THESIS

STUDY OF CONSUMER PERCEPTION TOWARDS TWO

WHEELERS- SCOOTERETTES

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 Table of Contents

Executive Summary

Chapter 1 Introduction and Objectives

1.1 Objective 7

1.2 Rationale 7
1.3 Introduction 8

Chapter 2 Executive Summary 11

Chapter 3 Problem Definition and Approach 12

Chapter 4 Research Methodology

4.1 Research Methodology 13
4.2 Research Approach 13
4.3 Data Collection 14
4.4 Sampling 14
4.5 Research environment 14
4.6 Statistical tool 15

Chapter 5 Literature Review

5.1 Industry Analysis 16
5.2 Scooterettes 35
5.3 Perception 43
5.4 Brand 44
5.5 Data from Other Studies 47

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Factors from Secondary Data 50

Hypothesis 50

Chapter 6 Analysis and Findings 51

Hypothesis Testing 69

Chapter 7 Limitations and Assumptions 70

Chapter 8 Suggestions 71

Bibliography 72

Questionnaire 73

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 LIST OF TABLES

SERIAL NUMBER DETAILS PAGE NUMBER

1 Car sales volume growth 11
2 Segment wise sales 11
3 Segmentation 12
4 Vehicles 13
5 Monthly car sales 14
6 Trend in sales 14
7 Trend in market share 15
8 Projected Demand 15
9 Industry projection 15
10 Auto loans penetration 16
11 Segment wise market share 16
12 Cost structure 19
13 Market Share May 21
14 Maruti Zen vs. Hyundai 51
Santro

LIST OF FIGURES

SERIAL NUMBER DETAILS PAGE NUMBER

1 Is this your first car? 57
2 Duration of use 58
3 Alternative brand 54
consideration
4 Factors rating for 61
importance
5 Maruti Zen- performance 64
6 Hyundai Santro- 65
performance
7 Tata Indica- performance 66
8 Level of satisfaction 77

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 CHAPTER-1

INTRODUCTION AND OBJECTIVES

OBJECTIVE

To understand the two wheeler auto industry in India

To study the perception towards two wheelers (scooterettes) in terms of the
significant factors considered by consumers while making purchase decisions

RATIONALE:

The two-wheelers market has had a perceptible shift from a sellers market to a buyers
market with a variety of choices. Players compete on various fronts viz pricing,
technology, product design, productivity, after sale service, marketing and distribution. In
the short term, market shares of individual manufacturers are going to be sensitive to
capacity, product acceptance, pricing and competitive pressures from other
manufacturers.

The new models and variants are being launched with the eye on the fact that customers
are increasingly developing the tendency to look to upgrade from their existing vehicle,
made easier by lucrative loan schemes and exciting offers. According to the Total
Customer Satisfaction Study (2002) conducted by research firm NFO there is a
replacement cycle of 3-5 years in two wheeler segment.

At the same time the concept of driving preferences is very important. Although many of
launches will help spurt consumer interests, there are various factors which influence the
Indian consumer in making the ultimate purchase decision and zeroing in on a particular
model and brand. Pricing, fuel efficiency, styling, comfort, safety, after sales service,
financing are some of the most relevant decision making points.

Hence it makes it very essential to study as to what are the areas into which
manufacturers should increase concentration on and how to make best use of the
consumer choice making criterion to accordingly design the value proposition. In the
quest to live up to the changing consumer preferences and to sustain markets,
manufacturers started using different brand positioning strategies for success. Therefore it
is essential to know how the Indian customer feels about various brands and the most
important factors that can affect purchase decisions.
The study of consumers choice criteria and evaluation process plays an important role as
consumer is the God for a company and keeping him satisfied and delivering the right
thing at right time is the companys never ending endeavor and indispensable strength.

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An effort in this direction is this study the consumer buying decision criterion that would
help the companies to rethink their strategies and formulate the existing strategies so as to
cater to the ever-increasing needs and demands of the consumers.

INTRODUCTION:

There have been seen some significant changes in the consumer preferences in two
wheelers in the last four to five years. The market leaders of yesteryears are being pressed
hard to sustain there monopoly positions and market shares. They are being driven to
maintain there leadership position in the forthcoming years. There is a fight for markets,
consumer mind space, new product development, new models and variant entries,
technological up-gradations and innovative marketing techniques.

Indian two wheeler (scooterette) industry is dominated by three players Honda, Kinetic
and Bajaj. They account for more than 80% of the market in totality. The dynamism in
the consumer choice criteria has crept in a very short span of time. In the quest to live up
to the changing consumer preferences and to sustain markets manufacturers started using
different brand positioning strategies for success. Therefore it is essential to know how
the average Indian car customer feels about various brands and the most important factors
that can affect his purchase decisions.

Background

India is the second largest manufacturer of two-wheelers in the world

Stands next only to Japan: number of two-wheelers produced
Stands next only to China: number of two-wheelers sold
Improved status of Indian women
India has world's largest number of professionally qualified women
India has largest population of working women in the world
Indian women have excelled in each and every field from social work to
visiting space station

Two Wheeler Industry

Classified into three major segments scooters/scooterettes, motorcycles and

mopeds
The scooter segment further classified into the geared and the ungeared
Geared scooters- metal bodied, demand is primarily from the middle aged
group, price sensitive compared to motorcycles
Un-geared(or scooterettes)- plastic bodies, demand is mainly from women,
teenagers and the student community
Poised to grow at a rate of more than 10% per annum
Backed by Governments initiative on rural roads and better connectivity with
major towns and cities, improved agricultural performance, upward trend of
purchasing power

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 Fuel prices increasing- two wheelers have become the preferred mode of
transport for the huge middle-class
Scooters have lost out to the faster and more fuel efficient motorcycles and
scooterettes
Motorcycle has remained a part of the male bastion, fairer sex has taken to the
gearless scooterette which are lighter to ride and easier to maneuver
Source:-CIER

Scooterettes

Lighter
Easier to handle
Price sensitive
Digital ignition system so no inconvenience of the kick start
Smaller wheels for better balance and maneuverability
Cater to the load carrying and personal transport requirement of most urban
two wheeler user
Demand fall of around 20% in scooters while sales of scooterettes will rise by
around 30% in FY07
Market share in the two-wheeler market: geared scooters fell from 46.2% in
FY91 to 25.8% in FY2000 while that of scooterettes increased from 4.3% to
7.2%
The un-geared segment of scooters have grown by over 15% in 2006/2007
Scooterettes and moped segment amount for a quarter of the two wheeler
market share in India and about 8% of all the exports which takes place from
the country
For scooterettes, northern India is the major market contributing nearly 46%
of the total scooterettes sales. Western and southern India take up second and
third position with 27.5% and 15.7% respectively
The action has moved to the scooterette segment
Bajaj's sales have increased after it introduced the 'Spirit' model, increased the
availability of its Saffire range, targeting a rise of around 61%yoy in
scooterette sales by the year end
Kinetic's new model 'Style' is selling well at around 4,000 units per months,
upgraded entire range of scoterettes, introduced the lean-burn technology for
fuel efficiencies
Exports of scooterettes has also picked up. During the first quarter, Kinetic
Motor exported 3,288 units, a rise of 53%yoy. Bajaj Auto exported 1,374 units
as against 444 units in the corresponding period last year
Customer preference shifting from geared scooters to motorcycles and
scooterettes- because of better fuel-efficiency and ruggedness of motorcycles
and better maneuverability and aesthetic appeal of scooterettes
Variety of choices

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 Compete on various fronts- pricing, technology, product design, performance,
after sales service, marketing and distribution

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Key Players

Scooterettes were first introduced by BAL (Sunny) followed by TVS Suzuki

(Scooty)
In FY99, LML entered the segment
Honda Motorcycle and Scooter India Limited in the late 90s revolutionized
the un-geared scooter market with Honda Activa
Bajaj Auto- Bajaj Wave DTSI
Hero Honda- hero honda Pleasure
Kinetic Motor- Kinetic Kine
Honda Motorcycle and Scooter India Limited- HondaDio, HondaActiva
TVS Motor- TVS Scooty
Honda Activa is one of the most popular model of scooters that is running on
the Indian roads today

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 CHAPTER-2

EXECUITVE SUMMARY

This thesis involves a research carried on to understand the two wheeler industry and
consumer buying behavior in terms of the most important factors they consider while
making purchase decisions. This thesis also involves finding consumers perception
towards different manufacturers of scooterettes.
Primary and secondary research has been done. Questionnaire method is used to collect
data of different consumers.
A sample of 110 people is considered for the study.
Women from different age groups, occupation and income level are selected for the study.
A comparison of various scooterette manufacturers is made through graphical
representation on a list of parameters, like price, comfort, style, safety, mileage, financing
etc.

The research undertaken shows that the most relevant factors that consumers consider
while evaluating scooterettes and making purchase decisions are price, fuel efficiency,
quality, delivery time, after sales service , styling and comfort and attractiveness of the
auto finance options.
Activa scores heavily on trendiness and neutral on ruggedness. Customers perceive Nova
as very contemporary and at the same time mature and submissive. It can be observed
that when we consider a complete image of Nova it is that of calm, delicate and a
submissive scooterette which is not very brawnish in nature as Pleasure would be. On the
count of driving pleasure Activa and Nova are seen as the smoothest scooterette.
In case of Pleasure it is domination, maturity and trendiness. Driving pleasure has been
rated low as it is being ranked high on roughness and ruggedness.

The manufacturers should increasingly concentrate upon technology and manufacturer

should always plan and introduce new variants.
Manufacturers should look into the specific areas like styling, comfort, fuel efficiency,
after sales service and pricing which have come out to be the prime factors from the
study. Price of acquisition, price of finance, price of fuel and price of maintenance should
constantly be worked upon. Manufacturers should ensure adequate and efficient
distribution systems with a good geographical disperse which increases accessibility.
Timely delivery schedule are imperative for success.

CHAPTER 3

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 PROBLEM DEFINITION AND APPROACH

PROBLEM DEFINITION:
The underlying purpose of the study is to study the factors that are of prime importance
and are given the most weightage in purchase decisions for scooterette by the consumers.
It also aims to study how the consumers perceive different scooterettes to be, their
opinion about them and how the scooterettes have got positioned in the consumers mind.

APPROACH TO THE PROBLEM:

The problem will be looked upon as the study of consumer buying criterion in terms of
what are the most relevant factors, which they consider while making purchase decisions
in the two wheeler scooterette category and how the brands have positioned themselves
in the minds of the consumer. Both Exploratory and descriptive research are used. Some
mathematical and statistical techniques are used in order to convert the qualitative
information into quantitative information so to make it more useful and applicable for
generating the research findings.

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 CHAPTER-4

RESEARCH METHODOLOGY

Research Methodology:

Exploratory Research:
The primary objective of Exploratory Research is to provide insight into and an
understanding of the problem. The objective of this research in this case is to provide
insights and understanding of two wheeler segment.
It will help to define the problem more precisely, identify relevant course of action, or
gain additional insights before an approach can be developed. It will also aid in
developing hypothesis. The information needed is only loosely defined at this stage, and
the research process adopted is flexible and unstructured. Different methods used for this
are expert surveys, pilot surveys, secondary data analysis and quantitative research.

Descriptive Research:
The objective of Descriptive Research is to describe market characteristics or functions.
A clear statement of the problem, specific hypothesis, and detailed information needs
marks it. The research process adopted is preplanned and structured. Different methods
used for this are secondary data analysis, surveys, panels, and observational and other
data.
Descriptive research will comprise applying mathematical tools to form a conclusion
about the decision-making behavior and perception of the respondents. This research is to
be conducted to ascertain the perception of consumers towards two wheelers
(scooterettes) and to determine the relative importance of various attributes.

Conducting the Exploratory and Descriptive research will fulfill the research objectives.
Methods incorporated for the purpose are

1. Secondary data Analysis

2. Primary data (Survey)

Research Approach:

Primary data: For primary data research approach would be by survey method.
Secondary data: For secondary data research approach would be interview and literature
review.

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Data collection:

Secondary data: It includes information made available by the business and government
sources, commercial marketing research firms, and computerized databases. It
includes all those data, which are collected for some earlier research work, and is
applicable or usable in the study. For this thesis data has been collected from various
magazines (automobile and business magazines), newspapers and the Internet,
reports, company reports.

