MARKETING STRATEGIES OF CAR

MANUFACTURERS IN INDIA

THESIS
SUBMITTED TO THE
MAHARSHI DAYANAND UNIVERSITY, ROHTAK
FOR THE AWARD OF THE DEGREE OF
DOCTOR OF PHILOSOPHY

Submitted by
JEANNIE BHATIA
Registration No: 04-DAVM-14

Under the Supervision of

DR. PARDEEP AHLAWAT
Associate Professor,
Institute of Management Studies and Research,
M. D. University, Rohtak

INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

MAHARSHI DAYANAND UNIVERSITY, ROHTAK
2013
 DECLARATION

This is to certify that the material embodied in the present work titled
Marketing Strategies of Car Manufacturers in India is based on my
original research work. It has not been submitted in part or full for any other
diploma or degree of any university. My indebtedness to other works has been
duly acknowledged at the relevant places.

(Jeannie Bhatia)
Registration No: 04-DAVM-14
Countersigned by
Supervisor

Dr. Pardeep Ahlawat

Associate Professor
Institute of Management Studies and Research
Maharshi Dayanand University, Rohtak

Director of the Institute

Prof. (Mrs.) Neelam Jain
Director
Institute of Management Studies and Research
Maharshi Dayanand University, Rohtak

i
 ACKNOWLEDGEMENTS

The satisfaction and euphoria that accompany the successful completion of any task
would be incomplete without mentioning the people who made it possible, whose
consistent guidance and encouragement crowned the efforts with success.

It is a matter of inordinate gratification and delectation for me to express my

thankfulness to Dr. Pardeep Ahlawat, Associate Professor, Institute of Management
Studies and Research, Maharshi Dayanand University, Rohtak for his adroit teachings
and unceasing motivation. Whatsoever, appears in this research work is the reflection
of his vivacious involvement and critique frame of mind. I am highly beholden for his
direction, advice and support extended to me spontaneously and decidedly beyond the
call of supervision. I can never adequately express my feeling for him as without his
able, learned and impulsive guidance, the present work would not have seen
conclusion.

Similarly, I am under an obligation to thank Prof. Mukesh Dhunna, Institute of

Management Studies and Research, Maharshi Dayanand University, Rohtak who
provided with his valuable and treasured inputs at every step of this research work. I
am also gratified to Prof. Neelam Jain and other faculty members of the Institute of
Management Studies and Research for their continuous support and warm cooperation
at every stage of the completion of the present research study.

I am highly obliged to my reporting superiors at DAV Institute of Management, Dr. N.

K. Sharma, Dr. Amit Chakrapani, Dr. Meera Wadhwa and Dr. Neelam along with Ms.
Gurjeet Kaur and my other colleagues who supported me to undertake this study along
with my job responsibilities at work and accommodated the work schedules, so that I
could complete and fulfill this long cherished dream of mine.

I am also thankful to all the marketing professionals and dealership authorities of all
the selected brands who supported and contributed with their inputs and also shared
the data pertaining to the proposed respondents. I am also grateful to all the
respondents and appreciate their contribution for bestowing their valuable time in
submitting their responses.

ii
I fail in my duties without acknowledging my father-in-law Prof. Daleep Singh who
in actual conceived the idea of this research and helped me throughout with his able
guidance and support. Thanks for giving me valuable suggestions about the research
design and thesis writing principles.

At this juncture I do not know how to acknowledge the support and encouragement
extended by my parents Mr. Parvinder Pal Singh and Ms. Manjeet Kaur and my
brother Mr. Abhijit and my sister-in law Ms. Sarah Dean at each step of this tenure. I
am equally thankful to my Mother-in-law Dr. Sunita, Sister-in-law Ms. Vidushi, Mr.
Deepak and my niece Mansi, towards the fulfillment of this project. Had they all not
provided a loving environment, this task would have proved arduous.

I am also grateful to Yashwanti Maam for bearing the inconveniences caused to her

as a consequential to the involvement of her husband Dr. Pradeep Ahlawat, my

supervisor and mentor, for a long time in this research work.

At this moment of pleasure, I am indebted to my husband Dr. Himanshu for his

continuous encouragement which kept me going and without his altruistic support this
work would not have been possible.

(Jeannie Bhatia)

iii
 TABLE OF CONTENTS
CONTENTS PAGE NO.
Certificate i
Acknowledgements ii - iii
List of Tables iv - vi
List of Figures vii

CHAPTERS

CHAPTER I 1 - 23
Introduction
Automobile Industry in India ... 1
Indian Consumer and Marketing Strategies of Car Manufacturers 5
Problem Formulation 10
Marketing Strategies - Literature Gaps . 15
Framework of Analysis . 22
Focus of Research .. 23

CHAPTER II 24 - 62
Indian Automobile Industry - Post Liberalization Scenario
Indian Automobile Industry - Post Liberalization Er a ... 24
Effects of Economic Reforms on Industry .. 29
Car Industry in India - Current Scenario .. 34
Trends in Indian Passenger Vehicle Market . 37
SWOT Analysis 42
Porters Five Forces Industry Analysis . 48
PEST Analysis . 58

CHAPTER III 63 - 113

Review of Literature
Consumer Buying Behavior and Marketing Strategies .. 64
Consumer Buying Behavior and Factors affecting Brand Preferences .. 67
Marketing Strategies and their influence on Brand Preferences .. 78
Positioning ... 90
Effectiveness of Strategies from Consumers Perspective .. 95
Car Buyers Brand Preferences .. 97
Electronic Marketing . 105
Customer Relationship Management ..... 106
Customer Satisfaction a nd Loyalty . 107
Theoretical Research Framework ... 112
CHAPTER IV 114 - 136
Research Design and Methodology
Objectives of the Study .. 114
Research Approach 115
Hypothesis Formulation 120
Structure of the Instrument ... 122
Data Collection Method 124
Demographic Statistic ... 125
Data Analysis Method ... 126
Limitations of the Study . 133
Expected Contribution from the Study ... 134
Organization of the Study . 135

CHAPTER V 137 - 186

Data Analysis and Interpretation
Section A: Descriptive Statistic ... 137
Section B: Inferential Statistic . 139
Buyer Behavior Stimuli .. 142
Marketing Stimuli ... 159
Other Marketing Stimuli 166
Perceived Brand Positioning 170
Car Buyers Brand Preference, Satisfaction and Loyalty Intention . 176

CHAPTER VI
Summary of F indings, Recommendations and 187 - 215
F uture Research Avenues
Section A: Summary of Findings . 188
Post Liberalization Scenario of Automobile Industry.. 188
Buyer Behavior Stimuli .. 192
Marketing Stimuli ... 195
Other Marketing Stimuli 196
Perceived Brand Positioning 198
Car Buyers Brand Preference, Satisfaction and Loyalty Intention . 201
Section B: Conclusions and Recommendations ... 203
Section C: Future Research Avenues . 214

APPENDIX I - Questionnaire

APEPNDIX II - Bibliography
 LIST OF TABLES

TABLE NO. DESCRIPTION PAGE NO.

2.1 Passenger car density 35
2.2 Trends in Market Share of Leading Manufacturers in the 38
Domestic PV Market (in percentage)
2.3 Trend in Domestic Passenger Vehicle Sales 39
2.4 Trend in Domestic Passenger Vehicle Production 40
2.5 Trend in Passenger Vehicle Exports 40
2.6 SWOT analysis of Indian Automobile Industry in Post 42
Liberalization Scenario
4.1 Selection of Car Manufacturers/Models 118
4.2 Category-wise Distribution of Surveyed Car Owners 120
4.3 Table of Hypotheses 121
4.4 Car Type/Form and Fuel Variant wise Demographics of 126
the Respondents
4.5 Description of the Respondents Demographics Related 127
Variables with Internal Consistency Results
4.6 Description of the buyer behavior stimuli related variables 129
with internal consistency results
4.7 Description of the Marketing Stimuli Related Variables 130
with Internal Consistency Results
4.8 Description of the Other Marketing Stimuli Related 131
Variables with Internal Consistency Results
4.9 Description of the Brand Association Related Variables 131
with Internal Consistency Results
Description of the Car Owners Satisfaction and Loyalty
4.10 Intention Related Variables with Internal Consistency 132 Results

5.1 Demographic Profile of the Respondents based on 138

Type/Form of the Car
5.2 Participation of Buyers in Purchase Activities and Brand 141
Choice
5.3 Reasons/Motives for Buying a Car - Chi-square Test 143
Results for Hypotheses
5.4 Cross-Tabulations of Payment Method Preferences Based 144
on Demographic Characteristics of Car Buyers
5.5a Car Fuel Preferences 146
5.5b Cross-Tabulations of Fuel Preferences Based on 147
Demographic Characteristics of Car Buyers

IV
 5.6 Buyers Role in the Car Purchase Decision 148
5.7a Influence of Social Factors on the Car Purchase Behavior 149
5.7b Influence of Cultural Factors on the Car Purchase 150
Behavior
5.7c Influence of Psychological Factors on the Car Purchase 151
Behavior
5.7d Influence of Information Sources on the Car Purchase 152
Behavior
Comparing Means of Factors/Sources Influencing
5.7e Purchase Behavior between Compact and Midsize 153
Segment Car Owners
Factor Analysis (Principal components, Varimax rotation)
5.8a of 30 Indicators Used for Assessing the Risks as Perceived 155
by the Car Owners
5.8b Means, standard deviations, and correlations among risks 158
and risk reduction related study variables (N=138)
5.9 Country of Origin Effect 159
5.10a Importance of Product Related Attributes (Product 160
Referent) in the Car Brand Preference
5.10b Importance of Product Related Attributes (Task or 161
Outcome Referent) in the Car Brand Preference
5.10c Importance of Product Related Attributes (User/Surrogate 162
Referent) in the Car Brand Preference
5.11 Importance of Customer Service Related Attributes 163
(Additional Services) in the Car Brand Preference
5.12 Importance of Price/Cost Related Attributes in the Car 164
Brand Preference
5.13 Importance of Place/Availability Related Attributes in the 164
Car Brand Preference
5.14 Importance of Promotion Related Attributes in the Car 165
Brand Preference
Importance of Post Purchase Related Attributes in the Car
5.15 166 Brand Preference
Importance of Electronic Marketing Related Attributes in
5.16 166 the Car Brand Preference
Importance of Customer Relationship Management in the
5.17 167 Car Brand Preference

Comparing Means of Integrated Marketing Attributes as

5.18 Perceived Important by the Buyers in Influencing Brand 169
Preference between Compact and Midsize Segment Car

V
 Comparing Means (Independent Sample t-test) of the
5.19 Importance of Car Brand Attributes with the Brand 173
Associations as Perceived by the Car Owners for their
Present Vehicle
Comparing Means (Independent Sample t-test) of the
5.20 Importance of Functional/Experiential/Symbolic Benefits 174
of Car Brands with the Brand Associations as Perceived
by the Car Owners for their Present Vehicle
Comparing Means (Independent Sample t-test) of the
5.21 Importance of Surrogate Car Brand Attributes with the 177
Brand Associations as Perceived by the Car Owners for
their Present Vehicle
5.22 Overall Importance of Attributes/Benefits and the Brand 178
Associations as Perceived by the Car Owners
5.23 Top Three Brands Considered by the Respondents while 179
Purchasing a Car
5.24 Mean Scores and Standard Deviations of Brand 181
Satisfaction Facets as Perceived by the Car Owners
5.25 Comparing Means of Brand Satisfaction Facets between 182
Compact and Midsize Segment Car Owners
5.26 Inter-Factor Correlations, Means and Standard Deviations 183
among Brand Satisfaction Facets (N=138)
5.27 Regression Analysis of Brand Satisfaction Facets on Car 185
Owners Overall Brand Satisfaction and Loyalty Intention
5.28 Regression Analysis of Car Owners Overall Brand 185
Satisfaction on Car Owners Brand Loyalty Intention
5.29 Compact and Midsize Segment Car Owners Perception 186
about a New Car Purchase (Brand Loyalty)
Integrated marketing attributes as perceived significantly
6.1 important by the car buyers in influencing brand 197
preference

VI
 LIST OF FIGURES

FIGURE DESCRIPTION PAGE NO.

NO.
1.1 Indian Automobile Industry 2
1.2 Competitive Picture of Indian Automobile Industry 3
1.3 Creating satisfied customers 14
2.1 Market Share of Car Manufacturers in the Domestic 38
Passenger Vehicle Market
2.2 Trend in Domestic Passenger Vehicle Sales 39
2.3 Trend in Domestic Passenger Vehicle Production 40
2.4 Trend in Passenger Vehicle Exports 41
3.1 Stages in Consumer Decision Making 68
3.2 Factors that Influence Consumer Buying Behavior 70
3.3 Intended, Actual and Perceived Positioning 92
3.4 Theoretical Research Framework Effectiveness of 113
Marketing Strategies of Car Manufacturers

VII
 CHAPTER - I
INTRODUCTION
Transportation system is a sign of technical wonder by human kind which satisfies
one of the most basic needs of the human being precisely, the mobility. Automobile
industry is a major constituent of surface transport and plays a vital role in economic
growth of a country. It is the industry which paves the way for reforms in foreign
trade, invites foreign investment and facilitates exposure of a country on a very broad
international platform. The automobile industry in India has long been recognized as a
core manufacturing sector with the potential to drive national economic growth and
foster the development of technological capabilities through its powerful backward
and forward linkages, and the localization of high value added manufacturing
processes within the domestic economies. In recent years, for instance, Indian
automobile industry contributes about 5 percent of the GDP and it is targeted to grow
five-fold by 2016 and account for over 10 percent of India's GDP (DBS
Cholamandalam Securities Limited Sector Report, 2012). Therefore the industry is
recognized as one of the drivers of economic growth as it contributes significantly to
the overall GDP of the nation.

1.1 Automobile Industry in India An Insight

The history of the automobile actually began 5,000 years ago when the first wheel was
used for transportation, probably on Mesopotamian chariots in 3200 BC. The dawn of
automobile in India actually goes back to 4000 BC when wheel was first used for
movement in India in form of chariots. Since then it has traveled a long way, from
chariots to bullock cart, to the jet-age (The Great Idea Finder, 2005). Today, the Indian
automobile industry comprises of all vehicles, including 2-3 wheelers, passenger cars
and multi-utility vehicles, light and heavy commercial vehicles, and agricultural
tractors and other earth moving machineries, besides the component segment for all
these categories.

Automobile Industry in India is still in its infancy but growing rapidly. The
opportunities in the automobile industry in India are attracting big names with the big
purse and they are investing vigorously in infrastructure, design and development, and
marketing. Despite economic slowdown, the Indian automobile sector has shown high
growth. The passenger vehicle market, which constitutes around 80% of automobile
sales, has immense growth potential as passenger car stock stood at around 18 per
1,000 people in 2012. Anticipating the future market potential, the production of
passenger vehicle is forecasted to grow at a Compound Annual Growth Rate (CAGR)
of around 10% from 2009-10 to 2012-13. This took the Indian automobile production
from 5.3 Million Units 2001-02 to 10.8 Million Units in 2007- 08 to 20.3 Million
Units 2011-12 (The Equicom, 2012).

Figure 1.1: Indian Automobile Industry

The industry is characterized by a very high percentage (about 80%) of 2-3 wheelers
production (Ray, 2012). Indian automobile industry is home for the largest motor
cycle manufacturer, the second largest two wheeler manufacturer, and fifth largest
commercial vehicle manufacturer in the world. The industry is producing about 13
lakhs passenger vehicles, 4 lakhs commercial vehicles, 76 lakhs two wheelers and
about 3 lakhs tractors per annum. The automobile industry has achieved a turnover of
US $ 28 billion and the auto component industry has reached a turnover of US $ 10
billion. The Indian tyre industry, which is an integral part of Indian automotive
industry, has registered a turnover of almost US $ 3 billion (Automotive Mission Plan,
2006-16). India is emerging as one of the world's fastest growing passenger car
markets which is increasing at average rate of 16-17 % per annum from the year 2005.
In the year 2011, the domestic market stood at 2.6 million vehicles and was expected
to increase to 3 million by 2012 (MBA Skool, 2012).

According to recent reports India's passenger car and commercial vehicle

manufacturing industry is the 6th largest in the world, with an annual production of
more than 3.9 million units in 2011. Due to an increase of 33.9% production in
automotive vehicles, India in 2010 produced more than 3.7 million automotive
vehicles, making the country the second (after China) fastest growing automobile

2
market in the world. Annual vehicle sales are projected to increase to 5 million by
2015 and more than 9 million by 2020. By 2050, the country is expected to top the
world in car volumes with approximately 611 million vehicles on the nation's roads.
The majority of India's car manufacturing industry is based around three clusters in
the south, west and north with 35%, 33% and 32% of the revenue share respectively
(Evince, 2013).

Figure 1.2: Competitive Picture of Indian Automobile Industry

Source: India Brand Equity Foundation, 2006

India has several competitive advantages over the world in the automobile sector. The
Indian market offers endless possibilities for investors. Investment in the technology
by the producers has been high. Currently, India's increasing per capita disposable
income and growth in exports is playing a major role in the rise and competitiveness
of the industry. The competitive landscape of the industry has been developed using
the Porter's (1990) Diamond Framework by India Brand Equity Foundation (2006) as
shown in Figure 1.2.

Being one of the fastest growing sectors in the world, the dynamic growth phases of
automobile industry are explained by nature of competition, product life cycle and

3
consumer demand. "Consumerism" is dominating the Indian market, thanks to the
economic reforms ushered in and the several agreements signed under the World
Trade Organization. The transition is taking place from a predominantly "sellers
market" to a "buyers market" where the choice exercised by the consumer is
influenced by the level of consumer awareness achieved.

India is breaking the inhibitions of world as a developing state and heading towards a
developed state with its world class technology, market, and consumer power. India
has a population of more than 1.21 billion, the second largest in the world and more
than three hundred million middle class. One of the reasons for growth of car industry
is the higher disposable incomes of the middle class and resultant increase in their
living standards. Because of its large market, low base of car ownership, and surging
economy, India has become a huge attraction for car manufacturers around the world.
Both the Indian and global automotive giants, including General Motors (GM),
Volkswagen, Honda, and Hyundai, have announced huge expansion plans (Asiaecon,
2012). India is expected to overtake China as the worlds fastest growing car
market in terms of the number of units sold and the automobile industry is one of the
fastest growing manufacturing sectors in India.

India is emerging as a supply hub to feed the world demand for sports utility vehicles
(SUVs). The major global car manufacturers are looking to leverage India's cost-
competitive manufacturing practices and are assessing opportunities to export SUVs
to Europe, South Africa and Southeast Asia. India also has the largest base to export
compact cars to Europe. Moreover, hybrid and electronic cars are new developments
on the automobile canvas and India is one of the key markets for them. Global and
Indian car manufacturers are focusing their efforts to develop innovative products,
technologies and supply chains. The automotive plants of global car manufacturers in
India rank among the top across the world in terms of their productivity and quality.
Top auto multinational car manufacturers like Hyundai, Toyota and Suzuki rank their
Indian production facilities right on top of their global pecking order (IBEF, 2013).

This extra-ordinary growth of the car industry is mainly due to the fundamental
regulatory changes in the Indian industrial sector in recent times as a consequence of
the economic reform programs. This is well supported by the economic conditions
particularly in the financial sector, which has played a big role in boosting the demand
and sustaining a long-term growth in the industry.
4
1.2 IndianConsumerandMarketingStrategiesofCar
Manufacturers The Backdrop
The car market in India is increasing by leaps and bounds. India might be a rapidly
growing economy, but its the car industry that is going to dominate the Indian roads,
generate volumes and strengthen car manufacturers bottom-lines in future. The
marketplace currently occupies a considerable share of the annual car production in
India. Most players within the car industry are trying to outdo one another in terms of
style, innovation, pricing, and technology, so as to achieve increased market share.

Considering few market realties; many more people are also buying cars now than even
few years ago and this number is growing exponentially. One of the reasons is the
continuously increasing income level of the Indian consumers with the growth in the
national economy. This can be manifest by the increased affluence of the growing Indian
middle class category (Nagaraj, 2008), ending in a very huge growth in personal vehicle
possession. It is predicted by a study on Indian consumers, conducted by Mckinsey
Global Institute, that if India's growth continues unabated, then the rise of over 291
million people over desperate poverty line by 2025, will make it the fifth largest
consumer market in the world. The reports forecast a massive rise in the number of Indian
middle-class to 583 million by 2025. The report also discusses a rise in the average
household disposable income from INR 113,744 (US$2,499.87) in 2005 to INR 318,896
(US$7008.70) by 2025 (McKinsey Global Institute, 2005).

These results indicate a rise in the consumption level of the Indian consumers and
shift in the consumption pattern from necessities towards discretionary consumption
which include expenditure on transportation in the form of passenger cars. The
findings of the report also reveal a change in spending habits of the rich urban
households which converges with that of their counterparts in developed countries
and their priority expenditure includes purchase of branded apparels, foreign
vacations and purchase of passenger cars. Other reasons apart from economic growth,
cited by the report include availability of easy consumer financing, tendency of the
people to rely more on their personal vehicles and reduction in the prices of the
passenger cars.

Presently the majority of the Indian population consists of youth (Here the working
age is considered between 15 years to 60 years), and with increasing disposable

5
income (Population commission report, 2001) they are discerning and are of highly
demanding nature, which make them a tough nut to crack for the marketers. (CSMM-
BW Customer Survey, 2007) measured the attitude of the Indian customers towards
various companies using two key dimensions, customer experience (how the
customers rate the firm's performance) and customer loyalty (extent of customer's
goodwill a firm enjoys) and the results deduced the rising expectations of the Indian
consumers which the marketers are finding difficult to meet on a consistent basis.
These results were attributed to the churn that has taken place post liberalization in the
Indian economy. With the availability of new and better choices due to opening up of
the Indian economy post liberalization and increase in the income levels have led to
the rise in consumer expectations about various products and services that they
purchased. And somehow, the inability of the marketers to meet the expectations of its
customers and the availability of newer and better alternatives has seen decline in
consumer loyalty towards various players operating in the market (CSMM-BW
Customer Survey, 2007).

The consumption pattern of a country depends on liberalization of economic policies,

buying habits of the younger generation, financial independence at a young age,
increase in number of nuclear families and increase in media exposure of the people.
The tastes and preferences of the current generation are changing rapidly. The current
generation does not mind paying extra for better facilities and ambience. Another
major factor that has led to increased consumerism is the growth of credit culture in
India. The Indian consumer does not feel shy to purchase products on credit and pay
tomorrow for what they use or buy today. This tendency has led to a tremendous
increase in purchase of homes, cars, two-wheelers and consumer goods. The market
for luxury products in India is also climbing at an astonishing rate as compared to a
decade ago when it was almost negligible. The reason behind this is that the
purchasing power of people of India is rising very steeply. The Indian consumer today
is highly aware about the product, price, quality and the options available with him.
The purchasing is done by keeping all these factors in mind. Today, price is not the
only consideration as it was a few years back when prices played a major role in
purchasing. Marketers are trying hard to capture this ever increasing Indian middle
class as they form the bulk of Indian consumers.

6
Also Internet is rapidly growing and providing the platform for e-commerce
marketing, many customers use Internet partly or even fully, for all the buying process
stages. Just about one in seventeen people may have access to internet in India, but
every third car buyer in the country's top cities start their search on the world-wide
web. As per Sharma (2010), four out of every ten new car buyers and three in every
ten used car buyers, use internet to do initial research, before making the purchase.
Liu and Xuan (2008) discuss the various opportunities for car manufacturers and
dealers to utilize the internet marketing medium in the five stages of e-marketing
buying process - Problem Recognition, Information Search, Evaluation of
Alternatives, Product Choice, Final Outcome / Post Purchase.

With change in consumer buying behavior the car manufacturer also have made
necessary changes in their marketing strategies. Now the car manufacturers are
launching premium models of cars to fulfil requirements of high class consumers.
Since purchasing power of rural India has increased, the marketers have started
shifting their focus towards rural India to capture untapped rural market. This has
reaped huge benefits for companies like in cases of Maruti, Hyundai and other car
manufacturers. The Companies not only aim to sell their products but also aim to
provide better after sales services to its consumers. For example, companies have
provisions to send their technicians to repair the cars struck at highways or other outer
locations due to technical failure or in case of a mishap. This improves the companys

credibility and helps to build its customer base. Companies design their products on
the basis of market segmentation so that they have products to suit every pocket and
requirement. Indian consumers liking for credit is also increasing rapidly. Hence

many financial institutions have come into existence in India and are flourishing with
the car manufacturers. Banks have also become liberal in their loan and credit
policies.

However, the existence of any business is only due to unfulfilled needs and wants of
the consumers. To fulfill needs of consumer, products/services are introduced in the
market by business organization. Thus, car manufacturers in India can rationalize their
existence only when they are able to have a thorough knowledge of consumers and
understanding of their buying behavior. The study of consumer behavior focuses on
how people build their preferences to spend their resources like time, money, effort on
consumption-related things (Schiffman and Kanuk, 1997). Consumer behavior is a

7
study of the process concerned when people choose, purchase, use, or eliminate
products, services, ideas, or experiences to satisfy wants and needs.

The concept of buying behavior has evolved over the years and plays a vital role in

creating an impact on purchase of products. The human wants are unlimited and always
expect more and more, and car models are no exception to this behavior which lead to
constant modifications of car models and its features. Today new models are coming into
the market practically every quarter. The study of consumer behavior provides useful
insights what a consumer requires in a product. It is only through research that a car
manufacturer will be able to understand the buying behavior of consumers. As one of
the measurements of the performance of the quality management system, the
organizations shall monitor information relating to customer perception as to whether the
organization has met customer requirements. The method for obtaining and using this
information shall be determined The requirement has
been there in the QS9000 standard clause 4.1.6 which says: Trends in customer
satisfaction and key indicators of customer dissatisfaction shall be documented and
supported by objective information. These trends shall be compared to those of
competitors, or appropriate benchmarks, and reviewed by senior management.
(International Organization for Standardization, 1998).

Rising disposable income of the working population and increase in the number of car
models introduced by different companies operating in India, has increased the array
of choice for the Indian consumers. With new players entering into the lucrative
Indian domestic market and with the current players introducing new models in
different segments, the bargaining power of the Indian customers is increasing. This
has resulted in a decline in consumer loyalty towards a particular player.

In order to compete in the Indian market, car manufacturers need to produce and sell
products that carry the highest customer value. To achieve this goal, they need to
provide European-quality cars at Asian prices. Price is considered as the crucial
selling point in the market. However, rise in the purchasing power of the Indians,
increasing competition in the Indian market, stress on driving comfort and life-cycle
costs, especially costs related to fuel, are also becoming important factors for potential
car buyers in India.

8
The key success of car manufacturers lies not only in having good products but also in
being able to provide the customer with the level of service they desire, because of
increasing competitiveness in the Indian automobile Industry. Car manufacturers have
to understand the significance of marketing concept and of what consumers think,
what they want, how they work and how the personal and group influences affect the
consumer decision making process in order to serve their customers by developing
quality products and services and selling at a price that gives consumer high value.

Understanding how consumers make purchase decisions can help car manufacturers in
several ways. For example, if a marketing manager knows through research that fuel
mileage is the most important attribute for a certain target market; the manufacturer
can redesign the product to meet that criterion. If a car manufacturer cannot change
the design in the short run, it can use promotion in an effort to change consumers
decision making criteria. For example, a car manufacturer can advertise a car
models maintenance-free features while downplaying fuel mileage.

Most people regard buying a new car as a major investment and the final choice
decision is usually made after careful consideration of alternatives. Consumers are no
longer content to acquire basic vehicles but seek variety ranging from mini cars to
large SUVs. Consumer choice has never been wider as the car market is becoming
increasingly fragmented and heterogeneous. In India, there are about more than
twenty five car manufacturing companies that offer a range of models in different car-
type segments. Prices range widely and an executive sedan may cost more than ten
times the price of a small car.

In this present era of marketing all the business activities revolves around consumer
and his needs and wants so it has become mandatory for the marketer to understand
the consumer and then plan the marketing strategy accordingly. Today the business
world very well recognizes that consumer rules the market and correct prediction
about when, why, how, and where consumers do or do not buy a product is crucial for
them to succeed. Moreover, understanding the consumer is not an easy task as it is
very difficult and sometimes impossible to predict about their behavior. Consumer
behavior is a blend of economic, technological, political, cultural, demographic and
natural factors as well. Sometimes the customers positively respond to company's
offerings and sometimes they straight away reject it.

9
Traditionally, economists and market researchers were inquisitive about identifying
the factors that may have an effect on consumers automobile purchase behaviors, and

have developed different marketing strategies to estimate market share. A consumers

buying preference behavior is influenced by cultural, social, personal and

psychological factors. Most of these factors are uncontrollable and beyond the hands
of car manufacturers but they have to be considered while developing marketing
strategies to influence the complex behavior of the consumers.

1.3 Problem Formulation for understanding the effects of Post

Liberalization Era on the Indian automobile industry scenario,
and how the Existing Marketing Strategies of Car
Manufacturers influence Consumers Brand Preference,
Satisfaction and Loyalty
In the present world, the speed of technological developments in industry sector
especially in automotive industry is so high and unexpected that coordination and
compliance with these changes have become a vital issue for countries and big
companies. No longer can a country confidently and authoritatively plan and design in
industry specially, automobile industry with no attention to worldwide changes.

Intensifying global competition in the automotive industry and constructing of pieces, and
emphasizing the survival and viability of an industry's ability to compete depend on its
ability to compete. In this regard, countries are required to have access to the latest
technological findings, reduce the costs and prices, and improve product quality.

In other words, automobile as a strategic commodity increasingly plays an important

role in developing and improving countries trade. That is to say automobile industry
through its links with other industries can be a powerful driving force for industrial
development in a country. This industry has always been considered as one of the
most important chains of industrial development in each country. Since the
automobile industry needs to be fed from other industries to grow, it, in turn, causes
many sectors and industries to grow. Thus, strengthening and supporting the
automotive industry has become an inevitable necessity for developing countries
(Khaju, 2009) like India.

10
India has seen a huge policy reforms over the years. Before Indian economy was
opened up in 1991, there was widespread protectionism across business sectors
resulting in lack of competition, poor quality goods and limited choices for
consumers. Businesses felt little need to have a strategy because it was the
government which made major strategic decisions from issuing licenses to start a
business to deciding on prices and from making capacity enhancements to importing
technology (Sharma, 2007). The Indian automobile industry has flourished after
economic liberalization in 1990s like never before. The various tax reliefs by the
Government of India in recent years have made remarkable impacts on the industry.
There was a shift from protection to the 'open' economy of the industry in India.

During the post economic liberalization era, well directed efforts have been made to
provide a new look to the automobile policy for realizing the sector's full potential for
the economy. Steps like abolition of licensing, removal of quantitative restrictions and
initiatives to bring the policy framework in consonance with WTO requirements have
set the industry on a progressive track. Removal of the restrictive environment has
helped restructuring, and enabled industry to absorb new technologies, aligning itself
with the global development and also to realize its potential in the country. The
liberalization policies have led to continuous increase in competition which has
ultimately resulted in modernization in line with the global standards as well as in
substantial cut in prices. Aggressive marketing by the auto finance companies have
also played a significant role in boosting automobile demand, especially from the
population in the middle income group.

The Automobile Industry in India has seen a booming phase in this era, with many
automobile giants entering the Indian market with their models, readily available,
without much waiting time for the delivery. Major car manufacturers such as Suzuki,
Ford, Toyota, General Motors, Skoda, Hyundai, Honda, Renault, Mitsubishi, Nissan,
Volvo, Audi, BMW and Benz, set up their manufacturing units in India with Joint
Venture collaboration with Indian companies. These foreign manufacturers began to
compete with the domestic players such as Hindustan Motors, Tata Motors, and Fiat
India etc. to increase their market share, with their highly technological, innovative
and attractive models of passenger cars. Sudden interest of major global players has
made Indian automobile industry very competitive, as India provides twin benefit of
ready market and low cost manufacturing base for them. With the explosion of the

11
automobile industry, due to its globalization and liberalization, car manufacturers
introduced much innovative and technological advancement in their vehicles.

As the car manufacturers are now open to competition consequent to removal of

restrictions by the government on market entry and exit, capacity addition and
technology adoption, they are faced daily by whole sets of challenges and
opportunities. Decision to be made includes location of production, mode of entry and
marketing strategies, for example, and all have significant ramifications for marketing
and corporate performance. They have to be flexible enough to respond rapidly to
competition and market changes, and in order to surpass their competitors, they need
to create competitive advantage and then sustain it through the appropriate fit business
strategies. Competition is the starting point of strategy. If there is no competition,
there is no need of strategy. Consumers, meanwhile, are exposed to a plethora of
domestic and foreign products and brands, among which choices have to be made.
They have even started thinking to change over to the new models of cars, with
related ease than before, to suit their changing life styles. This indicates that within
just over a decade and a half, the automobile industry landscape has changed
completely.

