the cars are fuel efficient w.r.t their weights and pick ups. Indigo fares as the best
car in terms of fuel efficiency. Baleno fares a little bit behind than its counterparts as far
as the stability at high speeds and mileage is concerned.



Dealer Service Satisfaction Level

Q1. Please rate your Dealer on the understated parameters on the scale of 1 to 5 where

1 Highly Satisfied
2 Satisfied
3 Neutral
4 Dissatisfied
5 Highly Dissatisfied
1 2 3 4 5
Distance ( Proximity)
Advertisements (Promotions)
Technical Facilities
Cost of Service
Availability of Spares
Information Provided
Service Time
Charges
Staff
Car Handling ( Delivery & service)
Assured Customer Transactions
Ambience of Service Center
Finance ( Credit) Schemes

Dealers are the middle men between a car manufacturer and its customers. Dealer thus
becomes the most important link in joining the company to its customers as he is the
person who will sell the product, will deliver it and will keep on providing the after sales
services to the customers as and when required. So, it becomes necessary automatically
to study dealer as a part of customers’ satisfaction journey with the product called car!

Why Maruti fares so well ahead of its competitors till date and its the largest car
company in India with the largest market share in A and B segment is because during the
protected regime it build a dealers network so strong that its yet very difficult for most of
the competitors to set up a network as large as Maruti. So wherever you go its not
difficult to find a Maruti service station and a Maruti dealer. This is how Maruti has
maintained relationships with its customers and has been able to convert most of them



into a repeat customer. So, dealer network is something of such importance that while
studying the customer’s satisfaction profile its almost impossible to ignore it.

Customer Satisfaction Level on the Basis of Dealers

100%

90% 2 3
3 4 4
Customer Satisfaction Level ( in %age terms)

4 4 4 4 5 5 4 4
80%
1
70% 4 2
3 2 4
2 4 4 4
60% 5 Hyundai
4 5
3 General Motors
50%
3 4 4 Tata Motors
4 4
40% 4 Maruti Suzuki
4 4 4 4 4
4
30%

20% 5 4
5 5 5 4 5
4 4 4 4 4 4
10%

0%
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Dealers releated parameters for diff Manufacturers

Interpretation:

While buying a car, dealers ‘choice play a very important role in deciding the company
and model’s choice. So dealers act as influencers on the complete buying behavior of the



prospective customers. Among all the listed factors Maruti fares the best among all its
counter parts in terms of dealer density which is quite obvious. Also, the cost of service
provided by Maruti dealers is the lowest followed by Tata Motors. Similarly, for B and C
segment cars Maruti emerges out as the clear winner among the four car companies
studied all thanks to the vast, extensive and well managed dealer system.

Q2. How do you rate the brand image of your car?

1 2 3 4 5
Very Low Very High

Brand Image

6
Customer Perception ( Avg)

5

4

3 Series1

5
2 4 4 4
3 3 3
1

0

Maruti Maruti Maruti Indica V2 Aveo Santro Getz
Estilo Wagon R Swift
Car Brands

Interpretation:

As per the analysis, Santro is the car whose brand image is most preferred in the market.
This is because of the reason, that it’s from the house of Hyundai a South Korean
company known for its overall image. On the contrary Maruti Estilo and Aveo share the



same platform on the brand image. This can be attributed to the fact that both these cars
are relatively new on the block and market takes time to imbibe and give the brand an
image. This is established by the fact that Maruti’s Wagon R and Swift are exactly the
same as far as the image is concerned.

Customer Perception of Different Cars

6

5
Customer Perception ( Avg)

4

3 Series1

5
2 4 4 4 4
3 3
1

0

Marina
Car Brands

Interpretation:

As the analysis reveals GM’s Optra fares as the Best Car as far as customers’ perception
is concerned about the brand image of the car in the C segment. This is because of the


fact that GM itself commands an amazing brand image among its customers. Accent and
Verna both Hyundai cars share the same position.Q3. Will you recommend your car to
your friends?

• Yes
• No

Customer's Ultimate Perception

80
73
70

60

50
Frequency

40

30 27

20

10

0

Yes No
Customer Action ( Will you recommend your car to your friends?)

Interpretation:

It seems logical that satisfied customers will someday become loyal customers, in other
words there is a positive correlation between customer satisfaction scores and customer
buying behavior. If a customer rates the car very high in satisfying his or her needs, the
car manufacturer should expect more referrals and this is reflected in the analysis that
73% customers say that they will refer their car to their friends even if they move to other
segment or other brand
Q4. Will you buy your new car in the



• Same segment , same manufacturer
• Same segment, different manufacturer
• Upper segment, same manufacturer
• Upper segment, different manufacturer

Customer Perception

40

35

30
12

25
Values

7 C
20 6
B

15 7

23
10
17 17

5 11

0

Same Segment, Same Segment, Upper Upper
same different Segment, Same Segment,
manufacturer manufacturers Manufacturer Different
Manufacturer
Customer Actions

Interpretation:

The analysis shows that most people when moving to upper segment will prefer a
different manufacturer. And the next striking finding is that the customers will prefer
both same and different manufacturers in the B segment cars and there is not much
difference in the C segment also. This behavior is complex to understand as this are the
customers who have given whopping response for recommending their car to their
friends. It’s the reason why brand perception is so difficult to understan

Demographics

I surveyed around 100 people who belonged to various age groups. The survey of 4 age
groups was done. The four age groups were:



 Less than 21 years
 21 -35 years
 36-54 years
 More than 55 years

MONTHLY FAMILY INCOME

monthly family
income
<50,000
50,001-1,00,000
1,00,001-2,00,000
>2,00,001

19

33

19

28

I surveyed around 200 people who belonged to various monthly family income groups.
The survey of 4 income groups was done. The four income groups were:
 Less than 50000
 50000 - 1,00,000
 1,00,001 – 2,00,000
 More than 2,00,001

Interpretation:

Above graphs exhibits the income bracket of the sample size, as evident the majority of
the sample is in the income bracket of < 50,000 a month income. Though none of the


A study of consumer perception of car market & buying behavior

A study of consumer perception of car market & buying behavior

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