Primary Data: It is collected for the specific purpose of addressing the problem at hand.
Survey is conducted for collecting the primary data. The survey method of obtaining
information is based on the questioning of the respondents. Respondents are asked
variety of questions regarding their behavior, intentions, attitude, awareness, motivations,
demographic and lifestyle characteristics. In this survey structured questionnaire is
administered on the respondents. In the structured questionnaire questions are asked in
a prearranged order. Questionnaire designed for this survey, has structured undisguised
both close and open ended questions.

Sampling:

Sampling Technique: Non Probability- Judgmental sampling has been used.

Judgmental Sampling is used as it involves studies in which respondents are
selected because it is expected that they are representative of the population of
interest and / or meet the specific needs of the research study. It is more efficient
and economic to use judgment where the sample sizes are small or where
randomization is not expected to provide representative sample.
Target: Women between the age group of 18-35, college going teenagers and
working women, middle income group
Questionnaire administration: to women outside colleges, coaching institutes,
and catchments areas
Sample size: 110 respondents have been surveyed for the study

Research Environment:

Delhi and NCR Region (Noida, Gurgaon)

Analytical hierarchical process:

The arithmetical technique used for Questions 8 & 9 is known as the analytical
hierarchical model. Analytical hierarchical process involves soliciting preferential
information from the respondents regarding various attributes/factors relevant to a
product and also for competing products.
Such preferential data is then worked upon in a mathematical way with a view to
obtaining weightages respondents assign to stated factors and products. The product of

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the weightages obtained for the factors/attributes and the brand themselves gives us the
performance of individual brands on all factors/attributes considered.
After the basic comparison data matrix is obtained for the brands and factors the matrices
are adjusted so as to give us the desired output. There are different and various
parameters based on which consumers make decisions regarding purchase of a
scooterette. Customers attach varying Importance to these parameters. The underlying
aim of this method is to analyze the relative importance amongst these parameters. The
steps involved are described below:
Preference rating of each element over other is obtained and plotted on the matrix.
Then the remaining matrix is obtained reciprocating these values.
Further each element is divided by its column sum.
Finally the weightages are obtained by calculating the average of each rows sum.
Now, when relative weightages of the factors/attributes is obtained along with relative
weightages of the brands, overall performance is obtained for all brands by finding the
product of the two.

Statistical Tools

t Test: to test the hypothesis

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 CHAPTER-5

LITERATURE REVIEW

Industry Analysis:
A well developed transport network indicates a well developed economy. For rapid
development a well-developed and well-knit transportation system is essential. As India's
transport network is developing at a fast pace, Indian Automobile Industry is growing
too. Also, the Automobile industry has strong backward and forward linkages and hence
provides employment to a large section of the population. Thus the role of Automobile
Industry cannot be overlooked in Indian Economy. All kinds of vehicles are produced by
the Automobile Industry. India Automobile Industry includes the manufacture of trucks,
buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly
divided into theCar manufacturing, two-wheeler manufacturing and heavy vehicle
manufacturing units.
The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle
& Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc.
Taking into consideration the rise in expendable income levels and necessity of personal
transportation as a result of inefficient or deficient public transportation means, the
demand for scooterettes is expected to increase. Exports are expected to increase as a
result of over capacity in the domestic two wheeler industry and the government's policy
to bring in a more liberal regime on the foreign exchange front. The flood of new entrants
into the scooterette industry as a result of liberalization has led to a complete
transformation of the sector. The scooterette segment is flooded with new models from
new and existing players, a visible shift from a constrained supply situation to a surplus.
Moreover a lot many models are waiting to hit the ramp by the end of the year.
The two wheeler industry in the country has really kick started in the recent years with
the industry poised to grow at a rate of more than 10% per annum. With the prices of fuel
increasing every other day two wheelers in general and, motorcycles in particular have
become the preferred mode of transport for the huge middle-class that exists in India.
With newer models rolling out of the factories, it's the consumer who is having the last
laugh. The industry has seen a paradigm shift in the recent years, the metal bodied geared
scooter which had caught the imagination of the nation for many decades has lost out to
the faster and more fuel efficient motorcycles. Today the motorcycle has become the most
preferred two-wheeler across all segments of the market. However without being sexiest
one can remark that motorcycle has remained a part of the male bastion, though the
occasional female riding a motorcycle is also seen on the city roads. The fairer sex has
taken to the gearless scooterette which are lighter to ride and easier to maneuver.

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India is the second largest manufacturer of two-wheelers in the world. It stands next only
to Japan and China in terms of the number of two-wheelers produced and sold
respectively. India is one of the very few countries manufacturing three wheelers in the
world.
All the three segments, motorcycles, scooters and mopeds have witnessed capacitiy
additions. Over this period, only the motorcycle segment is expected witness higher
demand vis--vis supply, while the scooters and mopeds supply will outstrip demand.
With the gradual shift in demand, sales in the scooter segment is expected to fall further,
while on the other side motorcycle and scooterette segments will record continued growth
in the future. This will translate into a demand fall in scooters while sales of scooterettes
will rise.
The future growth in the scooter segment will be more from the scooterettes or gearless
scooters segment, as compared to basic models. The four-stroke models of geared
scooters, which were expected to create some demand have not yet been able to do so.
This may be due to the their associated drawbacks like increased risk of skidding,
vibration problems and restricted efficiency gains. Also higher maintenance costs due to
the large number of moving parts add up to the disadvantages of buying a four stroke
scooter.
The scooter lovers of the country has seen their numbers decreasing with every passing
day, companies like Bajaj Auto and LML Motors have already stopped production of the
geared metal bodied scooters and in due course of time these two-wheelers will become
extinct from the Indian roads. Change they say is the only permanent thing.

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Two Wheelers in India

The feeling of freedom and being one with the Nature comes only from riding a two
wheeler. Indians prefer the two wheelers because of their small manageable size, low
maintenance, pricing and easy loan repayments. Indian streets are full of people of all age
groups riding a two wheeler. Motorized two wheelers are seen as a symbol of status by
the populace. Thus, in India, we would see swanky four wheels jostling with our ever
reliable and sturdy steed- two wheeler.

Segments:
Motorcycles
Scooters
Scoorettes/Mopeds

Historical Industry Development

India is the second largest manufacturer and producer of two-wheelers in the world. It
stands next only to Japan and China in terms of the number of two-wheelers produced
and domestic sales respectively. This distinction was achieved due to variety of reasons
like restrictive policy followed by the Government of India towards the passenger car
industry, rising demand for personal transport, inefficiency in the public transportation
system etc.
The Indian two-wheeler industry made a small beginning in the early 50s when
Automobile Products of India (API) started manufacturing scooters in the country. Until
1958, API and Enfield were the sole producers.
In 1948, Bajaj Auto began trading in imported Vespa scooters and three-wheelers. Finally,
in 1960, it set up a shop to manufacture them in technical collaboration with Piaggio of
Italy. The agreement expired in 1971.
In the initial stages, the scooter segment was dominated by API, it was later overtaken by
Bajaj Auto. Although various government and private enterprises entered the fray for
scooters, the only new player that has lasted till today is LML.
Under the regulated regime, foreign companies were not allowed to operate in India. It
was a complete seller market with the waiting period for getting a scooter from Bajaj
Auto being as high as 12 years.
The motorcycles segment was no different, with only three manufacturers viz Enfield,
Ideal Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the
Rajdoot were two-stroke bikes. The motorcycle segment was initially dominated by
Enfield 350cc bikes and Escorts 175cc bike.
The two-wheeler market was opened to foreign competition in the mid-80s. And the then
market leaders - Escorts and Enfield - were caught unaware by the onslaught of the 100cc
bikes of the four Indo-Japanese joint ventures. With the availability of fuel efficient low
power bikes, demand swelled, resulting in Hero Honda - then the only producer of four
stroke bikes (100cc category), gaining a top slot.

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The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and
Hero Honda brought in the first two-stroke and four-stroke engine motorcycles
respectively. These two players initially started with assembly of CKD kits, and later on
progressed to indigenous manufacturing. In the 90s the major growth for motorcycle
segment was brought in by Japanese motorcycles, which grew at a rate of nearly 25%
CAGR in the last five years.
The industry had a smooth ride in the 50s, 60s and 70s when the Government prohibited
new entries and strictly controlled capacity expansion. The industry saw a sudden growth
in the 80s. The industry witnessed a steady growth of 14% leading to a peak volume of
1.9mn vehicles in 1990.
The entry of Kinetic Honda in mid-eighties with a variometric scooter helped in
providing ease of use to the scooter owners. This helped in inducing youngsters and
working women, towards buying scooters, who were earlier inclined towards moped
purchases. In the 90s, this trend was reversed with the introduction of scooterettes. In line
with this, the scooter segment has consistently lost its part of the market share in the two-
wheeler market.
In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a
decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn vehicles.
Barring Hero Honda, all the major producers suffered from recession in FY93 and FY94.
Hero Honda showed a marginal decline in 1992.
The reasons for recession in the sector were the incessant rise in fuel prices, high input
costs and reduced purchasing power due to significant rise in general price level and
credit crunch in consumer financing. Factors like increased production in 1992, due to
new entrants coupled with the recession in the industry resulted in companies either
reporting losses or a fall in profits.
India is one of the very few countries manufacturing three-wheelers in the world. It is the
world's largest manufacturer and seller of three-wheelers. Bajaj Auto commands a
monopoly in the domestic market with a market share of above 80%, the rest is shared by
Bajaj Tempo, Greaves Ltd and Scooters India.
The total number of registered two-wheelers and three-wheelers on road in India, as on
March 31, 1998 was 27.9mn and 1.7mn respectively. The two wheeler population has
almost doubled in 1996 from a base of 12.6mn in 1990.

Automobile Industry Performance during 2006 07

The Automobile Industry performance in the year 2006-07 showed encouraging results
for all segments of the automobile industry. Despite the speculations of slow growth from
different quarters because of unprecedented rise in input prices, the
two wheeler segment as a whole during the year 2006-07 grew by over 15%. Backed by
Governments initiative on rural roads and better connectivity with major towns and
cities, improved agricultural performance, upward trend of purchasing power in the hands
of rural people

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 Government Policies
Traditionally, GOI has considered the automobile industry as a luxury segment. But
realizing the growing importance of two-wheelers with the increasing necessity of
personal transportation for the middle class in eighties, priority was given to the sector by
favorable foreign policy. This brought about technology revolution to the two-wheelers as
Japanese majors entered in technical and financial participation with Indian majors.
GOI has a moderate intervention in the operations of two and three-wheeler industry.
Excise duty structure, emission control, safety of rider, etc are all policy decisions.
The excise duty on two-wheelers, which previously ranged between 10 to 30%, according
to the engine capacity was rationalized in 1991-92 budget to only two-categories viz 15%
upto 75cc and 25% above 75cc. This mainly affected manufacturers of 100cc category in
the early nineties. Since then the excise duty structure for two-wheelers has been left
unchanged till 1999.
In the 1999-2000 budget, as a result of rationalisation of duty structure the excise duty up
to 75cc vehicles was increased to 16% while for those above 75cc decreased to 24%. As a
result, scooter prices were reduced by Rs200-400 per vehicle. The same duty regime was
continued in the FY2000-01 budget too.
The components used for manufacturing two-wheelers are charged an excise duty of
15%. The industry has been asking GOI to reduce this excise duty to 10%.
Two and three-wheelers sector was the first to be de-controlled from the clutches of
government regulations. This has resulted in the entry of world majors and subsequent in
technology and equity participation with Indian players. This has lead to technology
revolution for the two-wheelers in 1980's.
The regulation of safety of the rider is controlled by state government notifications, these
vary in different states. For eg helmets are compulsory for two-wheeler riders in New
Delhi and some other states. The same is optional in Maharashtra and Karnataka.
The price of the two-wheelers varies across the country due to variation in registration
charges, state taxes and octroi levied by states.
Automobile emissions are the major pollutants in the environment. To control pollution
from automobiles the GOI stipulates emission norms applicable from time to time. The
details about emission norms is given in Annexure 1.
The GOI wants the automobile industry to achieve a major improvement in emission
levels in two steps. The first milestone was achieved by implying stringent norms
applicable from April 1, 1996. This conforms to Euro I standards. The second hurdle was
set with a dead line of April 1, 2000 which conform to Euro II norms.
The GOI controls availability and price of petrol, the fuel for two-wheelers. But with the
dismantling of Administered Price Mechanism (APM), the cross subsidy provided by
high petrol prices is expected to come down leading to reduction in petrol prices in the

19
country. This will reduce the running cost per km for two-wheelers and have positive
impact on demand. The availability of unleaded petrol across the country will be a crucial
factor, as catalytic converters (used to confirm Y2K norms) work satisfactorily only
under unleaded petrol.