There is a sea change in government policies, automobile business environment and

customer expectations. Among various products, buying cars is more sensitive
because it deals with health and safety of human life. Consequently, understanding the
bases on which consumers select the models of cars poses another strategic challenge
for the car manufacturers. The aim of todays car manufacturers marketing is to
delight their customers perfectly better than their competitors. This goal ensures their
survival in the market arena. For this purpose car manufacturers adopt different
strategies and spend a significant amount of money for their promotional activities as
well as paying a handsome salary to their marketing personnel. On the other hand,
these companies try to understand their buyers behavior.

Therefore, possibly the most challenging concept in the marketing is to deal with
understanding the buyer behavior. The attitude of Indian consumers has undergone a
major transformation over the last few years. The Indian consumer today wants to lead a
life full of luxury and comfort. He wants to live in present and does not believe in savings
for the future. Thus, understanding how consumers make buying decisions can increase
the car manufacturers probability of getting success in the market. The

12
consumer decision-making process consists of a series of steps which the consumer
undergoes when select, purchase, use, or dispose of products, services, ideas or
experiences to satisfy needs and wants (Nelson, 1999). First of all, the consumer takes
decision to solve a problem of any kind. This may be the problem of buying a car
model to fulfill the family transportation needs in home. For this, information search
is carried out, to find how the transportation can be provided, e.g. by compact segment
or, by a midsized segment car. This leads to the evaluation of alternatives and a cost
benefit-analysis is made to decide which car model and brand image will be suitable,
and can take care of the problem suitably and adequately. Thereafter the purchase is
made and the car model is used by the consumer. The constant use of the car model
leads to the satisfaction or dissatisfaction of the consumer, which leads to repeat
purchases, or to the rejection of the car model.

There is obviously a strong link between consumer satisfaction and retention.

Consumers perception of service and quality of car model will determine the success

or failure in the market. Marketers can justify their existence only when they are able
to understand consumers needs and wants and satisfy them. With better understanding of
consumers perceptions, car manufacturers can determine the actions required to meet
the customers needs and wants. They can identify their own

strengths and weaknesses, where they stand in comparison to their competitors, chart
out the path future progress and improvement. Customer satisfaction measurement
helps to promote an increased focus on customer outcomes and stimulate
improvements in the work practices and processes used within the company.

Consumer behavior occurs either for the individual, or within the context of a group.
Thus consumer buying behavior focuses on how individual or group make decisions
to spend their available resources like time, money and effort on consumption related
items. Product use is usually of increased interest to the marketer, as this might
influence how a product is best positioned or it will encourage increased
consumption.

The marketing strategy is successful if consumers can see a need which a companys

product can solve and, offers the best solution to the problem. For a successful
strategy, the marketer must lay emphasis on the product/brand image in the
consumers mind. Position the product according to the customers likes and dislikes.

The brand which matches the desired image of a target market sells well. Sales are
13
important and sales are likely to occur if the initial consumer analysis was correct and
matches the consumer decision process. Satisfaction of the consumer, after the sales
have been affected, is important for repeat purchase. It is more profitable to retain
existing customers, rather than looking for new ones (Hawkins, Best, and Coney,
1983). The figure below gives an idea of the above discussion.

Figure 1.3: Creating Satisfied Customers

Companys Total
Product

Competitors Consumers Superior Value Sales

Total Product Decision Process Expected

Consumers Perceived Value

Decision Process Delivered

Source: Hawkins, Best, and Coney, Implementations of Marketing Strategy, 1983

Developing an effective marketing strategy requires the car manufacturers to consider

a variety of factors to insure that the strategy is successful. In addition to an
assessment of their capabilities, the car manufacturers must also evaluate changes in
overall business conditions, competition, regulation, and consumer buying behavior.
While this is sufficiently complex when the car manufacturers have to plan their
marketing strategies to create a position that is attractive to target customers on one
hand and a good source of cash flow for their business on the other. Achieving a
certain level of market-share is the key factor in the success of a marketing strategy
and it directly depends on the strength of companys product positioning and
market effort. This means that weak product marketing even with a strong product
will fail to deliver a designed level of market share, thus, the car manufacturers need
both in order to succeed.

There are many strategies for marketing and positioning brands, and many of these
can be formed into powerful combinations. Car manufacturers have learnt to harness
the power of marketing by using a combination of two or more strategies. Some
naturally go together, like features and benefits are so close that they are inevitably
combined.

There are various parameters on the basis of which a car manufacturer can create a
brand identity and market the product. These parameters can be on the basis of
attributes of the product, with respect to benefits derived, price and quality,

14
application, product class, target market, endorsement, competitive features and even
on the basis of psychological factors.

Marketing strategies are often designed to influence consumer behavior and lead to
profitable exchanges. Each element of the marketing mix can affect consumers in
different ways (Peter and Donnelly, 2004). There are individual and environmental
influences that have an impact on the choice method of consumers. Individual
characteristics represent motives, values, lifestyle, and personality; the social
influences are culture, reference teams, and family. Situational influences, like a
consumers money condition, additionally influence the consumption choice method.

The present study has incorporated several elements, which influence customer
decision-making like values, lifestyle, temperament and culture.

The positioning decision is central to the success of a brand (Pham and

Muthukrishnan, 2002; and Punj and Moon, 2002) as it directly shapes customers
perceptions and brand choice decisions (Aaker and Shansby, 1982; and Carpenter,
Glazer, and Nakamoto, 1994). Positioning is the act of designing the companys
offer and image so that it occupies a distinct and valued place in the target
consumers minds. It starts with a product, a piece of merchandise, a service, a
company, an institution or even a person. But positioning is not what one does to the
product; it is what one does to the mind of the prospect. That is, position of the
product is in the mind of the prospect.

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

1.4. Marketing Strategies The Literature Gaps

For the past four decades, marketing is thought to have significantly contributed to car
manufacturers outstanding results. Many academicians as well as industry experts
strongly believe in the strategic role of marketing in the present automobile business

15
operations and performance. However, contribution of marketing strategy to car
manufacturers performance, success and, indeed, to influence car buyers brand

preference, satisfaction and loyalty by adding consumer value has been questioned
and criticized.

Many of the researchers have argued that traditional marketing strategy is inadequate
for the businesses and it lacks customer orientation (Booms and Bitner, 1981;
Gronroos, 1994; Rafiq and Ahmed, 1995; Webster, 1998; Gombeski, 1998; OMalley

and Patterson, 1998; Day and Montgomery, 1999; Lovelock, 2001; Akroush, Shible and
Khawaldeh, 2005; and Akroush, 2010). The rationale behind their argument is that
marketing needs a paradigm shift due to changing business environment and customers
needs and wants, unprecedented advancements in information technology, severe
competition and emerging new competitive spheres and changes in regulatory
environments nationally and globally. This stream of research has introduced relationship
marketing, a paradigm shift, as an alternative paradigm to transactional
marketing which has contributed to the marginal influence of marketing in todays

business performance (Webster, 1992; Gummesson, 1994; Morgan and Hunt, 1994;
Gronroos, 1996, 2004; Payne and Frow, 2005; and Osarenkhoe and Bennani, 2007).
Their argument is that relationship marketing should be adopted as a new marketing
strategy for businesses which should lead to achieve the intended performance levels.
However, recent empirical evidence (Hakansson and Waluszewski, 2005; Zineldin
and Philipson, 2007; and Akroush, 2010) indicates that relationship marketing and
transactional marketing paradigms are complementary paradigms rather than a
paradigm shift.

Among this marketing controversy, leading marketing scholars have expressed serious
concerns about marketings strategic role, its identity as well as its impact on
companys performance (Day, 1992; Hunt, 1992; Srivastava, Tasadduq and Liam,
1998; Varadarajan and Jayachandran, 1999; and Day and Montgomery, 1999). They state
that there has been a considerable decline in marketings strategic influence in
companies and, its influence on consumers decisions is marginal at best.

The debate continues when a stream of researchers has approached the contribution of
positioning strategy to influence car buyers brand preference. They argue that despite
the importance of the positioning concept, there is lack of empirical research
examining the role of positioning strategies in consumers categorization processes of

16
brands. While it is well established that consumers perceive brands as similar when
they share the same (product) attributes (Tversky, 1977), it is unclear whether brands
sharing the same type of positioning strategy (i.e., positioning base) are also perceived
as similar by consumers. In fact, the question whether and to what extent positioning
information incorporated in marketing communications influences car buyers brand

categorization processes has not received empirical attention in the literature. In this
context, car buyers may perceive a brand as distinct or similar to other car brands due
to numerous (external) criteria which are not explicitly communicated, such as their
visually accessible or inferred features, price perceptions, appropriateness-in-use,
personal goals, expertise, or prior experience with the product (Bijmolt, Michel, Rik
and Wayne, 1998; Friedmann and Lessig, 1987; Day, Shocker, and Srivastava, 1979;
Dub and Schmitt, 1997; Graeff, 1997; Lefkoff-Hagius and Mason, 1993; Ratneshwar
Lawrence, Cornelia and Melissa, 2001; and Sujan and Dekleva, 1987).

A rather thorny issue in brand positioning research concerns the question of which
positioning strategy is best; for example, do car brands which are positioned on

tangible brand aspects (i.e., features) perform better than the brands positioned on
intangible aspects (e.g., user imagery)? Interestingly, past empirical research has not
paid much attention to this question (Keller and Lehmann, 2006; and Pham and
Muthukrishnan, 2002).

In the light of this debate, the unanswered question remains: how does car
manufacturers marketing strategy impact consumers brand preference? This is an

important question for top management and marketing managers of car companies.
Traditionally, the success of marketing strategy has been evaluated by either financial
outcomes such as return on investment and market share (Buzzell and Wiersema,
1981; Leonard and Sasser, 1982; Philips, Chang and Buzzell, 1983; Wind and
Robertson, 1983; Jain and Punj, 1987; and Appiah-Adu, 1998, 1999) or by customer
outcomes such as customer satisfaction and customer loyalty (Fornell, 1992;
Anderson, Fornell and Lehmann, 1994; and Akroush et al., 2005). Such behavioral
outcomes lead into superior performance as measured by financial metrics. Although
this is well documented in literature, the contribution of marketing strategy to
influence customers brand preference, satisfaction and loyalty by increasing
customer value is still incomplete in Indian automobile industry.

17
Having established that marketing strategies are grouped together, the purpose of the
current study is to analyze the effectiveness of the major marketing strategies of car
manufacturers from a consumer perspective and thus provide marketing people in
Indian automobile industry with empirically based insights for making sound
marketing decisions. For this purpose, the researcher uses the factors influencing
consumer decision making, integrated marketing mix strategies, main positioning
bases, namely feature positioning, direct benefit positioning, indirect benefit
positioning, and surrogate positioning and the strategic marketing tools namely
electronic marketing and customer relationship management.

While many academics and executives strongly believe in the strategic role of
marketing in automobile industry since it has contributed, and will contribute in the
future, to car manufacturers success, they relatively lack concrete empirical evidence

regarding marketings strategic influence on car buyers brand preference, satisfaction

and loyalty. This under-researched area is the main theme of this research.

More specifically, brand positioning has an impact on important consumer-based

outcome variables such perceived price sensitivity (Kalra and Goodstein, 1998), brand
affect (Jewell and Barone, 2007) as well as on customer derived brand equity, price
margins and demand elasticity (Boulding, Lee and Staelin, 1994; Kalra and
Goodstein, 1998; and Keller, 1993, 2003). Essentially, a well-positioned brand appeals
to the particular needs of a customer segment, leads to high consumer loyalty,
positively shaped preferences and beliefs about brand value, and greater willingness to
search for the brand (Day 1984; Schiffman and Kanuk, 2007; and Trommsdorff and
Paulssen, 2005). Ultimately, positioning has an impact on the financial performance of
a company (Day, 1990; Roth, 1992, 1995a, 1995b; and Urban and Hauser, 1993). In
general, if the positioning by a company is done effectively, it has the potential to
build powerful brands; however, if done incorrectly, it can also result in fatal branding
disasters (Haig, 2005).

Based on target customer needs, a car manufacturer must develop a product identity,
that is, in some way different and superior to competitors product identities. In a

price sensitive market, generally low prices as source of differentiation is valued by

target customers. For markets in which differentiation is possible and valued by target
customers, a variety of differentiation strategies are possible. Product differences,
service differences and brand image differences are meaningful to the customers and
18
the offer differentially superior to competitors, can create a more attractive product
Identity.

Many customers are not seeking the lowest price, and many are willing to pay a
higher price for products that deliver important customer benefits. Differences in
product durability, reliability or performance can attract customers who are seeking
products in these areas. Thus starting with the target customer needs, a car
manufacturer can seek to develop an attractive product position by differentiating their
product on a product difference that is meaningful to target customers.

Brand benefits such as strong association with prestige and status are important to
many target customers, and these are the basis of product marketing. A strong brand
enhances positive evaluations of a products quality, maintains a high level of product

awareness and provides a consistent image or brand personality. Thus brand image or
personality can be an important source of differentiation and marketing strategy.

Academics and industry experts argue that customers are won over not by the product
and price alone but by the service and happy experience too. Any customer who has
been happy with the service received is likely to be loyal to the company and most
probably he will be ready to compromise or overlook certain defects over superior
quality of service. This is not all. When a company has one happy customer, it can be
sure that in good time that happy customer will refer many more customers from his
social friends circle as well as family too. This can be a double edged sword. In case a
customer is not happy with his experience or the product, he can spread talk ill about
the company as well as the product to his friends and family too.

As the fast changing automobile industry environment has provided so many inputs in
terms of both the product package and emotional images built into them that
influences car buyers behavior and keeps their preferences in a constant state of flux.

The information revolution and intensifying competition places a large amount of

solicited information at the buyer's disposal before purchasing a car. The
informational inputs, advocating the merits of each car model influence the buyer
decision to a great extent. There are various other factors that influence the buyer
behavior may also be the topics of interest from the car manufacturers point of view.

For instance, marketers are very much familiar with the five stages of the customer
buying process, around which marketing activities can be planned and implemented.

19
Within each stage, marketers have the opportunity to improve the customer experience
and influence the customer through all stages toward a purchase. However, the mass
adoption of the Web channels like websites and online forums/communities among
customers has shifted the stages of the customer buying process from a mostly offline
activity to an increasingly online activity. Many customers now go through the entire
buying process online, or use the online channel though multiple steps of the process.
For instance, a car buyer may recognize his/her wants for a car after watching an
online advertising, collect data about the car online, look for references and
recommendations about the car by posting a topic on an online forum or by chatting
with somebody online and then make the purchase decision of the car at a nearby
dealer shop. So, marketers must respond with specific e-marketing techniques that
address each stage of the process.

Customer relationship management is as old a concept as marketing itself. Companies

always whether by accident or by design make attempts to encourage repeat buying
from regular and frequent consumers. However, as markets worldwide become highly
competitive, companies are desperately looking for ways and means to differentiate
their offerings from those of their competitors. 'Customer Relationship Management'
seems to have emerged as a strategic management tool which is being adopted by
most companies to retain customers, lest they should shift their loyalties to another
company.

On that account, whether to remain loyal to their existing brand / product or to switch
over to a new brand / product is a million dollar question that bother many car
owners. There lie the fortunes of many automobile manufacturers and retailers. In this
confusing scenario, some of the car buyers switch from one brand to another at trade-
in time, whereas some other car owners display consistent choice of sticking to their
brand / product from purchase to purchase, as hypothesized by Sambanandam and
Lord (1995), in their research studies (Sambanandam and Lord, 1995). Illingworth
(1991), illustrated that when it comes to the product evaluation stage, quality
products, positive showroom acoustics, ambience, positive showroom experience and
a consistent and formidable after-sales-service, are all essential and central to the
loyalty formula, and manufacturers have been concentrating on these considerable
efforts in these directions (Illingworth, 1991).

20
In this era of globalization, it has become imperative for car manufacturers to
understand the dynamics of the strategies of the domestics as well as multinational car
companies. A successful marketing strategy requires a thorough analysis of all the
value chain activities so that the balance between activities to be performed at the
global level and calls for a good understanding of customer requirements in each
market, where the company operates. In the new era of change the marketing
paradigms have changed from marketing mix to customer relationship through
optimizing their satisfaction and, thus, today market research, product design,
branding, positioning, choice of advertising agencies, pricing and selection of
distribution channels have become key issues in the marketing strategies.

More specifically, many studies dealt with similar as well as differing perspectives of
various significant integrated and individual marketing strategies of car
manufacturers. These previous studies have empirically examined the improvement in
the performance of firms in foreign countries including the integrated marketing
strategy studies of Gallasch, Grafe, Hans and Salter (2004); Stephens (2005); Tay
(2003); Ban, Belzowski, Gumbrich and Zhao (2005); Linker (2004); Welch (2003);
and Magee (2003). Additionally, many studies have been conducted and have
validated the marketing strategies of car manufacturers that affect organizational
performance. Examples include the studies of Shimokawa (2001); Johri (2000);
Petison and Johri (2006); Fongsuwan (1999); and Kertels and Porter (2003).
Subsequently, it is interesting to study how effective are the different marketing
strategies of car manufacturers to influence the consumers brand preference,
satisfaction and loyalty towards their car models in India. A few studies have
addressed the relative importance of different marketing strategies of car
manufacturers over others affecting consumer preferences in Indian context.

Consequently, to fill this gap in marketing literature, this research is designed to study
the strange buying behavior of consumer, the existing marketing strategies being
adopted by the car manufacturers and effectiveness of these strategies by examining
their impact on consumer buying decisions. The study includes an analysis of factors
that influence consumer buying decisions, satisfaction and loyalty and an attempt has
also been made to emphasize on the importance of social, cultural, personal and
psychological factors and their impact on the midsized segment car buyers preference
by considering consumers demographics as factor that will have an effect

21
on the marketing strategies of car manufacturers for consumers brand preference.
The present study also takes the initiative to understand the close relationship of post-
economic liberalization scenario of Indian automobile industry and the marketing
strategies through situational analysis including Porters five forces analysis, SWOT
analysis, and PEST analysis with a special reference to car industry in India.

1.5 Framework of Analysis

The post economic liberalization scenario of Indian automobile industry appears to be
a critical period for the study to understand the structure of Indian car industry and
stake out its position that is more profitable and less vulnerable to attack. Analysis of
the post liberalization scenario is intended to help the researcher to determine the
strength of the Indian car industry, profitability and competition.

To meet the challenges of competition, marketing of the brands in the respective

segment became utmost important. And, therefore, for the purpose of the present
research endeavor, the concept of marketing strategies in relation to passenger car
segment has been that the marketing strategy which can understand the requirements
of the customers for their optimum satisfaction that requires continuous market
research, new product designs, a range of brands, effective positioning, aggressive but
ethical advertising, competitive pricing and selection of most viable distribution
channel for after sale services.

On the whole, this study aims to analyze how the growth of automobile industry has
affected the competition among car manufacturers after economic liberalization in
India and demonstrate the extent to which the existing marketing strategies of car
manufacturers affect the consumer preferences, satisfaction and loyalty towards their
products. It considers two dimensions of automobile industry in relation to car
manufacturers, namely:

Post liberalization scenario of automobile industry, since this period plays a

vital role in determining the growth, competition and strength of automobile
industry; and

Existing marketing strategies being adopted by car manufacturers, since that

contributes to identify the reasons for the effectiveness of these marketing
strategies by analyzing impact on consumer brand preference, satisfaction and
loyalty, if any.
22
1.6 Focus of the Research
A number of studies have been conducted on automobile marketing strategies by the
scholars but after globalization particularly during the period of boom and recession
no study has been conducted on the subject and specifically in context of the car
manufacturers in India. And, therefore, the focus of the present study was on studying
the marketing strategies adopted by car manufacturers in the current global scenario,
evaluating the effectiveness of their strategies by analyzing the impact on consumer
and to suggest the strategies for the industry for better competitive edge in the
potential market like India and that is too in midsized car segment offered by these
companies.

23
 CHAPTER - II
INDIAN AUTOMOBILE
INDUSTRY:
POST LIBERALIZATION
SCENARIO
The growth prospects of a national economy are largely determined by its key

industries. In recent decades, the automobile industries in many countries have proven
to be one of the strongest drivers of technology, growth, and employment (Gottschalk
and Kalmbach, 2007) and its development has characterized global competitiveness of
leading industrialized economies. The automobile industry is fairly developed one and
involves huge investments in research and development and technology and is seen as
an indicator of the economic progress of a country. An understanding of the
automobile industry in some of the developed countries enables one to study the
emerging trends in developing countries (Choudhary and Goyal, 1997) like India.

The Indian Automobile Industry has got a tremendous market potential after economic
liberalization in 1990s like never before. The various tax reliefs by the Government of
India have made remarkable impacts on the industry. The country's large middle class
population, growing earning power, strong technological capability and availability of
trained manpower at competitive prices are also the reasons that attracted a large
number of multinational auto companies, especially from Japan, the U.S.A., and
Europe, entering the Indian market. At this juncture firstly, the study endeavors to
analyze the post- (deregulation and global environment) liberalization era.

Descriptive and analytical in nature, part of this study is based on secondary data
collected from various authentic and reliable sources like the reports and statistics
provided by Society of Indian Automobile Manufacturers (SIAM), ICRA and
Moodys, Economist Intelligence Unit (EIU) and Deloitte, International Organization

of Motor Vehicle Manufacturers (OICA), Govt. of India, trade journals and white
papers, industry portals, monitoring industry news and developments, and research
articles from various authors. The study is focused on making a situational/scenario
analysis (SWOT analysis, Porters Five Forces industry analysis and PEST analysis)
in this part, to provide with an understanding of the overall scenario of the Indian
automobile industry in the post-economic liberalization era.

2.1 Indian Automobile Industry Post-Economic Liberalization Era

Since the 1980s, the Indian car industry has seen a major resurgence with the opening
up of Indian shores to foreign manufacturers and collaborators. In the early 1990s, the
Indian economy faced a very serious economic slump that this almost self-sufficient
system had endured for decades finally led to a massive balance-of-payment crisis.
After the International Monetary Fund bailed it out, the Indian government had to take
a course of expedient actions toward liberalization and deregulation under the
guidance of the International Monetary Fund and World Bank (Jenkins, 1999; and
Joshi and Little, 1996). This period became the melting point for the industry in India
when large number of foreign players came into the country through collaborations
and partnerships. The face of the Indian automobile industry completely changed in
the open economy era post liberalization, which brought a remarkable change in the
Indian automobile industry. Yeong-Hyun (2003) called it a shift from CLP (controls,
licenses and protectionism) to LPG (liberalization, privatization and globalization).

In 1991, the Government of India embarked on an ambitious structural adjustment

programme aimed at economic liberalization, based on the pillars of De-licensing,
Decontrol, Deregulation and Devaluation. Post-liberalization, the Government of
India's new automobile policy announced in June 1993 contained measures, such as
de-licensing, automatic approval for foreign holding of 51 per cent in Indian
companies, abolition of phased manufacturing programme, reduction of excise duty to
40per cent and import duties of 'Completely Knocked Down units (CKD)' to 50per
cent and of 'Completely Built Up units CBU' to 110per cent, and commitment to
indigenization schedules (Mukherjee, 1997). The New Industrial Policy was drafted to
deregulate market entrance, production capacity and plant location in a wide range of
industries, and it was applied to the auto components sector in 1991 and the
automotive vehicles sector/passenger car industry in 1993 (Mohnot, 2001; and Ohri,
1997). No industrial license is required for setting up of any unit for manufacture of
automobiles except in some special cases. The norms for Foreign Investment and
import of technology have also been progressively liberalized over the years for
manufacture of vehicles including passenger cars in order to make this sector globally
competitive.

Liberalization of economic policies and the outward orientation introduced since 1991
brought about a dramatic change in this industry. These new measures effectively
dismantled the license raj, which had made it difficult for Indian firms to import
machinery and know-how, and had disallowed equity ownerships by foreign firms
(Krishnan, 2002). These newly implemented liberalization measures allowed two

25
local firms that had been specialized in light commercial vehicles, namely Tata
Engineering and Bajaj Tempo, to enter the passenger car industry.

Given the merits of market potential, India witnessed a rushed entry of global car
manufacturers in the auto industry. With ten of the worlds leading automobile
companies having set up new production facilities around the country, Indias
passenger car industry has experienced in the past decade a substantial increase in
production, a wave of new models, and unprecedented marketing wars among
automobile companies. The worlds major carmakers in the first five years following

liberalization were Daewoo, Mercedes-Benz (later changed to DaimlerChrysler), Fiat,

General Motors Opel, Ford, Honda, Hyundai, Mitsubishi, PSA Peugeot Citroen and
Toyota. Volvo jumped into the commercial vehicle industry, where local
manufacturers, such as Tata Engineering, Ashok Leyland and Bajaj Tempo, had been
dominant. Today, multi-national companies are using India as a manufacturing "base
for exporting vehicles to other countries". The growth rate of the Indian automobile
industry is well over 25 per cent, which is enormously larger than other developing
countries like Korea and Brazil (Mukherjee, 1997).

By the April of 1996, there were about eighteen automobile companies that had either
begun operations in India or were in the process of launching in the country. As a
result, while initially there were only about three vehicles to choose from, consumers
now have wide variety of options (Mukherjee and Sastry, 1996). Further in 1997,
some more reforms were made where new foreign entrants required establishing
actual production facilities, the minimum foreign equity was raised to $50 million,
and the minimum indigenization was to be 50 per cent in the third year and 70 per
cent in the fifth year.

While India has been able to attract a large amount of automotive capital in the past
decade, its market has not grown as fast as many expected. The countrys small,
stagnant market has forced auto companies to scramble for the right models to meet
Indian consumers needs and to look for exporting markets to shore up efficiency in

production. While the export of cars from India is still minimal, that of auto
components has increased dramatically since liberalization. Thanks to numerous
collaborations and joint ventures with global companies, the Indian auto component
industry has been greatly upgraded in both technology and finance and gained
competitiveness in global markets. Auto companies have become highly creative in

26
running the just-in-time system and overcoming the countrys business-unfriendly
transportation infrastructures. The buyer-supplier relationships have been characterized
by carmakers single sourcing and suppliers multiple supplying, both reflecting
Indias market conditions, governments auto policies and, in general,
history of the auto industry.

Again in 2002, the government altered auto policy allowing 100 per cent Foreign
Direct Investment in Indian automobile industry. With 100 per cent Foreign Direct
Investment, the Indian auto industry became a level playing field, with
governments role reduced to providing direction to the industry. The new automobile
policy attracted a large number of automobile companies and almost all the global
auto companies established facilities in India. These included GM and Ford from US,
Toyota and Honda from Japan, seven (Fiat, BMW, Mercedes-Benz, Audi,
Volkswagen, Volvo, and Porsche) European and two (Hyundai and Daewoo) South
Korean companies. All these measures resulted in tremendous increase in the
production levels, from 2 million in 1992 to 9.7 million in 2006 (Mukherjee, 2000).

Every major shift in policies made by the Indian government, the automotive industry
has come out stronger and better. While the shift in policies seems to have mostly
been brought by chance events, the Indian government has at least to be credited for
making the right decisions and implementing them correctly. It is paradoxical that the
Indian middle class, the most attractive feature for foreign investment in the
liberalization phase, was an outcome of the statist ideologies in the regulatory phase.
The product innovations of domestic firms like Tata Motors and Bajaj Auto today are
the fruits of indigenization and protection policies of the regulatory phases (Ranawat
and Tiwari, 2009).

A study by Rathore and Swarup (2006) estimated that sales of vehicles in India were
roughly around one million units per annum by the year 2006. However, they say that
this level of sales is "abysmally low" if one were to take into account the other
developing countries such as Pakistan and Sri Lanka where the penetration level is
still higher. The penetration level in India is substantially low at seven cars per one
thousand people. They thus say that even at the level of one million units per annum,
"this is just the tip of the iceberg" (Rathore and Swarup, 2006).

27
To maintain this high rate of growth and to retain the attractiveness of Indian market
and for further enhancing the competitiveness of Indian companies, the Government
through the Development Council on Automobile and Allied Industries constituted a
Task Force to draw up a ten year Mission Plan for the Indian Automotive Industry.
The challenge was to give shape to a futuristic plan of action with full participation of
the stakeholders and to implement it in a mission mode to remove the impediments
coming in the way of growth of industry. Besides making concerted efforts for
removal of obstacles for accelerated growth, the prime need was to put in place
required infrastructure well in time to facilitate growth. Through this Automotive
Mission Plan 2006-2016, Government also wants to provide a level playing field to all
players in the sector and to lay a predictable direction of growth to enable the
manufacturers to take more informed investment decision (Automotive Mission Plan,
2007).

The Automotive Mission Plan 2006-2016 was released in 2007, which visualizes India
emerging as a destination of choice in the world for design and manufacture of
automobiles and auto components with output reaching a level of $ 145 billion
accounting for more than 10 per cent of the GDP and providing additional
employment to 25 million people by 2016. LPG also had a positive impact on other
sectors vital for automobile industry to thrive. In education sector, thrust on technical
education resulted in setting up of numerous engineering colleges and allied technical
institutes, between 1991 and 2006, increasing the availability of skilled manpower
manifold. Availability of trained engineers and technical personnel propelled further
pursuits technology improvements, research and development, advanced
innovations, benchmarking exercises and borrowing best practices, etc. Presence of
efficient manpower, availability of advanced technology, low-cost labour and
availability of raw materials and ancillary units helped in enhancing production
capacities and reducing cost per unit (Automotive Mission Plan, 2007).

Now this industry is fully capable of producing various kinds of vehicles comprising
passenger cars, commercial vehicles, three wheelers and two wheelers which presents
a galaxy of varieties and models meeting all possible expectations and globally
established industry standards. There are 11 essential categories of vehicles on Indian
roads as on date. They are: scooters, motorcycles, mopeds in two-wheeler segment;
passenger carrying and load carrying in three-wheelers segment; passenger cars,

28
(including taxis) multi-utility vehicles, light commercial vehicles, buses and trucks
and tractors in four- and six-wheeler segments. In each category, there are a number
of manufacturing firms and they produce different models of vehicles of varying sizes
and capacities. Some of the leading names echoing in the Indian automobile industry
include Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Hyundai Motors,
Honda and Hindustan Motors in addition to a number of others.

At present 100 per cent Foreign Direct Investment is permissible under automatic
route in this sector including passenger car segment. The import of
technology/technological up-gradation on the royalty payment of 5 per cent without
any duration limit and lump sum payment of USD 2 million is also allowed under
automatic route in this sector. With the gradual liberalization of the automobile sector
since 1991, the number of manufacturing facilities in India has grown progressively.
The cumulative production of automobile for April-December 2011 registered a
growth of 14.94 per cent over same period in 2010 and in December 2011 it increased
by 10.91 per cent year-on-year (ASA and Associates, 2012).

Automobile Industry comprises of automobile and auto component sectors and is one
of the key drivers of the national economy as it provides large-scale employment,
having a strong multiplier effect. Being one of the largest industries in India, this
industry has been witnessing impressive growth during the last two decades. It has
been able to restructure itself, absorb newer technology, align itself to the global
developments and realize its potential. This has significantly increased automotive
industry's contribution to overall industrial growth in the country.

2.2 Effects of Globalization, Liberalization and Deregulation Policy

of India on the Growth of Automobile Industry
The industry is poised for a giant leap forward as it is being rapidly integrated into the
global automobile supply chain. Global automobile firms are looking towards India
not only for its growing market but also as an efficient supplier base. The researcher
evaluated various secondary studies conducted on the automobile industry in India by
other researchers.

Pingle (2000) reviews the policy framework of Indias automobile industry and its

impact on the growth. While the ties between bureaucrats and the managers of state-
owned enterprises played a positive role especially since the late 1980s, ties between

29
politicians and industrialists and between politicians and labor leaders have impeded
the growth. The first phase of 1940s and 1950s was characterized by socialist
ideology and vested interests, resulting in protection to the domestic auto industry and
entry barriers for foreign firms. There was a good relationship between politicians and
industrialists in this phase, but bureaucrats played little role. Development of
ancillaries segment as recommended by the L.K. Jha Committee report in 1960 was a
major event that took place towards the end of this phase. During the second phase of
rules, regulations and politics, many political developments and economic problems
affected the auto industry, especially passenger cars segment, in the 1960s and 1970s.
Though politicians picked winners and losers mainly by licensing production, this
situation changed with oil crises and other related political and macro-economic
constraints. The third phase starting in the early 1980s was characterized by de-
licensing, liberalization and opening up of FDI in the auto sector. These policies
resulted in the establishment of new LCV manufacturers (for example, Swaraj Mazda,
DCM Toyota) and passenger car manufacturers. All these developments led to
structural changes in the Indian auto industry. Pingle (2000) argues that state
intervention and ownership need not imply poor results and performance, as
demonstrated by Maruti Udyog Limited. Further, the non-contractual relations
between bureaucrats and Maruti Udyog Limited dictated most of the policies in
the1980s, which were biased towards passenger cars and MUL in particular. However,
DCosta (2002) argues that success of Maruti Udyog Limited is not particularly
attributable to the support from bureaucrats. Rather, any firm that is as good as Maruti
Udyog Limited in terms of scale economies, first-comer advantage, affordability,
product novelty, consumer choice, financing schemes and extensive servicing
networks would have performed as well, even in the absence of bureaucratic support.