Technology and usage of vehicles:

Two-wheeler is one of the rare industries, which is capital as well as labor intensive. The
setting up of a green field venture and ancillary network require enormous capital
investment. The assembly operation is highly labor intensive.
The capital requirement for a venture varies from segment to segment and based on
amount of outsourcing. For eg setting up of 0.1mn capacity plant for manufacturing
scooter requires approximately Rs1bn and motorcycles Rs1.7bn.
Two-wheeler production entails an assembly of over 700 components, including those
sourced from vendors / independent manufacturers(about 60-70%). In the press shop,
sheet metal components like body frame, fuel tank, front fender and rear fender, muffler
etc are pressed, welded, painted / plated in respective shops. In the engine plant, engine
components (cast/ forged parts) are machined and assembled along-with other
components. The engine is then transferred to the main plant and assembled with the
body and bought out components.
Due to the peculiar characteristic of high ancillarisation, balance sheet does not reveal the
complete picture. The material cost which is understood as fully variable, has in-built
overheads of ancillaries. Typically, when volumes are expanding, raw material cost
escalations are not passed on, as ancillaries are able to spread their overheads over larger
volumes. Ancillaries add as much as 50-300% value on the basic raw material. While
steel and aluminum account for 5% each, of the material cost, 60-70% of the cost is
incurred on components sourced from outside.
Engine is the heart of an automobile. The function of an automobile engine is to convert
chemical energy of the fuel into mechanical energy, to power the vehicle. In the engine,
petrol and air mixture is burnt from the spark ignited by a spark plug in a cylinder. The
combustion builds up pressure, which pushes the piston. The reciprocal movement of the
piston (riveted to a crankshaft) is converted in rotating motion. The power is transmitted
from the crankshaft to the wheels by a mechanism of gears.
The engines can be broadly classified as two and four stroke engines based on number of
strokes used to produce a single power stoke. In a four-stroke engine - suction,
compression, power and exhaust operations are carried out by four different strokes of the
piston. Therefore four-stroke engine produces one power stoke out of every four strokes
of the piston. In a two-stroke engine one power stroke is produced out of every two
strokes of the piston.
In a 2-stroke engine, during the emission of the exhaust gases, fresh fuel/air mixture
comes from transfer port to the main cylinder. This leads to emission of some unburnt
gasses along with exhaust gases leading to drop in fuel efficiency and increase in

20
pollution through emission. However, a two-stroke engine generates twice as much
power as four stroke, engine size and speed being the same. A four-stroke engine is
heavier, complex in design and expensive.
Gears determine the ratio between engine speed and wheel speed, using a mechanism of
gear wheels of different diameters. In a geared drive, the driver manually shifts the gears
to change the torque supplied to the wheels. Whereas in a variometric drive, the torque is
transmitted by a belt running between variable diameter pulleys, providing infinite
number of gear ratios.
Scooters originated in Italy and were designed for ladies, particularly nuns. It has no bar
in the front and the engine and wheels are covered for the convenience of women riders.
The scooter engine is shaft driven.
In India, scooter manufacturing was started in 1972 by Bajaj Auto in collaboration with
Piaggio, Italy. With the passage of time, scooters have taken considerable position in
domestic transport as they are considered as rugged yet safe family vehicle. This
perception was due to a larger board area, which can be used to carry groceries and a
better carrying capacity, which helps in driving three adults on the vehicle. But the
scooters suffered from poor aesthetics, low fuel efficiency and difficulty in driving.
The introduction of ABS body along with variometric transmission by Kinetic Honda
changed the perception leading to a shift in demand from moped users like youngsters
and working women.
Motorcycle - the name is evolved from motorised cycle. A motorcycle has an engine,
wheels and chain exposed. Moreover, it is chain driven. Two-stroke motorcycles are
positioned as power bikes by making use of their high power delivery to cater the young
generation. Four-stroke motorcycle is positioned as fuel-efficient and environment
friendly vehicle.
The Indo-Japanese motorcycles have advantage of better fuel efficiency, more power,
better road grip, low emissions and lightweight compared to scooters. Usually,
motorcycles are the costliest among two-wheelers.
Mopeds - the motorcycle with pedals is the entry level two-wheeler. Mopeds are the
cheapest category of two wheelers, having low power compared to scooters and
motorcycles. Mopeds are most popular amongst college students, ladies and low income
house holds. These vehicles cost in the range of Rs12,000 and onwards. Mopeds are
predominantly used for small distance transportation. Mopeds are also used as the second
vehicle in the family along with car or scooter/motorcycle.
Autorickshaw, as the name indicates is a motorised cycle rikshaw, a three-wheeler. The
shortage of personal and mass commute transport in the country, easy maneuverability on
narrow and crowded roads and low operation costs gave rise to exponential growth for
three-wheeler industry in the country. Three-wheelers are also used as goods transport
vehicles for small distance transportation within the city limits.
The Indian three-wheeler industry is dominated with petrol engine vehicles. But the
dominance was threatened to an extent with the introduction of diesel engines from

21
Crompton Greaves, which provides a benefit of low operating cost. But higher vibration
and maintenance cost lead to drop in sales of diesel engine three-wheelers.
All the two-wheeler manufacturers are regulated by emission levels, noise levels, color,
shape etc, which vary from country to country. Imports of vehicles therefore have to pass
through homologation (approval process) of a sample vehicle.
Emission norms
Two-wheelers emit harmful pollutants such as carbon monoxide and hydrocarbons. The
emission norms are becoming stringent the world over. In India, the norms are being
implemented in two phases. While the first phase Euro 1 norms have become applicable
since April 1996, even more stringent norms Euro 2 will come into effect from April 1,
2000. The details about emission norms is as given in Annexure 1.
For the two-wheelers new emission norm for year 2000 will be an acid test as none of the
present models except four stroke vehicles confirm to the norms. To full-fill emission
norms the manufacturers have three options: to switch to four-stroke engines, to fit
catalytic converters for the existing models, to improve upon the existing two-stroke
engine.
The temporary option for overcoming emission norms is to fit the catalytic converters,
this will increase the cost of vehicles. But as a long-run solution scooter manufacturers
have to opt for four-stroke engines or improvement in two stroke engines.
The catalytic converters cost in the range of Rs1,500 - 2,500, but have a limited life of
10,000 km of vehicle running. Therefore catalytic converter require regular maintenance
on behalf of the user. Also catalytic converter will be effective only for unleaded petrol
usage, which is not widely available in the country.
Scooter manufacturers have started responding to the Y2K norms by introducing four-
stroke vehicles in H2 FY98. They plan to fit catalytic converters to two-stroke scooters to
overcome emission norms.
The Japanese motorcycle segment will be able to overcome emission norms with the
technology help of respective Japanese collaborator. The Indian motorcycles have to
either shift to four-stroke technology or make use of catalytic converter. But this will
reduce the price difference between Indian and Indo-Japanese motorcycles, reducing the
price advantage of Indian motorcycles.
The mopeds segment will be badly affected due to Y2K emission norms, as none of the
existing moped models confirm to the specifications. With the deadline nearing, the
moped manufacturers have to tighten the belt to meet the norms.
Three wheelers will be another major segment to be affected by Y2K emission norms
even though they are liberal in comparison to two wheeler norms. To over come this
problem the industry leader Bajaj Auto has introduced four-stroke versions in the
FY2000.

22
 Demand-supply, import-export
Demand
The Indian two-wheeler industry has witnessed deep cyclical trends. A robust growth
witnessed upto 1989, was followed by a severe recession upto FY93 and a strong
recovery between 1993-96. The industry then witnessed a slowdown since the second
half of FY97 which continued upto FY99. Prospects in FY2000 have turned for the better
once again with an overall revival in demand. The trend in two-wheeler sales since the
past decade is as given below.

Year FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY2000

Sales volume 1.61 1.50 1.76 2.21 2.66 2.97 3.04 3.4 3.78
(in mn)

yoy growth (%) (11.2) (6.7) 17.5 25.2 20.4 11.8 2.4 11.8 11.0

Source : SIAM
Two-wheeler sales have increased from 0.37mn in FY80 to 1.85mn in FY90 at a CAGR
of 17.4%. There after the industry suffered from drop in demand in 1991, 1992 and 1993.
In the 90's, the two-wheeler industry has performed extremely well especially after the
automobile recession in 1992-93. In the period FY93-FY99 the two-wheeler industry has
grown at a CAGR of 14.6%. This splendid growth was possible due to the above average
performance of the motorcycle segment, which has grown at a CAGR of 24.3%
compared to 11% for scooters and 8.6% for mopeds.
After lying low for two years, sales of two-wheelers bounced back to witness growth in
FY99. In the period April '98 to March '99 the sales of two-wheelers has increased by
11.85% yoy to 3.4mn. The trend has continued in FY2000 with the sector sales growing
by 11% to 3.78mn vehicles.
The demand for two-wheelers in India is dependent upon factors like availability of
finance, increase in income levels, restricted growth in public transportation and
movement in petrol prices. Except petrol prices, all other factors have positive correlation
with the demand for two-wheelers. The increase in petrol prices on the contrary,
adversely affects the demand for two-wheelers, due to increase in the running cost of a
vehicle.
Two-wheelers are distinguished on different factors for different consumer segments. For
eg, high powered two-wheelers have a niche market as racing/sporting vehicles and have
a special appeal to youngsters. Easy maneuverability/handling ease is preferred by
teenagers and women. Urbanites are lured by fuel efficiency and low maintenance. The
lower end of the market looks for durability, value for money and higher resale value.
Scooters

23
The scooter segment can be further classified into the geared and the ungeared scooter
segment. Geared scooters are generally metal bodied while the ungeared ones come in
plastic bodies. The demand for geared scooters is primarily from the middle aged group
who have a family to look after. They would look out for the utility value of the vehicle.
The demand for geared scooters is price sensitive compared to motorcycles. The demand
for gearless scooters (or scooterettes) is mainly from women, teenagers and the student
community. They are basically easy to handle and ride. Demand in this segment is also
price sensitive. The scooterettes were first introduced by BAL (Sunny) followed by TVS
Suzuki (Scooty). In FY99, LML entered the segment with a scooterette in 60cc and 75cc
engine capacity.
Until 1990, the two-wheeler market was dominated by the geared scooter with their sales
equaling the combined sales of motorcycles and mopeds. However, things have changed
in the 90s with customer preference shifting from geared scooters to motorcycles and also
to an extent to the premium end scooters and scooterettes. This is mainly because of
better fuel-efficiency and ruggedness of motorcycles and better maneuverability and
aesthetic appeal of scooterettes.
Scooter sales have increased from 0.91mn in FY91 to 1.25mn in FY2000 at a CAGR of
3.6%. But sales growth has dropped from a high of 24%yoy in FY95 to 7.1%yoy in
FY97. FY99 saw better times with sales growth rising to 5.5%yoy. In FY2000, scooter
sales fell by 5.4%yoy to 1,253,969 units over last year.
Trend In Scooter Sales

2001-02 2002-03 2003-04 2004-05 2015-16

937506 848434 935279 987498 1020013

Though the metal geared scooters have fallen out of favor of the Indian riders, the un-
geared segment of scooters have been able to drive the volumes in this segment. This fact
is reflected in the dip in production during the early 2000. On a more positive note the
un-geared segment of scooters have grown by over 13% in 2004/2005 thus driving the
production in this segment. Bajaj Auto which has an overwhelming presence in this
segment has produced 742,000 units during 2004/2005.
The scooter segment can be further classified into the geared and the ungeared scooter
segment. Geared scooters are generally metal bodied while the ungeared ones come in
plastic bodies. The demand for geared scooters is primarily from the middle aged group
who have a family to look after. They would look out for the utility value of the vehicle.
The demand for geared scooters is price sensitive compared to motorcycles. The demand
for gearless scooters (or scooterettes) is mainly from women, teenagers and the student
community. They are basically easy to handle and ride. Demand in this segment is also
price sensitive. The scooterettes were first introduced by BAL (Sunny) followed by TVS
Suzuki (Scooty). In FY99, LML entered the segment with a scooterette in 60cc and 75cc
engine capacity.

24
The scooter industry is dominated by five players viz, BAL, MSL, LML,
KMCL and TVS Suzuki. A major proportion of scooter sales is garnered
by BAL, which dominates the scooter market with about 58% market
share along with its affiliate MSL. BAL which has been the market
leader over the years maintained its position due to aggressive
capacity addition in the late eighties and no threat from existing
players who were struggling financially. However, with the coming in of
Kinetic Motor and TVS Suzuki with their range of gearless scooters, BAL
has seen its market share drop to 46% in FY2000 from the initial 60%.

Until 1990, the two-wheeler market was dominated by the geared scooter with their sales
equaling the combined sales of motorcycles and mopeds. However, things have changed
in the 90s with customer preference shifting from geared scooters to motorcycles and also
to an extent to the premium end scooters and scooterettes. This is mainly because of
better fuel-efficiency and ruggedness of motorcycles
Motorcycles
The motorcycle is being increasingly used by youngsters/bachelors in urban areas and by
rural folk as a sturdy means of personal transportation. Bigger wheels, better road grip,
higher ground clearance, power, fuel efficiency, low maintenance cost are the major
attraction of this segment. The motorcycle segment, too, can be further classified into the
Japanese and the Indian motorcycle segments. The former consist of models
manufactured out of Japanese technology while the latter category consist of the high-
powered bikes of the 'Rajdoot' and 'Bullet' range and also the step-thru's which fall
somewhere between a scooter and a motorcycle.
The sales of motorcycle has increased from 0.1mn in FY80 to 0.38mn in FY93 at a
CAGR of 11.6%. The segment picked up momentum in the 90's to grow at a CAGR of
15.7% to 1.796mn vehicles in FY2000. Motorcycle sales achieved a major milestone of
crossing the scooter sales in the month of November 1998. This trend has further
continued for the next couple of years causing a jump in sales of 28.7%yoy to 1,796,734
units in FY2000.
Motorcycle segment has witnessed the launch of several new models from existing
players. Majority of these have been in the four-stroke engine category for which the
technology has come from Japanese parents. Increasing product differentiation and
competition has resulted in new sub-segments emerging. The efficiency segment is
currently the fastest growing and constitutes four-stroke motorcycles. This has caused a
dent in the demand for two-stroke motorcycles which is expected to further drop in the
future. Taking in to consideration the limited availability of mass transportation in rural
and semi-urban areas and suitability of motorcycles to these conditions, we expect the
segment to continue to grow at 20%yoy growth in FY01. This will increase demand for
motorcycles from 1.80mn in FY2000 to 2.5mn in FY02.
Mopeds
Mopeds are entry level vehicles. The demand for mopeds is predominantly from low to
middle income families who graduate from bicycles to motorized vehicles and also

25
among college students. Moped sales increased from 0.11mn in FY80 to 0.42mn in FY93
at a CAGR of 11.3%. But an increasing preference towards scooterettes and motorcycles
in the nineties lead to slow growth for mopeds compared to other segments.
After rising to 19.6%yoy in FY96, growth in the moped segment has slowed down
mainly because of rising sales in the scooterette segment. A scooterette offered the buyer
more power and higher stability combined with the easy maneuverability of a moped.
The moped segment witnessed a 3.5% drop in sales in FY98. Growth in the moped
segment has shown a reversal in line with two-wheelers sales trend, to witness a growth
in sales for FY99. Sales in FY2000 has risen by 7.4%yoy.
Supply
The manufacturers of two-wheelers distinguish their products based on power, fuel
efficiency, maintenance requirement, ease in handling, style, looks and ergonomics, price
etc.
The two-wheeler industry is controlled by eight major players viz Bajaj Auto Ltd (BAL),
Maharashtra Scooters Ltd (MSL), LML, Kinetic Motors Ltd, Hero Honda Motors Ltd
(HHML), Escorts Yamaha Motors Ltd (EYML), TVS Suzuki Ltd (TSL) and Kinetic
Engineering Ltd (KEL). Among these only Bajaj Auto and TVS Suzuki are having
presence in all the three segments of two-wheelers, with the rest catering to one or two
segments of the two-wheeler market.
Exports
The exports of two-wheelers from India are insignificant in comparison to domestic sales.
The exports started looking up in FY94 and FY95 when they registered a growth of
above 50% to reach a figure of 0.116mn vehicles. In FY96, the exports remained stagnant
but continued its upward journey at a growth of 9.43% to reach 0.125mn vehicles in
FY97.
In FY98, the exports remained stagnant due to slump in Asian demand. The sluggish
trend continued during FY99 and FY2000. Shares of both scooters and mopeds in the
export market fell while that of motorcycles remained stagnant. The major portion of
exports is contributed by motorcycles which form about 42.4% of total two-wheeler
exports.
The major exporters from the country are Majestic Auto, BAL, Escorts Yamaha and Hero
Honda constituting 66% of the total two-wheeler exports from the country in 1999.
Majestic Auto exports its 'Hero Puch' mopeds, which contribute nearly 16% of the total
exports from the country. Major export destinations, in terms of value, include Egypt, Sri
Lanka and Argentina for scooters, Nepal, Sri Lanka, Argentina and Uruguay for
motorcycles and UK, Argentina and Uruguay for mopeds.
International Scenario
A two-wheeler is used as a personal/family vehicle or a goods carrier in the developing
countries, whereas it is confined to sports/racing (heavy motorcycles) or short distance
shopping (mopeds) in developed countries.

26
The world two-wheeler market is dominated by Japan. Japanese manufacturers account
for around 65% of the total two-wheeler production in the world. However, production
within Japan has been declining due to lower domestic demand and shift in
manufacturing base outside the country. Japan is also the world's largest exporter of two-
wheelers in the world controlling around 75% of the world trade. Its major markets are
China, USA and Europe. In terms of player positions, Honda Motors Corporation,
Yamaha Motors and Suzuki Motors corporation share the top three slots in the world two-
wheeler market. The table below shows the production and sales figures of motorcycles
and scooters in Japan during the past decade.
Key Earning Drivers
Government policy impact on petrol prices: Petrol prices determine the running cost of
two/three wheelers expressed in Rupees per kilometer. Petrol prices are the highest in
India as GOI subsidises kerosene and diesel. But with the recent change in GOI policy to
reduce the subsidy, the prices of petrol will remain constant at the current prices. This
will have a positive effect on purchases on two/three wheelers.
Improvement in disposable income: With the increase in salary levels, due to entry of
multinationals following liberalization process and fifth pay commission, the disposable
income has improved exponentially over the years. This will have multiplier effect on
demand for consumer durables including two-wheelers. This is already witnessed in
improved demand for 2-wheelers in FY99 compared to a meager growth in FY98.
Changes in prices of second hand cars: The second hand car prices of small cars have
come down sharply in the recent past. This will shift the demand from higher end two-
wheelers to cars and affect the demand for two-wheelers negatively. A further drop in
second hand car prices will lead to pressure on the two-wheeler majors who plan to
release higher end scooters and motorcycles.
Implementation of mass transport system: Many states have planned to implement
mass transport systems in state capitals in the future. This will have negative impact on
demand for two-wheelers in the long-run. But taking into account the delays involved in
implementation of such large infrastructure projects, we expect the demand to be affected
only five to seven years down the line.
Availability of credit for vehicle purchase: The availability and cost of finance affects
the demand for two and three-wheelers as the trend for increased credit purchases for
consumer durables has increased over the years. Therefore any change with respect to
any of these two parameters as a result of change in RBI policy has to be closely watched
to assess the demand for two and three wheelers.
Conclusion
The two-wheelers market has had a perceptible shift from a buyers market to a sellers
market with a variety of choices. Players will have to compete on various fronts viz
pricing, technology, product design, productivity, after sale service, marketing and
distribution. In the short term, market shares of individual manufacturers are going to be
sensitive to capacity, product acceptance, pricing and competitive pressures from other
manufacturers.

27
All the three segments, motorcycles, scooters and mopeds have witnessed capacitiy
additions in the last one year and it will continue in the upcoming period as and when
Honda opens a local subsidiary. Over this period, only the motorcycle segment is
expected witness higher demand vis--vis supply, while the scooters and mopeds supply
will outstrip demand.

As incomes grow and people feel the need to own a private means of transport, sales of
two-wheelers will rise. Penetration is expected to increase approximately to more than
30% by 2008.
There is a large untapped market in semi-urban and rural areas of the country. Any
strategic planning for the two-wheeler industry needs to identify these markets with the
help of available statistical techniques. Potential markets can be identified as well as
prioritised using these techniques with the help of secondary data on socio-economic
parameters. For the two-wheeler industry, it is also important to identify the target groups
for various categories of motorcycles and scooters. With the formal introduction of
secondhand car market by the reputed car manufacturers and easy loan availability for
new as well as used cars, the two-wheeler industry needs to upgrade its market
information system to capture the new market and to maintain its already existing
markets. Availability of easy credit for two-wheelers in rural and smaller urban areas also
requires more focussed attention. It is also imperative to initiate measures to make the
presence of Indian two-wheeler industry felt in the global market. Adequate incentives
for promoting exports and setting up of institutional mechanism such as Automobile
Export Promotion Council would be of great help for further surge in demand for the
Indian two-wheeler industry.

28
Scooterettes

The action has clearly moved on to the scooterette segment with all players positioning
themselves well with products which have attracted customer interest. Bajaj's sales have
increased after it introduced the 'Spirit' model. Recently, it also increased the availability
of its 'Saffire' range. The company is targeting a rise of around 61%yoy in scooterette
sales by the year end. Kinetic's new model 'Style' is selling well at around 4,000 units per
months due to its higher powered engine (75cc). The company has also upgraded its
entire range of scoterettes and introduced the lean-burn technology to improve upon their
fuel efficiencies. Exports of scooterettes has also picked up. During the first quarter,
Kinetic Motor exported 3,288 units, a rise of 53%yoy. Bajaj Auto exported 1,374 units as
against 444 units in the corresponding period last year. With demand shifting towards the
scooterette segment, sales of mopeds have witnessed a modest growth of 6.8%yoy.
The future growth in the scooter segment will be more from the scooterettes or gearless
scooters segment, as compared to basic models. The four-stroke models of geared
scooters, which were expected to create some demand have not yet been able to do so.
This may be due to the their associated drawbacks like increased risk of skidding,
vibration problems and restricted efficiency gains. Also higher maintenance costs due to
the large number of moving parts add up to the disadvantages of buying a four stroke
scooter. Given the latest emission norms, scooters, if not four-stroke, will have to be
fitted with a catalytic converter. This would bring down the price differential between a
scooter and motorcycle and result in further switching of demand from the scooter
segment. The four-stroke scooter model launched by Bajaj Auto also has been unable to
live up to the expectations. Nothing much is expected from it in the future either. Thus
the demand for geared scooters is expected to fall in the future.
Companies like Bajaj Auto, which have a major presence in the geared scooter segment
are trying to milk what remains of a shrinking market. Their strategy will be include
starting hire-purchase schemes in areas with a population of above 100,000 in the
traditional scooter market of the north. Secondly, Bajaj will also plan product specific
strategies. The aim would be to excite the buyer by giving him something new in terms of
features, technology, specifications and aesthetics. One such effort in this direction will
be the 4-stroke 'Chetak' scooter with higher fuel efficiency (70 km/ltr) than a traditional
2-stroke one. Another model to be introduced later will be called 'Fusion' with a metallic
finish and good power. The company seems confident that the traditional markets for
scooters like Punjab, Delhi etc will for the foreseeable future stick to geared scooters as
the product has come to signify a certain value proposition which will be difficult to beat
by other kinds of two-wheelers.
The paradigm shift among scooters and their users go on to explain the fact that a new
entrant like Hondamotorcycles and scooters India Limited have been able to topple
traditional manufacturers of scooters like Bajaj Auto and LML. Honda Activa is one of
the most popular model of scooters that is running on the Indian roads today. However a
silent revolution is also taking place in this sector, this is fuelled by the introduction of
motor scooters. Kinetic Motor Company has introduced a 165 cc machine called the