Piplai (2001) examines the effects of liberalization on the Indian vehicle industry, in
terms of production, marketing, export, technology tie-up, product up-gradation and
profitability. Till the 1940s, the Indian auto industry was non-existent, since
automobile were imported from General Motors and Ford. In early 1940s, Hindustan
Motors and Premier Auto started, by importing know-how from General Motors and
Fiat respectively. Since the 1950s, a few other companies entered the market for two-
wheelers and commercial vehicles. However, most of them either imported or

30
indigenously produced auto-components, till the mid-1950s, when India had launched
import substitution programme, thereby resulting in a distinctly separate auto-
component sector. Due to the high degree of regulation and protection in the 1970s
and 1980s, the reforms in the early 1990s had led to a boom in the auto industry till
1996, but the response of the industry in terms of massive expansion of capacities and
entry of multinationals led to an acute over-capacity. Intense competition had led to
price wars and aggressive cost-cutting measures including layoffs and large-scale
retrenchment. While Indian companies started focusing on the price-sensitive
commercially used vehicles, foreign companies continued utilizing their expertise on
technology-intensive vehicles for individual and corporate uses. Thus, Piplai (2001)
concludes that vehicle industry has not gained much from the reforms, other than
being thrusted upon a high degree of unsustainable competition.

In August 2006, a Draft of Automotive Mission Plan Statement prepared in

consultation with the industry was released by the Ministry of Heavy Industries and
Public Enterprises. This was finally released as a report in December 2006. This
document draws an action plan to take the turnover of the automotive industry in India
to US$145 billion by 2016, accounting for more than 10 per cent of the GDP and
providing additional employment to 25 million people, by 2016. A special emphasis is
laid on small cars, MUVs, two-wheelers and auto-components. Measures suggested
include setting up of a National Auto Institute, streamlining
government/educational/research institutions to the needs of the auto industry,
upgrading infrastructure, considering changes in duty structure and fiscal incentives
for Research and Development. Similarly, NMCC (2006), which lays down a national
strategy for manufacturing, recognizes the importance of the Indian automobile and
auto-component industry, particularly the latter, as a competitive knowledge-based
industry with immense employment generation potential.

ACMA (2006) notes that Indias joining the WP (Working Party) 29: 1998

Agreement for global harmonization of automotive standards, coupled with the

funding of National Automotive Testing and Research Infrastructure Project
(NATRIP) by the Government of India, has increased prospects of the Indian auto
industry rising up to global standards in the near future, in all aspects.

Narayanan (1998) analyses the effects of deregulation policy on technology

acquisition and competitiveness in the Indian automobile industry during the 1980s

31
and finds that competitiveness has depended on the ability to build technological
advantages, even in an era of capacity-licensing. In a liberalized regime, this would
depend on firms ability to bring about technological changes, as inferred from the

behavior of new firms in the sample considered. Further, vertical integration could
score over subcontracting in a liberal regime. This is probably because of the entry of
new foreign firms that produce technologically superior and guaranteed quality
vehicles and choose to produce most of the components in-house. Narayanan (2004)
analyses the determinants of growth of Indian automobile firms during three different
policy regimes, namely, licensing (1980-81 to 1984-85), deregulation (1985-86 to
1990-91) and liberalization (1991-92 to 1995-96). Unlike the prediction by Narayanan
(1998), this study finds that vertical integration is detrimental for growth in a
liberalized regime as it potentially limits diversification. Narayanan (2006) also finds
that vertical integration plays a positive role in a regulated regime, while it is not
conducive for export competitiveness in a liberal regime.

Kathuria (1996), notes that the time-bound indigenization programme for commercial
vehicles in the 1980s facilitated the up-gradation of vendor skills and modifying
vehicles to suit local conditions, which demand functional efficiency, overloading
capabilities, fuel economy, frequent changes in speed and easy repair and
maintenance. Kathuria (1996) also mentions that the choice between vertical
integration and subcontracting crucially depends on the policy regime: In a liberal
regime, vertical integration may not work.

Sharma (2006) analyses the performance of the Indian auto industry with respect to
the productivity growth. Partial and total factor productivity of the Indian automobile
industry have been calculated for the period from 1990-91 to 2003-04, using the
Divisia-Tornquist index for the estimation of the total factor productivity growth. The
author finds that the domestic auto industry has registered a negative and insignificant
productivity growth during the last one and a half decade. Among the partial factor
productivity indices only labour productivity has seen a significant improvement,
while the productivity of other three inputs (capital, energy and materials) havent
shown any significant improvement. Labour productivity has increased mainly due to
the increase in the capital intensity, which has grown at a rate of 0.14 per cent per
annum from 1990-91to 2003-04.

32
The automobile industry is typically considered to be the forefront of globalization.
No doubt, the automobile industry is technically advanced but the increasing
integration of low income countries into the global division of labor has put
competitive pressure on traditional automobile producing countries. The multinational
companies are investing in low income countries, resulting in increase in foreign
direct investment which is further leading to emergence of new automobile producers
and exporters in different parts of the world including India. The sector is not only
progressing in terms of production, sales etc. but also adopting the moderate work
systems and human resources policies like personal focused comprising job
satisfaction, health system and social support, organizational focused comprising
organization commitment and perception of organizational justice (Zacharatos,
Herschovis, Turner and Barling, 2007)

Mukherjee and Sastry (1996) have made a comparison between the automobile
industries of South Korea, Brazil, China and India and also identify some factors that
can lead to better performance. Although South Korea was a late entrant than Brazil in
the automobile industry but still it has made much progress. Different factors like
government support, clear vision of becoming a world class industry, retaining
management control, more investment in Research and development and acquiring
product development categories have helped South Korea to develop at a better pace.
The other three countries have not invested much in these factors. The markets in
Brazil, China and India are dominated by small car segment. Lean production system
has not been adopted majorly. Supplier industry has also not been developed properly
in these countries. However, due to stagnation in developed markets and increasing
capacity in developing and emerging markets, the monopoly of developed nations
over car production could erode, although they will continue to dominate product
development.

Mukherjee and Sastry (1996) also discuss that penetration of passenger cars in rural
and semi- urban areas is extremely low and could provide fresh markets. They
opinion that new entrants will have to deal with uncertainty of demand, different and
evolving customer needs, a relatively poor supplier base, a market crowded with
competition and industry wide capacity shortages. They see the prospect of India
emerging as a significant manufacturing base for exports. They conclude that in the
highly price sensitive market, reduction of prices because of lower duties and taxes

33
and progressive indigenization, and rising middle class incomes are likely to further
increase industry growth rates.

Sagar and Chandra (2004) have stated how the Indian car industry has transformed
from a protected business to a global one. During the process, the Indian car industry
has advanced technologically, driven by a confluence of factors such as intense
competition, demanding consumer preferences, government policies (especially
tightening emission standards), and the global strategies of the various players. They
elaborate that cars manufactured in India are based on designs, incorporating
advanced technologies, that are often comparable with those available globally and
Indian car exports are also growing in the post liberalization era.

Pillai (2009) reported that the car sales are getting into a steady stage, in the month of
December 2008. In spite of the general slump in automobile market, the used car
segment has not taken much of a beating. Many of the dealers reported steady sales in
December 2008, contrary to the negative sales in the previous few months. This is
attributed to the package announced by the Government of India for the automobile
industry in terms of reduction in the excise duty of cars, and attractive packages
announced by the car manufacturers.

Many players have been considering India as their global manufacturing hub for small
cars and governments new auto policy are further designed to promote such
developments. But, as the global integration of Indian economy goes on and as other
developing countries are also emerging as prominent global players, the industry is
likely to face more challenges and in order to meet these challenges, the Indian
automobile manufacturer as well as the related industries like auto-component
suppliers will have to build on their ongoing progress and continue to strengthen their
technological capabilities with the support of public policy that needs to pay more
attention on the drivers of technological change.

2.3 Car industry in India The Current Scenario

The Indian Automobile industry has good potential in the existing and future scenario.
All the leading car manufacturers have become major players and are manufacturing a
wide range of cars in various categories in India. Moreover the globalization and
liberalization impact on car industry is huge and significantly contributes to increase
the levels of the usage of passenger cars at grassroots levels.

34
As per a report by Deloitte in 2011, Indian passenger car market has almost
quadrupled over the decade as a result of good economic performance (10% CAGR in
GDP PPP over the decade). Amongst the Asian countries, India was the fourth largest
exporter of passenger cars with Chennai accounting for approximately 60 per cent of
the exports (Deloitte, 2011).

The report further explains that the passenger cars comprise of 75 per cent share of the
total production of cars and commercial vehicles. China is the leader with 23.51 per
cent of the total production, followed by Japan with 12.39 per cent, USA with 9.9 per
cent, Germany with 7.6 per cent, South Korea with 5.5 per cent and India with 4.58
per cent of the total global vehicle production in 2009-10. The passenger car density
per thousand people in major markets of the world is highest for USA with 1200
vehicles, Germany with 500, UK with 463, Japan with 445, South Korea with 246,
Russia with 188, Brazil with 158, Turkey with 85, China with 45 and India continues
to have one the lowest car density with 13 (Deloitte, 2011).

Table 2.1: Passenger car density

Country Passenger car density

(Per 1,000 persons)
United States of America 1200
Germany 500
United Kingdom 463
Japan 445
South Korea 246
Russia 188
Brazil 158
Turkey 85
China 45
India 13
Source: EIU, Deloitte, 2011

The domestic passenger car industry has been on a relatively steady growth phase
over most of the last decade and has registered a 10 years CAGR of 10.3 per cent
during the period. It has been one of the few markets worldwide which saw growing
passenger car sales during the liquidity crisis and recessionary phase witnessed during
financial year 2009 (ICRA, 2011a). Buoyant economic growth, rising disposable

35
income levels, favorable demographics, strong growth from tier II/III cities and rural
India, together with improving availability of vehicle financing at competitive interest
rates have been the key factors fuelling growth in the Indian passenger vehicle
market. The growth has also been supported by car manufacturer led initiatives like
whole host of new model offerings from both from existing companies as well as new
entrants in the market. Furthermore, in India, the car prices have remained relatively
flat over the years compared to steadily rising per capita income levels.

However, since the beginning of 2011-12, the industry witnessed a slowdown in

volume growth marred by rising inflation, hardening interest rates and increasing fuel
prices that have combined to dent consumer sentiment. Even the festive season failed
to stoke domestic demand despite new model launches, aggressive discounts and
promotional schemes offered by car manufacturers. Apart from macro-economic
headwinds dampening demand, events such as production disruption at Indias largest

car manufacturer, Maruti Suzuki, the tsunami in Japan and the recent floods in
Thailand also created supply chain stresses, further aggravating the weak performance
of the passenger car industry. The above demand-supply pressures effectively
translated into a decline in domestic volumes by 0.5 per cent year over year in 8
months in the financial year 2012 (Moneycontrol, 2011).

Within segments, the small car and executive car segments have been the worst
impacted so far, even as volume growth in the mid-size car segment and utility
vehicles (UVs) segment remained in the positive zone. With steady increase in fuel
prices since January 2009, there has been a decisive shift in customer preference in
favor of diesel-powered cars, reflected in the 24 per cent growth in sales volumes of
diesel vehicles in the financial year 2012 against a 11 per cent decline in sales
volumes of petrol vehicles during the same period. In fact, in segments where both
petrol and diesel options are available, diesel vehicle sales far outnumber that of petrol
variants by an overwhelming factor of 4:1. However, the preference for diesel vehicles
fostered by a distorted fuel price regime could get altered in the event of any increase
in excise duty on diesel vehicles that is currently being mulled by the government
(ICRA, 2011a).

The large incumbents in the domestic car industry derive strength from their low cost
manufacturing capabilities, established vendor base and widespread sales and service
network; however, their dominance is being challenged by multinational car

36
manufacturers that have entered the domestic market in the recent past. Overall, ICRA
believes that car manufacturers may continue to face challenging times at least over
the short term as sluggish demand on one hand and increasing competition on the
other may restrict earnings growth.

2.4 Trends in Indian Passenger Vehicle Markets

2.4.1 Market share
The top four players namely Suzuki, Hyundai, Tata Motors and Mahindra and
Mahindra constitute almost 80 per cent of the passenger car sales thereby making it a
highly concentrated market. However, increasing competition across vehicle segments
is expected to lower the concentration levels. As can be observed from the Table 2.2
and Figure 2.1, new players are quickly gaining market share, though small in
percentage but it is expected that the passenger car market will have 5 or more players
making up for 80 per cent of the market in the upcoming years.

In the financial year 2012 and 2013, industry volumes were impacted by production
disruptions at Maruti Suzuki which led to a sharp decline in its domestic market share
from 45.9 per cent in the financial year 2011 to 38.8 per cent in the financial year
2012 and 39.1 in 2013. The volumes of all the players were also observed on the path
of slow growth due to the overall slump slowdown in the automobile industry in the
year 2012-13. Though, MUL and most of the other major players were able to sustain
their market share and volumes by sailing on the push in the rural sector (Gupta,
2013).

Although due to production snarls at MUL, a part of the demand shifted to other
OEMs like Toyota and Honda which gained market share is also facilitated by their
new product launches. Also, market participants having diesel models and newly
launched compact SUVs in their portfolio specifically M&M and Renault and

general diesel variants offered by Tata Motors and Ford consolidated their market
position.

The increasing scenario of passenger car segment has shown positive effect on the
sales of the segment. Passenger car production in India is projected to cross three
million units in 2014-15. Sales of passenger cars during the period 2015-16 are
expected to grow around 10 per cent (The Equicom, 2012).

37
Table 2.2: Trends in Market Share of Leading Manufacturers in the Domestic
PV Market (in percentage)

FY FY FY FY FY FY FY FY FY FY FY FY
02 03 04 05 06 07 08 09 10 11 12 13

Maruti 50.4 46.7 46.7 45.9 46.1 46.1 45.9 47.0 45.3 45.9 38.3 39.1
Hyundai 13.0 14.6 14.4 13.4 13.9 14.1 14.0 15.9 16.4 14.7 14.8 14.3
Tata 13.2 14.7 15.5 16.9 16.5 16.4 14.7 13.9 13.5 12.1 14.1 11.7
M&M 6.6 7.4 7.6 7.5 7.4 6.5 8.4 7.8 8.1 7.3 9.5 11.6
Toyota 3.7 4.3 4.7 4.1 4.1 3.7 3.6 3.1 3.3 3.4 6.1 6.2
GM 1.3 1.2 2.0 2.7 2.7 2.8 4.3 4.0 4.5 4.3 4.2 3.3
Ford 2.2 2.2 2.4 2.6 2.5 3.0 2.2 1.8 1.9 4.0 3.5 2.9
Honda 1.6 1.9 2.4 3.5 3.7 4.4 4.0 3.4 3.2 2.4 2.1 2.7
Volkswagen 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.3 2.3 3.0 2.4
Nissan/Renault 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 1.2 1.4
Skoda 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.9 0.9 0.9 1.3 1.1
Others 8.0 7.0 4.3 3.4 3.1 3.0 2.0 2.1 2.6 2.2 1.9 3.3
Source: ICRA and ACG

Figure 2.1: Market Share of Car Manufacturers in the Domestic Passenger

Vehicle Market

FY 2011-12 Legend FY 2012-13

Source: ICRA and ACG

2.4.2 Sales, Production and Export trends

In India, car production has been greater than sales over the decade. The CAGR of
sales and production were 15.8 per cent and 17.6 per cent respectively during the last
decade. The domestic sales witnessed and reported a very strong volume growth over

38
the last few fiscal years, with as much as more than 20 per cent growth in 2010 and
even higher than 25 per cent in the year 2011. However, the domestic passenger
vehicle industry started observing a drastic slowdown since the beginning of the
financial year 2012 with the year ending at only 4 per cent year on year growth. The
society of Indian Automobile Manufacturers revised and reduced the projected growth
of the industry several times for the year 2013 which finally concluded at just 2 per
cent over the previous year.

Table 2.3: Trend in Domestic Passenger Vehicle Sales

FY FY FY FY FY FY FY FY FY FY FY FY FY FY
01 02 03 04 05 06 07 08 09 10 11 12 13
Sales 691 675 707 902 1,062 1,143 1,380 1,550 1,553 1,950 2,520 2,638 2,686
('000)
Source: SIAM, ICRA and ACG

Figure 2.2: Trend in Domestic Passenger Vehicle Sales

Source: SIAM, ICRA and ACG

In the last two years, around 25 new models and 10 refreshed versions of ongoing
brands have been launched in the Indian market. This has been amongst the strongest
pace of new product introductions in India so far since the start of the industry.
However, this increased supply push has coincided with a period of slow industry
volume expansion making it difficult for the market to assimilate all new models.
Around half of these new product introductions have received a lukewarm market
response, exerting pressure on the profitability of OEMs as well as associated
suppliers and dealers. In December 2012, the demand for passenger vehicles declined
by 1.1 per cent YoY, despite steep discounts being offered across the board to push

39
year-end sales. While growth momentum slowed down in the passenger cars segment,
the Utility Vehicle (UV) segment continued to witness strong volume growth aided by
increasing demand for recently introduced models. M&M registered a YoY growth of
16.1 per cent in volumes in December 2012, while Renault also continued to scale-up
volumes on the back of the successful launch of Duster. (Moneycontrol, 2013)

Table 2.4: Trend in Domestic Passenger Vehicle Production

FY FY FY FY FY FY FY FY FY FY FY FY FY FY
01 02 03 04 05 06 07 08 09 10 11 12 13
Production 675 707 901 1061 1,210 1,309 1,545 1,778 1,839 2,357 2,987 3,123 3234
('000)
Source: SIAM, ICRAs and ACMA

Figure 2.3: Trend in Domestic Passenger Vehicle Production

Source: SIAM, ICRAs and ACMA

Riding majorly on the domestic demand the production trends were very similar to the
sales trends. After seeing an exceptional growth of production at more than 25 per
cent for two consecutive years in 2010 and 2011, the economic slowdown paralyzed
the manufacturers specifically the major players to a point that the units had to be
either shut-down or work at half the capacity for several days with piling inventory in
the year 2012 and 2013 with the year-on-year growth in production posted at just 4
per cent and 3 per cent respectively. (SIAM, 2013b; ICRA, 2011a; and ACMA, 2013).

Table 2.5: Trend in Passenger Vehicle Exports

FY FY FY FY FY FY FY FY FY FY FY FY FY FY
1 2 3 4 5 6 7 8 9 10 11 12 13
Exports 22 53 72 129 166 175 198 218 335 446 444 508 554
('000)
Source: SIAM, ICRA

40
Figure 2.4: Trend in Passenger Vehicle Exports

Source: SIAM, ICRA

Counter-balancing the declining domestic sales due to the subdued sentiments in the
domestic auto market, a concerted export push and has kept the country's biggest car
makers in good stead. Growing exports also offers a partial hedge on foreign
exchange exposures at a time when the rupee has been vacillating sharply.

Maruti Suzuki and the other major players in the country took a conscious call in lieu
of the slowing European markets, which accounted for more than 70 per cent of their
exports and took a note of the need to develop alternate markets. Consequently new
market in Latin America, Africa and the ASEAN countries were targeted and as a
result now the dependence on European markets has come down to just 25 per cent
and currently 75 per cent of vehicle exports are going to Non-European markets.

Although the economy is adversely affected due to a falling rupee but it is proving
beneficial as far as the exports are concerned. This is being attributed as one of the
reasons for growing exports in the sector. The exports in the sector has seen a
continuous growth every year over the decade, except for the 0.4 per cent decline in
2011, which was majorly attributed to the dependence over the European markets
which entered an economic turmoil during the period. With the manufacturers
realizing and developing the new markets, the export has again seen respectable
growth with 14 per cent in 2012 and 9 per cent in 2013 despite an overall slowdown
even in the Asian and non-European markets.

41
2.5 Situational/Scenario Analysis - The Post Liberalization Scenario
of the Automobile Industry in India
Situational/Scenario analysis has been used in this study to provide with a systematic
collection and evaluation of the data pertaining to post-economic liberalization era
with an objective to identify internal and external forces that may influence car
manufacturers performance and their choice of strategies. A SWOT analysis of the
post-economic liberalization era has been done to assess the present and future
strengths, weaknesses, opportunities and threats to the automobile industry. Porter's
Five Forces Industry Analysis is used in understanding the analytical processes in
which car manufacturers understand, their consumers and the competitive market
environment in which they operate. And, PEST analysis is to assess the external
market influences on the automobile business environment in India.

2.5.1 SWOT Analysis

SWOT analysis is a tool of strategic planning which is used to evaluate the strength,
weakness, opportunities, and threats involved in a business venture. It involves
identifying the external and internal factors which are either favorable or unfavorable
for the company or industry. The two main categories in a SWOT analysis are;
internal and external factors. The internal factors comprise of strength and weakness,
and the external factors include opportunities and threats.

Table 2.6: SWOT analysis of Indian Automobile Industry in Post Liberalization

Scenario
Strengths Weaknesses
Investment by Foreign Car Low Labor Productivity
Manufacturers Production Costs and Regulatory
Increase in Passenger Vehicle Exports Environment
Low Cost and Cheap Labor Localization and the Quality of
Rising Middle Class and Disposable Production
Income Levels Poor Infrastructure
Expertise as a Small Car Hub
Opportunities Threats
Government Reforms Economic Slowdown
Low Car Penetration Levels Unskilled Labor
Niche Rural Markets Diminishing Export Markets
Changing Demographics and Saturating Domestic Urban Markets
Differentiation Acceptability
42
The presented SWOT analysis of the Indian Car Industry in the post liberalization
scenario is focused on both the internal and external factors. This analysis will be
used to do a comprehensive strategic assessment for the industry. Through the
analysis, identification and highlighting of the major areas of strengths, weakness,
opportunities and threats the players in the car industry can make useful adjustments,
realignments, and changes in their business strategies.

Strengths

Investment by Foreign Car Manufacturers: India has seen significant amount of FDI
from the foreign origin car manufacturers over the last decade. In all, the
automobile sector has seen a cumulative Foreign Direct Investment (FDI) equity
inflows of US$ 8.217 Billion (` 38, 571 Crore) in this sector during the period of
2000 to 2013 which is nearly 4.32 per cent of the total FDI inflows in the country
and the portion of Passenger Vehicle segment accounts to more than 50 per cent of
the total inflows in Automobile Industry Sector (Department of Industrial Policy
and Promotion Statistics, 2013).

Increase in Passenger Vehicle Exports: The economy is adversely affected due to a

falling rupee but it is proving beneficial as far as the exports are concerned. This is
being attributed as one of the reasons for growing exports in the sector. The
exports of passenger vehicles from India has grown with a CAGR of more than 20
per cent over the last five years and despite the slowdown in the economy during
the last one year the exports have still managed a growth of 9 per cent in 2013
with the manufacturers realizing the slowdown in European markets and
consequently developing the new ones (ICRA, 2011; and SIAM, 2013c). In recent
years India has become the export hub for several global automobile
manufacturers. Several large automotive players in India are investing
substantially in capacity expansion, establishing partnerships in India and abroad,
positioning India as an export center for vehicles and corporate intelligence, and
setting up R&D facilities and design capabilities (Ernst and Young, 2012).

Low Cost and Cheap Labor: Cost competitiveness remains one of the key
characteristic of India with the availability of low cost labor and inexpensive
manufacturing capabilities it is a key attraction for the businesses. In particular,
Indias attractive labor costs can explain the phenomenal growth of its rapidly

43
 growing manufacturing sector including the automobile. Although India has
witnessed some increases in its labor cost, but it remains a highly attractive
destination for investors who struggle to find the same mixture of low cost and
high quality (Ernst and Young, 2012).

Rising Middle Class and Disposable Income Levels: Rising disposable income over
the last decade have led to increased discretionary spending which in turn have
driven car sales during that period. In 2002, the per capita disposable income was
$399 (nominal)/$1,381 (PPP), when the sales started picking up. The car sales
have mostly followed the trends in per capita disposable income. Post 2002, the
per capita disposable income has seen a CAGR of 13 per cent as against a CAGR
inflation growth of 7 per cent which has resulted in a real disposable income
growth of 6 per cent. With the growth in per capita income and overall growth in
the economy the proportion of middle class households have also grown which
explains the popularity of smaller cars segments in India in the last few years
(Delloite, 2011).

Expertise as a Small Car Hub: With the launch of worlds cheapest car Nano
at a price of US$ 2500, Tata Motors bought a revolution in the industry, not just in
India but even globally. Presently, in India there are 33 Small Cars (198 Variants)
with in a range of ` 8 Lakh that are manufactured locally and 7 Hatchbacks (13
Variants) in the luxury segment ranging from ` 20 to ` 40 Lakhs which are
imported as CBUs, on offer and comprise of nearly 80 per cent of the total car
sales in the country. With changing customer preferences towards small fuel-
efficient cars, in the developed countries, it is clearly an advantage for the
developing nations. Every big automobile player in the world is ready to invest in
the Indian automobile sector, especially in the small car segment.

Weaknesses

Low Labor Productivity: According to the Economic Survey highlights, recent

trends in industrial employment creation in India have been cause of concern.
Even if industry's share of total employment has been comparable to other large
Asian countries at similar stage of their growth, its share of gross value added has
remained more or less stagnant over the last decade and is far less than that in

44
 other countries. The main reason for this near stagnant share of industrial sector
value addition is the low productivity in the sector (Gulzar, 2013).

Production Costs and Regulatory Environment: The production costs are still higher
in India as compared to the other Asian countries including China, Thailand and
other. Apart from the production costs the regulatory environment in other Asian
countries is more affable as compared to India that gives these nations an edge
over India (The Economist, 2013).

Localization and the Quality of Production: Though most of the major car
manufacturers from around the world have set up their assembling units in India
but still they prefer to import most of the sophisticated parts instead of sourcing it
from the local manufacturers. The ratio of localization with most of the foreign car
manufacturers is significantly low as compared to their units elsewhere in the
Asian countries. This aspect has been majorly attributed to the quality of
production of the local parts manufacturers (The Economist, 2013).

Poor Infrastructure: Road infrastructure is a crucial factor that affects the

automobile industry. Poor condition of roads in villages and cities burden
consumers with heavy repair bills of their cars. Many owners approach
automobile companies with complains of parts that wear out soon. Others working
in travel industry have spoken about increase in maintenance cost of their cars due
to poor road conditions (Motortrend, 2013).

Opportunities

Government Reforms: The Government of India allows 100 per cent foreign direct
investment (FDI) in the automotive industry through automatic route. The
Government has plans in process to accelerate the supply of electric vehicles over
the next eight years and also plans to introduce fuel-efficiency ratings for
automobiles to encourage sale of cars that consume less petrol or diesel (IBEF,
2013).

Low Car Penetration Levels: The low car penetration levels make India one of the
most attractive markets for the global automobile industry. Accordingly, India's
current average of just 15 cars per 1000 people is among the lowest in the world
as compared to China with the average at 60 per 1000, Brazil at 200 and in USA it

45
 is 800 per 1000. With a strong 200 million middle class, the India is a huge
potential in the Indian Car Industry (Ghosn, 2013).

Niche Rural Market: Car sales in rural India have been on the increase in the last
few years since the government announced various schemes such as farm loan
waiver etc. for the rural population. Major players in the industry including Maruti
Suzuki, Tata, Mahindra and Mahindra and others have been focusing on and
targeting the niche untapped rural market in last few years and in the time of
economic slowdown have been able to maintain their sales figures riding on this
segment of the market. Foreign players like Toyota Kirloskar Motor are planning
to sell 40 per cent of their cars in rural markets in India. The rural population in
India comprises nearly 70 per cent of the consumer base in the country and so far
not much has been catered to and thus, this segment provides a great opportunity
for the players in the industry (Kotni, 2012).

Changing Demographics and Differentiation Acceptability: With the change in the

demographics of the Indian Corporate world, as the average working population is
getting younger and the rising number of females, the acceptability towards newer
brands, newer designs and newer segments have also increased. Over the last few
years even the existing car manufacturers have launched newer models and
variants with specific focus on the features and designs targeted at the sporty
youth and sleeker female drivers oriented designs. It provides the potential car
manufacturers an open opportunity to enter the markets with products targeted on
the newer segments (Grewal, 2013).

Threats

Economic Slowdown: Just when the exports had begun to rise after the global
economic crisis, the Indian economy has slowed down and the car industry has
witnessed straight nine months year on year negative sales growth for the first
time in last one decade. And the current economic state is bound to continue over
the next few years which are turning out to be one of the biggest threat to not only
the car manufacturers, but to all the industries (Thakkar, 2013).

Unskilled Labor: For India, on the one hand, domestic economic growth has
created huge employment demand and job opportunities, while on the other; a
shortage of skills is making more people unemployable. The large size of the

46
 population alone cannot be Indias problem since China, with a similar scale of

population and training structure, has better labor productivity (indicating higher
skills). In essence, India lacks sufficient skilled workers as its existing vocational
training system does not target the casual or informal workforce that constitutes
majority of Indias working population (Hajela, 2012).

Diminishing Export Markets: Exports in the car segment have been hit by the
turmoil in the Eurozone. A significant chunk of India's car exports were to Europe
and car makers are now looking at alternative destinations in Asian and Africa to
make up for those lost numbers. Also where development of these new markets
will take time, the Indian exporter will have a bigger challenge and threat from the
exporters from other Asian countries including China, Thailand, Indonesia etc.
which has a better productivity, quality and lower costs of production (Gupta,
2013).

Saturating Domestic Urban Markets: The demand from the population with
considerably higher disposable income which mainly stays in the major cities have
now reached its saturation and the traffic congestions are now adding to the woes
of the daily commuter, due to ever increasing number of vehicles on the roads.
The car sales growth which has diminished during the last couple of years have
also been constituted by saturating urban demand as a crucial attribute. Though,
still there lies a niche in semi urban and rural markets but the initial investment
and time required to set up facilities in those markets is another challenge and a
significant threat for the competitors in the industry (Ravichandran, 2013).

Some other Threats to the Indian Car Industry: Public transport like buses and
railways also form an important means of transportation in the Indian cities
especially in the urban areas. Despite the growth in the number of private vehicle
owners in middle income segments in the metro cities, a substantial number of
commuters are still dependent on the public transport. Hundred million out of 235
million people living in the Indian cities belong to lower income segment who
cannot afford to own a private vehicle. Currently, many state governments have
taken up various initiatives regarding improving the intra-city transportation by
allowing private operators to run buses within the city, introducing new and better
means of transportation like metro rail in Delhi, new buses, investment in road

47
 infrastructure like making new roads and widening of existing roads, etc. These
initiatives, coupled with increase in the fuel prices, present a potential threat to the
sales of the passenger cars (Gupta, 2008).

International Car Rental Firms: Another threat to the passenger car market is that
international car rental firms are making a beeline for the Indian shore with almost
a dozen car rental brands expected to enter the market soon. Several International
players like Hertz, Europcar, Leaseplan and Avis among others have already
established their presence in the country, while others like, Thrifty, Dollar,
Enterprise and Vanguard's brands like Almo and National among others are also
said to be firming up their Indian plans. This sudden rush to India has been
attributed to a slump in the US and European market. However, in spite of being
US$2.24 Bn., car rental industry in India is highly unorganized. The market share
of organized players in car rental industry is just 3 per cent. However, the industry,
on the whole, has been seeing a buoyant growth of about 35-50 per cent in the last
two years (Verma and Mohapatra, 2007).

Moreover, easy availability of credit financing has led to increased demand for bigger
and better cars. Foreseeing the Indian market potential, major luxury automakers were
setting up their offices in India to cater to the rich people's fancy for trendy and
luxurious cars. Mercedes and BMW have offered products at a starting price of INR
25-30 lakh (US$54,945-65,934), whereas the Maybach has lured the consumers to pay
as much as INR 5 Cr. (US$1,098,901) to drive in the lap of luxury. Other motor giants
like Volkswagen, Audi, Lamborghini, Rolls Royce Phantom, Bentley, and Porsche
have already joined the luxury car revolution in India (McKinsey Global Institute,
2005).

2.5.2 Porters Five Forces Industry Analysis

Backed by robust volumes as well as realizations, car manufacturers have registered a

phenomenal growth across the world over the past few years. The situation in the
domestic industry is no exception. In fact, it enjoyed a double digit growth rate
backed by a robust growing economy over the last decade. Car manufacturers are
always subject to industry forces which they would have to keep dealing with
constantly. And irrespective of the size or stature of the business or its dominance of
the market in terms of brand value or market share, there is no escaping the fact that

48
these competitive forces could dislodge the car manufacturing company from its
position of dominance in the market at a quick turn of events.

Porter (1985) and Porter (2008) listed down five major forces of competition that
applies to every industry including to that of the car manufacturers that needs to be
kept track of, if they have to succeed in the complex world of industry dynamics and
competitive strategy. The five competitive forces that shape strategy includes:

1. Threat of New entrants

2. Bargaining power of Suppliers

3. Bargaining Power of Buyers

4. Threat of Substitute products or services

5. Intensity of Rivalry among existing competitors.

This part of the study analyzes the economic and market forces that will ultimately
influence the car manufacturing industry in India through Michael Porter's five force
model so as to understand the competitiveness of the sector.