29
Kinetic Blaze which can give most motorcycles in the country a run for their money.
Other set of two wheels which have fallen out of the favour of two wheeler users are
mopeds, these entry level two wheeler have also taken a back seat as entry level
motorcycles have taken their place. If the metal bodied scooters have fallen out of the
consumers' choice, scooterettes have been climbing up the popularity charts lately. These
set of two wheelers are a hit among people over the age group of 45, women and the
young adults. These two wheelers are lighter which makes them easier to handle, they
come with a digital ignition system to do away with the inconvenience of the kick start.
They also have smaller wheels for better balance and maneuverability. They cater to the
load carrying and personal transport requirement of most urban two wheeler user.
scooterettes and moped segment amount for a quarter of the two wheeler market share in
India and about 8% of all the exports which takes place from the country. One company
which has remained in the forefront of scooterettes and mopeds manufacturing in the
country is TV Sundram Iyengar and Sons Limited (TVS), they were the first to launch an
indigenous scooterettes in the Sub 100 cc category in the year 1984. However it was not
until the entry of HondaMotorcycle and scooter India Limited in the late 90s which
revolutionized the un-geared scooter market in the country. The entry of HondaActiva
brought about a much needed change in the scooterettes and moped market in the country
though the latter can't strictly be included in this category. The market then had not seen
any significant change for about 10 years till the time Hondahad come in with its' set of
two wheelers.
Most of the two wheeler companies like Bajaj Auto, Hondamotors, Kinetic motors have
their presence in the scooterettes segment.

Some of their products are as follows:

Bajaj Auto

Bajaj Wave DTSI

Bajaj Kristal DTSI
Bajaj Blade DTSI

hero honda
hero honda Pleasure

Kinetic Motor
Kinetic Kine

HondaMotorcycle and scooter India Limited

HondaDio

TVS Motor
TVS Scooty

30
 BAJAJ AUTO HERO HONDA KINETIC MOTOR

Bajaj Wave Hero Honda Pleasure Kinetic Kine

Bajaj Kristal DTSi - Kinetic 4S

Bajaj Blade DTSi - Kinetic Nova

- - Kinetic Zoom

- - Kinetic V2 Range

- - Kinetic King 100

- - Kinetic Luna Super

- - Kinetic Luna TFR

HMSIL TVS MOTOR

Honda Dio TVS Scooty

Honda Activa TVS XL

Two Wheelers by Cubic Capacity

An increase in the cubic capacity of a vehicle leads to a higher mileage, higher torque at
lower rpms, increased number of pistons and cylinders that increase the speed, smoother
running of the engine and more power strokes. As we proceed from less than 100cc to
above 180cc, the size of the engine increases and thereby fuel efficiency also increases.

The vehicles in the two wheeler segment have been demarcated on the basis of Cubic
Capacity. The different capacities are: less than 100cc, 100-150cc, 150-180cc and greater
than 180cc.

Less than 100 CC

SCOOTERETTES
Bajaj Blade DTSi Bajaj Kristal DTSi Hero Honda Pleasure

Kinetic Zing Kinetic King 100 Kinetic Kine

Kinetic Luna TFR Kinetic Luna Super Kinetic V2 Range

TVS Scooty TVS XL -

100-150 CC

SCOOTERETTES
Bajaj Wave Honda Dio Honda Activa

31
 Kinetic 4S Kinetic Zoom Kinetic Nova

TVS Motor Co.

TVS Motor Company was established by Shri. T V Sundaram Iyergan in 1911. Its two
manufacturing plants are at Mysore and Hosur, near Bangalore.

It is the third largest two wheeler manufacturer in India and has reached tenth position
among the world listing. Its dealer and customer network is widely spreaded in India
which includes over 500 dealers and 2500 customers.

This company has been honored with-

The Deming Prize' for Total Quality Management ( TQM ) with the hallmark of Japanese
Quality.
TVS Apache- Bike of the Year 2006 by Business Standard Motoring. International
certifications like QS 9000, ISO 9000 and TS 16949.

TVS SCOOTERETTES/MOPED

MODEL CAPACITY
TVS Scooty
59.9 CC
TVS Scooty ES
74.6 CC
TVS Scooty Pep 87.8 CC

TVS Pep Plus

TVS Spectra DX/AX 150 CC

TVS XL
TVS XL Super

TVS XL Super HD

Bajaj Auto Ltd.

Bajaj Auto Limited is one of the pioneering companies in the two wheeler industry. Bajaj
Auto has a vast network of about 1500 service centers and 500 dealers all over India. It
has 3 manufacturing plants located at Akurdi, Waluj and Chakan in Maharashtra. The
company's technology partner is Kawasaki Heavy Industries, Japan. The company
exports to ASEAN region, South America and Africa.

BAJAJ SCOOTERETTES/MOPEDS

MODEL CAPACITY
Bajaj Blade DTSi 100 CC

Bajaj Cagiva CRX 145 CC

32
Bajaj Fusion 145 CC

Bajaj Kristal DTSi 100 CC

Bajaj M 80 Electronic 74.08 CC

Bajaj Rave 74.08 CC

Bajaj Saffire 74.4 CC

Bajaj Spirit 100 CC

Bajaj Sunny 59.86 CC

Bajaj Sunny Spice 59.86 CC

Bajaj Wave DTSi 109.7 CC

Kinetic Motor Company Ltd.

Kinetic Motor Company Limited was incorporated in 1984 as a joint venture with Honda
Motor, Japan and is a part of the Kinetic group of companies. The company has a state of
the art manufacturing facility at Pithampur, near Indore, Madhya Pradesh and has a
strong network of over 400 dealers and authorized service centers. Kinetic Motor is ISO
9001 certified from DNV for all models and activities. USA, Canada, Latin America,
Europe, Africa, Middle East and South Asia are the main export markets for the Kinetic
Motor automobiles.

KINETIC SCOOTERETTES/MOPEDS

MODEL CAPACITY
Kinetic 4S 113.5 CC

Kinetic Honda Dx/Zx 100 cc 97.2 CC

Kinetic Honda Marvel 98 CC

Kinetic K4 100 97.2 CC

Kinetic Kine 71.5 CC

Kinetic King 100 97.2 CC

King 100

King 100 Dlx

Kinetic Luna Super 59.57 CC

Kinetic Luna TFR 49.8 CC

Kinetic Nova
134.9 CC
Nova 135
115 CC
Nova EX

Kinetic Pride FX 72.86 CC

Kinetic Style 49.86 CC

33
Kinetic V2 Range
58.2 CC
V2
49.68 CC
V2 XL 73.08 CC

Kinetic Zing 71.5 CC

Kinetic Zoom 110 CC

Hero Honda Motors

In 1984, Hero Honda started as a Hero Cycles Of India and Honda Motors Company
Limited of Japan. Hero Honda has the unique distinction of being awarded the Bike
maker of the Year award for 3 consecutive years by Overdrive magazine.
Hero Honda is the clear market winner in the two-wheeler segment and boasts of more
than 5 million customers. Located at Dharuhera and Gurgaon in Haryana, Hero Honda
Motors Limited has over 1500 sales outlets all over India.

HERO HONDA SCOOTERETTES/MOPEDS

MODEL CAPACITY
Hero Ankur 49 CC

Hero Gizmo 49 CC

Hero Honda Pleasure 102 CC

Hero Panther 49 CC

Hero Puch Automatic 64 CC

Hero Sakhti 3G 64 CC

Hero Stepmatic 64 CC

Hero Street 97.2 CC

Hero Winner 74.08 CC

Honda Motorcycles & Scooters India Private Limited

Established in 1999, the Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI) is a wholly
owned subsidiary of Honda Motor Company Ltd., Japan and is located at Manesar,
Haryana. The company's most well known brand is the Honda Activa that revolutionized
the Indian scooterette market in terms of design and features. The company exports
scooters to the European Union.

HONDA SCOOTERETTES/MOPEDS
MODEL CAPACITY
Honda Activa 102 CC

Honda Dio 102 CC

34
Before buying a Two Wheeler

There are mostly two reasons of buying a two-wheeler - need and desire. From the
practical point of view most people look for a workhorse that can take them to work
everyday, run errands, do odd jobs, not cost too much, nor guzzle up too much petrol, be
easy to put on stand and get off stand, be fairly reliable, and easily repairable with easy
availability of spare parts. Budgetary constraints are also an important decider on the kind
of scooterette people eventually buy. Apart from budget, the two most important factors
in a scooterette are safety and comfort.

35
Indian Women

Current Scenario

India has world's largest number of professionally qualified women.

India has largest population of working women in the world.

India has more number of doctors, surgeons, scientists, professors than the United
States

Women Achiever

With the help of these social reformers women of India slowly started recognizing her
true potential. She started questioning the rules laid down for her by the society. As a
result, started breaking barriers and earned a respectable position in the world. Today
Indian women have excelled in each and every field from social work to visiting space
station. There is no arena, which remained unconquered by Indian women. Whether it is
politics, sports, entertainment, literature, technology everywhere we can hear applauses
for her.

Politics

Women of India are highly active today in this area. Sarojini Naidu, Vijaylakshami
Pandit, Sucheta Kriplani were the torchbearer for the women of India. Mrs.Vijay
Lkshami Pandit was the first Indian woman to hold a post in the cabinet, thus paving the
way for other women. The most important name in the category of women politicians of
recent times is Mrs Indira Gandhi. She was the one who made world stop and notice the
talent and potential of Indian women. She was the first women Prime Minister of
independent India.

Other women who have made their name in politics of India are Shiela Dixit, Uma
Bharti, Jayalalitha, Vasundhra Raje and Mamata Banerjee.

Sports

Indian women have achieved great laurels for the nation in every sport. Whether it is
cricket or hockey India have national women team for every game. Indian women cricket
team has won Asia Cup of 2004 and 2005 and made country proud. Some women sports
icons of India are:
P.T. Usha (Athletics)

Kunjarani Devi (Weight lifting)

36
 Diana Edulji (Cricket)

Sania Mirza (Tennis)

Karnam Malleshwari (Weight lifting)

Art and Entertainment

This arena is full of Indian women. We have many names to boast of like M.S.
Subbulakshmi, Indian Nightingale Lata Mangeshkar, Asha Bhosle as famous singers.
Madhu Bala, Rekha, Aishwarya Rai as Bollywood queens. Today Indian woman is a
painter, an actor, a singer, and a beauty queen.

Literature

In past women of India used to write, but their work did not get the recognition. Today
they are getting their dues. Arundhati Roy, Anita Desai, Kiran Desai, Shobhaa De,
Jhumpa Lahiri are famous names in Indian literature. Not just in India now these women
are recognized all over the world. Arundhati Roy has been awarded with the Booker Prize
of 1997 for her work "God of Small Things". Kiran Desai has been given Booker Prize of
2006 and Jhumpa Lahiri got recognition in the form of Pulitzer prize.

Corporate Divas

Kiran Majumdar Shaw is the undisputed corporate queen of India. She is the MD of
Biocon India. She is the wealthiest entrepreneur of India. Other names in this list include
Vidya Mohan Chhabaria, Chairperson of Jumbo Group, Naina Lal Kidwai, Vice
Chairperson and Managing Director of HSBC Securities and Capital Market, Sullaijja
Firodia Motwani and Mallika Srinivasan.

Social saints

Important names working for the cause of people includes Aruna Roy who worked for the
save RTI Campaign and Medha Patekar who is associated with Narmada Bachao.

Universal Queens

Indian women have not just made their mark on earth but they have engraved their name
in the whole universe by flying to space. Kalpana Chawla, who was the member of
Colombia Space Shuttle, following on her footsteps is another woman of Indian origin
Sunita Williams has become the second one to be the member of International Space
Station crew.

Indian women have mastered anything and everything which a woman can dream of.