Automobile industry in India is an emerging sector and has a potential to improve it.
The increasing GDP and economical resources have boost up during the last decade
which has increased purchasing power of the Indian consumer. The car segment in
India has emerged as one of the promising sector and has shown growth trends in
tremendous production, sales and exports (The Equicom Research, 2013). Despite
economic slowdown, the Indian automobile sector has shown high growth. The
passenger vehicle market, which constitutes around 80 per cent of automobile sales,
has immense growth potential as passenger car stock which stood at around 13 per
1,000 people in 2011 (Delloite, 2011) increased to around 18 to 20 per 1,000 people in
2012-13 (Trefis, 2013). Anticipating the future market potential, the production of
passenger vehicle is forecasted to grow at a CAGR of around 10 per cent from 2009-
10 to 2012-13. This took the Indian automobile production from 2001-02 to 10.8
Million Units in 2007-08 to 14.6 Million Units 2011-12. The other reasons attracting
global auto manufacturers to India are the countrys large middle class population,
growing earning power, strong technological capability and availability of trained
manpower at competitive prices.

49
Threat of New Entrants

According to Porter (2008), the new entrants bring new capacity and a desire to gain
market share that puts pressure on prices, costs, and the rate of investment necessary
to compete in an industry. Thus, the threat of new entrants puts a cap on the profit
potential of an industry. The threat of entry in an industry is determined by the level of
entry barriers that are present and on the reaction entrants can expect from
incumbents. The barriers to entry includes the factors like Economies of Scale and
Capital requirement; Brand identity, Product Differentiation and Customer Switching
Costs; Access to technology, raw material and Channels of distribution; and
Government policies and protection.

In the automobile industry, the existing loyalty to major brands, high set-up costs,
scarcity of resources, high cost of switching companies, slowdown in the economy,
rising fuel prices and government regulations serve as entry barriers which reduce
competition in the industry. So far there is moderate to high competition in the
automobile sector in the Indian domestic market. The competition is however
increasing with new players entering the market and some smaller players catching
up.

Firstly, considering the factor of Economies of Scale and Capital requirement as a

barrier for new entrants in the automobile industry, an enormous amount of capital is
required. Besides capital, a new firm that is interested in entering the market needs to
conduct in-depth research beforehand. An entering firm would need a tremendous
amount of implicit and explicit knowledge in order to design and manufacture a
product that has never been presented or offered before. An automobile manufacturing
facility is very specific and specialized; therefore in the event of a failure or
malfunction, the cost of repair is extensive. In recent years the international majors
like Renault, Nissan, Volkswagen, Fiat etc. have overcome this factor by inculcating
strategies like alliances initially with domestic players, or alliances based on Badge
engineering for their manufacturing and marketing in case of Fiat with Tata and
Renault with Mahindra and Mahindra or setting up the facilities in alliances like
Renault - Nissan and Volkswagen for its offered brands including Skoda, Volkswagen
and Audi (Business Line, 2012; and Ramanathan and Raj, 2013). Though on this
factor it may be stated that large amount of capital for entering the industry is required

50
and that economy of scale prevails and make it a significantly difficult for new
entrants to enter the industry.

As far as Brand identity, Product Differentiation and Customer Switching Costs are
concerned; Brand identity is a crucial barrier to entry. Exclusive high quality car
brands have established extremely high brand equity-value over time. This is one of
the main reasons why the public is willing to pay premium price for it. Although the
barriers to this exclusive market are substantial, there are various ways around this
obstacle. Companies who are well established in the automobile sector may enter the
new market (luxury cars) through strategic partnerships or through buying out or
merging with other companies. Maruti Suzuki India Limited, a subsidiary of Suzuki
Motor Corporation of Japan is India's largest and leading passenger car companies
which presently hold a share of over 45 per cent of the domestic car market, despite
the entry of many multinationals over the years, post liberalization. Although, in
recent years Tata Motors which was leader in commercial vehicle segment has
emerged as key player in Indian Passenger Vehicles as well with a market share of
16.45 per cent. Tata motors recently entered the luxury and premium segment with the
acquisition of Jaguar and Land Rover Brands on one hand and launched the worlds
cheapest car Nano on the other, which changed and shifted the automobile sector
paradigm as many other companies have started focusing on the cheapest segment of
the industry (The Equicom Research, 2013). Other key players in automobile segment
of India have also performed well and have contributed significantly and the scenario
in market is attracting other international brands to the market. With the increasing per
capita income and purchasing power of the Indian population, the sale of luxury cars
has grown and market share has gained over the years and India is projected to be
amongst top three luxury car market by 2020 (Malhi, 2013).

Many foreign automobile manufacturers are aggressively entering high growth

emerging markets such as India amidst slowing demand in the developed economies.
Volkswagen has succeeded in establishing its brand in the Indian market since its
entry in 2008. After its entry into India, Volkswagens Polo, along with Ford Indias Figo

and General Motors Indias Beat have managed to capture the market share from

the companies such as Maruti, Hyundai and Tata Motors Ltd.

51
The threat of new entrants is high for the car industry in general but specifically for
the small car segment it is very high. The growing economy and the increasing buying
power of the customers have made every automobile player to grab the opportunity in
small car segment. There are around five new players coming in to the small car
market; H800 from Hyundai priced around 1.6 lack, Maruti Cervo 600 priced 1.6
lacks, Bajaj-Nissans new electric car etc. Non automobile players also have their
focus in this segment like Ajanta Manufacturing limited has launched electric car
Orevo. Barriers for entering would include economies of scale, competition from
existing players, customer switching costs and the investment decisions.

As far as other factors like access to raw material, technology and distribution channel
in the automobile industry are concerned, are not easily accessible or easy to
establish. With the new regulation policies pertaining to fuel emission, efficiency and
a projected efficiency rating; rising fuel prices; downturn in the economic scenario
and new segments like compact sedans, compact SUVs, luxury hatchbacks etc.
(Bhanushali, 2013; and Baggonkar, 2013). Having created and established by the
existing competitors, it would be really challenging for the potential new entrants in
the industry to bring out such technologically advanced products that can compete in
the existing market. Another barriers for the new entrant and even the recently entered
players in the industry would be to compete with the major players like Maruti
Suzuki, Hyundai and Tatas which has established and provides the dealership
and service networks for their vehicle even in the remote countryside areas of the
country (Gupta, 2013). With the saturating urban demands and huge countryside
market potentials, the distribution channels are going to play a significant role in the
future course and direction of the car market.

Another significant and one of the most important factors includes the Government
policies and protection for the sector. And since the automobile sector in India is a
crucial aspect of its growing economy and the GDP, the government has liberalized
the policies pertaining to the sector. Currently, the Government of India allows 100
per cent foreign direct investment (FDI) in the automotive industry through automatic
route and is also planning to introduce fuel-efficiency ratings for automobiles to
encourage sale of cars that consume less petrol or diesel along with the plans to
accelerate the supply of electric vehicles over the next eight years (IBEF, 2013).

52
From the present scenario pertaining to the Threat of New Entrants in the car
manufacturing industry in India, it may be concluded on the basis of the above
discussions on the factors including Economies of Scale and Capital requirement;
Brand identity, Product Differentiation and Customer Switching Costs; Access to
technology, raw material and Channels of distribution; and Government policies and
protection, that the threat is medium, and hence Industry attractiveness from this
aspect is moderate.

Bargaining Power of Suppliers

The automobile industry is considered to be highly Capital and Labor intensive as the
major part of the cost of production include wage bills of labor; material costs
including that of steel, aluminum, dashboards, seats, tires etc.; and intensive
advertising and market research activities. Though, the automotive market majorly
comprise of the vehicles, but the auto parts make up the other half of the industry
which includes the parts manufactured by the original equipment manufacturers
themselves and the replacement parts or accessories and other rubber fabrications that
are procured from the suppliers in the industry (Investopedia, 2013).

The suppliers play a vital role in the value chain of the automobile industry and affect
the crucial aspects including the lead times and even the overall quality of the
products, and thus, analyzing the bargaining power of the suppliers in the Indian
automobile industry is significant. According to Porter (2008), the parameters on
which the bargaining power of suppliers can be assessed includes the number of
suppliers present, availability of substitutes for suppliers available to the
manufacturers, contribution of suppliers in cost and quality and the importance of the
industry for the suppliers.

As far as suppliers in Indian automotive industry is concerned, there are more than
500 auto component manufacturers in the organized sector which are largely
represented by the Automotive Components Manufacturers Association of India
- ACMA apart from other 5000 manufacturers in the unorganized sector which caters
to the domestic market demand and also export a significant share of its output
(Automotive Mission Plan, 2006-16). Apart from the available large number of
suppliers in almost all the categories of required components the manufacturers also
have an alternative to source the auto components from the nations which have the

53
free trade agreements with India and from the countries for which India has lowered
the duties and taxes including the auto technology majors like Japan, South Korea and
even Thailand and other low cost labor oriented nations including China, Malaysia
and South Africa (ICRA, 2011b).

As far as the contribution of suppliers in cost and quality of the product is concerned,
it is significant in the automobile sector, but with the alternatives available to the
manufacturers ranging from the large number of domestic suppliers to globally
available sources which have excelled in the technology over the years it does not
extends the bargaining power to the suppliers in the industry (ICRA, 2011b).

Thus, on the aspect of the bargaining power of suppliers in the Indian automobile
industry, based on the noteworthy dependence of the component suppliers on the
domestically growing industry and a downturn in the economies globally on one hand
and the alternatives available with the manufacturers for the sourcing component
ranging from domestic to global suppliers on the other, it may be concluded that the
overall bargaining power with the suppliers in the present Indian automobile scenario
is either moderate or low.

Bargaining Power of Buyers

In todays competitive environment and customer driven markets, the bargaining

power of the buyers or customers is significant and influence every decision that the
manufacturers make and the automobile industry is no different in this case.
According to Porter (2008), the bargaining power of buyers can be assessed on the
basis of number of buyers in the industry, the availability of substitutes, switching
costs involved and the contribution of buyers in the cost and quality.

The Indian automobile industry has been enjoying the CAGR of around 10 per cent
over the last decade and with the potential in unexplored and rural markets, it is
expected to continue the run over the coming many years (Deloitte, 2011). With an
increased purchasing power, a developing state of the economy and large untapped
rural markets, the number of potential customers in India is huge and all the existing
manufacturers as well as the proposed new entrants can expect to grow enormously in
those areas.

Though with the changing preferences, income graphs and saturating urban markets
on one hand and increasing number of alternatives, be it mode of transportation, types

54
of vehicles or the number of brands and their products ranging from hatchbacks and
sedans to SUVs and luxury segments, the power of choosing from the available
alternatives lies with the customers. At present there are 9 Indian and 15 foreign
manufacturers producing or assembling nearly 120 models and their variants locally
apart from another 100 models that are imported by the car manufacturers as complete
built units. Further, most of the car manufacturers are either proposed to launch new
models or are developing newer ones to be launched in Indian market over the next
few years (Surfindia, 2013).

In the automobile industry with low switching costs involved and since most of the
brands are new in the market except from the few established ones, the brand loyalty
aspect does not impact much, and thus the manufacturers are continuously challenged
to bring out more efficient and quality vehicles at the lowest possible costs. Apart
from that the manufacturers have to incur a significant amount on the market research
at the time of development and on advertising and promotion at the time of launch and
sale of the product, which constitutes a large part of the overall cost of the product
(Bradley, Bruns, Fleming, Ling, Margolin, Roman and Flury, 2005).

Thus, it may be concluded that the relationship between the car industry and its
buyers or purchasers of finished vehicles, the power axis is tipped towards the
consumers. The Consumers enjoys the greatest power in this relationship due to the
fairly standardized nature of the commodity and the low switching costs associated
with selecting from among competing brands. However, the automotive industry
remains marginally powerful due to the large customer to producer ratio.

Threats from Substitutes

The threat to a car manufacturer is not just that a customer would buy a different brand of
car but they also need to consider the likelihood of a potential customer taking the
alternative modes of transport including bus, train or airplane to their destination. The
higher the cost of operating a vehicle, the more likely people will seek alternative
transportation options (Investopedia, 2013). The factor of fuel prices has a large effect on
consumers decisions to buy vehicles. Apart from the cost while determining the
availability of substitutes the factors including time, money, personal preference and
convenience are also considered in the travel industry. According to Porter (2008), while
analyzing the threat from substitutes, one need to consider the

55
parameters including availability of close substitutes, switching cost and substitutes
price and value.

As far as the scenario of travel industry in India is concerned, rail and air travel
comprise of 10 per cent of the total passenger travel and rest 90 per cent of passenger
travel is undertaken by roads (World Bank, 2013). And this share of road travel
encompass 72 per cent of two-wheelers, 14 per cent of passenger vehicles including
cars, jeeps and taxis and rest 14 of other public transport busses and non-passenger
vehicles (Govt. of India, 2011). The biggest and ever emerging available substitute for
passenger cars is the two-wheeler segment, which has grown from 8 per cent at the
time of independence to the whopping 72 per cent in the present scenario. And this
one segment has very low switching cost and price. There have been efforts from the
respective state governments to promote the public transportation modes, but the
positive shift in the incomes and purchasing power graphs has increased the usage of
private vehicles. Although in metro cities like Delhi, there has been a marginal
increase in usage of the economical public transport, with the start of the dedicated
metro rail projects, and considering the response of commuters a number of other such
projects have been proposed and approved for other metro cities (The Indian Express,
2012).

Based on the evidences and reports on the factors pertaining to the threat from
substitutes to the Indian car industry, it may be concluded that threat is significantly
high and thus the industry attractiveness on this aspect is low.

Intensity of Industry Rivalry

The auto industry is considered to be an oligopoly around the globe, which helps to
minimize the effects of price-based competition (Investopedia, 2013). Though, while
taking a note of Indian automobile industry, the industry rivalry has been divided into
two major phases: the phase before the economic reforms in 1991 and the other post
the reforms. In the first phase there were only three major players including the
Maruti Udyog, Hindustan Motors and Premier Automobiles which were competing in
the passenger car segment which were not even able to meet the market demand
during that time. Such factors and other economic circumstances led to the economic
reforms and with the opening up of a market for foreign players that had enormous
potential, the attractiveness was very high. At present the Indian customer has more

56
than 20 domestic and foreign players offering 120 locally manufactured models and
their variants apart from other foreign players offering another 100 imported models
in almost all the price bands ranging from ` 1.45 Lakh to whopping amount of ` 20 Cr.
to choose from (Morey, 2013; and Silicon India, 2013).

Porter (2008) suggests considering parameters that includes number of competitors,

industry growth rate, product differentiation, switching costs involved and the
strategic stakes of the manufacturers to assess the industry rivalry among existing
competitors.

The number of competitors in the Indian car market has grown significantly in last
decade and many others are expected to arrive over the next few years with 100 per
cent FDI allowed in Indian automobile sector (Philip, 2013). The industry has grown
with a CAGR of 10 per cent over the last decade and though it might have slowed
down over the current economic crunch across the globe, but is expected to continue
the growth over the next few years (Delloite, 2011; and IBEF, 2013).

The product war in the Indian car market is intense and with minimal differentiation
almost every player offers one or more products in the defined segments. The extreme
competition exists in the small car or the hatchback segment which constitutes nearly
80 per cent of the total car sales (ICRA, 2011a). Though, in last few years the SUV
and luxury segment with a CAGR of nearly 30 per cent has also witnessed a close
competition (Thakker, 2012). The companies have focused on new product launches,
be it the newer enhanced versions of the existing products or launching a new product
altogether in the market. The new product war is so intense that the major players are
considering it as one of the major strategies to capture and increase their market share,
since the market shares have picked up for auto majors like Honda, Maruti Suzuki,
Renault, Ford and others after their recently launched products have been well
accepted by the consumers (Bhargava, 2013).

With decreasing brand loyalty among customers, number of available alternatives and
nature of commodity with low switching costs, the manufacturers need to review,
revive and enhance their customer experience on a continuous basis and with the
intensity of competition it only increases the rivalry (Capgemini, 2013). Car
Manufacturing/Assembling industry being capital intensive in nature involves high
strategic stakes of the competitors involved in the industry. Though, most of the major

57
players be it Maruti Suzuki (Now wholly owned by Suzuki), Tata, Mahindra and
Mahindra, Toyota, Ford and others, do have their diversified businesses be it in two-
wheeler or commercial vehicles; or entirely conglomerate in nature, but the stakes in
this industry for all the players are very high.

Based on the reports and analysis on the factors including number of competitors,
growth rate, differentiation, switching costs and the strategic stakes involved it may be
concluded that the intensity of rivalry is skewed towards the higher side and thus the
attractiveness in the industry may be rated as considerably low in this aspect.

2.5.3 PEST Analysis - Indian Car Industry

The economic reforms in India in 1991 changed the entire business scenario, as it
opened up the market for foreign investors. The automobile market in India was
however, opened up to foreign investors in 1996. International names like Ford,
Hyundai, Toyota, Volvo, Daimler Chrysler, Volkswagen, GM, Honda and others were
thus, able to make their foray into the Indian automobile sector. This section of the
study includes an analysis of the macro-environment factors including Political,
Economic, Social and Technology, based on the PEST Analysis.

Political Environment

Indian Government has changed its role from controller to facilitator with prime
focus on providing better infrastructure, growth oriented economic policies and
right environment to attract investments. This has made giant auto manufacturers
enter into India and affect the competitive environment.

The liberalization steps, such as, relaxation of the foreign exchange and equity
regulations, reduction of tariffs on imports, and refining the banking policies, have
played an equally important role in bringing the Indian Automotive industry to
great heights.

The Government presently allows 100 per cent foreign direct investment (FDI) in
the automotive industry through automatic route.

The auto emission rules issued by the government in recent years ensured that the
vehicles manufactured in India, catered to international standards.

A reduction in the tariff imposed on car exports has been effected by the Indian
government. There has also been a removal of the minimum capital investment

58
 required from new investors. The new policy is also in favor of reduction in excise
duty for small automobiles and low emission and multi utility cars. The tariff
policy is also to be reviewed on a regular basis in order to affect a balance
between domestic industry and international trade.

The government has recently proposed for an infrastructure that will provide one
stop clearance for any kind of proposal for foreign direct investment in the
automotive sector. This will include the local clearance system also for the same
purpose. The government has also proposed for a concession in import duty for
the establishment of new manufacturing units and industrial holdings.

The Indian government is also urging the state governments to ensure continuous
power supply to the automotive manufacturing units as well as granting them with
the preferred plots of land. Captive Generation for the automobile sector has also
been proposed. The auto policy of the Indian government also includes the
promotion of vehicles which are run on alternative energy resources. Talks are also
on for extensive research, development and designing facilities that would affect
modernization in the automotive sector.

(Ranawat and Tiwari, 2009; Equicom, 2012; ACMA, 2013; Economy Watch, 2010;
Premalatha and Iyer, 2013; IBEF, 2013; Deloitte, 2011; and AMP, 2006-16)

Economic Environment

Focused at promoting the Research and development and skill development the
economic policy provides a 5 years extension of 200 per cent weighted deduction
of R&D expenditure under Income Tax Act and introduced weighted deduction of
150 per cent for expenditure on skills development.

Over the last decade the economy has witnessed a rise in disposable income that
led to increased discretionary spending which in turn have driven car sales. The
car sales have mostly followed the trends in per capita disposable income. Post
2002, the per capita disposable income has seen a CAGR of 13 per cent which has
resulted in a real disposable income growth of 6 per cent. With the growth in per
capita income and overall growth in the economy the proportion of middle class
households have also grown.

59
 Weighted tax deduction of up to 150 per cent for in-house research and R&D
activities. Govt. has granted concessions, such as reduced interest rates for export
financing.

Several Indian firms have partnered with global players. While some have formed
joint ventures with equity participation, other also has entered into technology tie-
ups.

Increase in the number of financing options while car purchase due to changed
economic policy in India.

(SIAM, 2013; Delloite, 2011; IBEF, 2013; Evince, 2013; Govt. of India, 2011;
Grewal, 2013; Krishnan, 2002; Philip, 2013; and Ray, 2012)

Social Environment

With the change in the demographics of the Indian Corporate world, as the
average working population is getting younger and the rising number of females,
the acceptability towards newer brands, newer designs and newer segments have
also increased. Over the last few years even the existing car manufacturers have
launched newer models and variants with specific focus on the features and
designs targeted at the sporty youth and sleeker female drivers oriented designs. It
provides the potential car manufacturers an open opportunity to enter the markets
with products targeted on the newer segments.

The average distances between work-place and Residence is increasing. As more

population is migrating to the already saturated metropolitan cities and urban
areas seeking jobs and careers, it has become a trend to reside on the outskirts and
downtown areas and travel long distances every day to the offices.

With increasing disposable income the average number of vehicles per household
has increased, as not only the earning members, but also the dependents in regard
to the adolescent now prefer to travel in the cars.

Another aspect that has increased the average number of vehicles per household is
that of the utility of the car as per the occasion. As a trend, the households with
very high disposable incomes have separate vehicles for their everyday individual
travel and family travel needs.

60
(Grewal, 2013; Delloite, 2011; Verma and Rathore, 2013; Sharma, 2007;
Ravichandran, 2013; and Population Commission Report, 2001)

Technology Environment

Emission Norms: As per the Auto Fuel Policy approved by the Cabinet in 2003,
the quality of Petrol and Diesel has been upgraded to Bharat Stage-IV (equivalent
to Euro-IV specifications) in 13 identified cities with effect from 1st April, 2010.
In the rest of the country, BS-III Petrol and Diesel (equivalent to Euro-III
specifications) has been introduced from 1st April, 2010.

The Government of India is in process to introduce fuel-efficiency ratings for

automobiles to encourage sale of cars that consume less petrol or diesel or other
fuel. And also extends exemption from BCD on lithium ion automotive battery for
manufacture of lithium ion battery packs for supply to manufacturers of hybrid
and electric vehicles.

Contemporary technologies have now become very much part of mainstream

Indian car market. Now a significant fraction of the models available in the
country have technology that is at par with what is available in rest of the world,
including industrialized countries. While many of the global firms that are in India
have often introduced models that already have been launched in other countries
but over time, the lag between the first launch of the product and its introduction
in India has been generally reduced, or sometimes eliminated to an extent that
some of the cars and even the concepts are now first worldwide launch are done in
India.

Many of the Indian manufacturers have been emphasizing improvements in

manufacturing processes that increase productivity and/or quality. The fact that
many of the Indian manufacturers either had or have an MNC partner, or they are
an MNC subsidiary, helps in improving manufacturing practices, since these
global players are able to draw upon their knowledge and deep experience.

The need to reduce costs has provided an impetus to manufacturers to move

toward greater indigenization. With the lower domestic operational costs as
compared to the higher import costs, most of the players including the luxury and
premium brands in the industry have now moved towards the indigenization.

61
 Alternate Fuel and Hybrid Cars: increasing use of CNG, LPG and electricity as a
source of fuel instead of conventional fuel has made the entry of new kinds of
vehicles in the market.

(PIB, Govt of India, 2010; Sagar and Chandra, 2004; Mohanty, Sahu and Pati, 1994;
IBEF, 2013; and Premlatha and Iyer, 2013)

62
 CHAPTER - III
REVIEW OF LITERATURE
With the growing competition due to the globalization of the world economy and the
consequent globalization of markets, more demanding and assertive customers, rapid
advancement in technology, and changing government policies and laws, the business
environment in India has been changing dramatically and is becoming more turbulent.
Ferrell and Hartline (2007) propose that when the external environment is constantly
changing, it is important that management understand these changes and know how to
act on them. It is a fact that the Indian automobile market, bearing the characteristics
of an oligopolistic market structure, is one of those which are affected most by these
changes. Therefore, it is required to develop new behavioral skills and marketing
strategies for economic agents with respect to competition and changes in the post-
liberalized Indian automobile business scenario.

Cravens (2000) argues that marketing is a major stakeholder in new product

development, customer management, and value/supply-chain management, and
marketing strategy provides concepts and processes for gaining competitive
advantage by delivering superior value to the customers. Hooley, Piercy and
Nicoulaud (2008) explain that the marketing strategy is supposed to develop effective
responses to changing market environments by defining market segments and
developing and positioning product offerings for those target markets. He further
argues that companies acting within a market structure should prefer and adapt
various marketing strategies to achieve their targets and to define their competitive
power. Therefore, to deal with the current challenges, the businesses must have more
distinctive and purposeful marketing strategies and they should be effectively
implemented (Cravens, Merrilees and Walker, 2000).

For developing an efficient marketing strategy, it is important to identify the driving

aspects of the automobile industry, which give a competitive edge to the car
manufacturers. Hindustan Motors ruled Indian roads for four decades with one model
Ambassador till Maruti came along as an option in 1983. Soon Maruti became the
leader with its fuel efficient small car Maruti 800. But that was just the beginning of
competition which became fiercer after automotive industry was completely
decontrolled in 1993 (Sharma, 2007). In the present scenario, it is crucial for car
manufacturers to develop the most profitable marketing strategy, which adapts to new
competition, changing environments and economic instability. Today's marketing
people must execute more than simply set long-term strategies and hope for the best
(Begley and Boyd, 2003). Ferrel and Hartline (2007) considers the organizational
structure, resources and the organizations performance, the consumer environment,
the competition, economic growth and stability, and political trends are the issues to
be identified to develop a strategy and this is when the marketing mix is employed in
order to meet consumer's needs and wants.

So far a number of studies in Indian and global scenario have been conducted from
time to time in the related areas. This section of the thesis examines briefly the
concepts of consumer buying behavior, marketing strategy, brand positioning, and
customer relationship management. The concepts are presented from the view of
various authors and writers. The researcher further looks into the contribution of some
of the experts in the area with a special focus on the car buyers and try to find the
buyer related factors and marketing strategies influencing brand preference,
satisfaction and loyalty. Finally a theoretical research framework is developed which
highlights the marketing strategies essential for the competitive market situation being
adopted by the car manufactures and their impact on consumer decision-making in
India.

3.1 Consumer Buying Behavior and Significance of Marketing

Strategies for Car Brand Preference
As the wave of globalization has directly affected the automobile industry and the
buyer behavior in the car market, the study of how marketing strategies influence
buyer behavior has assumed paramount importance in the automobile industry in
general, and in the Indian car market in particular. It has thrown open several
challenges to the car manufacturers in formulating effective and competitive
marketing strategies for growth and market acceptance. It also fosters the process of
understanding why a consumer or a buyer makes a car purchase. Without such an
understanding the car industry will find it very difficult to respond to the needs and
wants of the Indian consumers. It is challenging to understand how consumers
respond to the plethora of marketing tools used by marketers in the marketing of cars.
If car manufacturers and car dealers could understand the customer preferences and
perceptions better than their competitors then it is potentially a significant source of
competitive advantage for the car manufacturers. Hence the study makes an attempt to
find significant reasons why the car manufacturers spend considerable time, money
and effort to learn Indian consumers brand preferences.
64
Of the basic principles governing the current competitive automobile market are
customer orientation and belief in customer-centeredness. At present, the competitive
market forced producers to produce goods based on customer needs (Tafler and Tafler,
2004). The study of consumer buying behavior, which is briefly called consumer
behavior, provides information about consumer and his/her consumption patterns. A
car manufacturer can continue to survive if it can supply consumer needs and wants
with a comprehensive understanding of them. This shows the importance of studying
consumer buying behavior (Hawkins, Best and Coney, 2006) and requires
understanding buying behavior of car buyers which is not so simple. Consumers may
not know their own deeper inner motivation or they may react to affecting factors in
the last moment and simply change their mind. However, marketers should consider
their customers requests, intakes and buying behaviors (Kotler and Keller, 2009).

Car industry has an important role in the lives of Indian people. In todays competitive
world chance of survival of a car manufacturer is related to continually providing its
customers satisfaction and to attract their loyalty and support. Knowing the factors
that consciously or unconsciously affect the decision to purchase a car can have
positive effects on supplying the customers with better products. Diversity in car
production also persuades the buyer/customer to make a selection.

The Indian automobile industry has witnessed a major selling prospect during the
recent times. Day by day increasing the market density due to globalization of
business and liberalized policies of the government has also revealed the importance
of marketing strategies for the car manufacturers. Many multinational companies have
entered to fray, turning the market place into a business battlefield. Many recent
studies have reviewed the scope of car market in India. According to Sardar (2012),
the primary factor driving the automobile industry is the rising household income in
India. This is fueled by the growth in the service sector. In economic terms, there is a
strong correlation between car sales and GDP growth. With lucrative jobs being
available to young people today, there is an increase in the disposable income, having
more disposable income on hand, the aspiration of Indians to own a car is highest
among the developing countries. Increasing urbanization and proportion of young
people in the population coupled with improving consumer finance facilities with the
entry of banks into car finance has come as a boon to the Indian car industry. Home
car manufacturers too have started offering consumer finance facilities. These

65
facilities are propelled by the reducing interest rate in the economy. Reduction in the
excise duties on cars has helped reduce their prices. At present, many models are
available with the Indian car manufacturers at competitive prices and manufacturers
are reducing the prices to increase the sales volumes (Sardar, 2012). The liberalization
and global operation of automobile industry has given an opportunity to the Indian
consumers to select one out of various similar car models available in the market and
they are much better equipped with information to choose from these available
options. The Indian consumers now exhibit a totally different behavior what they used
to do in a regulated market.

Good understanding of customers, competitors and the market environment are

considered to be the key approaches to low cost production and efficiency
improvement (Dodgson, 1989; and Storey, 1994). Buzzell, Gale and Sultan (1975)
identified six factors for the competitiveness. They are marketing effort, relative
product quality, research and development, product innovation, relative service quality
and product availability. The most powerful of these are relative product quality, level
of innovation and marketing expenditure (Buzzell et al., 1975). According to Zairi
(1994), the key elements of competitiveness include the voice of the customer through
current and future demands and the voice of the process through establishing the
organizational capability to deliver customers needs and wants.

The knowledge of consumers needs and wants is a fairly important aspect, both from
the viewpoint of the academicians theoretical interest and the practical applicability

that it has for the marketing practitioners. In the modern concept of marketing, the only
rationale for the organizational existence is believed to be the consumers satisfaction that
it provides. The importance of consumer behavior was well recognized by the social and
management scientist. The father of our nation, Mahatma
Gandhi recognized the importance of the customers and said, A customer is the most

important visitor on our premises. He is not dependent on us. We are dependent on

him. He is not an interruption in our work. He is the purpose of it. He is not an
outsider on our business. He is a part of it. We are not doing him a favor by serving
him. He is doing a favor by giving us an opportunity to do so. Therefore, it is of
vital importance that the knowledge of "what makes the Indian consumer to think"
and what consequently would contribute to his satisfaction, is at the disposal of
marketing people in car manufacturing companies.

66
3.2 Consumer Buying Behavior and the Factors Influencing Car
Buyers Brand Preferences
3.2.1 Consumer Buying Behavior A Conceptual Understanding
Consumer buying behavior can be defined as a process by which individuals search
for, select, purchase, use and dispose of goods and services in respect of satisfying
their needs and wants (Kotler and Armstrong, 2008).Consumer buying behavior
includes a series of mental and physical processes that continues through before and
after purchase (Peer and Olson, 1999). Studying consumer buying behavior includes
the study of what, how, and why people are buying (Khajeh-Nasiri, 2008). Consumer
buying behavior indicates how consumer decisions are made, how the goods or
services are used (Mc Daniel, Charls and Joseph, 2003). Berkman and Gilson (1981)
explain consumer buying behavior as activities in which people are involved in actual
or potential use of various products of market including goods, services, ideas and
environment of the market. According to Solomon (1999), consumer behavior, with
the aim of satisfying needs and desires of people and different groups, examines the
process affecting the selection, purchase and use of products, services, ideas and
experiences (Ismailpour and Ghafarieashtiyani, 2002). Consumers buying
behaviors are physical emotional and mental activities to satisfy the needs and
demands of the consumers when people select, buy, and use goods and services and to
discard the product (Wilkie, 1994).

Consumers make four main types of purchases. Firstly, habitual behavior looks to
describe purchases that consumers make on a regular basis. Consequently, these
purchases are commodities, which require little money and hardly any thought
process. Bread, milk, newspapers and frequently consumed beverages such as tea and
coffee are examples of these (Hawkins, Best and Coney, 1995). Secondly, the
behavior pattern is characterized by the small amount of thought processing that is
required before a decision is made to purchase the product. This means that little
information about the product is required to make a decision because it is relatively
easy to attain this information. This is known as limited decision-making buying
behavior (Solomon, 2006). The third type of consumer buying behavior is caused by
the impulsive sector of human emotion, and is thus entirely unpredictable. It involves
consumers irrationally purchasing a product that they do not necessarily need or

67
consciously desire, but suddenly buy it in response to external factors (such as
advertisements). It usually lasts for a short period of time (Hawkins et al., 1995).