37
Perception

In psychology and the cognitive sciences, perception is the process of acquiring,

interpreting, selecting, and organizing sensory information. It is a task far more complex
than was imagined in the 1950s and 1960s, when it was proclaimed that building
perceiving machines would take about a decade, but, needless to say, that is still very far
from reality. The word perception comes from the Latin perception-, percepio, , meaning
"receiving, collecting, action of taking possession, apprehension with the mind or
senses." Methods of studying perception range from essentially biological or
physiological approaches, through psychological approaches through the philosophy of
mind and in empiricist epistemology, such as that of David Hume, John Locke, George
Berkeley, or as in Merleau Ponty's affirmation of perception as the basis of all science
and knowledge.
There are two basic theories of perception: Passive Perception (PP) and Active Perception
(PA). The passive perception (conceived by Ren Descartes) could be surmised as the
following sequence of events: surrounding - > input (senses) - > processing (brain) - >
output (re-action). Although still supported by mainstream philosophers, psychologists
and neurologists, this theory is nowadays losing momentum. The theory of active
perception has emerged from extensive research of sensory illusions with works of
Professor Emeritus Richard L Gregory in a lead. This theory is increasingly gaining
experimental support.

38
Brand

The American Marketing Association defines brand as: a name, term, sign, symbol, or
design, or a combination of them, intended to identify the goods of one seller or group of
sellers and t differentiate them from those of competitors. Thus a brand identifies the
seller or the maker.
The word "Brand", when used as a noun, can refer to a company name, a product name,
or a unique identifier such as a logo or trademark.
According to Kevin Keller What distinguish a brand from its unbranded commodity
counterparts is the consumers perception and feelings about the products attributes and
how they perform. Ultimately a brand resides in the minds of the consumers.
Additional definitions:
Brand image is defined as consumers' perceptions as reflected by the associations
they hold in their minds when they think of your brand.
Brand awareness is when people recognize your brand as yours. This does not
necessarily mean they prefer your brand (brand preference), attach a high value
to, or associate any superior attributes to your brand, it just means they recognize
your brand and can identify it under different conditions.
Brand awareness consists of both brand recognition, which is the ability of
consumers to confirm that they have previously been exposed to your brand, and
brand recall, which reflects the ability of consumers to name your brand when
given the product category, category need, or some other similar cue.
Aided awareness occurs when you show or read a list of brands and the person
expresses familiarity with your brand only after they hear or see it.
Top-of-mind awareness occurs when you ask a person to name brands within a
product category and your brand pops up first on the list.
Brand awareness is not everything. Brand awareness is vitally important for all brands
but high brand awareness without an understanding of what sets you apart from the
competition does you virtually no good. Many marketers experience confusion on this
point.
Strategic awareness occurs when not only does the person recognize your brand, but they
also understand the distinctive qualities that make it better than the competition. Strategic
awareness occurs when you have differentiated your brand in the mind of your market.
This distinction as to why your brand is unique in your category is also referred to as
your Unique Selling Proposition or USP. Your USP tells your target market what you do
and stand for that is different from all of your competitors.
Brand preference occurs when consumers prefer your brand over competing brands.
Brand preference might be considered "the holy grail" of branding because it is the result
of consumers knowing your brand, understanding what is unique about your brand,
connecting emotionally with your brand, making a decision that your brand is superior to
others for some reason or combination of reasons, and choosing it over competing
brands, product name, or a unique identifier such as a logo or trademark.

39
THE CONCEPT OF BRAND POSITIONING:

Brand positioning is a concept that is all about capturing the consumers mind space and
the consumers perceptual space rather than a concept which is focused toward enhancing
and sustaining volumes and market shares.
The position of a brand is its perception among target consumers. This perception is
based upon its functional attributes and benefits (tasty, aromatic, sporty, roomy) as well
as on the nonfunctional and emotional associations it has acquired mainly from its
advertising (reliable, traditional, smart, prestigious, modern contemporary, stodgy, lively).

A comprehensive definition of brand positioning can be

The position of the brand is the perception it brings about in the mind of the target
customer.
This perception reflects the essence of the brand in terms of its functional and
non-functional benefits in the judgment of that consumer.
It is relative to perception, held by that consumer, of competing brands, all of
which can be represented as points or positions in his or her perceptual space and
together, make up a product class.
The benefits of a strong brand
Here are just a few benefits you will enjoy when you create a strong brand:
A strong brand influences the buying decision and shapes the ownership
experience.
Branding creates trust and an emotional attachment to your product or company.
This attachment then causes your market to make decisions based, at least in part,
upon emotion-- not necessarily just for logical or intellectual reasons.
A strong brand can command a premium price and maximize the number of units
that can be sold at that premium.
Branding helps make purchasing decisions easier. In this way, branding delivers a
very important benefit. In a commodity market where features and benefits are
virtually indistinguishable, a strong brand will help your customers trust you and
create a set of expectations about your products without even knowing the
specifics of product features.
Branding will help you "fence off" your customers from the competition and
protect your market share while building mind share. Once you have mind share,
you customers will automatically think of you first when they think of your
product category.
A strong brand can make actual product features virtually insignificant. A solid
branding strategy communicates a strong, consistent message about the value of
your company. A strong brand helps you sell value and the intangibles that
surround your products.

40
 A strong brand signals that you want to build customer loyalty, not just sell
product. A strong branding campaign will also signal that you are serious about
marketing and that you intend to be around for a while.
A brand impresses your firm's identity upon potential customers, not necessarily
to capture an immediate sale but rather to build a lasting impression of you and
your products.
Branding builds name recognition for your company or product.

A brand will help you articulate your company's values and explain why you are
competing in your market.

Relevance of consumer decision-making criterion:

Consumer buying behavior varies according to product. Some of the product requires
high involvement while others require low involvement. A two wheeler requires high
involvement of consumers.

High Involvement Low Involvement

Significant differences
Between brands Complex Variety Seeking
Buying Behavior Buying Behavior

Dissonance- reducing Habitual

Buying Behavior Buying Behavior
Few differences
Between brands

A scooterette is a high involvement purchase as opposed to FMCGs that are a low-

involvement and impulse-based purchase. Therefore, purchase of a scooterette comes
under complex buying behavior. There are large numbers of factors influencing the
purchase decision.

If one is planning to buy a two-wheeler or a car, an average of three-six months' salary

needs to be shelled out. People who are buying a car worth Rs 5 lakh are typically
earning Rs 10 lakh a year. People, who are buying a car worth Rs 3 lakh, earn Rs 5 lakh
per year. Similarly, a person who buys a scooterette worth Rs 20,000 is earning Rs 2,000
per month only. Investing three-five months' salary in a product involves complex
decision making.

As regards durables, they are not something that you experience everyday. In the case of
a scooterette, you ride it day in and day out. You are experiencing the product in its full

41
capacity. You risk your life on it. It makes a statement about you. That is, the kind of
vehicle you are riding/driving is the kind of person you are. Just like what you wear is
what you are.

For scooterette marketers there are two important tasks. First is to create pride of
possession for the user. Second is since two wheelers are high involvement products,
spare parts and service is very important. Pre-sale is as important as post-sale. Customer
dissatisfaction can damage the manufacturer's image since this is a word-of-mouth
industry.

42
 Data from other studies conducted

What drives Chinas auto buyers. Bremner,Brian.business week, 5/18/2006,

p11-11

According to the study conducted in China by Bremner,Brian.business week, consumers

are anything but pushovers when it comes to sizing up models, features, and price. And
they are embracing the Net to research their purchases, cut through marketing hype, and
zero in on value and functionality. Also according to their preferences on price range,
brand
About half of all Chinese buyers rely on the opinions of family and friends when making
this critical purchase, but the growing gaggle of Net auto channels and car blogs is
widening the loop. Consumers are more likely to value intelligence picked up directly
from auto owners than reviews in the car buff books and mainstream media, where big
advertisers have an uncanny knack for receiving fawning coverage, or directly from the
companies.

Modeling Customer Preferences: An Empirical Study of

the Automobile Market in Brazil, 312 International Journal of Management Vol. 23
No. 2 June 2006,Luiz Paulo Lopes Favero,Claudio Felisoni De Angelo,Anthony J.
Kos,Rangamohan V. Eunni

The study was done to ascertain the most important attributes from the viewpoint of
customers and assess their relative contribution to customer purchase decisions. They
analyzed a number of standard and optional features of the vehicles and inferred which
attributes consumers value the most in terms of comfort, status, speed, and safety. Based
on this analysis, they conclude that an understanding of consumer behavior relative to the
attributes of goods, such as automobiles, could enhance the management of the industry
value chain.
The worldwide expansion of the automobile market and its increasing technological
sophistication has resulted in a growing range of vehicle types and models, each with its
own unique accessories, optional features and levels of comfort designed to meet the
needs and preferences of the target customer segments. Now, in the automobile market
there are popular vehicles, sports utility vehicles, convertibles, pick-up trucks, etc. with
varying degrees of affiordability, convenience and safety. Customers factor in criteria
such as locomotion quality, safety, comfort, speed and such other attributes consitent with
their needs and preferences in their choice of automobiles. A potential customer for an
automobile discriminates between available features, prioritizes one's preferences and
evaluates their relative worth taking into account the price one is willing to pay for a
vehicle. In short, each customer selects his or her "package" of characteristics that a
vehicle can provide based up on his or her perception of their relative utility.

43
In this study, they have assessed several types and models of new automobiles and
analyzed their characteristics, with a view to asertain which attributes, or "package" of
attributes, provide the consumer with the greatest amount of utility
The results of the study highlight the importance of fuel efficiency, status, comfort, after
sales service and safety in customers' buying behavior
The results of the study have important implications for the design and development of
new vehicles as well as redesign of existing vehicles.
Moreover, rendering the attributes explicit might provide guidance for marketing and
promotion strategies. Design, driving pleasure and pricing factors were given by reports
on the collaboration between Audi and the University of St. Gallen in Switzerland to
study how consumers decide about the two wheeler to buy.

44
 FACTORS FROM SECONDARY RESEARCH

Price
Fuel Efficiency
Styling
Comfort
Safety & Reliability
Performance (Power & Engineering)
After Sales Service
Brand image
Finance scheme
Maintenance (Cost of spare parts and their availability)

HYPOTHESIS

H0: All factors based on which consumers form perceptions are equally
important
H1: All factors based on which consumers form perceptions are not equally
important

45
 CHAPTER-6

ANALYSIS AND FINDINGS

[Q] Is this your first scooterette?

IS THIS YOUR FIRST SCOOTERETTE?

80

70 68

60
NO. OF RESPONDANTS

50

42
Series2
40

30

20

10

0
YES NO
REACTION

It can be observed from the above graph that more than 50 % the respondents are not first
time purchasers/users of a scooterette. This kind of lends more credibility to the study as
the respondent might have experiences of more than one brand of scooterettes. The
respondent will have more pragmatic and comparative a view.
[Q] How long have you been using this scooterette?

46
 DURATION OF USE

60

50

40

30

20

10

0
< 1 YEAR 1 TO 3 YEARS 3 TO 5 YEARS
NO. OF YEARS

It can be observed that almost 50 % of the users have been using the scooterette for
almost an average of four years now. This means that they are on the verge of the
repurchase cycle and are consequently very much into evaluating various options. The
relevance of the fact is that consumer response taken is quite thoughtful and exhaustive
which makes it more viable to conclude that sample represents population to a
considerable extent.

47
[Q] Which other brand of scooterette did you consider while purchasing this scooterette?

ALTERNATIVE SCOOTERETTES CONSIDERED

100 92
90 82
80
NO. OF RESPONDENTS

71
70
60 55

50 Series2
40
30
20
10
0
Honda Kinetic TVS Hero
Activa Nova Scooty Honda
Pleasure
BRANDS

Given the fact that the choice set is very small in the segment, it can be seen that the
consumer looks consistently into almost all the alternatives. It is though a closer fight
between Honda and Kinetic.

48
[Q] While purchasing the scooterette what factors did/will you have in mind?
[Rate the factors on a scale of 1 to 5, 5=most important, 1=lest important]

FACTORS Rating/Score
Price 4.0
Fuel Efficiency 3.9
Styling 3.8
Comfort 4.0
Safety 2.9
Power & Engineering 3.0
Superior After Sales Service 4.4
Superior Brand image 3.2
Better Finance scheme 4.0

Mean value of the ratings obtained for various factors is shown above. From the results
obtained we can conclude that the factors shown in bold letters are the most significant
factors in terms of the relevance for consumer purchase decision for a scooterette.