Finally, in the context of making a high involvement purchase, consumers are usually
aware of all the positives and negatives of each choice in terms of brand, quality, price
and innovation (Mittal, 1995). This behavior may be observed when a consumer
contemplates the purchase of a long term and possibly expensive product, which
makes this an infrequent purchase like car purchase. There is, therefore, some risk
involved and, consequently, this requires more thought processing and time, which
makes this behavior more difficult to understand and predict (Hawkins et al., 1995).
Consumers attempt to forecast the outcome of each option in order to determine which
is best for that particular situation so that they may make a reasoned decision. This
type of buying behavior is called extensive decision-making behavior. Consumers
decision-making for high involvement purchases such as automobiles consists of a
sequential process involving problem recognition, information search, brand
evaluation and selection, purchase and post-purchase (Punj, 1987) which provides an
overview of the decision-making process as can be seen in Figure 3.1.

Figure 3.1: Stages in Consumer Decision Making

Source: Consumer Behavior, 6th edition, Michael R. Solomon.

68
Previous studies have stated that consumer behavior for a product purchase is a
complex problem solving process (Quester, Neal and Hawkins, 2007). This is
reflected in different product purchase situations. These situations are likely to be
characterised by (a) active information seeking about various brands (Peterson and
Merino, 2003), (b) major comparison of product attributes (Radder and Huang, 2006),
(c) special preferences for a particular brand, such as brand loyalty (Dholakia, 2001)
and (d) choices that are likely to be made with a high degree of awareness (Greenleaf
and Lehmann, 2005). For example, consumers usually require knowledge and
preparation, such as an extensive information search, to learn about the product, and
enough time to process and evaluate the available information so as to reach an
appropriate product purchase decision (Bosnjak, 2010).

3.2.2 Factors Influencing Car Buyers Brand Preferences

A company that is aware of consumers reaction to different characteristics of
goods, prices and advertisement tricks has advantage over its competitors (Kotler and
Keller, 2009). Recognition of factors affecting brand preferences is one of the issues
that car manufacturers are trying to identify in order to understand the interests and
demands of their consumers and address them.

The behavior of car buyers is affected by a lot of variables, ranging from personal
motivations, needs, attitudes and values, personality characteristics, socio-economic
and cultural background, age, sex, professional status to social influences of various
kinds exerted by family, friends, colleagues and society as a whole. The combinations
of these various factors produce a different impact on each of the car buyer as
manifested in their different behavior as consumers. Dorsch, Grove and Darden
(2000) studied consumer buying behavior using the five-step process (need -
information search - evaluation of alternatives - purchase - post-purchase evaluation)
problem solving paradigm or through the progression of consumer choice from a
product class to brand choice.

Making a brand choice, the car buyer considers many factors classified in four
categories. The categories are personal differences, cultural influences, social
influences and psychological processes. Individual differences are aspects such as
knowledge, attitude, motivation and personal values. Environmental influences
include culture, social class, family and situation. Finally, psychological processing is

69
about how consumers process new information, how they learn and what attitude they
have towards changes (Hooley, Piercy and Nicoulaud, 2008). In many authentic
marketing texts, these factors are categorized generally as cultural factors, social,
personal and psychological categories. Abdul, Abdul and Edwin (2006) in their study
noted that consumer behavior is influenced strongly by these factors while making a
car brand choice. However, Kotler and Armstrong (2006) state that although
marketers cannot influence many of these factors, identifying these factors is
important to identify potential buyers and make products to meet these needs. Each of
these factors has a special dimension. For instance, social factors play a special role in
the decision of the buyers purchase (Kotler and Armstrong, 2006).

Figure 3.2: Factors that Influence Consumer Buying Behavior

Cultural Social Personal Psychological

Reference Age and Life Motivation

Culture Groups cycle Stage

Occupation Perception
Sub Culture Family Economic Buyer
Situation Learning
Social Class Roles and Lifestyle
Status
Personality and Beliefs and
Self Concept Attitude
Source: Kotler and Armstrong, 2008

Figure 3.2 shows the factors that influence consumer buying behavior. The cultural,
social, personal and psychological factors refer to purchasing patterns that consumers
follow when pursuing a product. The behavior involved between wanting, obtaining,
making use of and eventually getting rid of the product, are some of the tools that
marketers can use to understand these patterns. This understanding is a key element
when trying to isolate deciding factors in terms of transforming consumer attention
towards a product into final purchase. The part that the consumer plays is of great
significance. Evidence of this can be seen in the form of time spent by the consumer
when deciding to make a purchase (Engel, Blackwell and Miniard, 1995).

70
3.2.2.1 Cultural Factors
Perhaps the most significant factor that affects not only consumers, but also human
behavior in both social and economic environments, is the individual and personal
background of a person. Such broad factors are covered by one important term,
namely culture. Cultural factors include the set of basic values, perceptions, wants and
behavior learned by a member of society from the family and other important
institutions (Abdul et al., 2006).
Kurtz, Mackenzie and Snow (2009) define culture as the values, beliefs, preferences
and tastes that are handed down from one generation to the next. Culture is the
broadest environmental determinant of consumer behavior. The marketer needs to
understand the role played by the buyer's culture. Culture is functional according to
Lamb, Hair and McDaniel (2008). Culture is the most basic element that shapes a
persons wants and buying patterns. An example of this is that a teenager growing up

in society will acquire basic values, perceptions, preferences and behavior through
their interaction with their surroundings, family and friends. This learning curve is
achieved through socialization (Hoyer and Macinnis, 2009). In India, there are so
many different cultures, which only goes on to make the marketer's job tougher. Some
of the few cultural factors that influence buyers brand preference are:
The color, size, design, and shape of the product influence buyers brand preference

based on cultural effect. There are many examples that support this point. For
example, the Tata Sumo, which was launched in rural India in a white color, was not
well accepted. But however, when the same Sumo was re-launched as Spacio (a
different name) and in a bright yellow color, with a larger seating capacity and ability
to transport good, the acceptance was higher.

Similarly, there are so many different cultures, and each culture exhibits different
social practices. For example, in a few villages they have common bath areas.
Villagers used to buy one Lifebuoy cake and cut it into smaller bars. This helped
lifebuoy to introduce smaller 75-gram soap bars, which could be used individually.
Moreover, the male in Indian culture has always been given the designation of key
decision maker. For example, the Mukhiyas opinion (Head of the village), in most

cases, is shared with the rest of the village. Even in a house the male head is the final
decision maker. In rural areas, this trend is very prominent. Also, the saving and
investment patterns are changing from Gold, Land, to Tractors, VCRs, LCD TVs etc.

71
3.2.2.2 Social Factors
The social factors such as consumer's family, small group, social roles and status
influence the buying behavior of consumers (Abdul et al., 2006). The social factors
include:

Reference Groups: Reference groups include buyer reference groups, such as

family members, friends, social organizations, professional institutions and trade,
heavily influence the selection and specific brand. Reference Group somehow
affects the value and behavior of others. Most of the purchases affect ideas and
opinions of the reference group (Nesaee, 2009). Clement and Venkatapathy (2009)
studied the influence of peer group in the purchase of car and found that the
influence of friends is higher for the purchase of small sized and mid-sized
Automobiles. Reference group can impact a person at least in three ways. First,
the person will face new behaviors and lifestyles; second, the ideas and
imaginations that affected individuals interests will be adapted to the reference
group. Third, the created compulsive conditions may have influence on the choice
of product brands (Kotler and Armstrong, 2006).

It should be noted that the reference group differs from opinion leaders. In the
study of human communication it can be seen that some people provide
information more than others. Such people are opinion leaders who can be defined
as "consumers who influence the purchase decision of others" (Samadi, 2007).
Opinion leadership is the status of a particular class of product. In a separate class
of product, opinion leaders may influence others about a number of different
products. However, leadership does not seem to exist in all product categories
(Griffin, Barry and William, 2003). Leaders of opinion or thought leaders are
members of reference groups that can affect others because of their skill,
intelligence, personality or other traits. Manufacturers of branded goods, the
demand of which is severely influenced by reference groups, should try hard to
access the opinion leaders (Griffin et al., 2003).

Family: Family members, forming the basic structure of the initial reference group,
have a great impact on buyer behavior. In everybodys life, two kinds of
families may be formed. The first kind is a family in which someone is born and
grows and religion, politics, economics and education of that person depends

72
directly on that family. The second kind of family in which the buyers behavior
is affected includes children and people under supervision (Nesaee, 2009).

Family has had a special place in a community. In fact it is a basic social unit.
Norms and senses that stabilize the family gain their references from the inclusive
society which is an ideal source of community and family stability. Effects of
traditional attitudes, interests and incentives of families not only will be evident in
the developmental period, but also it may be extended in the next generations.
Family is a particular sub-group of society and at the same time implies an
important economic unit. Family is a complete and complex purchasing
organization that encompasses the needs of two generations or more. Purchasing
behavior will be affected by the nature of family and its responsibilities may
create a range of reverse demands for goods and services. The style of the family
life determines its place in the society.

Several researchers studied the impact of social factors on individual and family
consumption patterns (Samadi, 2007). Banerjee, Walker and Elizabeth (2011)
studied about Car acquisition and ownership trends of motorized vehicle owning
households. The study regarding vehicle choice behavior recognized that
household income is the chief determinant of the number and size of cars that
household possess, and that family size is a much less important factor whereas
smaller vehicles were preferred even by larger family.

White (2004) discussed the factors that affect car buyers' brand preference and
comments that people expect to haggle with dealers over price and to receive
substantial rebates or incentives as well as low-interest payment plans. He pointed
out that with an increase in multi-car households, car dealers and advertisers
needed to target the right audience, taking into account the pester power of
children and the importance of life stage. Despite the fact that women are the
primary buyers of most new cars, he admits that the motor trade has traditionally
been contemptuous of women's role in the car-buying process. Jacob and Khan
(2010) also reported in their studies that there is also a substantial influence of
women in the car purchase decision of the family. The trend have replicated as it
can be seen many women driving the car in the city and towns in all parts of India.
Vaddae (2010) in his study found that the consumer decision to purchase a two
wheeler is based on own perception, experience and belief. The role of friends and

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 relatives is found to be insignificant in the purchase decision process. The
respondents have given first preference for mobility of the vehicle, whereas the
urban respondents have given their preference to cope up with busy schedule to
possess a two wheeler. Thus it was concluded that the consumer purchase decision
of a two wheeler is not based on single variable, it is multivariable decision and
requires a careful study of consumer's socioeconomic needs from time to time.
Clement et al. (2009) has also studied the peer influence in the purchase of
automobile.

Social Status: Social status of each person throughout his life depends on a family
group, clubs and organizations. Person's position within each of these groups can
be defined based on the role and status of the individual. Every role includes
activities that are expected of a person. Someone may have the role of the
daughter of a family and beside her family may have the role of a wife and a
mother and she may have the role of responsible sales manager in the company
where she works. Each of these roles has special effects on purchasing behavior
(Kotler and Keller, 2009). Each role has a dignity. Dignity is the respect that
society has toward that role. Generally, people choose products which are the
messengers of their social role and status in the community (Kotler and
Armstrong, 2006). When a person accepts a role, the normative pressures have
effects on the person to act in a special way. An important role in consumer
behavior is related to the decision maker; she makes the final decision about which
brand to choose (Mowen and Minor, 2009).
3.2.2.3 Personal Factors
The personal characteristics such as buyer's age, lifecycle stage, occupation, economic
situation and lifestyle influence a buyer's brand preference (Abdul et al., 2006). Mousavi
(2006) in a study considered factors such as income, location, age, sex,
number of car buyers family members and their jobs. Car buyers in this study were

selected based on personal characteristics, social, economic and behavioral factors.

The relationship between these factors and purchasing choice was studied. The results
of this study show that at present factors such as income and its changes, occupation,
gender, income resources are more affecting than other variables on the purchase
decision of a car. A person's brand preference is further influenced by four major
psychological factors: Motivation, Perception, Learning, Beliefs and Attitudes.

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3.2.2.4 Psychological Factors

Information from several groups, marketing and situational influences affects what
consumers think and feel about particular products and brands. However, there are a
number of psychological factors that influence how this information is interpreted and
used, and how it impacts the consumer buying process. Two of the most important
psychological factors are product knowledge and product involvement (Peter and
Donnelly, 2004).

Product Knowledge: Product knowledge refers to the amount of information that

a consumer has stored in her or his memory about particular product classes,
product forms, brands, models and ways to purchase them. For example, a car
buyer may be more informed about car in respect of type economy or luxury
(product class); hatchback or sedan (product form); Maruti versus Hyundai
(brand); and various package sizes (models) and dealers that sell it (ways to
purchase).

Group, marketing and situational influences determine the initial level of product
knowledge, as well as changes. For example, a consumer may hear about a new
car dealers showroom opening from a friend (group influence), see an advert for
it in the newspaper (marketing influence), or see the dealers showroom on the
way to work (situational influence). Any of these influences would increase the
amount of product knowledge; in this case a new source for purchasing the
product (Peter et al., 2004).

The initial level of product knowledge may influence how much information is
sought when deciding to make a purchase. For example, if a consumer already
believes that Maruti car is the best, knows where to buy it, and knows how much
it costs, the consumer will not feel the need to look elsewhere for further
information.

Finally, product knowledge influences how quickly a consumer goes through the
decision-making process. For example, when purchasing a new product of which
the consumer has little product knowledge, extensive information may be sought
and more time may be devoted to the decision (Pride and Ferrell, 2010).

Product Involvement: Product involvement refers to a consumer's perception of

the importance of the personal relevance of an item. For example, car owners are

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 generally highly involved in the purchase and use of the product, brand and
accessories. However, a consumer who buys new toothbrush would likely view
this as a low involvement purchase (Doyle and Stern, 2006).

Product involvement influences consumer decision making in two ways. First, if

the purchase is for a high involvement product, consumers are likely to develop a
high degree of product knowledge so that they can be confident that the item that
they purchase is right for them. Second, a high degree of product involvement
encourages extensive decision-making process (Pride et al., 2010).

Other Psychological Factors Influencing Car Buyers Brand Preferences

Perceived Risk: Car buyers have a number of enduring perceptions, or images,

that are particularly relevant to the study of their brand preferences. A major factor
affecting personal relevance and motivation is perceived risk, the extent to which
the car buyer is uncertain about the personal consequences of buying, using or
disposing of a car brand. If negative outcomes are likely or positive outcomes are
unlikely, perceived risk is high. Perceived risk is considered in the present study
as the uncertainty that car buyers face when they cannot foresee the consequences
of their purchase decisions. The degree of risk that car buyers perceive and their
own tolerance for risk taking are factors that influence their purchase strategies.
Various types of risks have been recognized by the earlier researchers.

Nicolas and Castillo (2008) reported the probability that a purchased product
results in failure to function as expected is a technical risk, the probability that the
firm will not offer a good service in the future is a service risk, whereas the
probability that a product purchased results in the disapproval of family or friends
is a social risk. Mafe, Blas and Manzano (2009) termed the sensation of wasting
time associated with the purchase, and especially, the time that the consumer
perceives is unnecessarily spent in looking for and finding goods as the time risk.
Forsythe and Shi (2003) explained the probability that a product results in
inconsistency with self-image is a psychological risk and the probability that a
purchase results in loss of money or other resources is the financial Risk. Doolin,
Dillon, Thompson and Corner (2002) defined the risk of making a poor or

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 inappropriate purchasing decision as product risk. Massad and Tucker (2000)
described the risk that the specific product may have problem as brand risk.

Consumers look for risk reduction strategies to make him or her more comfortable
with purchase, or to reduce the perceived risk until it is below his or her level of
acceptable risk (Chu and Chi, 2008). Therefore, finding key risk reduction
strategies for both experience and search the goods actually help stimulate
consumers' purchase intentions.

Country of origin: The scholars adopted the term "country of origin" or COO,
being the country where the product is originally produced or where its corporate
headquarters are located (Johansson and Hans, 1985; and Ozsomer and Cavusgil,
1991). However, as business becomes more globalized, companies are faced with
pressures to lower production costs by searching for cheaper raw materials and
lower costs of labor. This globalization of production leads to the possibility that a
particular product could be designed in one country but produced in another.
Other than COO, some researchers prefer the term ''made in'', which refers to the
country where the product is manufactured or assembled (Han and Terpstra, 1988;
and Haslop and Papadopoulos, 1993). Thakor and Kohli (1996) define the ''origin
of the brand'' as the place, region, or country where the product or the brand is
perceived to have originated from.

The country of origin plays a significant role in the consumer buying behavior.
Brown, Light and Gazda (2007) analyzed the customers' attitude towards
European, Japanese and the US cars. They found that country of origin followed
by brand name, lower price and distributor's reputation plays a significant role in
the consumers' behavior.

In many instances, consumers are often mistaken about products actual COO. For
example, Anderson (2007) conducted a survey and found that 33.7 percent of the
subjects believed that Lexus is an American firm, rather than a Japanese firm,
whilst 55.7 per cent thought that Hyundai was Japanese. Some researchers believe
that consumers' perceptions could be more important than the actual location
where the product is actually produced or designed, or even where the
headquarters is physically located (Thakor and Kohli, 1996; Lim and O'Cass,
2001; and Jo, Nakamoto and Nelson, 2003).

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 Over the past four decades, extensive research has been conducted on the effect of
COO on consumer decisions. Schooler (1965) pioneered research on the linkage
between COO and the perceived quality of the product. The results show that
consumers clearly use COO to judge the product's quality and performance, i.e.
products originating from highly industrialized countries are viewed as more
superior in terms of quality. This was confirmed in further research by Tongberg
(1972), Krishnakumar (1974), Erickson, Johansson and Chao (1984), Heslop et al.
(1993) and Ahmed D'Astous and El-adraoui (1994).

It is also apparent that COO influences consumers' "willingness to pay". Akaah

and Yaprak (1993) examined USA and Turkish business executives' intention to
purchase specific brands of cars, cameras and calculators made in Germany, Japan
and Italy. The researcher found that COO affected consumers' willingness to pay
through the effect of perceived quality. Roth and Romeo (1992) conducted a study
on product categorization in automobile industry. He suggested that each country
possessed its own unique image towards a certain product category, so consumers
would be willing to pay higher for the product that "fits" that country's image. For
example, consumers were willing to pay more for a car from Japan, Germany and
the USA; but less willing to pay for Mexican and Hungarian automobiles.

3.3 Marketing Strategies and Their Influence on Car Buyers Brand

Preferences
3.3.1 Marketing Strategy A Conceptual Understanding
A strategy is the matching of the activities of a company to the environment in which
it operates and to its own resources capabilities (Johnson and Scholes, 2001).
Whereas, marketing is a social and managerial process by which individuals and
groups obtain what they need and want through creating and exchanging products and
value with others (Kotler and Armstrong, 2008). Although there are several
definitions of the main function of marketing, the core message is that of attracting
consumers. The message is simple, but this process can be complex as consumer-
buying patterns are changing, while consumers are also becoming more
knowledgeable about product offerings, resulting in them becoming more analytical.
Consequently, consumers are willing to pay more for a product, which they perceive
to be of good quality. Companies are presently faced with a challenge of gathering

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knowledge and understanding their consumers and offering them products that exceed
their expectations (Kotler and Armstrong, 2008). This can be achieved through
developing an efficient marketing strategy that attracts new consumers and creates an
advantage over competitors.

Marketing strategy is an overall marketing approach that is used to achieve objectives

of strategic marketing plans. The mix is a bundle of variables which are offered to the
customer. These include the product or service itself; the place where and when it is
available, delivered or distributed; the way it is promoted and the price which should
be charged (Sharma, 2012). A marketing strategy demonstrates how a company
satisfies the needs and wants of its consumers. It could also involve other functions
that are as important to the business such as maintaining relationships with
stakeholders and other business partners.

Overall, a marketing strategy should focus on providing superior consumer value, and
recognize that innovation offers a sustainable advantage; make long-term investments
in relationships with suppliers, distributors, employees and consumers; create satisfied
consumers based on capabilities and motivation of their people; and build effective
supply chains and information technology infrastructure to deliver superior operating
performance (Cravens and Piercy, 2008). Thus marketing strategies denotes the
combination of various elements, which in total constitute a company's marketing
system. To be more precise, marketing strategy is a plan for how a company will use
its strengths and capabilities to match the needs and wants of the market (Ferrell et al.,
2007).

As a strategy, marketing seeks to develop effective responses to changing marketing

environments by defining market segments, developing and positioning product
offerings for those target markets (Webster, 1998). Marketers need to design strategies
which build the right relationships with the right customers as it is impossible to
appeal to all consumers in the market (Kotler and Keller, 2012). They have to decide
which customers to serve (segmentation and targeting) and how to serve them
(differentiation and positioning). Market strategy identifies the total market and then
splits it into smaller segments, then selects the segments that are most promising and
focuses on serving and satisfying the selected customers in those segments (Kotler
and Armstrong, 2013). Marketing strategy of companies in practice should typically
be a mixture of carefully planned and deliberate steps, and more

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informal patterns of decisions and actions that emerge as managers react to events and
improvise (Belz and Peattie, 2009). By so doing, the companies concentrate on the
consumers they can serve best and profitably. Target marketing denotes the move
companies make when they identify market segments, select one or various, and then
develop marketing programs and products geared towards each.

According to Kurtz, MacKenzie and Snow (2009), a company develops its marketing
strategy by first identifying the target market for its products and then develops a
marketing mix strategy designed to attract new consumers of a particular segment. A
unique combination of the product, price, promotion and place in the sector allows
companies to compete effectively to ensure sustainability and profitability. For
example, companies wanting to increase their market share can achieve this by
matching product offerings with related price discriminations, promotions and an
efficient distribution system (Jeannt and Hennessey, 2001). Once the companies have
established the general marketing strategy, the details to be planned next are those of
the marketing mix.

3.3.2 Integrated Marketing Mix

According to Kotler (2003), in order to create a successful marketing strategy, the

marketing mix must reflect desires of the consumers in the target market. The
marketing mix comprises of product, price, place and promotion that the company
blends to produce the response it wants in the target market (Kotler and Armstrong,
2013). These elements of the marketing mix are controllable variables which can be
altered and adjusted to suit the company's objectives (Kotler, 2003). The function of
the marketing mix variables is to maximize the performance of the companies by
combining different variables to satisfy the needs of consumers. The challenge,
however, is that marketers are under pressure to adjust their marketing strategies to
suit new consumer preferences, which are caused by changes in the business
environment. Proctor (2000) also elaborates that these elements of the marketing mix
should not be seen as individual entities but as a set of interrelated entities which have
to be set in conjunction with one another and in the context of the strategic window
presented. The marketing mix variables are discussed as below.

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3.3.2.1 Product

Product indicates the goods and services combination the company offers to the target
market. For example a car consists of nuts and bolts, spark plugs, pistons, headlights
and thousands of other parts. Car manufacturer offers several models and dozens of
optional features. The car comes with fully serviced and with a comprehensive
warranty that is much a part of the product as the tailpipe (Kotler and Armstrong,
2013).

Classification of Product-related Attributes

The classification schema, as proposed by Myers and Chay (1981), for describing
products, services, and brands includes three major types of product-related attributes:
1) product referent, 2) task or outcome referent, and 3) user referent.

Product referent: Physical characteristics or product referent characteristics are

in the cognitive realm used by potential users/evaluators to describe a
product/service in two subcategories. Physical Characteristics are the most
objective types of product descriptors in the sense that they are measurable on
some sort of physical scale, in the present study case, for example, fuel
consumption, power or equipment level. Pseudo-physical characteristics are
objective in nature but not quite as measurable as physical characteristics on a
physical scale. Nevertheless, they reflect physical properties that are generally
perceived and understood as such by both sellers and buyers; e.g., strength,
shininess, or smoothness (Lichtenthal and Goodwin, 2005).

Task or outcome referent: Attribute dimensions that reflect the perceived

benefits or outcomes from using a product/service are labeled task or outcome
referent. These attributes primarily involve instrumental types of outcomes in the
affective realm and involve subjective evaluations. They can include in addition,
the ambience of surrounding conditions while using the product or service. For
example, a product or service can be shown being used in pleasant surroundings
such as beautiful scenery or in the company of friendly people. Benefits consist of
attributes that describe specific need-satisfaction outcomes from using a product
or service or buying from a particular supplier (Lichtenthal and Goodwin, 2005).
Potential benefits can be described in straightforward ways, for example,
safety comfort or convenience in the present study.

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 User referent: Attribute dimensions that reflect what usage of the product or
service indicates or imply about the person who selects or uses it, are called user
referent. These attributes reveal expressive properties that are also subjective in
nature and referred to as imagery. Imagery attributes suggest various types of
associations that may be evoked by the product or service. They usually tell us
how the product itself or use of the product epitomizes the user to other people.
Phrases such as the choice of high-status people, give a high-tech appearance or

representative of premium car with best quality are examples of Imagery

attributes. Imagery is not intrinsic to the product itself, so such attributes need to
be conveyed symbolically in promotions (Lichtenthal and Goodwin, 2005).

The product can be offered in the following ways: (1) core product, which is the core
benefit that the consumer can buy; (2) actual product is what the consumers perceive
the brand to be over competitor products, which is done through branding, added
benefits, extra features and so on; and (3) augmented products are the added non-
tangible offering that a company can use, for example, additional services, delivery
and so forth. Companies are now offering more than one product line in order to
reduce the risk by spreading it amongst different products (Porter, 1998).

3.3.2.1a Customer Service The Additional Services

Customer Service is the interaction between a customer and the company, usually via
traditional channels like phone or email. Usually the customer will have an issue or
some sort of request that needs resolving. The person could be a prospective or current
customer. Calif (1987) describes customer service as one of the organizational
processes which companies perform considering the growing competition and for
attracting entrepreneurial opportunities for increasing profitability and better access to
the market and increasing the customer satisfaction and loyalty level. According to
Goofin and Price (1996) customer service has importance because it ends in
increasing product quality, gaining competitive advantage, gaining profitable
opportunities, and as a result increasing sales and income. According to Newby and
McManus (2000) excellent quality of customer services is based upon not just the
knowledge and skills of the individual but also upon the way that the company as a
whole, from top management downwards, pulls in the same direction and presents a
clear, positive message to customers.

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The domain of the activities related to customer service is vast. Services which are
presented in addition to the actual product by car manufacturing industry today are
informational, training, communicational, leasing, repairing and maintenance
services, and also innovational services (considering data mining functions) (Khaksar,
et al., 2010). Presenting informational services is in the line of informing customers
about new products, information regarding service centers and also car news. Today,
large car manufacturers present their informational services utilizing email, Short
Message Service, and websites (Wilson and Gilligan, 1997). Presenting suitable
training services create possibility for increasing the level of customer service and
hence the customer satisfaction. Using trained staffs also, increases the accountability
of the company (Putri and Yusof, 2009).

3.3.2.2 Place
Place includes company activities that make the product available to target
consumers. A car manufacturer partners with a large body of independently owned
dealerships that sell the company's many different models. A car manufacturer selects
its dealers carefully and strongly supports them. The dealers keep an inventory of car
manufacturers automobiles demonstrate them to potential clients, negotiate prices,
close sales and service the cars after the sale (Kotler and Armstrong, 2013).

Place or distribution is the least likely marketing principle to change and the solution
to a businesss inability to attract consumers. Choice of the right location can be
expensive, but larger companies prefer to employ specialists to find them the best
location (Doyle and Stern, 2006).

3.3.2.3 Promotion

Promotion refers to activities that communicate the merits of the product and persuade
target customers to buy it. Advertisements on the audio visual medium are a rage as it
gives the car makers an opportunity to flaunt their cars. Flashy cars can be
demonstrated on television but when it comes to the finer-prints of the cars, print and
online media comes to the rescue. The digital medium offers a greater flexibility to
the car companies since they come with a lot of interactive features like
demonstrating the interiors of the car with its salient features. The print medium on
the other hand provides an opportunity to the car makers to explain the function of a
car in detail.

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Car manufacturers spend huge amounts every year on advertising to inform customers
about the car and its features. Dealership sales representatives assist potential buyers
and persuade them that X model is the best car for them. Car manufacturers and
their dealers also offer special promotions - sales, cash rebates and low financing rates
- as added purchase incentives (Kotler and Armstrong, 2013).

Products or services that are rendered are successful only if the benefits are clearly
communicated to the target market, hence, when companies decide on their strategy,
they should contemplate who their target market is and their behavior (Kotler and
Armstrong, 2008).

In order to define a target market, an effective message should be created. The

message will begin to produce interest from potential consumers, and furthermore
make consumers keen to own the product, and in the end make them purchase it.
Promotional strategy of a company can contain the following: advertising, sales
promotion, personal selling and direct mail. Media strategy refers to the way in which
an organization will pitch or deliver their message (Achrol and Kotler, 1999).

Advertising, sales promotions, salespeople and publicity can influence consumer's

perceptions of car models, what emotions they experience when purchasing and using
them, and what behaviors they display, including purchasing from a particular dealer
and purchasing specific brands. Since consumers receive so much information from
marketers and screen out a good deal of it, it is important for car manufacturers to
devise communications that offer consistent messages about their products; and are
placed in media that consumers in the target market are likely to use. Marketing
communications play a critical role in informing consumers about products and
services, including where they can be purchased, and in creating favorable images and
perceptions (Doyle and Stern, 2006).

3.3.2.4 Price
Price is the amount of money clients must pay in order to obtain the product. For instance,
car manufacturer determines recommended retail prices that dealers can charge for each
car model; on the other hand retailers rarely charge the cover/brochure price, instead they
negotiate the price with each customer offering discounts, trade-in allowances and credit
terms. These price adjustments are according

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to prevailing competitive and economic situations and bring them into line with the
buyer's perception of the car's value (Kotler and Armstrong, 2013).

Price differs from the other three elements, since it is the only marketing element that
generates direct turnover. Marketers should seek to find the optimum balance between
cutting costs and making maximum profits, without negatively influencing the
volume of production (Achrol and Kotler, 1999). The price should reflect the supply
and demand relationship (Kotler and Armstrong, 2006).

Furthermore, pricing is the marketing variable that is the easiest to change (Ferrell and
Hartline, 2007). While the product or promotion can take months to change, the price can
be changed directly. Except from being the easiest and fastest to change, pricing is also
the cheapest to change. While changing promotion, products or distribution is usually
quite costly; the opposite is true when it involves the price element.

The price of a car model often influences whether consumers will purchase it at all
and, if so, which competitive offering is selected. Some car manufacturers are
perceived to charge low prices and attract consumers based on this fact alone. For
some car manufacturers, higher prices may not deter purchase because consumers
believe that their car models are of a higher quality or are more prestigious. However,
many value-conscious consumers may buy products more on the basis of price rather
than other attributes (Peter and Donnelly, 2004).

For a marketing program to be effective the Four P's should be blended into the
program incorporating a marketing mix element into an integrated marketing program
which is designed to achieve the company's marketing objectives by delivering value
to customers.

3.3.3 Brand Positioning A Conceptual Understanding

Positioning is the development of the image of a product directly against to the
competitor products and other products produced by the company's own. Car
manufacturers use brands to identify and differentiate their automobiles from
competitors and the other brands produced by their own. The commercial importance
of brands is undoubtedly evident. Benefits of a great brand include a short-term gain
on recognition to long-term competitive advantage on loyalty, which are ultimately
translated into revenues and profits.

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There are several meanings of brand depending on whether the focus is on the
narrow or broader perspective. For example, Haigh (2007) has proposed three
definitions: trademark is a logo with associated visual elements, brand is a
trademark with associated intellectual property rights, and branded business
covers the whole organization. The Bennett (1995) defines a brand as a name, term,
sign, symbol or design, or a combination of them intended to encourage prospective
customers to differentiate a producer's product(s) from those of competitors. The
primary function of the brand is to provide convenience and clarity in decision
making, providing a guarantee of performance and communicating a set of
expectations, thereby offering certainty and facilitating the buying process. Keller
(2002) in his study said that the brand is the sum total of all elements of the marketing
mix. Brands can also be explained based on their elements as those trademark able
devices that serve to identify and differentiate the brand (e.g.; brand names, logos,
symbols, characters, slogans, jingles and packages). In his study, Phillips has
described a brand that can be described as a "trademark that communicates a promise"
(Phillips, 1988).

Broadbent and Cooper (1987) in their study noted that, if the brand is to be successful,
images and symbols must relate to and indeed exploit the needs, values and lifestyles
of consumers in such a way that the meanings involved give added values, and
differentiate the brand from other brands. Park, David and Lawrence (1996) stated
that, symbolic and functional attributes that the market place associates with the
brand. Symbolic attributes are those that satisfy internally generated needs for self-
enhancement, role position, group membership or ego identification, whereas,
functional brand attributes solve an externally generated consumption related
problem. Ambler and Styles (1996) describe two different views of defining a brand.
The first is the product plus view, when the brand is seen as an addition to the
product, and in this view, a brand is also called an identifier. The second is the holistic
view that communicates the focus on the brand itself that is considered to be much
more than just the product, whereas, positioning is a management activity that focuses
on creating associations in the mindset of consumers relative to competitors.

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3.3.3.1 The Role of Brand Positioning in Marketing

In times of an over-communicated world that is crowded with offerings, where even

strong brands are becoming increasingly similar (Clancy and Trout, 2002), positioning is
often acknowledged to be the tool of competitive warfare (Ries and Trout, 1986). Brand
positioning is the foundation of branding (Anderson and Carpenter, 2005) as marketing
activities and programs are largely based upon a brands positioning strategy (Aaker
and Shansby, 1982; Keller and Lehmann, 2006;
and Myers, 1996). A positioning strategy is an attempt to move brands to a particular
location within a perceptual product space (Dillon, Domzal and Madden, 1986) and is
generally implemented to communicate a brand image and differentiate the brand from
competitors (to achieve a position) (Park, Jaworski, and MacInnis, 1986).
Positioning is important as it sets the direction of marketing activities and programs
what the brand should and should not do with its marketing (Keller and Lehmann,

2006). Thus, the development of the marketing program should be linked to the
positioning to ensure that marketing mix decisions are consistent and supportive
(Aaker and Shansby, 1982). For example, when a company claims high prestige, it
can support this claim by charging a premium price, by limiting the number of
distribution outlets, and/or by producing less than demanded (Bhat and Reddy, 1998).
The marketing mix can hence be viewed as the tactical details of the brands

positioning strategy, any decision on positioning has direct and immediate

implications for the whole marketing mix (Evans, Moutinho and van Raaij, 1996).
Conversely, all elements of the marketing mix promotion, pricing, distribution and,
of course, the product are critical factors in positioning (Shostack, 1987), since they
have an impact on the perceptual space of consumers (Easingwood and Mahajan,
1989; Ellson, 2004; and Ries and Trout, 1986). Moreover, all members of the
marketing team need to be coordinated in order to become the positioning as close in
consumers minds as intended by the company (Crawford, 1985).
The essence of brand positioning from the companys perspective is developing
key brand associations in the mindset of consumers aimed at differentiating the brand
from competitors and thereby attaining the highest possible extent of competitive
superiority (Keller and Lehmann, 2006; and Keller, Sternthal and Tybout, 2002). This
set of associations may cover physical attributes, benefits, or life-style, usage
occasion, or user image among others (Aaker, Batra and Myers, 1992). Thus,

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positioning does not refer to what is done with the product itself, but what is done
with the product in the mind of the consumer (Ries and Trout, 1986) that is how
consumers perceive, think, and feel about a brand relative to competitive entries
(Czerniawsky and Maloney, 1999; and Ries and Trout, 1986). Marketers also make
efforts to change the belief of buyers about their identical products as different in the
market through positioning for competitive advantage.

3.3.4 Differentiation
Differentiation is actually differentiating the product to create superior customer value
(Kotler and Armstrong, 2013). The product on offer has to be different from other
similar products in the market in order for consumers to purchase it. Levitt (1980) in
his article, Marketing Success through Differentiation of anything, describes the
attributes of products that give the marketer opportunity to win the customer from the
competition, and having won him, to keep him. And also describes the alert,
imaginative state of mind that characterizes good management of product
differentiation. Through positioning, two identical products may be viewed as
different or two rather dissimilar products may be viewed as substitutes by altering
the beliefs about a brand (Kalra and Goodstein, 1998). A typical example is car
models of various car manufacturers: even though the physical characteristics of the
cars are (nearly) identical, well-positioned brands like Maruti Swift are more
successful in the marketplace than their competitors.

Brand positioning is traditionally discussed as part of the segmentation, targeting and

positioning (STP) model (Dibb and Simkin, 1996; and Lilien and Rangaswamy,
2003), which is considered to be the basis for all marketing strategy (Kotler, 2003).

3.3.5 Segmentation
The first step in this model is segmentation, which involves dividing a heterogeneous
market into a number of mutually exclusive submarkets, i.e., homogeneous groups
(also referred to as segments). Consumers in a market may differ in one way or
another; needs, buying attitudes, practices, locations and resources. Formally,
segmentation is defined as the process of subdividing a market into distinct subsets
of customers that behave in the same way or have similar needs (Bennett, 1995).
Segmentation is essential since most (probably all) markets are not monolithic but
instead consist of submarkets that are relatively homogeneous in terms of what they

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need or want from firms offering similar types of products of services (Myers, 1996).
It is important to form segments because they are likely to respond differently to
various marketing activities (Myers, 1996) and are relevant for explaining and
predicting customer behavior to a companys marketing actions (Wind and
Cardozo, 1974).
Segments can be based upon and are thus homogeneous in terms of various consumer
characteristics such as demographics, lifestyles, behavioral patterns, needs, values,
and other characteristics (Wedel and Kamakura, 2000; and Myers, 1996). In this
regard, it is essential that buyer groups (that are targeted) respond similarly to
companys marketing activities. Marketers can divide consumers into manageable

segments with products and services that match each segment's unique needs (Kotler and
Armstrong, 2013). According to Proctor, segmenting is a vital marketing skill, the
different segments buy the same product for different reasons; more than one variable can
be used when segmenting markets, the more variables the better as it aids in focusing on
tighter target markets (Proctor, 2000). Overall, Wind (1982) contends that the real value
of product positioning is revealed only when the positioning is coupled
with an appropriate market segmentation strategy.

3.3.6 Target Market

The second step in the STP model is the target market selection. A target market is the
market or market segments which form the focus of the company's marketing efforts
(Proctor, 2000). Targeting involves assessing the various segments identified in the
segmentation process with the aim of determining in which submarkets the company
should compete (Friedmann and Lessig, 1987). This assessment is primarily based
upon the segments overall economic attractiveness as well the companys resources

and objectives (Kotler, 2003). More specifically, in evaluating the segments, particular
focus is put on factors like segment size, resources required to penetrate the segment,
firm strengths and weaknesses, presence of substitutes within and outside the product
category (Porter, 1980). In general, marketers are recommended to focus on segments
which a brand can satisfy in a superior way. The selected segment should be chosen
on the basis of its profitability, the customer value to be generated and long-term
sustainability. In this context, it is important to recall that some consumer segments
value certain differential claims made by brands more than other segments, thus, the
target segment decision influences the choice of the positioning.

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3.4 Positioning

The last step in the STP model is positioning, which logically follows after the
appropriate target segment has been determined (Crawford, Urban and Buzas, 1983).
Proctor (2000) suggested that positioning represents the most important decision and
action that management has to take for the company and its marketing (Proctor, 2000).
Kotler (2003) defined the term positioning as the act of designing the companys
offering and image to occupy a distinctive place in the mind of the target
market. In other words, a marketer's product positioning relates to the manner in
which a product is defined by consumers on its important attributes; how the
consumers view the product as compared to competing products (Kotler and
Armstrong, 2013). Kotler and Armstrong further stress that positioning is arranging
for a product to occupy a clear, distinctive and desirable place relative to competing
products in the target markets' minds (Kotler and Armstrong, 2013). According to
Kotler, in positioning its brand, a company first identifies possible customer value
differences that provide competitive advantages on which to build the position (Kotler
and Armstrong, 2013). The end result of positioning is the successful creation of a
customer-focused value proposition, a cogent reason why the target market should
buy the product (Kotler, 2003). Positioning involves placing a brand in a way that the
target market perceives it as different and superior in relation to competitors
(Crawford, 1985; Kotler, 2003; and Myers, 1996). Effective positioning begins with
market differentiation so as to give consumers more value. Companies are required to
communicate effectively in order to deliver the selected position to the market.

3.4.1 Positioning A Company versus Consumer Perspective

A comprehensive literature review reveals that positioning can be viewed from the
marketers perspective or from the consumers perspective (Blankson and Kalafatis,
2004; Crawford, 1985; and Wind, 1982).

From a company perspective, which is regarded as the dominant perspective in the

literature, positioning implies the identification and communication of associations so

as to change or strengthen consumers perceptions of the particular brand vis--vis
other brands. In this regard, positioning from a firms perspective can be divided into

two subcategories namely the intended and the actual positioning.

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 Intended positioning: The intended positioning is how a company wants/intends
to have the brand perceived by the target consumers. Thus, the intended
positioning comprises the (complete) set of associations that managers desire the
target consumers to hold (Brown, Peter, Michael and David, 2006). For example,
an automobile companys intended positioning of a particular SUV model
may be that target consumers should perceive its automobile as (a) being superior
with reference to safety, and/or (b) that the particular model was the pioneer in the
SUV category. The initial ideas about the intended positioning (i.e., target
position) may be grounded in the strategic market positioning of the company (i.e.,
company specific-level) and can be driven by factors such as the core competence
or capabilities of a company (Ellson, 2004; and Porter, 1979). On a more brand-
specific level, the intended positioning is likely to be driven by the aim of finding
the position with the highest utility for customers, touching the largest or most
profitable customer segment, or being well differentiated from

competitors. Hauser (1988) assumes that positioning decisions depend on

competition, cost structure, as well as the consumers preference structure.

Actual positioning: Whereas the intended positioning reflects the associations a

company intends to create with a brand, the actual positioning is reflected in the
positioning information actually presented to the consumers. This is typically
done with different marketing communication tools such as public relations, sales
promotions, packaging, etc. but primarily via advertising, which is regarded as the
main tool for building a brands position (Krishnan, 1996; Lilien and
Rangaswamy, 2003; and Lodish 1986). Thus, the difference between the intended
and the actual positioning lies in the execution of the marketing/communication
program (e.g., advertising program) (Blankson and Kalafatis 2007; and Roth
1992).

From a consumer perspective, on the other hand, positioning refers to a process

that occurs in the minds of consumers - how a consumer perceives a brand in
his/her mental map in relation to competition (Antonides and van Raaij, 1998; and
Jain 2000). From this point of view, the company is passive and the consumer is
active consumers form or alter the perceived positions of brands in their minds
(Crawford, 1985).

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 Perceived positioning: In essence, based on the actual positioning, consumers
form their own perceptions of the brand and position the latter in their minds; this
is the perceived positioning, which indicates the complex set of perceptions or
beliefs, thoughts, feelings and impressions that consumers hold for the brand
compared to competitor brands (Ellson, 2004; Kerin, Hartley and Rudelius, 2007;
and Ries and Trout, 1986). Aaker, Batra and Myers (1992) define the perceived
positioning (i.e., position) of a brand as the set of associations the consumer
has with the brand. These may cover physical attributes, or life-style, or use
occasion, or user image. A brands position in a consumers mind is a relative
concept; in that it refers to a comparative assessment by the consumer of how this
brand is similar to or different from the other brands that compete with it.

Figure 3.3 presents an overview of the relationships between the intended, actual, and
perceived positioning. As shown in the Figure, marketers need to make the active
decision first thus, they need to position their brands in an attempt to influence
consumer perceptions (Crawford, 1985). The intended positioning is then
implemented in the form of the actual positioning which contains the information that
is actually communicated to the target audience. The actual positioning eventually
serves a basis for the creation of the perceived positioning.

Figure 3.3: Intended, Actual and Perceived Positioning

3.4.2 Positioning Bases

In principle, companies can position their brands on an almost infinite number of

dimensions (Hooley, Saunders and Piercy, 2004; and Wind, 1982). For example, a car
model can be positioned upon its size, shape, stylishness, etc. In an attempt to
overcome this issue and thus to operationalize these individual dimensions, academics
have classified conceptually similar positioning dimensions into distinct groupings

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which are called positioning bases (Aaker and Shansby, 1982; Blankson and Kalafatis,
2004; Crawford, 1985; Kapferer, 2004; Kotler et al., 2005; and Wind 1982). Thus, a
positioning base comprises of a set of theoretically related associations (i.e., dimensions)
and constitutes a means to convey a differential advantage of a brand in
consumers minds. It is generally distinguished between three main groups of
positioning bases attribute positioning (consisting of concrete and abstract attribute
positioning), benefit positioning (consisting of direct and indirect benefit positioning)
and surrogate positioning (consisting of multiple alternative bases). The main
positioning bases commonly discussed in the literature are as below:

Features (Concrete Attributes): Company highlights the concrete attributes of

the brand in order to create a differential advantage. These attributes are
characteristics of the brand advantage and are objectively measurable, mostly
tangible and typically search features. They are also specific to the product
category (Aaker and Shansby, 1982; Crawford, 1985; Hooley et al., 2004; Keller,
1993; Olson and Reynolds, 1983; Plummer, 2000; Vriens and ter Hofstede, 2000;
and Wind, 1982). For example, Knee airbag; cylinders; horsepower; price; air-
conditioning; hybrid engine.

Abstract Attributes: Often regarded as bundles of concrete attributes, are

frequently comparable across product categories and are not tangible (Olson and
Reynolds, 1983; Reynolds, Gengler and Howard, 1995; and Snelders and
Schoormans, 2004). For example, Performance; quality; style; sporty; fast
acceleration.

Direct (Functional) Benefits: These are the communicated advantages of the

usage of a brand. Consumers assign the personal value to good or service features
and find closer related to the benefits than product attributes. Direct benefits are
not directly observable, have functional nature, reflect whether a brand works as
intended, mostly attribute-based benefits, and refer also to problem solutions and
functional needs. (Aaker and Shansby, 1982; Bridges, Keller and Sood, 2000;
Crawford, 1985; Keller, 1993; Plummer, 2000; Tybout and Sternthal, 2005; Vriens
and Ter Hofstede, 2000; and Wind, 1982). For example, Cost reduction; park in
smallest lots; comfort; convenience; durability; superior service; ease of use.

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 Indirect (Experiential/Symbolic) Benefits: Benefits that satisfy
experiential/hedonic needs are indirect in nature. These are psycho-social
consequences out of the use of the product that have a hedonic, expressive, or
symbolic function. Experiential/social benefits give consumers an indirect
advantage of the consumption of a product. These have the perception of a self or
a social-image benefit (Crawford, 1985; Gutman, 1982; Keller, 1993; Olson and
Reynolds, 1983; Snelders and Schoormans, 2004; Tybout and Sternthal, 2005; and
Vriens and ter Hofstede, 2000). For example, Car X attracts looks of people;
enjoyment of the luxury; makes driver feel younger; gives you respect; driving
experience; driving fun etc.

Surrogate Positioning: This positioning is designed to create consumer

associations about external aspects of a brand. It says something about the brand
that allows the consumer to come to individual conclusions. It is not about
attributes and benefits but creation of inferred (secondary) associations and refers
to intangible aspects of the brand (Aaker, 1991; Bridges et al., 2000; Crawford,
1985; Friedmann and Lessig, 1987; and Keller, 1993). For example, User type
for people who never grow up; making associations with Formula 1 or great
writers; highlighting the pioneer status; product category disassociations;
the best selling car.

3.4.3 Positioning Strategies

A company might claim that it is better from any other company in many ways: We
are faster, were more secure, we are cheaper, and we are more comfortable, we are
more stable, we are more intimate, we have higher quality, and we have better value,
and the list continues. However, a product must be identified in the best way to
express a sense as for a group of customers. Otherwise it will be positioned poorly
and will not be remembered sufficiently. What the consumers remember are the first
or the best products tapering (Kotler, Veronica, Saunders, and Armstrong, 2005).

A positioning strategy consists of three steps: to reveal possible competitive

advantages to create a positioning, to select the right competitive advantages and to
choose a comprehensive positioning strategy. Later, the company should provide
effective communication and distribution to market regarding the selected position
(Kotler and Armstrong, 2006).
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A single positioning base or a combination of positioning bases forms the positioning
strategy of a brand. In essence, a positioning strategy (intended or actual positioning)
is defined as an attempt to move brands to a particular location within a perceptual
product space (Dillon et al., 1986) and generally implemented to communicate a
brand image and differentiate the brand from competitors (to achieve a position)
(Park et al., 1986). Thus, a positioning strategy can reflect the intended or the actual
positioning.

Conceptually, the overall positioning strategy of a brand can be described by (a) the
number and type of positioning bases employed (single/multiple) and the emphasis
put on each base (different/equal). Thus, one can first distinguish between pure
positioning, whereby only one dimension is used to position the brand (e.g.
positioning with regards to concrete attributes) and hybrid positioning, where multiple
bases are employed (e.g., concrete attributes plus surrogate positioning of some sort).
If hybrid positioning is used, a further distinction can be drawn between a balanced
positioning strategy and a dominant positioning strategy. Under the former strategy,
approximately equal emphasis is given to the various positioning dimensions, whereas
under the latter strategy the emphasis varies.

3.5 Effectiveness of Strategies from Consumers Perspective

The researcher examines the extant literature to investigate the effectiveness of

strategies from a consumers point of view.

3.5.1 Effectiveness of Positioning Strategies from a Consumer Perspective

The positioning effectiveness is a multidimensional construct capturing consumers

evaluations of a brands position in terms of credible and favorable differentiation
in relation to competing brands thus enabling an assessment of the extent to which the
brand in question occupies a credible, distinct, and positively-valued position in the
minds of consumers. Contrasting the major positioning bases (i.e., feature, direct
benefit, indirect benefit and user/surrogate positioning) against each other, several
arguments might be brought forward to suggest that benefit and surrogate positioning
are likely to be perceived by consumers as more effective positioning strategies than
feature positioning.

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An initial argument for this is that consumers buy benefits and not features (Sengupta,
2005). Benefits that are realized from the brand are more relevant to the consumers

evaluation than the physical characteristics (i.e., features) of the brand (Bagozzi,
1986) because they are actually intended to solve a need or a problem. However,
brands increasingly introduce features that fail to provide consumers with benefits
that are meaningful and important to them (Broniarczyk and Gershoff, 2003).
Moreover, Thompson, Hamilton and Rust (2005) find that consumers experience a
feature fatigue. A final drawback of feature positioning, which especially becomes
evident in highly technological or complex product categories (e.g. automobiles),
concerns the fact that the communicated product-related information (i.e., features)
may sometimes be too product category-specific to be comprehensible to consumers
(Mukherjee and Hoyer, 2001; Mahajan and Wind, 2002; and Vriens and ter Hofstede
2000).

In light of the above, it is not surprising that benefits are felt [by managers] to be
more effective than features as positioning approaches (Crawford, 1985; and Wind,

1982). Benefit as well as surrogate positioning strategies tends to produce more self-
relevant meanings which are closer to consumers needs and values, and should be
thus more strongly related to brand attitudes than information that creates meanings
about the product (MacInnis and Jaworski, 1989). Indeed, consumers should be more
persuaded by thoughts about what products can do for them and a products relevance

to personal goals or objectives than by thoughts about physical product

characteristics (Graeff, 1997). For example, with user positioning a widely
employed form of surrogate positioning (Crawford, 1985) favorability is created by
associating consumers with their desired or actual membership group, role or self-
image (Hong and Zinkhan, 1995; Sirgy, 1982; and Lefkoff-Hagius and Mason, 1993)
and thus consumers needs for self-expression or social-approval are satisfied (Belk,
1988; and Sirgy, 1982). Moreover, user positioning is believed to be much harder to
be duplicated (Ennis, 1982).

A further argument for the superiority of benefit and surrogate positioning over
feature positioning is the premise that abstract positioning strategies (i.e., benefit and
surrogate positioning) provide more information to consumers than concrete
positioning options (i.e., feature positioning), as they are inclusive of the respective
features (Pham and Muthukrishnan, 2002). Specifically, consumers who are exposed

96
to benefit from surrogate information may (implicitly) also infer the features that
underlie the focal benefit (Snelders and Schoormans, 2004), or are associated with the
surrogate (Friedmann and Lessig, 1987).

3.5.2 Effectiveness of Marketing Strategies from Car Buyers Brand

Preference, Satisfaction and Loyalty Perspective
The key success of car manufacturers lies not only in having good car models but also
in being able to provide the customer with the level of service they desire and
maintaining a positive image of the brand in the customer's mind, because of
increasing competitiveness in the Indian automobile Industry. This image is reflected
in the customers' perceptions and feelings about the company's products and services
(Proctor, 2000) in terms of customers brand preference, satisfaction and loyalty.

3.6 Car Buyers Brand Preference

The researcher has evaluated various secondary studies conducted on the car buyers
behavior by other researchers in the relevant area, in different countries and
specifically in India. The existing literature shows it very important how car
manufacturers determine their structure in the market. Competition among car
manufacturers in the Indian automobile market has been growing since the 1990s as a
result of new firms entering the market. These firms needed to adopt new strategies to
exist in the market and to continue improving their profits and market share. In
oligopolistic market structures, car manufacturers utilize different marketing
strategies. There are various theoretical and empirical evidences in the literature on
determining the effectiveness of the strategies from a car buyer perspective.

While companies are selling a product, consumers are buying a solution (Kotler,
2003). The way car manufacturers offer their car models should be thought of with
careful consideration of competitive forces. As more car models are placed on the
market, and offer solutions to consumers, car manufacturers are finding it more
difficult to come up with innovative solutions. This is a result of consumers becoming
more knowledgeable about product offerings and benefits. These car models can be
perceived in various ways, which include physical make-up, as well as the availability
and branding of products.

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Balcet and Enrietti (2002) made an effort to determine the interactions between the
local strategies and global strategies preferred by companies in the automobile
industry. Goldberg and Verboven (2000) analyzed price determination based on
product differentiation in the European automobile market. Sudhir (2001) modelled
the competitive pricing behaviour of organizations in the American automobile
market. Tanaka (2001) considered (by means of game theory) the price and quantity
strategies of organizations doing business in oligopolistic market structures. Mazzeo
(2002) used the product differentiation strategy in oligopolistic market structures.

India's top car manufacturer, Maruti Suzuki India Limited, has reworked its entire
corporate strategy and business portfolio. Sangameshwaram (2001) reported that the
company launched initiatives to diversify into support services like vehicle insurance,
used car sales, fleet management, accessories and car finance. He cited the result of a
joint study by Maruti along with AT Kearney in 1998, which stated that the purchase
price of the car is only one third of what the consumer spends during the ownership
cycle of the car. A third is accounted for by fuel. The rest goes into support services.
Almost all car manufacturers are going in for localization to become more cost
effective. Vijayraghavan and Philip (2001) have found that many customers include
spare parts cost in their consideration for car purchase. Maruti has the advantage of
having the highest localization content (90 per cent) owing to its lengthy presence in
the country. Other automakers like Hyundai, Fiat and General Motors are also able to
offer competitive spare parts.

Moreover, due to various measures implemented by the Reserve Bank of India to

support the economy and boost up the demand, Indian banks have reduced the interest
rate for car loans, which gives a hope for the industry. As reported by Ajit (2009),
while the new generation banks in the private sector concentrate their car financing
activities in the cities, Public Sector Banks are turning the heat on, in the small and
medium towns and rural area, where they have more coverage and influence.(Ajit,
2009). The car manufacturers in India also have an eye on these types of economic
developments in financial institutions.

Doyle and Stern (2006) suggest that several attributes of a car model, including brand
name, quality, newness and complexity, can affect car buyers brand preference.
The physical appearance of the car model, packaging and labelling information can
also influence whether consumers notice a car model in showroom, examine it and

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purchase it. One of the key tasks of marketers is to differentiate their products from
those of competitors and create consumer perceptions that the product is worth
purchasing.

Fred and Panigrahi (2000) evaluated empirically the attitude of African-American

consumers towards US and Japanese made automobiles. Kwortnik, Creyer and Ross
(1997) pointed out that the consumer will be interested in purchasing the product if
the product is of high value according to his perception. According to the study
conducted by Krishna (1994) buyers purchase behavior can be influenced not only by
current price of a product but also by the price they expect in future.

Awni (1993) in a study outlined the pricebenefit plan model in America's medium
size cars. In this study the characteristics of a vehicle such as engine power, chassis
size, passenger capacity, fuel tank capacity and car prices have been assessed. The
research has shown that there is a positive relationship between price and benefits.
Moreover, there are seven medium size car markets in America and competition is not
high in subsection. In Low levels that the brand names such as Mercedes and Volvo
are present, companies are gathering their models from the market. The results show
that a manufacturer with the right combination of cost - benefit and some secondary
benefits in customer demand can find intact market of clients for themselves.

Distribution is a critical element in the marketing process so is pricing which is not

just a mechanistic process involving knowledge of costs and the addition of a profit
margin. Strategic pricing decisions need to be made and pricing is inherently limited
to product quality specification. Finally, strategic considerations with respect to
marketing communications are considered. Cowley and Mitchell (2003) concluded
that as customers differ in their knowledge about the product, therefore marketing
communication must be tailored accordingly. Deb (2004) says Indian customers now
also have access to various channels of information about automotive technology
through TV channels, internet, personal travel overseas, and automotive magazines.

Celebrity Influence is again an important tool which is able to influence Indian

consumer buying behavior. In India, celebrities are being increasingly used in
marketing communication by marketers to lend personality to their products. Their
activities and movements are being closely watched and imitated. What they endorse
sell like hot cakes. Indians always love their heroes and heroines. Consumers like

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advertisements more if they are admirers of the celebrities in the advertisements.
When a consumer likes the celebrity in the advertisement, he or she is more likely to
accept what the celebrity says about the advertised product and therefore will develop
more positive feelings toward the advertisement and the brand itself. Famous
celebrities are able to attract attention and retain attention by their mere presence in
the advertisements.

Sharma (2006) in her study pointed out the importance of celebrity endorsement in
advertisement and concluded that advertisers use endorsers to add excitement and
glamour to their brands. Basically, celebrity endorsements give a brand a touch of
glamour in the minds of people, and the hope that a famous face will provide added
appeal and name recognition in a crowded market.

Celebrity endorsements and testimonial advertisements have come a long way and are
also doing their bit to sell the cars. Super star Shahrukh Khan has been associated
with Hyundai Motor Company for a long time and he comes regularly on television to
promote the Santro car. Similarly Ford has roped in Abhishek Bachchan for the
promotion of the latest offering from the company Ford Fiesta. On a similar note Saif
Ali Khan and Rani Mukherjee is shown chasing each other with a Chevrolet Aveo.
Aamir Khan who is considered to be one of the most talented actors in the industry is
frequently seen changing roles on screen to promote the Toyota Innova, a car which is
generations ahead of its predecessor Toyota Qualis. Cricketers haven't been left
behind in the race of promoting cars; Fiat Palio had received a great thrust when the
promotion of the car was taken up by the batting maestro Sachin Tendulkar.

Zahedanenobandan (2002) in a research investigated the impact of environmental

stimulus and effective marketing on consumer behavior of in Iran khodro Company.

In this study influential environmental factors and marketing and importance index of
each factor in terms of quality, satisfying customer needs, and managing Peugeot
GLX 405 buyer behavior were identified. The results indicated that external
motivators such as cultural and personal factors as well as marketing motivators
including price, product quality, improving after sale services and distribution
channels with different degree of importance have impact on consumer behavior. It is
also known that the effective marketing factors in comparison with the effective
environmental factors have a greater impact on consumer behavior.

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3.6.1 Marketing Mix Influence on Car Buyers Brand Preferences

The elements of the marketing mix are controllable variables, which should be
managed in the correct way in order to meet the needs of the defined target group
(Kotler, 2003). A number of earlier studies have explained how consumers form
preferences for various goods and services using theories of adoption (Rogers, 1995;
and Mason, 1990). Ravichandran and Narayanarajan (2004) studied factors
determining the brand preference of consumer durables. They concluded that the study
with brand preference of consumer durables is largely influenced by a number of
factors such as advertisement, price, quality, performance, availability of spares, and
after-sales service. Moreover, these factors play a vital role in the decision-making
process and in the brand preference.

Chidambaram and Alfred (2007) postulates that there are certain factors which
influence the brand preferences of the customers. Within this framework, the study
reveals that customers give more importance to fuel efficiency than other factors.
They believe that the brand name tells them something about product quality, utility,
technology and they prefer to purchase the passenger Automobiles which offer high
fuel efficiency, good quality, technology, durability and reasonable price. Kaur and
Sandhu (2006) conducted a study in Punjab and Chandigarh to figure out the features
considered by the customers while going for the purchase of a car. The respondents
perceive that safety and comfort are the most important features of the passenger
Automobile followed by luxuriousness. So the manufacturers must design the product
giving maximum weightage to these factors.

Purohit (2009) identified that consumers are mainly satisfied by the company,
durability, driving comfort, brand popularity, spare parts availability, travel
convenience and overall look. Good product features led the consumers to purchase
Maruti product than the others. Dongyan and Xuan (2008) conducted a study on
Chinese consumers which revealed that they take "safety" as the most important
characteristic and take "value for money" as the second most important and "riding
comfort" as the third important characteristic when purchasing a car. The results of the
study conducted by Chen (2007) highlight the importance of speed, comfort and
safety in US customers' buying decision when they purchase a sedan car.

Kalra and Goodstein (1998) found that the Indian buyers rate technology, comfort and
convenience as important considerations for car purchase. In the developed world,

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technology has always played an important consideration for car manufacturers as
customers have always embraced state-of-the art cars. In their study Rowland, Cornet
and Bouvard (2001) reviewed the scope of automotive telematics for usage in
automobiles. However, the study by Ealey and Mercer (1999) stated that different
countries accept technology at different rates.

Kotha (1998) in his study examines the influence of extrinsic causes namely price,
reputation of the product and advertising that has been investigated in a main
experimental setting using multi-item measures. The results indicate that all the three
signals affect consumer's quality perception and they have an indirect influence on
purchase intent. As per Kotwal (2009), face-off buyers now prefer to have cars with
the space, comfort and luxury of a midsize saloon or sedan. With the growing
affluence and technological advancement, there develops a certain maturity in taste, as
evidenced by the growing popularity of the Indian Hatchback market. The "third box"
or the boot space does not seem to have the same importance, which it once had.
Many customers buy cars with the space and comfort, less the boot, as it is easy to
negotiate in our ever-increasing congested cities. That is where the premium
hatchback commands a respect in its segment. Though they are costing more money,
customers buy them for their practicality and comfort they offer, without sacrificing
the feel-good factor.

Prices are used by car manufacturers as an advertising appeal to attract consumers.

This is shown by the increasing presence of car prices in the media and advertising
campaigns. This is aimed at providing the consumer with a comparative element to
judge the different alternatives he or she has at his or her disposal when making a
purchase (Alvarez and Casielles, 2004).

Joseph and Kamble (2011) evaluated the behavioral pattern shown by passenger car
owners consisting of professionals, employees of public and private sector,
businessmen and agriculturist and found that one of the most important factors that
influence purchase of passenger cars in India is the availability of auto finance or
consumer credit. There have also been studies to evaluate concepts of price fairness
and customer satisfaction and empirically demonstrate the influence of perceived
price fairness on satisfaction judgments. Herrmann, Xia, Monroe and Huber (2007),
seek to examine specific factors that influence fairness perceptions, including price
perception and consumer vulnerability, in the context of car purchases in major

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German car dealerships. Their research paper (Herrmann et al., 2007) shows that price
perceptions directly influence satisfaction judgments as well as indirectly through
perceptions of price fairness.

A study by Lang (2007) found a list of 20 factors to be the most important factors that
influence purchase of car. They are as follows Reliability/Dependability, Exterior
Styling, Price/Cost to Buy, Interior Comfort, Value for the Money, Fun to Drive,
Reputation of the Manufacturer, Quality of Workmanship, Engine Performance,
Road-holding/Handling, Fuel Economy, Storage and Cargo Capacity, Ride Quality on
Highway, Durability/Long Lasting, Safety Features, Future Trade-In/Resale, Length
of Warranty, Rebate/Incentive, Discount/Value Package, and Environmentally
Friendly Vehicle. Similarly a study by Power and Associates (2005) listed the
following nine to be the most important reasons for car purchase - Styling, Reliability,
Costs too much, Poor quality, Resale value, Too small, Lacked performance, Didn't
offer incentives, Poor gas mileage. A study published in Anonymous (2008a) UK
found for as many as 71% of customer price was the most important factor, followed
by fuel economy, running costs, fuel type and Vehicle Excise Duty (VED) costs.
Similarly an article published in Anonymous (2008b) quoted After Price; Reliability is
the number one factor for buyers. Car buyers rate reliability over fuel efficiency as
their primary decision makes. Fuel efficiency and safety rank second and third in
importance Performance not a top priority for most car buyers.

3.6.2 Brand Positioning Influence on Car Buyers Preferences

Brand positioning is not driven by good advertising alone but is significantly impacted
upon by the cars performance and design, quality, and the cost of ownership. Small
car buyer seeks capability in advertising, and fuel efficiency is relatively more
important to them. In fact, the Indian car market is extremely price/value conscious. A
case in point is the Maruti 800 campaign in which the kids who is playing with a toy
Maruti 800 exclaims to his dad (when asked how long will
he keep on running the car), papa ki Kara, petrol khatam hi nahin Honda. The ad
cleverly conveys that the car just keeps going on and on. It ends with the voiceover
telling us that Maruti Suzuki is most fuel-efficient car.

103
Generally, it has also been seen as one move up the value chain, the differentiation is
more on the emotional pay-off. People buy car as an extension of their personality
rather than just features. A car, in India, helps build up show off, social esteem value.
The advertising would also vary according to the segment which one is targeting. For
instance, the Chevrolet Optra ad (which depicts a young husband driving his wife to
see the moon on the occasion of Karvachauth) shows an Optra consumer as someone
who believes in family values and indulging loves ones. As the Indian consumer buys
a car not only for himself but also for the family, the Optra positioning goes well with
the companies catch lines of for a special journey called life.