If we see the score total for the identified factors, Honda Activa has the maximum score
of 34.1, followed by Kinetic Nova with a score of 33.2 and Hero Honda Pleasure with a
score of 30.0. Furthermore considering the most important factors (shown in bold) Honda
Activa scores maximum of 23.5 followed by Kinetic Nova 21.5 and Hero Honda Pleasure
with 20.7.

49
[Q] While purchasing the scooterette what factors did/will you have in your mind?

FACTORS' RATING FOR IMPORTANCE

5.0

4.0

3.0
RATING
2.0
1.0

0.0 Fuel Pow er Superior Superior Better

Price Styling Comfort Safety
Efficien & After Brand Finance

Rating 4.0 3.9 3.8 4.0 2.9 3.0 4.4 3.2 4.0

FACTORS

50
[Q] Rate the following parameters on a scale of 1 to 5 in terms of the importance you
will give/gave them at the time of the purchase of a scooterette?

HERO
IMPORT HONDA KINETIC
FACTORS HONDA
ANCE ACTIVA NOVA
PLEASURE
Price 4.0 3.8 3.3 3.7
Fuel-efficiency 3.9 4.0 3.4 3.2
Styling 3.8 3.6 3.9 2.8
Comfort 4.0 3.9 3.1 4.0
Safety 2.9 3.4 4.0 3.5
Power & Engineering 3.0 3.6 3.9 3.0
Superior After Sales
4.4 4.6 3.7 3.4
Service
Superior brand image 3.2 4.2 3.8 2.8
Better finance scheme 4.0 3.4 4.1 3.6
TOTAL 34.1 33.2 30
 HONDA ACTIVA'S PERFORMANCE ON STUDIED FACTORS

5.0
4.5
4.0
3.5
PERFORMANCE

3.0
Rating
2.5
Honda Activa
2.0
1.5
1.0
0.5
0.0
Superior Better
Fuel Pow er & Superior
Price Styling Comfort Safety After Sales Finance
Efficiency Engineering Brand Image
Service Scheme

Rating 4.0 3.9 3.8 4.0 2.9 3.0 4.4 3.2 4.0
Honda Activa 3.8 4.0 3.6 3.9 3.2 3.6 4.6 4.2 3.7
OVERALL IMPORTANCE RATING

53
 KINETIC NOVA'S PERFORMANCE ON STUDIED FACTORS

5.0
4.5
4.0
3.5
PERFORMANCE

3.0
Rating
2.5
Kinetic Nova
2.0
1.5
1.0
0.5
0.0
Superior Better
Fuel Pow er & Superior
Price Styling Comfort Safety After Sales Finance
Efficiency Engineering Brand Image
Service Scheme

Rating 4.0 3.9 3.8 4.0 2.9 3.0 4.4 3.2 4.0
Kinetic Nova 3.3 3.4 3.9 3.1 4.0 3.9 3.7 3.8 4.1
OVERALL IMPORTANCE RATING

54
 HERO HONDA PLEASURE'S PERFORMANCE ON STUDIED FACTORS

5.0

4.5

4.0

3.5
PERFORMANCE

3.0
Rating
2.5
Hero Honda
2.0 Pleasure
1.5

1.0

0.5

0.0
Superior Superior Better
Fuel Pow er &
Price Safety Comfort Styling After Sales Brand Finance
Efficiency Engineering
Service Image Scheme

Rating 4.0 3.9 3.8 4.0 2.9 3.0 4.4 3.2 4.0
Hero Honda Pleasure 3.7 3.2 2.8 4.0 3.5 3.0 3.4 2.8 3.6
OVERALL IMPORTANCE RATING

55
Honda Activa has performed well on almost all factors. Kinetic Nova and Hero Honda
Pleasure overtake Honda Activa on the power and engineering parameter. Hero Honda is
well known in the industry for its technology and engineering endeavors.

On the Price Front all the three brands are hovering around the 3.5 mark, Honda Activa
scoring the maximum because of its perceived running costs and spare parts availability.
Hero Honda does almost as well because it is positioned as the value for money
scooterette.

Honda Activa outclasses Hero Honda Pleasure and Kinetic Nova on fuel efficiency.
When it comes to styling, Kinetic Nova is the frontrunner. Honda Activa loses on this
count with its dated looks. As far as comfort is concerned Honda Activa outshines. Hero
Honda Pleasure also scores heavily in fact better than Honda Activa.

After Sales Service is undoubtedly the best in Honda Activa. Hero Honda Pleasure and
Kinetic Nova have an equal footing on this count. As far as finance schemes are
concerned Kinetic has scored the maximum being always initiative oriented when it
comes to auto finance and bumper offer.

Honda Activa scores the maximum on the brand image parameter. Hero Honda Pleasure
scores high on styling and it scores low on the safety aspect.

56
PAIRED COMPARISON FOR FACTORS:

Quality Price Service Delivery

Time
Quality 1.0 2.5 0.33 0.28
Price 0.4 1.0 0.20 0.5
Service 3.0 5.0 1.0 0.36
Delivery
3.5 2.0 2.8 1.0
Time
7.9 10.5 4.33 2.14

Quality Price Service Delivery Weightage

Time
Quality 0.13 0.24 0.08 0.13 0.145
Price 0.05 0.09 0.05 0.23 0.105
Service 0.38 0.48 0.23 0.17 0.276
Delivery 0.44 0.19 0.65 0.47 0.438
Time

Customers though conscious about quality are quick to select brands based on factors
beyond quality like after sales service and delivery time. The weightage given to quality
is approximately 15% which implies that the customer gives a value of 15% of the whole
decision to quality , quality hence playing an important role. Pair wise comparison shows
quality is less than half as important as servic and still less important than delivery time.

Service has faired well with a weightage of 28%. Time constraints and fast running
lifestyles lead consumers to lay significant emphasis on after sales service. Service
dimensions like maintenance costs, running costs, availability of service stations and
mechanics is imperative. Price has been given a weight of 11%.

Delivery time has been given the maximum weight of 44%. This implies that customers
these days do not wait for long and alter brand decisions if delivery is not desirably
instant.

57
PAIRED COMPARISON FOR BRANDS:

QUALITY:

Honda Activa Kinetic Nova Hero Honda

Pleasure
Honda Activa 1.0 0.33 5.0
Kinetic Nova 2.0 1.00 4.0
Hero Honda 0.2 0.22 1.0
Pleasure
Total 3.2 1.55 10.0

Honda Activa Kinetic Nova Hero Honda Weightage

Pleasure
Honda Activa 0.30 0.02 0.50 0.34
Kinetic Nova 0.55 0.45 0.40 0.46
Hero Honda 0.06 0.14 0.10 0.10
Pleasure

PRICE:

Honda Activa Kinetic Nova Hero Honda

Pleasure
Honda Activa 1.0 1.90 2.1
Kinetic Nova 0.51 1.0 1
Hero Honda 0.47 1.0 1
Pleasure
Total 1.98 3.9 4.1

Honda Activa Kinetic Nova Hero Honda Weightage

Pleasure
Honda Activa 0.51 0.5 0.52 0.51
Kinetic Nova 0.25 0.24 0.24 0.24
Hero Honda 0.27 0.26 0.24 0.24
Pleasure

58
SERVICE:

Honda Activa Kinetic Nova Hero Honda

Pleasure
Honda Activa 1.0 1.5 1.4
Kinetic Nova 0.67 1.0 0.9
Hero Honda 0.7 1.11 1.0
Pleasure
Total 2.37 2.71 3.3

Honda Activa Kinetic Nova Hero Honda Weightage

Pleasure
Honda Activa 0.42 0.55 0.42 0.46
Kinetic Nova 0.28 0.37 0.27 0.31
Hero Honda 0.29 0.41 0.30 0.33
Pleasure

DELIVERY TIME:

Honda Activa Kinetic Nova Hero Honda

Pleasure
Honda Activa 1.0 0.5 1.0
Kinetic Nova 3.5 1.0 0.5
Hero Honda 1.0 1.0 1.0
Pleasure
Total 5.5 2.5 2.5

Honda Activa Kinetic Nova Hero Honda Weightage

Pleasure
Honda 0.18 0.2 0.4 0.26
Activa
Kinetic 0.6 0.4 0.2 0.4
Nova
Hero Honda 0.18 0.4 0.4 0.33
Pleasure

59
FINAL BRAND PERFORMANCE ON THE FOUR FACTORS:

QUALITY PRICE SERVICE DELIVERY AGGREGATE

TIME WEIGHTS
Honda 0.145*0.34 0.105*0.51 0.276*0.46 0.438*0.26
Acti 0.34
va
Kinetic 0.145*0.46 0.105*0.24 0.276*0.31 0.438*0.40
0.33
Nova
Hero 0.145*0.1 0.105*0.28 0.276*0.33 0.438*0.33
0.27
Honda

It can be seen from the table that it is a tough tussle in the scooterette segment especially
between Honda and Kinetic. When it comes to quality Kinetic Nova is clear winner.
Moreover Kinetic scores over Honda and Hero Honda in terms of technological
advancement and new variants and models roll out rate.

Hondas unmatched distribution network has made it to be the clear winner in the service
factor. Excelling in the service parameter gives Activa a huge competitive edge because it
occupies the consumer mind space as a easy and low running cost vehicle. Both Nova
and Pleasure are catching up fast.

On the price factor Activa is again the winner by far. Price in itself has not been given
much of a weight age though but it is relative factor evaluation i.e. customer perceives
price Vis-a-vis the complete value proposition. Nova and Pleasure have scored equally.
Nova is seen as a value for money scooterette, while Pleasure is seen as a first mover in
technology and design and is talked as some day leap frogging Activa. On the Delivery
time front Nova is the winner outplaying Activa and Pleasure.

60
[Q] How will you rate the car on the following factors on a scale 1 to 7?

KINETIC HONDA HERO

NOVA ACTIVA HONDA
PLEASURE
Strong/rugged 5 3.9 2.5 Delicate
Exciting 3.8 2.8 2.54 Calm
Smooth 1.6 2.86 5.51 Rough
Comfortable 2.63 4.6 3.2 Uncomfortable
Sophisticated 3.2 2.54 4.9 Unsophisticated
Orthodox 3.9 5.58 4.04 Trendy
Youthful 4.5 3.0 4.1 Mature
Dominating 5.3 3.0 2.25 Submissive
Contemporary 2.5 2.0 3.0 Non-
contemporary

KINETIC NOVA:

1 2 3 4 5 6 7

Strong/rugged I---------I----------I----------I-----------I----------I----------I Delicate

Exciting I---------I----------I----------I-----------I----------I----------I Calm

Smooth I---------I----------I----------I-----------I----------I----------I Rough

Comfortable I---------I----------I----------I-----------I----------I----------I Uncomfortable

Sophisticated I---------I----------I----------I-----------I----------I----------I Unsophisticated

Orthodox I---------I----------I----------I-----------I----------I----------I Trendy

Youthful I---------I----------I----------I-----------I----------I----------I Mature

Dominating I---------I----------I----------I-----------I----------I----------I Submissive

Contemporary I---------I----------I----------I-----------I----------I----------I Noncontempory

61
HONDA ACTIVA:

1 2 3 4 5 6 7

Strong/rugged I---------I----------I----------I-----------I----------I----------I Delicate

Exciting I---------I----------I----------I-----------I----------I----------I Calm

Smooth I---------I----------I----------I-----------I----------I----------I Rough

Comfortable I---------I----------I----------I-----------I----------I----------I Uncomfortable

Sophisticated I---------I----------I----------I-----------I----------I----------I Unsophisticated

Orthodox I---------I----------I----------I-----------I----------I----------I Trendy

Youthful I---------I----------I----------I-----------I----------I----------I Mature

Dominating I---------I----------I----------I-----------I----------I----------I Submissive

Contemporary I---------I----------I----------I-----------I----------I----------I Noncontempory

HERO HONDA PLEASURE:

1 2 3 4 5 6 7

Strong/rugged I---------I----------I----------I-----------I----------I----------I Delicate

Exciting I---------I----------I----------I-----------I----------I----------I Calm

Smooth I---------I----------I----------I-----------I----------I----------I Rough

Comfortable I---------I----------I----------I-----------I----------I----------I Uncomfortable

Sophisticated I---------I----------I----------I-----------I----------I----------I Unsophisticated

Orthodox I---------I----------I----------I-----------I----------I----------I Trendy

Youthful I---------I----------I----------I-----------I----------I----------I Mature

Dominating I---------I----------I----------I-----------I----------I----------I Submissive

Contemporary I---------I----------I----------I-----------I----------I----------I Noncontempory

62
COMPARITIVE VIEW:

1 2 3 4 5 6 7

Strong/rugged I---------I----------I----------I-----------I----------I----------I Delicate

Exciting I---------I----------I----------I-----------I----------I----------I Calm

Smooth I---------I----------I----------I-----------I----------I----------I Rough

Comfortable I---------I----------I----------I-----------I----------I----------I Uncomfortable

Sophisticated I---------I----------I----------I-----------I----------I----------I Unsophisticated

Orthodox I---------I----------I----------I-----------I----------I----------I Trendy

Youthful I---------I----------I----------I-----------I----------I----------I Mature

Dominating I---------I----------I----------I-----------I----------I----------I Submissive

Contemporary I---------I----------I----------I-----------I----------I----------I Noncontempory

KINETIC NOVA
HONDA ACTIVA
HERO HONDA
PLEASURE

Activa scores heavily on trendiness and neutral on ruggedness.