With a plethora of new models in the market, and generic benefits (such as space or
fuel efficiency) of a particular car segment which are hardly a distinguishing factor
between car models, car manufacturers are increasingly differentiating on the
emotional pay-off a particular car model/brand provides to the customer. This, of
course, varies from the segment to segment and also on how long a particular model
has been in the market. For instance, while advertising for entry level or smaller cars
tends to focus more on the rational or functional benefits of the vehicles, the
differentiations is increasingly on the emotional benefits when it comes to high end
cars. Technology, innovation, and emotional benefits influence premium mid-size
buyers.

High end car manufacturer Skoda auto too, through its advertising, attempts to
connect with its consumer on emotional level. The advertising shows the consumer to
be youthful, image-conscious and even a bit macho. The Skoda Auto India not only
communicates the quality of the brand but an appreciation for the finer things in life to
its target consumer, primarily a male, businessman or someone in the senior
management. Surely, image building does come higher in the consumers scheme of
priorities when buying a new car than ever before.

In addition, the diesel automobiles are becoming popular in India and the
announcement of reductions in excise duties by the government has helped to some
extent to boost the demand. Moreover, the competition makes the car manufacturers
important to launch at least one new model or a variant of the model every year
(Sundaram, 2008). Kumar (2009) also reported that the passenger car market is
coming out of the economic slow-down phenomenon being witnessed all over the
World (The Hindu, 2009). He further reported that manufacturers have adopted a

104
strategy to introduce new and modified edition of the existing models in the market in
the coming months, to smarten the market, which gives a positive signal to the car
industry in general.

Menon (2012); and Jacob and Khan (2010) reported in their studies that there was
considerable proportion of modern women car buyers, which has increased three fold
in the recent years. Companies have started to dig deep into the Indian women's
psyche and attention for details. Marketers may need to look at the needs of women
customers, who are increasingly growing in the segment.

Car dealers are implementing a strategy to position themselves, more effectively in

the market place than before, by means of continuous improvement of quality
maintenance through services delivery packages, as car dealers are increasingly being
confronted by demanding and technologically knowledgeable consumers, shortened
product model lifecycles, intensified competition and fragmented market segments
(Sharma and Patterson, 1999).

3.7 Electronic Marketing

Traditionally, purchasing a car was considered tedious with numerous visits to car
showrooms, comparison of features through brochures, taking opinions from friends,
word-of-mouth from peers and finally experiencing the car through a test drive. The
information technology revolution has empowered consumers to access information
relevant to car purchase easily. There is a wide gamut of information available on the
automobile industry online, ranging from car model specifications to pricing, finance
options, pre-owned cars etc.

The steady increase of online forums/virtual brand communities and the constructive
opinion they generate is very encouraging. The importance of these communities is
growing day by day as a result of consumers increasingly using online tools to contact
fellow consumers in order to get information on which to base their decisions. For this
reason, it attains importance to explore, some of the effects of participation in a virtual
brand community on consumer buying behavior. Luis, Carlos and Miguel (2007)
proposed the positive effects of participation in a virtual community on both
consumer trust and loyalty to the product, brand or organization around which the
community is developed. The survey reveals that participation in the activities carried
out in a virtual community may foster consumer trust and loyalty to the mutual
105
interest of the community. In addition, the study also found a positive and significant
effect of consumer trust on loyalty. Menon (2012) also observed that car makers have
woken up to the new reality of internet providing a key role in their marketing and
communication strategies. Internet has witnessed increased brand building efforts by
car companies over the past few years. Hence the researcher posits that car
manufacturers may foster car buyers trust and loyalty by developing virtual brand
communities and promoting consumers' participation in them.

3.8 Customer Relationship Management

In todays context, it is more profitable to keep customers for a long term.
Customer relationship management is the strategic process which makes a great deal
of sense to keep existing customers happy, improve customer retention rates, thus
reducing churn, increasing profitability and reducing the need to devote high levels of
marketing effort on acquiring new ones. Research studies by Garbarino and Johnson
(1999); and Morgan and Hunt (1994) have emphasized the significance and relative
prioritization of relationship marketing (Garbarino and Johnson, 1999; and Morgan
and Hunt, 1994). Many companies have increasingly been prioritizing their attention
and focus to the establishment, development and maintenance of close and lasting
relationships with their customers, in order to create a differentiating value addition to
their products and/or lowering the product costs to engage in a penetration pricing
mechanism. This is corroborated by Weitz and Bradford (1999) in their research
studies (Weitz and Bradford, 1999). Even in the car industry, which is predominantly
driven by the product characterization, classification and orientation, establishing a
long-term relationship is being considered to be essential marketing strategy at all
distribution levels. Preiss and Kleinhans (2001); and Osegowitsch and Kleinhans
(2001) have emphasized customer relationship management as a key goal for success
in automobile industry. Ealey and Mercer (2000) suggested that auto companies must
build on their long term relationships with customers. Chojnacki (2000) ascertained
that customer knowledge and relationship building, through constantly addressing
their needs, are considered to be vitally important selling ingredients to contribute to a
car dealer's competitive advantage (Chojkacki, 2000). Thus, car manufacturers
through customer relationship management make the opportunity cost of getting out
of the relationship somewhat prohibitive for the customer.

106
3.9 CustomerSatisfactionandLoyalty A Conceptual
Understanding
Customer satisfaction is an ambiguous and abstract concept and the actual
manifestation of the state of satisfaction vary from person to person and
product/service to product/service. Customer satisfaction is a term frequently used in
marketing as a measure of how products and services supplied by a company meet or
surpass customer expectation (Bennett, 1995). Customer satisfaction is defined as "the
number of customers, or percentage of total customers, whose reported experience
with a firm, its products, or its services (ratings) exceeds specified satisfaction goals"
(Farris, Bendle, Pfeifer and Reibstein, 2010). Although many of the theorists have
defined customer satisfaction in various ways, the conceptualization, which appears to
have achieved a wider acceptance, is that satisfaction is a post-choice evaluative
judgment of a specific transaction (Bastos and Gallego, 2008). Customer satisfaction
is the result of a customers perception of the value received in a transaction or
relationship where value equals perceived service quality relative to price and
customer acquisition costs (Hallowell, 1996; Heskett, Sasser and Hart, 1990; and
Blanchard and Galloway, 1994).

The state of satisfaction depends on a number of both psychological and physical

variables which correlate with satisfaction behaviors such as return and recommend
rate. The level of satisfaction can also vary depending on other options the customer
may have and other products against which the customer can compare the
organization's products. A business ideally is continually seeking feedback to improve
customer satisfaction. Customer satisfaction provides a leading indicator of
consumer purchase intentions and loyalty (Farris et al., 2010). Customer
satisfaction data are among the most frequently collected indicators of market
perceptions. Their principal use is twofold: Within organizations, the collection,
analysis and dissemination of these data send a message about the importance of
tending to customers and ensuring that they have a positive experience with the
companys goods and services. Secondly, Although sales or market share can
indicate how well a firm is performing (Farris et al., 2010). Currently, satisfaction is
perhaps the best indicator of how likely it is that the firms customers will make
further purchases in the future.

107
While the literature contains significant differences in the definition of satisfaction, all
the definitions share some common elements (Giese and Cote, 2002). When examined
as a whole, three general components can be identified of consumer satisfaction (1) a
response (emotional or cognitive); (2) a response that pertains to a particular focus
(expectations, product, consumption experience, etc.); and (3) a response that occurs
at a particular time (after consumption, after choice, based on accumulated
experience, etc.).

More specifically, in the literature, there has been discussion about two major
concepts of satisfaction; transaction-specific satisfaction and cumulative satisfaction
(Gustafsson, Herrmann, Huber and Johnson, 1997). The first one is described as
customer evaluation of single experience with a product or service. Therefore how
happy the customer is with the offering at given point of time, during concrete
transaction. Transaction-specific concept refers to satisfaction as the evaluation of
single experience. Opposite to transaction specific satisfaction is the concept of
cumulative satisfaction, which understands satisfaction as customers up to date

experience with a product or service. In such comprehension, satisfaction is the sum

of evaluations of all purchase and consumption experiences with a product during
whole relationship.

During the course of this study, cumulative satisfaction concept has been used, as it is
more appropriate for automotive industry. In this durables business, purchases are
infrequent and satisfaction is understood as a long term experience. The owners of the
cars, if asked about satisfaction with the particular brand, refer to cumulative
satisfaction they talk about purchase experience, vehicle use experience, ending
with after-sales service experience.

Satisfaction has its drivers, which influence the satisfaction levels. In general, there
are two major drivers of customer satisfaction - products performance and
expectations, which includes both products quality and products value (relation of

price and quality). The results of satisfaction from the drivers (performance and
expectations) are loyalty and retention. Those two consequences are correlated with
each other, but are at the same time distinct results of customer satisfaction.

Newman and Werbel (1973); and Kasper (1988) hypothesized in their paper that
customer satisfaction is often used as a predictive measurement of future consumer

108
purchases (Newman and Werbel, 1973; and Kasper, 1988). Satisfied customers are
more likely to resort to repeating purchases in the time of actual instance, as reported
by Zeithaml, Berry and Parasuraman (1996), in their studies. Moreover, highly
satisfied customers will convey their success stories of satisfaction and directly
recommend that others try the source of satisfaction, as stated by Reynolds and Arnold
(2000); and Reynolds and Beatty (1999) in their research studies (Reynolds and
Arnold, 2000; and Reynolds and Beatty, 1999). Fitzell (1998) suggested that such
satisfied customers shall become less receptive to the competitor's offerings (Fitzell,
1998).

Ball, Simo~es-Coelho and Macha's (2004); and Copeland (1923) remarked that a
quick observation of customer loyalty is demonstrated by repeated purchase, based on
their studies (Ball, Simo~es-Coelho, and Macha's, 2004; and Copeland, 1923). Bowen
and Shoemaker (1998) stated in their paper that in practical terms, firms want
repeated purchases mainly because such behavior in consumers can apparently show
the customer preference for a brand or product clearly (Bowen and Shoemaker, 1998).

Loyalty is only expressed psychological predisposition toward purchasing and/or

using a particular product/service once again, however it does not guarantee a success
to an organization measured as customer retention. In other words, loyalty is a high
perceived or expressed likelihood of repurchase or willingness to pay a higher price,
but does not mean, that customer will repurchase from an organization (Johnson,
1986). It is the retention, which is ultimate consequence of satisfaction and which is
the actual act of repurchase.

As suggested by several researchers (Kumar and Shah, 2004; Back and Parks, 2003;
Ball et al., 2004; and Dean, 2007) there are two types of loyalty; behavioral and
attitudinal loyalty. The behavioral aspects of the customer loyalty were characterized
in terms of repurchase intentions, word-of-mouth communication, and
recommendations of the organization (Nadiri, Hussain, Ekiz and Erdogan 2008;
Karatepe and Ekiz, 2004; Yi, 1990; and Zeithaml et al., 1996). Liu-Thompkins,
Williams and Tam (2010) defined attitudinal loyalty as a favorable evaluation that is
held with sufficient strength and stability to promote a repeatedly favorable response
towards a product/brand or a store. According to Kumar and Shah (2004), consumer
loyalty seems to be based on a collection of factors. The first is trust. Consumers must
trust the vendor or product they encounter. Second, the transaction or relationship

109
must have a positive perceived value greater than that supplied by competitors. Third,
if marketers build on the first two factors, they may be able to create a level of
positive customer emotional attachment. That emotional response may be
commitment to their brands that is resistant to change (Pitta, Franzak and Fowler,
2006). Today, every industry offers a variety of loyalty schemes aiming at
differentiating one competitor from another (Butscher, 1999). Each time a customer
buys, he progresses through a buying cycle (Griffin, 2002).

3.9.1 Relationship between Customer Satisfaction and Loyalty

The relationship between satisfaction and loyalty has been observed in several studies
such as Coyne (1989); Oliva, Oliver and MacMillan, (1992); Fornell (1992);
Guiltinan, Paul and Madden, (1997); Sivadas and Baker-Prewitt (2000); Bowen and
Chen (2001); and Silvestro, and Low (2006). Some customers have their satisfaction -
loyalty linked to the product alone. Keller (1993) evaluated customers, who purchase
specific category of products for the first time, and were found to focus on the product
benefits, and not on the brand (Keller, 1993). He states that the emphasis in this case,
is in the tangible attributes of the product, which are visible and accountable to the
buyer. Customers looking for low-price car, to meet their budget, may necessarily
focus on the characteristics of the car, regardless of brand.
Satisfaction and loyalty are not surrogates for each other (Shankar and Amy, 2002;
Bloemer and Kasper 1995; and Oliver 1999). It is possible for a customer to be loyal
without being highly satisfied (e.g., when there are few other choices) and to be highly
satisfied and yet not be loyal (e.g., when many alternatives are available). (Shankar
and Amy, 2002) The results of Bowen and Chen (2001) study verified the nonlinear
and asymmetric relationship between customer satisfaction and customer loyalty.
When satisfaction increased above a threshold, purchase loyalty went up rapidly and
when satisfaction dropped below a threshold level, purchase loyalty decreased equally
rapidly. Guiltinan et al. (1997) believed that satisfied customers are more likely to be
repeat (and even become loyal) customers. Fornell (1992) have found strong
correlations between satisfaction and loyalty. According to Mittal, Kumar and Sirros
(1999) the relationship between satisfaction and loyalty changes over time. However,
the relationship between satisfaction and loyalty is expected to be dependent on the
quality of the product and services.

110
3.9.2 Marketing Strategies Influence on Car Buyers Brand Satisfaction
and Loyalty

Brands are important in the automobile market. They are the interface between car
buyers and the car manufacturers, and buyers may become satisfied and then develop
loyalty to car brands. Saxena (2000) investigated the satisfaction level amongst the
customers of premium cars - Opel Astra, Ford Escort, Maruti Esteem and Daewoo
Cielo. For measuring brand satisfaction level amongst the four manufacturers, eight
attributes (service, spare parts availability, safety, leg space, boot space, price, style,
and resale) were listed in the questionnaire. The study found no significant difference
in satisfaction level among different brands of premium cars on the eight attributes. To
evaluate satisfaction with dealer service, thirteen attributes were evaluated (location,
ease of appointment, facilities, proper diagnosis, labour cost, spare cost, spares
availability, promptness in service, correct service, staff behaviour, warranty service,
post service follow up, reception handling). However, the study found significant
differences in satisfaction level towards dealer service between different brands of
cars.

Suresh and Raja (2006) made an attempt to measure the customer satisfaction with
small cars. In this study, the customer satisfaction is measured by using the following
variable attributes under different dimensions, a namely, after sales service, ability to
understand customer needs, behavior and knowledge of the mechanics, warranty,
prompt delivery, 24 hours customer care, information about the cars, horse power,
engine capacity, power steering, technology, fuel capacity, acceleration, easy finance,
convenience and accessibility, ground clearance, easy processing and documentation,
price, discount and rebates, fuel efficiency, maintenance cost, luggage capacity, safety
measures, model and color of the car, music accessories, engine pickup, availability of
spares, cost of labor and spares.

Presenting communicational services is again directly related to customer satisfaction.

Customers after purchasing products may have doubts in their decision making; the
only way to manage this uncertainty is to establish a long term relationship with
customers (Flynn, Belzowski and Haas, 2002). One of the strategies of presenting
better customer services in car manufacturing industry is to provide proper trainings
to personnel and customers (Khaksar, Nawaser and Afshar, 2010). Providing repair
and maintenance is the inseparable part of customer service in car manufacturing
111
industry. Maintenance means changing, cleaning, installing, and restarting up the parts
which has problems (Calif, 1987). Discovery services refer to the services that
company do for detecting defects in the product and rectifying them without causing
any loss for the customers. Discovery services have also used for discovering new
needs and creating new entrepreneurial opportunities. (Kruse, Steinbrecher and
Moewes, 2010). For implementing this type of services, company tests its products in
some markets and with utilizing benchmarking mechanisms satisfaction of the
product is analyzed.

A study by Lau and Lee (1999) proposes that trust in a brand is important and is a key
factor in the development of brand loyalty. Factors considered to influence trust in a
brand include a number of brand characteristics, company characteristics and
consumer-brand characteristics. The findings of the study reveal that brand
characteristics are relatively more important in their effects on a consumer's trust in a
brand. The results also show that trust in a brand is positively related to brand loyalty
(Lau and Lee, 1999). Marketers should, therefore, take careful consideration of brand
factors in the development of trust in a brand.

Ewing (2000) in his research theory investigated brand loyalty by examining actual
past behavior and its impact on future behavioral intentions: in terms of expectation to
purchase same/other brand from same/another retailer as well as willingness to
recommend the brand and retailer to another customer known to him. Findings
indicate that purchase expectation/intention remain a valid research metric (Ewing,
2000). It would appear that the brand/consumer interface offers greater predictive
ability than the retailer/consumer interface. Willingness to recommend a brand to
another consumer does not seem to be influenced by past behavior, but the higher the
respondent's expectation to purchase the brand, the higher will be their willingness to
recommend the brand. Same will be applicable to retailer recommendation.

3.10 Theoretical Research Framework

There is a hidden reason as to why this topic and this particular industry are chosen
and that is a sudden change in the mind of the customers towards various brands in
the industry. Therefore to make the present study meaningful, it is important to know
how the buyer behavior stimuli (social, cultural, personal and psychological contexts),
marketing stimuli (integrated marketing mix elements, i.e., 4Ps, segmentation,
112
targeting, differentiation and positioning) along with other marketing stimuli
(electronic marketing and customer relationship management) work together during
the purchase cycle in India. In the present study, the researcher asks car buyers
opinions about their brand preference, satisfaction and loyalty on each car attribute to
determine the effectiveness of the marketing strategies of car manufacturers in the
post-liberalized competitive business environment of Indian automobile industry. In
this part, an attempt has been made to apply the extant literature reviewed in this
chapter to develop a theoretical framework for the current study (Figure: 3.4).

Figure 3.4: Theoretical Research Framework Effectiveness of Marketing Strategies of

Car Manufacturers

Personal
Influence
Social

Influence
Car Buyers

Behavior
Cultural Electronic

Influence
Marketing Car Buyers
Brand
Psychological Dissatisfaction
Influence Segmenting &
Product Price
Targeting
Post-Liberalization Target Car Buyers

Scenario of Indian SWOT Market Brand

Automobile Analysis Preference
Industry
Differentiation Place Promotion
& Positioning
Car Buyers
Brand
Competitive Satisfaction
Porters Customer
Automobile Relationship
Business 5 Forces Management
Environment Analysis Car Buyers
Brand Loyalty
Intention
External Environment - PEST Analysis

113
 CHAPTER - IV
RESEARCH DESIGN
AND
METHODOLOGY
After laying down the theoretical framework, the next phase of research is to test the
theory empirically. To meet the objective, an empirical study of major car manufacturers
operative in India belonging to the domains of hatchback and sedan cars and their
marketing strategies was undertaken in NCR-Delhi. The present study proposed to make
an understanding of the position of Indian car industry in the post liberalization era and
how the Indian buyer reacts towards the marketing plans of car manufacturers about the
vehicle options available with him in compact and midsized segments, on the basis of a
research framework of key variables for analyzing the influence of social, cultural,
personal and psychological contexts on consumer buying behavior, and integrated
marketing mix elements, segmentation, targeting, differentiation and positioning along
with electronic marketing and customer relationship management on car buyers brand
preference, satisfaction and loyalty intention.

This chapter discusses the research objectives and research procedure which includes the
overall research design, the sampling procedures, the data collection methods, the
methods of data analysis, measures undertaken and statistical techniques used for data
analysis. The purpose of this chapter is to provide information regarding the research
contexts, philosophical assumptions underpinning the study, and research strategies used.

4.1 Objectives of the Study

This study provided greater insight into the post-economic liberalization scenario of
Indian automobile industry responsible for highly competitive business environment for
car manufacturers. The present study is also to make an analysis of the marketing
strategies for effective outcomes in car manufacturing companies. Following are the
concise objectives of the study:

1. To study the post liberalization scenario of the automobile industry in India and the
existing marketing strategies being adopted by the car manufacturers.

2. To study the effectiveness of these marketing strategies by analyzing the impact on

consumer in terms of their brand choice, satisfaction and loyalty intention.

3. To explore and suggest marketing strategies in regard to the current scenario for the
car manufacturers and marketers.
4.2 Research Approach
The research approach used in the present study is quantitative. This type of research is
more concerned about issues of design, measurement, and sampling because their
deductive approach emphasizes detailed planning prior to data collection and analysis.
(Neuman and Lawrence, 2000). The first reason for the quantitative approach to be
chosen is that as mentioned above, the deductive approach is often associated with
quantitative research design. Another reason for the quantitative approach is that the
researcher wants to generalize from the samples and make conclusions from the samples.
It is very difficult to know the exact number of NCR-Delhi existing and potential car
buyers and data collection from each case is not possible and not necessary for the study,
so the researcher used questionnaire in the study to collect primary data in order to make
generalization from the sample chosen. As Hair, Money, Samouel and Babin (2003)
suggests that once data is obtained, and then analyzed, it becomes the basis for
conclusions and decision-making.

4.2.1 Research Design

The study is explorative cum descriptive cum diagnostic in nature. It is exploratory in a
sense that prior to liberalization few studies have been conducted by the scholars on
marketing strategies of car industry. The focus of these studies have been on marketing
mix that is too on positioning as there were only few players in the Indian market. After
globalization the automobile market scenario has completely changed due to the entry of
large number of multinational companies in the fray. And in this changed situation where
the focus is on customer value, in the best knowledge of the researcher based on the
extant literature, no study has been conducted on how marketing strategies of car
manufacturers influence the consumers in India, and in particular, who wants to make a
mark in the domain of hatchback and sedan in compact and midsized segment of cars
among the existing car manufacturers.

Descriptive research involves gathering data that describe events and then organizes,
tabulates, depicts, and describes the data collection (Glass and Hopkins, 1996). The
present study is also descriptive in nature as the researcher made an attempt to describe
the current scenario in the global automobile sector with a focus on the players prevailing

115
in the Indian market, the marketing strategies being followed by these players and the
researcher attempts to make a situational/scenario analysis (SWOT analysis, Porters Five

Forces Industry analysis, and the PEST analysis) in the context of automobile business
environment. Moreover, the problem has been formulated and conceptualized on the
basis of the description of existing literature on the subject.

The present study is also diagnostic as first it explores the marketing strategies of the
major players and then attempts to analyze the effectiveness of these strategies on Indian
car buyers brand preference, satisfaction and loyalty. Finally, an attempt has also been

made to recommend some more viable aspects of marketing strategies that can be
implemented in the current global environment.

Survey was the predominant research methodology used in this work. To proceed on right
track and to do justice with the study, the primary sources of information were browsed.
Technical expectations as well as social expectations and obligations were delineated in
consultation with the Research Supervisor and the Marketing Personnel of car
manufacturers/dealers/financing agencies who were apt to the idea of processes and
problems of the buyer behavior and marketing strategies to influence car buyers in Indian
automobile business environment before finalizing the line of action. Thus the thrust
areas were marked for the target audience, the hatchback and sedan car owners for the
compact and midsized segment in India. A quantitative survey was chosen for the
research because it is a simple and cost effective means of gathering a large amount of
information within a short timeframe.

4.2.2 Universe and Survey Population

The universe of the study was the major car manufacturers who are offering hatchback
and sedan in compact and midsize besides their other segment cars in India. The survey
population included the car owners to see impact of marketing strategies of the
companies selling brands like Maruti Suzuki, Tata, Hyundai, Ford, Toyota, Honda,
Renault, Chevrolet, Nissan, Skoda, Volkswagen, and Fiat on consumers brand
preference, satisfaction and loyalty.

116
4.2.3 Data Sources
The present work is an empirical research based on both primary and secondary data. The
theory is basically developed from secondary sources of information and a thorough
study of various academic works in the field has been attempted. Various sources used for
the purpose are the records of the sampled auto organizations, auto magazines, books,
articles that appeared in journals and newspapers, study reports etc. on the subject
particularly for formulation of the problem and also to compare the respondents

perception about the influence of strategies and the buyer preference, satisfaction and loyalty.
Self-administered questionnaire was the main source of colleting the primary data which
include items on demographic information of respondents, the car manufacturers
marketing strategies and their impact on brand preference, satisfaction
and loyalty. It also included some open ended questions to give the chance to respondents
for expressing their view point on various aspects of the problem. However, personal
interviews were also conducted of the subjects in the light of same questionnaire.

An analysis of the automobile marketing strategies documentation was conducted prior to

the commencement of the survey. Perceptual inputs in the form of documentation were
collected by personal visits to the senior level marketing managers and marketing
professionals of the car manufacturers, dealers and financing agencies under study.

4.2.4 Sample Area

The data has been collected from NCR-Delhi as the area has a high residential density
with people from all over India due to the high migration influx in recent years. The
population is quite heterogeneous, with various dimensions such as religion, caste,
customs, traditions, social hierarchy, language, literacy, education, occupation, income
etc.

4.2.5 Sample Design and Survey Sample

Twelve dealers of the car companies in NCR-Delhi were selected on the basis of
judgment sampling for inclusion in the sample. A preliminary discussion was held with
the concerned manager of each of the car dealers under study located in NCR-Delhi who
were asked to supply the list of those customers who had bought the cars for more than a

117
year. Of this list, 240 subjects were randomly selected for giving a personal telephonic
call for participating in this survey.

4.2.6 Selection of Car Manufacturers

In passenger car segment, Suzuki is the leader with around 50%, market share followed
by Hyundai with 19% and Tata with 16%. Other players in this segment are Honda and
Ford, Toyota, General Motors etc. (Menon, 2012). Therefore, the objects to be
investigated were the customers of car manufacturers with largest market share as shown
in Table 4.1. Given that larger organizations tend to have more established and
comprehensive marketing programs, this sample was chosen because of their experience
with the implementation of innovative marketing strategies.
Table 4.1: Selection of Car Manufacturers/Models
Brand Name and Type of fuel
Name of the Company/Car type used
Model
Petrol Diesel
Chevrolet Sales India Private Limited Hatchback Chevrolet SAIL U-VA
Sedan Chevrolet SAIL
FIAT Group Automobiles India Private Hatchback Fiat Punto
Limited Sedan Fiat Linea
Ford India Private Limited Hatchback Ford Figo
Sedan Ford Fiesta
Hyundai Motor India Limited Hatchback Hyundai i-20
Sedan Hyundai Verna
Honda Cars India Limited Hatchback Honda Brio --
Sedan Honda Amaze
Maruti Suzuki India Limited Hatchback Maruti Suzuki Swift
Sedan Maruti SX4
Toyota Motor Corporation Hatchback Toyota Etios Liva
Sedan Toyota Etios
Tata Motors Limited Hatchback Tata Indica Vista
Sedan Tata Manza
Volkswagen India Private Limited Hatchback Volkswagen Polo
Sedan Volkswagen Vento
SKODA Auto India Private Limited Hatchback Skoda Fabia
Sedan Skoda Rapid
Nissan Motor India Private Limited Hatchback Nissan Micra
Sedan Nissan Sunny
Renault India Private Limited Hatchback Renault Pulse
Sedan Renault SCALA
Note: All the hatchback and sedan cars belong to compact and midsize segment respectively.

118
4.2.6.1 Selection of Car Models
The flood of entrants into the car industry in the last few years has led to a complete
transformation of this industry. Many of the auto industry experts and agencies like
Society of Indian Automobile Manufacturers (SIAM) have classified various car models
existing in various segments in the Indian marketplace on different parameters. For the
purpose of this study, the researcher focused on specific car models and grouped them on
the basis of their type/form i.e. hatchback or sedan into compact and midsize segment as
shown in Table 4.1. Reason being, the compact and midsize is coming up as the most
competitive segments in India. Moreover, the luxury, sports utility vehicles (SUVs) and
multi-purpose utility vehicles (MUVs) have been considered beyond the scope of the
study being different in design, style, specification, cost, purpose etc.

4.2.7 Selection of Respondents

A cross section of respondents who are using hatchback or sedan cars in compact and
midsize segment was selected from the list supplied by the dealers of the sampled
companies as to get a better and wider perspective. The sampling technique employed in
the study was convenience based random sampling.
The information executives or managers from the dealerships under study were solicited
to serve as intermediaries for their respective car companies and asked to provide the

backgrounds of those car owners who had purchased a car within the last 12 months.
Survey was conducted by in-person structured interview method, using a structured
questionnaire. A total of 195 out of 240 respondents were approached in the entire
selected car dealerships of NCR-Delhi. To ensure a high response rate, care was taken to
personally administer as many questionnaires as possible, further constant follow-up was
done and patience was maintained all throughout to ensure that the respondents filled up
the questionnaires. An attempt was made to ensure that the filled up questionnaires
should come from each category of the car. For thorough estimates and analyses, only
those questionnaires that were filled out correctly and completely were used for this
study.

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Table 4.2: Category-wise Distribution of Surveyed Car Owners

Category of cars Car owners Total

Car type Brand Name and Model Petrol Diesel (N=138)
Hatchback Chevrolet SAIL U-VA 1 3 4
Sedan Chevrolet SAIL 0 4 4
Hatchback Fiat Punto 2 7 9
Sedan Fiat Linea 1 2 3
Hatchback Ford Figo 0 7 7
Sedan Ford Fiesta 2 5 7
Hatchback Hyundai i-20 3 8 11
Sedan Hyundai Verna 1 5 6
Hatchback Honda Brio 4 0 4
Sedan Honda Amaze 0 3 3
Hatchback Maruti Suzuki Swift 1 6 7
Sedan Maruti SX4 1 4 5
Hatchback Toyota Etios Liva 1 3 4
Sedan Toyota Etios 1 6 7
Hatchback Tata Indica Vista 0 7 7
Sedan Tata Manza 0 6 6
Hatchback Volkswagen Polo 1 5 6
Sedan Volkswagen Vento 2 3 5
Hatchback Skoda Fabia 1 3 4
Sedan Skoda Rapid 2 6 8
Hatchback Nissan Micra 1 3 4
Sedan Nissan Sunny 2 7 9
Hatchback Renault Pulse 2 2 4
Sedan Renault SCALA 1 3 4
Total number of Hatchback (compact size ) cars 17 54 71
Total number of Sedan (midsize size) cars 13 54 67
Grand Total 30 108 138

Finally, data from the 138 out of 195 questionnaires complete in all respects was put to
SPSS ver. 17.0. Eighteen incomplete questionnaires were discarded; thus the effective
recovery rate was 70.76 per cent. Category-wise distribution of sample is given in Table
4.2.

4.3 Hypotheses Formulation

After an interdisciplinary theoretical investigation of the subject under research and an
analysis of existing empirical studies, a set of 23 null hypotheses was developed which
are as shown in Table 4.3.

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Table 4.3: Table of Hypotheses
Hypotheses
H1.1 There is no significant relationship between the car purchase decision and increasing disposable
income of the buyers.
H1.2 There is no significant relationship between the car purchase decision and increasing family
needs of the buyers.
H1.3 There is no significant relationship between the car purchase decision and increasing family size
of the buyers.
H1.4 There is no significant relationship between the car purchase decision and better safety at roads.
H1.5 There is no significant relationship between the purchase decision and matching of car with the
lifestyle and personality of the buyers.
H2.1 There is no significant influence of demographic characteristics on the payment decisions of car
buyers.
H2.2 There is no significant influence of demographic characteristics on the car fuel variant preference
of buyers.
H3.1 There is no significant relationship between the social factors and purchase behavior of the car
buyers.
H3.2 There is no significant relationship between the cultural factors and purchase behavior of the car
buyers.
H3.3 There is no significant relationship between the psychological factors and purchase behavior of
the car buyers.
H3.4 There is no significant relationship between the information sources and purchase behavior of
the car buyers.
There is no significant difference in the compact and midsized segment car buyers view about
H3.5 influence of social, cultural and psychological contexts and information sources on purchase
behavior.
H4.1 Product referent attributes of a car brand are given lesser preference than task/outcome referents
by the consumers.
H4.2 Product referent attributes of a car brand are given lesser preference than user/surrogate referents
by the consumers.
H4.3 Task/outcome referent attributes of a car brand are given lesser preference than user/surrogate
referents by the consumers.
H5.1 Concrete attributes are given lesser preference than the abstract attributes associated with a car
brand by the consumers.
H5.2 Surrogate attributes are given lesser preference than the (concrete/abstract) attributes associated
with a car brand by the consumers.
H5.3 Direct benefits are given lesser preference than the indirect benefits associated with a car brand
by the consumers.
H5.4 Surrogate attributes are given lesser preference than the (direct/indirect) benefits associated with
a car brand by the consumers.
H5.5 Benefits are given lesser preference than the (concrete/abstract) attributes associated with a car
brand by the consumers.
H6.1 There is no effect of the brand satisfaction facets on car owners' overall brand satisfaction.
H6.2 There is no effect of the brand satisfaction facets on car owners' brand loyalty intention.
H6.3 There is no effect of the overall brand satisfaction on car owners' brand loyalty intention.

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4.4 Structure of the Instrument
4.4.1 Questionnaire Development
To develop the questionnaire a significant effort was put into so that the instrument may
dynamically extract ample information from the respondents to make appropriate
conclusions. Selected marketing professionals of the car manufacturers, dealers and car
financing agencies were consulted in order to obtain their views on car buyers
preferences and about the marketing strategies being adopted in car manufacturing
companies to attract and retain their customers. During the informal chat with these
industry people information as to how buyers feel about the marketing initiatives of the
car manufacturers/dealers/financing agencies was extracted and recorded. Once the initial
items generated, the executives were asked to re-confirm about the initiatives and
subsequently framed for the inclusion in the questionnaire. Such discussions enabled the
researcher to gauge the clarity of the tasks, assess the instruments qualitative validity,
and omissions and commissions, if any were pinpointed.