Customers perceive that Nova as very contemporary and at the same time mature and
submissive. It can be observed that when we consider a complete image of Nova it is that
of calm, delicate and a submissive car which is not very brawnish in nature as Pleasure
would be. On the count of driving pleasure the Nova is seen as the smoothest scooterette.
In case of Pleasure it is domination, maturity and trendiness. Driving pleasure has been
rated low as it is being ranked high on roughness and ruggedness.

63
[Q] Are you satisfied with the scooterette you own currently?

LEVEL OF SATISFACTION

40

35
NO. OF RESPONDENTS

30

25

20

15

10

0
Highly Dissatisfied Neutral Satisfied Highly
Dissatisfied [39.33%] [23.60%] [16.85%] Satisfied
[7.8%] [12.36%]
% OF RESPONDENTS

Highly Dissatisfied Neutral Satisfied Highly

Dissatisfied Satisfied
Honda Activa 16% 20% 52% 12%

Kinetic Nova 8% 12% 40% 36% 4%

Hero Honda
8% 20% 40% 32%
Pleasure

Honda Activa has an edge in total customer satisfaction. 64% of Activa owners rate
themselves as being satisfied. Kinetic Nova on the other hand has only 40% consumers as
satisfied. In case of Hero Honda Pleasure only 32% have given satisfactory ratings.
According an NFO Automotive 2006 Customer Satisfaction report Activa is a clear leader
among scooterettes in terms of satisfaction indices. Also dissatisfaction rate which is
ranging from 20-30% in case of Nova and Pleasure is only 16% in Activa.

64
 Hypothesis Testing

Ho: All factors based on which consumers form perceptions are equally
important
H1: All factors based on which consumers form perceptions are not equally
important

Chi-Square Calculations

FACTOR E O (E-O) (E-O)^/E

Price
405.7 440 -34.3 2.8999014
Fuel efficiency
405.7 429 -23.3 1.33815627
Styling
405.7 418 -12.3 0.37291102
Comfort
405.7 440 -34.3 2.8999014
Safety
405.7 319 86.7 18.5281982
Power and Eng
405.7 330 75.7 14.1249445
Superior after
sales service 405.7 484 -78.3 15.1118807
Superior brand
image 405.7 352 53.7 7.1079369
Better finance
405.7 440 -34.3 2.8999014
Total
3652 3652 65.2837318

df= 8, Significance level= 0.05 Table value= 15.507

The computed value is higher than the critical value. Hence we reject the null hypothesis.
The hypothesis is rejected and alternate hypothesis is accepted that all factors based
on which consumers form perceptions are not equally important.

65
 CHAPTER 7

LIMITATIONS

The thesis has been with certain limitations and problems that were encountered at
various stages of the research.

Due to paucity of time the thesis has been restricted to Delhi and NCR region
covering only 110 respondents, which might not be giving the true picture of the
entire population.
Very few research papers are available in the Indian context.
The research results may have been influenced by the composition of the sample
size and use of non-probabilistic sampling technique. However effort was made to
remove such bias as far as possible through composition of non-users on the
sample.
Respondents often find difficulty in articulating their opinion on questions and are
occasionally not able to understand questions. There may be biased opinion on the
part of the consumer
Managers in the various concerned manufacturing companies and agencies were
reluctant to give appointments so that certain matters can be discussed.

ASSUMPTIONS

Certain assumptions were made while conducting the study.

Sample is representative of the target population

Probability of type 1 error is 5%

66
 CHAPTER 8

SUGGESTIONS

The manufacturers should increasingly concentrate upon technology and build

state of the art scooterettes for the consumer as they are becoming more conscious
about such factors.
The major players in the Indian market should realize the strengths of the
competitors and build their own competence in those areas.
The manufacturer should always plan and introduces new variants so that no
customer can escape their net.
Another important area that should be concentrated upon is new product
development in order to leverage from the first movers advantage.
Manufacturers should look into the specific areas like safety and comfort, fuel
efficiency and pricing which have come out to be the prime factors from the
study.
Manufacturers should try to indigenize production as far as possible to pass on the
cost reduction to the consumer as a price decrease. They should keep the price
competitive.
Manufacturers should use technology to improve the scooterettes fuel efficiency.
On the maintenance front spare parts availability should be easy and cheap.
Further attractive auto finance and insurance schemes should always be on offer
to enhance the value proposition.
Manufacturers should ensure adequate and efficient distribution systems with a
good geographical disperse which increases accessibility. Timely delivery
schedule are imperative for success. Right geographic spread of service facilities
should be concentrated upon and focusing on distribution, logistics, and supply
chain management and amply mend their delivery schedules in the earliest future.
Consumers should be provided with schemes like mileage warranty. Dealers
should undoubtedly be kept happy with dealer-focused promotions

67
 BIBLIOGRAPHY:

Kotler phillip(2002),Marketing Management,Prentice Hall

Ramaswamy,V.S. & Namakumari,S.,Marketing Mangement-
Planning,Implementation and Control,3rd Edition(2002),MacMillan India.
Schiffman,G.Leon and Kanuk,(2004),Consu,er Behaviour,Prentice Hall
Sengupta,Subroto,Brand Positioning,(2000),Tata McGraw Hill
Malhotra, Naresh,Marketing Research,(2004), Pearson Education
Bikes: some essential tips, dave koshollek,, dealernews. April 2006. Pg 60,61
Brand loyalists are rare breed, steve finlay, editors forum, wards dealer business,
july 2007, pg 6.
Insights for automotive, B&T weekly, ac nielson. , may 2007. pg20
Discrete emotions: implications for persuasion and behavior,mary luce, advances
in consumer research, university of pennsylvania,. , vol 28, 2001
Modeling Customer Preferences: An Empirical Study of the Automobile Market
in Brazil, 312 International Journal of Management Vol. 23 No. 2 June 2006,Luiz
Paulo Lopes Favero,Claudio Felisoni De Angelo,Anthony J. Kos,Rangamohan V.
Eunni
What drives Chinas auto buyers. Bremner,Brian.business week, 5/18/2006, p11-
11, 1p
Wats stopping your customers, bob sigall, selling point, small business resource,
aug 2006
More bike for the buck, pg 42, consumer reports, july 2005, consumers union of
US
service: then and now, dave koshollek, june 2006, dealernews
Rosen, S. (1974). Hedonic prices and implicit markets: production differentiation
in pure competition. Journal of Political Economy, 82, 34-55.
Kravis, I.B. & Lipsey, R.E. (1969). International price comparisons. International
Economic Review, 10,233-246.
Audi, university study consumer buying habits, Krix, Pia, Automotive News,
Europe;10/2/2006, Vol. 11 Issue 20, p29-29, 1/3p, 1c

WEBSITES:

Search.ebscohost.com
www.auto-asia.com
www.siam.com
www.ncaer.org
www.mouthshut.com
www.tvs.com
www.bajaj.com
www.honda.com

68
 QUESTIONNAIRE

Dear Sir/Madam,
This questionnaire is a part of academic study. Data from the study would be kept
confidential.

[Q1] Which brand of scooterette do you own?

Honda Kinetic Hero Honda

[Q2] Is this your first scooterette?

YES NO

[Q3] If yes, how long have you been using this scooterette?
< 1 year 1 to 3 years 3 to 5 years

[Q4] If no, please specify the scooterette you owned prior to this one.
__________________

[Q5] Which other brand of scooterette did you consider while purchasing this
scooterette?
________________________________________________________________

[Q6] While purchasing this scooterette what factors did you have in mind?
(Rate the factors on a scale of 1 to 5, 5= most important, 1= least important)

FACTORS Rating/Score
Price
Fuel Efficiency
Styling
Comfort
Safety
Power & Engineering
Superior After Sales Service
Superior Brand image
Better Finance scheme

69
[Q7] Rate the following parameters on a scale of 1 to 5 in terms of the importance
you will give/gave them at the time of the purchase of a scooterette.

Importance Honda Kinetic Hero

FACTORS Honda
Price
Fuel-efficiency
Styling & looks
Comfort
Safety
Power & Engineering
Superior After sales service
Superior Brand Image
Better Finance scheme

[Q8] Give the relative preference of the attributes in the box for the following pair of
parameters on a scale of 1 to 9.
Scale 1 to 9:
1equally preferred
3moderately preferred
5strongly preferred
7very strongly preferred
9extremely preferred
Note: interval values of 2,4,6,8 provide additional levels of discrimination.

Paired Parameters Rating

Quality vs. Price
Quality vs. Service
Quality vs. Delivery time
Price vs. Service
Price vs. Delivery time
Service vs. Delivery time

[Q9] Give the relative preference of amongst the following brands for the attributes
mentioned against the pairs of brands on a scale of 1 to 9.

Paired Brands Quality Price Service Delivery

Time
Honda V/S Kinetic
Honda vs. Hero Honda
Kinetic vs. Hero Honda

70
[Q10] How would you rate the Honda Activa on a scale of 1 to 7 for the following
factors?

1 2 3 4 5 6 7
Strong/rugged Delicate
Exciting Calm
Smooth Rough
Comfortable Uncomfortable
Sophisticated Unsophisticated
Orthodox Trendy
Youthful Mature
Dominating Submissive
Contemporary Non-
contemporary

[Q11] How would you rate Kinetic Nova on a scale of 1 to 7 for the following factors?

1 2 3 4 5 6 7
Strong/rugged Delicate
Exciting Calm
Smooth Rough
Comfortable Uncomfortable
Sophisticated Unsophisticated
Orthodox Trendy
Youthful Mature
Dominating Submissive
Contemporary Non-
contemporary

[Q12] How would you rate the Hero Honda Pleasure on a scale of 1 to 7 for the following
factors?

1 2 3 4 5 6 7
Strong/rugged Delicate
Exciting Calm
Smooth Rough
Comfortable Uncomfortable
Sophisticated Unsophisticated
Orthodox Trendy
Youthful Mature
Dominating Submissive
Contemporary Non-
contemporary

71
[Q13] Are you satisfied with the scooterette you own currently? Please rate your level of
satisfaction on the following scale.

Highly Dissatisfied Neutral Satisfied Highly

Dissatisfied Satisfied

[Q14] Which brand of Scooterette would you purchase, if you had to do so in the near
future and why?
______________________________________________________________
______________________________________________________________
______________________________________________________________

Personal Information

AGE: 1) 18 TO 25 YEARS 2) 25 TO 35 YEARS

3) 35 TO 45 YEARS 4) 45 AND ABOVE

OCCUPATION:

INCOME: 1) <Rs. 20,000 2) Rs.20, 000 TO Rs. 30,000

3) Rs. 30,000 TO Rs. 40,000 4) Rs. 45,000 AND ABOVE

________________________THANK YOU ________________________

72