Feedback served as a basis for correcting, refining, and enhancing the experimental
items, some of which were eliminated as they were found to represent essentially the
same aspects with only slight wording differences. Some items were modified because
the semantics appeared ambiguous or irrelevant to the marketing context. Finally, items
were added to, and modified in, the list if they were relevant to the buying behavioral
issues or the organizational marketing strategies in the automobile business context. This
method allowed the researcher to learn about buyer's knowledge, beliefs, preferences etc.
about the marketing activities of car manufacturers. This also facilitated to justify some
of extraneous variable and fruitful checks to be imposed.

Items were written to represent each of the attributes for customer brand choice,
satisfaction and loyalty identified in the present study. The language for the items was
taken from the qualitative survey and industry experts responses. Almost items are close-
ended questions because they are easy to answer, take less time to answer, have less
potential to errors, and make comparison, tabulation and analysis easier (Aaker, Kumar,
Day and Leone, 2004). All response ratings were made on a 5-point Likert-type scale.
The items were written in the form of statements or attributes and presented to the

122
subjects to respond. Newly developed items as well as translated and back-translated
items formed the questionnaire for the quantitative analysis of the study. The scales used
for measuring various constructs are discussed at the relevant places in the further
section.

Overall, this self-administered questionnaire comprised of three sections: Section-1

concerned About you i.e. the demographic part, by which the participants were asked

about their gender, age, education level, occupation, marital status, family income, and
job position. Section-2 comprised of four parts, and was aimed at examining the purchase
process and brand preferences of car buyers. Part-A was for examining how the social,
cultural, personal and psychological contexts influence the purchase behavior of car
buyers. Part-B included all the marketing stimuli (Integrated marketing mix,
segmentation, targeting and positioning) influence the brand choice of the car buyers.
Part-C concerned about other marketing stimuli such as electronic marketing and
customer relationship management to investigate how car manufacturers can save their
marketing efforts and costs by implementing these in their marketing strategies. Whereas,
Part-D investigated the preference for the important concrete/abstract/surrogate attributes
and functional/experiential/symbolic benefits and the brand associations as the
respondents perceive for their present car brands. And finally, Section-3 included items to
evaluate the level of brand satisfaction and effect of various brand satisfaction facets on
overall satisfaction and loyalty intention of the car owners under study.

4.4.2 Pilot Survey

The present study used standardized scales or survey instruments to collect primary data.
These scales were adapted and customized to suit the study undertaken. In order to
customize the measurement instrument, a pilot test was made to confirm the
completeness and importance of each item in the instrument.

Pilot survey was conducted using the questionnaire over 24 car buyers randomly selected
from the list previously supplied by the car dealers. The importance ratings of each item
were given scores of 1 (not important at all) to 5 (very important). The factor structure of
the initial set of items was examined using this sample. Participants completed
questionnaires and responses were anonymous. The sample included 16.7 per cent female
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 within 35-45 years of age. In addition, 62.5 per
cent respondents owned hatchback in the
compact size and 37.5 per cent having a sedan
in the midsized car segment. The responses
were carefully reviewed and analyzed and as
per the results subsequent changes were made
in the questionnaire so as to adapt them to the
present study. It was ensured that all the items
were relating to car marketing strategies,
clearly understandable, user-friendly, presented
Questionnaires returned from the survey were
screened for completeness. Data for each
multi-item instrument were analyzed for
internal consistency. Based on respondent
feedback and the analyses, seven of the items
were omitted from the survey and language
adjustments were made to four additional
items. The results indicated that each item
scored 3 or higher in over 82 per cent of the
responses, suggesting that no further wording

4.5 Data
Collectio
Convenience of the car owners was pre-
checked by making phone calls and the
questionnaires were got filled at the premise
suitable to respondents. In some cases the
researcher had a free access to visit the car
owners. Some of the respondents desired to
As the questionnaire was self-explanatory
the respondents were asked to respond as
per the instructions in the questionnaire. In
order
the to reduce bias and get frank responses
respondents
were apprised about

124
 an attempt was made to include people from different backgrounds in terms of their
demographics;

the respondents were also assured about the confidentiality of the information and were
asked not to mention their names or the dealership from where they purchased the car; and
in case of any doubts, the researcher was available to clarify.

4.5.1 Period of Data Collection

It took approximately 5 months in collecting the primary data as the process was started in the
last week of December, 2012 and ended by the last week of May, 2013.

4.6 Demographic Statistic

The basic data and sample distribution of the respondents gender, age, marital
status, level of education, occupation, family income and job position, from
whom the questionnaire was collected is as below:

4.6.1 Characteristics of the Respondents

Female representation (15.22%) is low as compared to males (84.78%) in the sample. 52.9 per
cent of the respondents belonged to business community i.e. self-employed and 40.58 per cent
are public or private sector employees, whereas only 6.52 per cent were those who had retired
from their jobs. More than half i.e. 52.9 per cent of the sample consists of the car owners with
annual family income less than 7 lakhs and 36.96 per cent upto 15 lakhs whereas only 10.14
per cent of the respondents have more than 15 lakhs of income. In the sample 17.39 per cent
subjects were with supervisory responsibilities, and 73.19 per cent were middle level managers
and only 9.42 percent were occupying the job positions of Chief Executive Officer. In addition,
55.07 per cent of the respondents ranged in age from 35-45 years and more than 60 percent of
the respondents were holding the postgraduate or above degrees (Table 4.4).

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Table 4.4: Car Type/Form and Fuel Variant wise Demographics of the Respondents

Number of Respondents (Percentage) Total

Basic Classification Hatchback Sedan
(N=138)
Petrol Diesel Petrol Diesel
Gender Male 5 (3.62) 52(37.68) 7 (5.07) 53 (38.41) 117 (84.78)
Female 12 (8.7) 2(1.45) 6 (4.35) 1 (0.72) 21(15.22)
Marital Married 6 (4.35) 51(36.96) 11 (7.97) 54 (39.13) 122 (88.41)
status Single 11 (7.97) 3(2.17) 2 (1.45) 0 (0) 16(11.59)
< 35 years 2 (1.45) 17(12.32) 1 (0.72) 2 (1.45) 22(15.94)
Age 35-45 years 9 (6.52) 31(22.46) 5 (3.62) 31 (22.46) 76(55.07)
> 45 years 6 (4.35) 6(4.35) 7 (5.07) 21 (15.22) 40(28.99)
Employee 9 (6.52) 23(16.67) 6 (4.35) 18 (13.04) 56(40.58)
Occupation Self-employed 5 (3.62) 29(21.01) 4 (2.9) 35 (25.36) 73 (52.9)
Retired 3 (2.17) 2(1.45) 3 (2.17) 1 (0.72) 9(6.52)
Family < 7 lakhs 7 (5.07) 43(31.16) 1 (0.72) 22 (15.94) 73 (52.9)
income 7 - 15 lakhs 9 (6.52) 11 (7.97) 5 (3.62) 26 (18.84) 51(36.96)
> 15 lakhs 1 (0.72) 0 (0.0) 7 (5.07) 6 (4.35) 14(10.14)
Educational Diploma or below 2 (1.45) 8 (5.8) 1 (0.72) 3 (2.17) 14(10.14)
qualification Graduate 3 (2.17) 18(13.04) 3 (2.17) 17 (12.32) 41(29.71)
Post graduate or above 12 (8.7) 28(20.29) 9 (6.52) 34 (24.64) 83(60.14)
CEO 0 (0.0) 0 (0.0) 6 (4.35) 7 (5.07) 13 (9.42)
Job Position Department Head 11 (7.97) 40(28.99) 5 (3.62) 45 (32.61) 101 (73.19)
Supervisor 6 (4.35) 14(10.14) 2 (1.45) 2 (1.45) 24(17.39)
Total 17 (12.32) 54(39.13) 13 (9.42) 54 (39.13) 138 (100)

Further approximately half i.e. 51.45 per cent of the respondents were the pride owners of
hatchback cars. Interestingly, there were more respondents (78.26%) having diesel cars,
out of which maximum car owners were male, in the age group of 35-45 years, holding
the positions of managers and/or self-employed (Table 4.4).

4.7 Data Analysis Methods

The data obtained from the survey questionnaires were coded and fed into the computer
for coding, tabulation and analysis of data. As the questionnaire was not pre-coded, first
the coding of the questionnaire was done and for preparing data for computation, data
definition file was prepared with variable numbers, column numbers, variable codes and
labels. All the items were indexed for final analysis.
2
SPSS (Version17.0) was used for extensive analysis and statistical tools like test,
Students t-test, analysis of variance (ANOVA) were used for analysis of the data
gathered to bring out the significant influences of study variables amongst compact and

126
midsized segment car owners. Correlations and multiple regressions were used to bring
out the significant relationships and effects of study variables on compact and midsized
segment car owners buying behavior, satisfaction and loyalty intention. Percentages,
weighted means, grand means and standard deviations were also used to explain the
direction and extent of the significant differences.

4.7.1 Measures Used in the Study

4.7.1.1 Measure of Personal Information
The personal profile included questions regarding the car owners personal background
viz. gender, age, marital status, level of education, occupation, family income, and job
position (in case of family/partnership business, level of job position in their business) in
their present organization and ex-job position (in case of retired people).

Internal Consistency Analysis

Internal consistency was used to assess the reliability of the measurements (seven
constructs) depicting the degree to which they indicate a common latent (unobserved)
construct. It relates to the extent to which an experiment, test or any measuring procedure
yields the same results on repeated trials (Bryman and Cramer, 1999). Cronbachs -
value is commonly used for this purpose. Values of alpha range from between 0 and 1.0,
with higher values indicating higher reliability. According to Nunnally (1978),
Cronbachs -value must be higher than 0.7. The value of each variable, as measured by
each item/statement, is computed using the reliability analysis procedure. Descriptions of
the dependent variables (V1 to V7) those used in the study are shown in Table 4.5.

Table 4.5: Description of the Respondents Demographics Related Variables with

Internal Consistency Results

Variable No. Description No. of items/statements -value

V1 Gender 2 0.8201
V Age 3 0.7673
2
V Marital status 2 0.8076
3
V Level of education 3 0.8726
4

V5 Occupation 3 0.7267
V6 Family income 3 0.9013
V7 Job position 3 0.8761

127
The alpha values range from 0.7267 to 0.9013, which indicates an internal consistency
with the alpha value of more than 0.70, so no items were dropped from above list. These
results are therefore acceptable and are a reliable measure of the constructs. Overall, this
section of the instrument has been proven to be an acceptable instrument through this
test.

4.7.2. Measures of Key Variables

Several methods were used to collect information for the study. Measures used in the
study are buyer behavior stimuli, marketing stimuli, brand associations and car owners

satisfaction and loyalty intention. All the different scales used to measure various study
variables were standardized with adequate reliability and validity. Inter correlations also
showed generally positive relationships. The scales used to measure the various variables
have been delineated below.

In this research, the design of the questionnaire with 26 questions was primarily based on
multiple-item measurement scales taken from previous researches. A single question was
designed to know the name of the brand/model of respondents car and one question to

identify the set of activities they engaged themselves in during the process of car
purchase and brand choice. Eight questions to evaluate buyer behavior stimuli, 3
questions to evaluate marketing stimuli, one question to evaluate brand association
(perceived brand positioning) and 3 questions were designed to evaluate car owners
brand satisfaction and loyalty intention. Two open ended questions were also presented to
seek the comments/suggestions on the car manufacturers and the study questionnaire.
Seven questions were designed related to personal information of the respondents.

4.7.3 For Investigating the Car Buyers Buying Behavior and Brand
Preference
This section of the survey questionnaire comprised of four parts and was prepared to
investigate the buying behavior and the influences on brand preference and distributed to
a cross section of compact and midsized segment car owners.

128
4.7.3.1 Buyer Behavior Stimuli
The objectives of this part of the study were to examine the effect of marketing strategies
of car manufacturers on the payment method and car fuel variant preferences based on
the demographic characteristics of the respondents and to analyze the influences of
social, cultural, psychological and personal factors/sources and effect of country of
origin on the car owners.

Internal Consistency Analysis

Internal consistency was used to assess the reliability of the measurements (nine
constructs) depicting the degree to which they indicate a common latent (unobserved)
construct. Descriptions of the dependent variables (V8 to V16) those used in this part of
the study are shown in Table 4.6.

Table 4.6: Description of the buyer behavior stimuli related variables with internal
consistency results

Variable No. Description No. of items/statements -value

V8 Process of car purchase and brand choice 9 0.8210

V Reasons for buying a car 5 0.7619
9
V Payment method preference 2 0.7812
10
V Fuel variant preference 5 0.8013
11
V Buyers role in the car purchase decision 4 0.7348
12
V Sources influencing car purchase decision 25 0.8911
13
V Perceived risks 30 0.8450
14
V Risk decreasing factors 8 0.8751
15
V Country of origin effect 4 0.8313
16

The alpha values range from 0.7348 to 0.8911, which indicates an internal consistency
with the alpha value of more than 0.70, so no items were dropped from above list. These
results are therefore acceptable and are a reliable measure of the constructs. Overall, this
part of the instrument has been proven to be an acceptable instrument through this test.

4.7.3.2 Marketing stimuli

Having described the buyer behavior stimuli, this part of the second section of the study
was to identify important marketing stimuli for the car brand preference of the car
owners.
129
Internal consistency analysis

Internal consistency was used to assess the reliability of the measurements (eight
constructs) depicting the degree to which they indicate a common latent (unobserved)
construct. Descriptions of the dependent variables (V 17 to V24) those used in this part of
the study are shown in Table 4.7.

The alpha values range from 0.7737 to 0.8911, which indicates an internal consistency
with the alpha value of more than 0.70, so no items were dropped from above list. These
results are therefore acceptable and are a reliable measure of the constructs. Overall, this
section of the instrument has been proven to be an acceptable instrument through this
test.
Table 4.7: Description of the Marketing Stimuli Related Variables with Internal
Consistency Results
Variable No. Description No. of items/statements -value

V Product referent 13 0.8164

17
V Task or outcome referent 12 0.8739
18
V User/Surrogate referent 6 0.7692
19
V Customer service 5 0.7737
20
V Price 3 0.8911
21
V Place 4 0.8274
22
V Promotion 7 0.8625
23
V Post purchase 6 0.8836
24

4.7.3.3 Other Marketing Stimuli

Two of the marketing stimuli electronic marketing and customer relationship

management were also included along with the marketing mix stimuli to find the
important integrated marketing attributes and their influence on the brand preference
behavior of compact and midsized segment car buyers in this part of the study.

Internal Consistency Analysis

Internal consistency was used to assess the reliability of the measurements (two
constructs) depicting the degree to which they indicate a common latent (unobserved)
construct. Descriptions of the dependent variables (V 25 to V26) those used in this part of
the study are shown in Table 4.8.
130
Table 4.8: Description of the Other Marketing Stimuli Related Variables with
Internal Consistency Results

Variable No. Description No. of items/statements -value

V Electronic marketing 4 0.8891
25
V Customer relationship management 10 0.7391
26

The alpha values range from 0.7391 to 0.8891, which indicates an internal consistency
with the alpha value of more than 0.70, so no items were dropped from above list. These
results are therefore acceptable and are a reliable measure of the constructs. Overall, this
part of the instrument has been proven to be an acceptable instrument through this test.

4.7.3.4 Perceived Brand Positioning

After analyzing the buyer behavior stimuli and integrated marketing stimuli, this last part
of the second section of the study was to investigate how the respondents associated the
car brands with the features and benefits intended in the study.

Internal Consistency Analysis

Internal consistency was used to assess the reliability of the measurements (three
constructs) depicting the degree to which they indicate a common latent (unobserved)
construct. Descriptions of the dependent variables (V 27 to V29) those used in this part of
the study are shown in Table 4.9.

Table 4.9: Description of the Brand Association Related Variables with Internal
Consistency Results

Variable No. Description No. of items/statements -value

V Concrete and abstract attributes 8 0.9241
27
V Direct/Indirect Benefits 8 0.8769
28
V Surrogate Attributes 4 0.8832
29

The alpha values range from 0.8769 to 0.9241, which indicates an internal consistency
with the alpha value of more than 0.70, so no items were dropped from above list. These
results are therefore acceptable and are a reliable measure of the constructs. Overall, this
part of the instrument has also been proven to be an acceptable instrument through this
test.
131
4.7.4 For Investigating the Car Buyers Brand Satisfaction and Loyalty
Intention

The objectives of the last section of the study were to analyze the level of satisfaction
among the car owners on ten brand satisfaction facets under study and the effect of these
facets on the respondents brand satisfaction and loyalty intention.

Internal Consistency Analysis

Internal consistency was used to assess the reliability of the measurements (fourteen
constructs) depicting the degree to which they indicate a common latent (unobserved)
construct. Descriptions of the dependent variables (V 30 to V43) those used in this part of
the study are shown in Table 4.10.
Table 4.10: Description of the Car Owners Satisfaction and Loyalty Intention
Related Variables with Internal Consistency Results

Variable No. Description No. of items/statements -value

V Top three brands considered while purchasing car 12 0.8825
30
V Point of purchase service quality 9 0.8194
31
V Design of the car 11 0.7967
32
V Engine performance 5 0.8832
33
V Comfort and functionality of the car 8 0.8616
34
V Safety 10 0.9217
35
V Quality of the car 7 0.7423
36
V Brand image 7 0.7827
37
V Dealer/after-sale service quality 13 0.8432
38
V Costs of ownership 5 0.8399
39
V Value for money 2 0.8446
40
V Overall brand satisfaction 3 0.8192
41
V Brand loyalty intention 3 0.8764
42
V Future car preference 4 0.7365
43

The alpha values range from 0.7365 to 0.9217, which indicates an internal consistency
with the alpha value of more than 0.70, so no items were dropped from above list. These
results are therefore acceptable and are a reliable measure of the constructs. Overall, the
last section of the instrument has also been proven to be an acceptable instrument through
this test.

132
4.8 Limitations of the Study

As limitations are inherent in all research investigations, it is important that these be

brought to light. It should be noted that the current research is also bound by several
limitations, which can be turned into avenues for further analysis.

Methodologically, using a single informant to analyze company marketing strategies can

be regarded as a significant limitation. Studies suggest that significant measurement error
and unreliability may exist in single-respondent measures (Gerhart, 1999). In addition,
the inability to draw a random sample of car owners is a well-known problem facing
researcher using survey methodologies. Since so many male, married, self-employed and
post-graduation or above education degree holder respondents, having diesel cars replied
to the survey and so few female, single, employees and graduation or below education
degree holders having cars with petrol as fuel variant, the survey may not accurately
reflect the perceptions of buyers about car companies operative in India.

There are limitations in the information supplied as well. The study was conducted on the
basis of perceptions of the respondents and observations made by the researcher. Though,
every effort has been made for getting correct responses for each question included in the
schedule but even then the researcher cannot be sure about the possibility of
respondents bias in reporting while imparting information. Similarly, the researcher
may also make observations according to her own set of mind and, therefore, the
prejudices of the researcher in making observations always influence the rationality of the
collected information. In addition, this research was only concerned with few
organizations under study and thus it is hard to establish whether the marketing strategies
also are same in other organizations. Although this was checked with the extensive
literature review conducted on attributes of marketing plans but cannot be generalized.
The concept of consumer buying phenomenon is also found to be quite complex and
consists of a wider scope than the current research study.

The small sample size should be noted also. The sample of the study is relatively small and to
certain extent confined to NCR-Delhi that poses difficulty in generalization of results. The
respondents provided information on their brand choice phenomenon and perceived
influence of car manufacturers marketing strategies in regard to the hatchback
133
and sedan cars in compact and midsize segment. Because of this small size, the sampled
companies in the current research may not be sufficiently representative to render a
comprehensive conclusion. Different samples may indeed trigger different results
because the marketing practices differ widely across car segments. Therefore, it is
necessary not only to expand the size of the sample, but also, to cover diverse segments
of the vehicles.

Some caveats also apply to the questionnaire of the study. The questionnaire does not
contain any negative question, and the same scale was used for all the factors so routine
ticking by respondents and its impact cannot be ruled out. Some elements of inaccuracy
might have crept in because of wrong interpretations, of questions on the part of
respondents. The generalizations occurring from this study are more conducive and are
based on the perceptions of a limited particular group of car owners who were included.
These limitations should be duly considered by future researchers in this area.

4.9. Expected Contribution from the Study

By brining to fore the impact of marketing strategies on car buyers, the car manufacturers
will be in a better position to take initiatives for improving effectiveness of their
marketing strategies. This study on the marketing strategies in the post liberalization era
will be of interest to the academicians and researchers on one hand, and the senior
marketing executives and marketing professional of the car manufacturers in India on the
other who are concerned with implementing marketing plans at their organizations. To
the academics, it highlights the role played by the various marketing strategies towards
customers perception, attitude and ultimate buying behavior. Clearly, this study should

help the senior marketing executives and marketing professional of car manufacturers in
general and those of the selected companies investigated in this study, in particular in
resolving a series of problems such as selection of appropriate marketing strategies and
innovating in terms of product and marketing techniques from time to time. Both estab-
lished and new entrants might use the synthesis to review efforts underway in both the
multinational and domestic car companies. The purpose of the present study is to
document the experiences of selected car manufacturers, as well as experiences of car

134
buyers. Analysis of such documented information at least gives some idea of strength of
the brand and the effect of the marketing strategy on consumers perception.

Moreover, in the post-liberalization scenario of Indian market it is evident that there is

huge growth potential for car manufacturers, as both domestic and multinational
manufacturers, are presented with great challenges and opportunities in the near future.
Industry body SIAM had lowered the growth projections for auto sales in fiscal year
2012, due to high fuel prices, interest rates and slowing economic growth which continue
to defer buyers from car purchases. Thus it is very helpful to determine the car consumer
preferences to determine which segment of the potential consumer market prefers which
model/brand of a car.

Armed with a greater knowledge and understanding of the post liberalized automobile
industry environment, the findings of this study should prove useful to both marketers
and car manufacturers to have a few detailed insights into the factors influencing
consumer preference and choice as the inflation is not under control and the cost of
vehicle ownership is high.

4.10. Organization of the Study

This research is structured as follows:

Chapter I include the introduction to the automobile industry, need for undertaking such
a study along with a brief description of the literature gaps arising out of the
marketing strategies of car manufacturers, focus and framework of the study.

Chapter II is devoted to profile the position of Indian automobile industry in post

liberalization era and includes the detailed analysis of the effects of
globalization, liberalization and deregulation policy of India on the growth of
automobile industry.

Chapter III presents the findings of the literature concerning several key marketing
variables, which have been found to influence the car buyers preference,
satisfaction and loyalty intention.

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Chapter IV covers the research methodology including, research design, universe,
survey population and sampling, content analysis, data collection and analysis
as adopted for the present study.

Chapter V of the study presents the micro analysis of the collected data for the study.
Major observations, inferences drawn and findings based on the objective wise
observations are depicted in this chapter of the report.

Chapter VI presents the summary of the findings, conclusions drawn, recommendations

for the car manufacturers and the future research avenues.

Appendices specifying the Research Instrument and Bibliography have been enclosed in
the end of the thesis.

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 CHAPTER - V
DATA ANALYSIS AND
INTERPRETATION
The present chapter of study embraces and incorporates the findings of the survey,
which have been excerpted over the analysis of the data collected from a set of car
owners who had brought the choicest brand belonging to 12 car manufacturing
companies in Delhi - NCR. All of these manufacturers produces hatchback and
sedan in the respective compact and midsize segments apart from their offerings in

the other car size segments. These companies provide both the petrol as well as diesel
fuel variants (except Honda Brio which is available in petrol only), and hold the
largest market share among all the car companies operative in India (see Menon,
2012). With regard to the survey conducted over the period of six months during
December, 2012 to May, 2013, this study entangle over 138 (out of 156) recorded
responses (through questionnaire) from 195 respondents who were approached by the
researcher with a useable response rate of 70.76 per cent.

The chapter has been divided into sections and sub-sections that exhibit the
demographic profile of the respondents; Consumer Buying Behavior and the Factors
Influencing Car Buyers Brand Preferences; Marketing Strategies and their
Influence on Car Buyers Brand Preferences; and Influence of Marketing
Strategies on Car Buyers Brand Satisfaction and Loyalty.

SECTION - A: DESCRIPTIVE STATISTIC

5.1 Demographic Profile
The first section of the study was about the demographic profile of the car owners
under study. The respondents were asked seven questions about their gender (2
items), marital status (2 items), age (3 items), annual family income (3 items),
level of education (3 items), occupation (3 items) and the job positions (3 items)
hold by them in this part of the study. Of the total sample, females were only 15.22
per cent and the rest 84.78 per cent were males. This supports the fact that the gender
ratio is skewed in the usage of cars and hence the number of women car owners is still
low. Also, it was observed that majority of female respondents owns a hatchback.
Majority of the respondents (88.41%) surveyed were married and amongst the single
owners, majority owns a hatchback.

There were more respondents (60.14%) representing the sample having postgraduate
or above degree as their level of education. More than half of the respondents
(55.07%) were noted in the age group of 35-45 years whereas 28.99 per cent were
found to be of more than 45 years of age and only 15.94 per cent respondents were
aged below 35. A trend of owning a hatchback among youngsters and shifting towards
sedans as the age progresses was also noted. Amongst the respondents more than half
of the surveyed participants (52.9%) were self-employed; another 40.58 per cent were
working as employees and rest 6.52 per cent have retired from their respective career.

Table 5.1: Demographic Profile of the Respondents based on Type/Form of the

Car
Number of Respondents (N)
Basic Classification (Percentage)
Hatchback/Compact Sedan/Midsize Total (N=138)
Male 57 60 117
(41.3) (43.48) (84.78)
Gender
Female 14 7 21
(10.14) (5.07) (15.22)
Married 57 65 122
(41.3) (47.1) (88.41)
Marital status
Single 14 2 16
(10.14) (1.45) (11.59)
< 35 years 19 3 22
(13.77) (2.17) (15.94)
Age 35-45 years 40 36 76
(28.99) (26.09) (55.07)
> 45 years 12 28 40
(8.7) (20.29) (28.99)
Employee 32 24 56
(23.19) (17.39) (40.58)
Occupation Self-employed 34 39 73
(24.64) (28.26) (52.9)
Retired 5 4 9
(3.62) (2.9) (6.52)
< 7 lakhs 50 23 73
(36.23) (16.67) (52.9)
Family income 7 lakhs - 15 lakhs 20 31 51
(14.49) (22.46) (36.96)
> 15 lakhs 1 13 14
(0.72) (9.42) (10.14)
Diploma or below 10 4 14
(7.25) (2.9) (10.14)
Educational Graduate 21 20 41
qualification (15.22) (14.49) (29.71)
Post graduate or 40 43 83
above (28.99) (31.16) (60.14)
CEO 0 13 13
(0.0) (9.42) (9.42)
Job Position Department Head 51 50 101
(36.96) (36.23) (73.19)
Supervisor 20 4 24
(14.49) (2.9) (17.39)
Total 71 67 138
(51.45) (48.55) (100)

138
In addition, the respondents belong to male (43.48%), married (47.1%), postgraduate or
above degree holders (31.16%) and self-employed (28.26%) groups who possess sedan
cars. Hatchback cars were noted more with the participants whose family income was less
than 7 lakhs. In regard to the job positions of the respondents, the results indicates that
most respondents were working as Department Heads (73.19%) followed by Supervisors
(17.39%) and Chief Executive Officers (9.42%), which may be a reflection of the
proportion of car owners in the sample. In all, it was also observed that 51.45 per cent
respondents own a hatchback/compact and 48.55 per cent owns a sedan/midsize car,
making it a uniformly distributed sample (Table 5.1).

SECTION - B: INFERENTIAL STATISTIC

Across the segments as presented in Table 5.1, there is correlation visible between
gender and car size the larger the number of cars, the larger percentage of men
owners versus women. Interestingly, largest percentage of women owners is in the
compact cars segment, where 19.7% (14 out of 71) of the car owners are women
versus 15.2% (21 out of 138) for the total brand. Contrary, in midsize cars segment,
89.6% (60 out of 67) of car owners are men. Such results are very natural the
smaller the car, the more appealing to women. As a result compact cars are most often
in the possession of women, while only few of them (10.4% of total population of
midsize cars owners) own models from midsize segment. Similarly, more of the
unmarried people (87.5%) were having compact/hatchback cars whereas married
(53.3%) were preferring a midsize/sedan car. This reflects in the marital status that
married persons consider sedan as a family car.

As midsize segment cars are premium ones, they are sold at correspondingly high
prices and therefore younger consumers in majority cannot afford them. This is
reflected in the age structure of midsize car owners 55.07 per cent of respondents
are in the age of 35 to 45 years. Another conclusion applicable in the analysis of age
structure of respondents is that the smaller the car and therefore more affordable, the
youngest and the oldest consumers are driving it. Within the owners of compact cars,
there is largest percentage of youngest (below 35 years old) and oldest respondents
(above 45 years old) as compared to other segments 13.77% and 8.7% respectively.
Such observation is related not only to the fact that disposable income of youngest and
oldest consumers is relatively lower than of mid age consumers, but also to the

139
fact, that compact cars are proper size cars at youngest and oldest stage of life, as
respondents at this stage of life usually dont have the children yet or already dont
have children dependent on them.

The largest group among car owners are self-employed (own or family business)
52.9% of respondents. Second largest group is employees (working in public and
private sector) 40.58% of respondents belonged to this group. There were
significant differences visible among segments; among compact cars owners,
employees (57.14%) were much more visible than in midsize car owners (42.9%). On
the other hand, self-employed are largest group among owners of midsize cars
(53.4%) as compared to compact car segment (46.5%). Such relation has its
background in the income as the self-employed are on average most affluent group,
they are most likely to purchase midsize car as opposite to less affluent employees
and retired people.

The size of the car is reflected in its price, therefore the larger the car, the higher the
price and as a result higher income of the owners. Such relation was observed in the
analysis of income among car owners. Respondents, who are driving compact cars,
have on average lower income than midsize car owners (see table 5.1). Surprisingly,
there was also found the effect of the level of education. 51.8 per cent of the
postgraduate or above degree holders, 47.8 per cent of the undergraduate degree
holders and 28.6 per cent of the diploma or below level of education were having the
sedan/midsize segment cars. Regarding job position of the respondents, on average
more persons working on managerial positions are within the total sample. Among
CEOs, all the respondents were having sedan/midsize segment cars. Among
supervisors, most of the respondents (20 out of 24) possessed a hatchback/compact
car.

5.2 Analysis of Consumer Buying Behavior and the Factors

Influencing Car Buyers Brand Preferences
For the purpose of this section of the study, a set of ten questions comprising of
general aspects including name of the brand and model of car; and nine items for
process of car purchase and brand choice, and a section focusing on Buyer Behavior
Stimuli including five items for reasons for buying a car; two items for payment
method preference; five items for fuel variant preference; four statements for

140
buyers role in the car purchase decision; twenty five items for sources influencing car
purchase decision; thirty statements for perceived risks; eight statements for risk
decreasing factors; and four statements for Country of origin effect have been

analyzed.

5.2.1 Car Model/Segment

Among the 138 respondents, more than 50 per cent owns the hatchback car and
intriguingly, 78.26 per cent owns a car with diesel as fuel variant irrespective of the
car being a hatchback or sedan. All the hatchback cars (71 out of 138) were in the
compact size whereas the sedans (67 out of 138) were belonging to the midsize
segment (see Table 4.4).

5.2.2 Process of Purchase and Brand Choice

All the respondents were asked to indicate the phases in which they participated
during the process of purchase and brand choice of a car. It was observed that more
than 93.48 per cent of respondents participated in their new car purchase decision,
91.30 per cent actively made initial choices of brand and model, 90.58 per cent visited
the dealers and finally 89.13 per cent were involved in the final decision making
process. Out of the sample, 75.36 per cent were also involved in price bargaining with
the dealers and collected information and 74.64 per cent about the brands and car
models and more than 70.29 per cent took the decision after taking a test drive.
However, only 62.32 per cent were cautious about deciding on the budget before the
purchase and brand choice for their car model. The results indicate that more people
are involved in purchase decision at their own, making initial choices, visiting dealers
and finally deciding on the manufacturer and model of their car.
Table 5.2: Participation of Buyers in Purchase Activities and Brand Choice

Sr. No. Activities in Purchase Decision Frequency Percentage

(N=138)
1 Purchase decision of a new car 129 93.48
2 Initial choices of brands and models 126 91.3
3 Visit dealers 125 90.58
4 Final decision on maker and model 123 89.13
5 Price bargaining 104 75.36
6 Collecting information about the brands and models 103 74.64
7 Contact car dealers 99 71.74
8 Test drive 97 70.29
9 Decision of the budget 86 62.32
Annotation: N = Number of respondents

141
Buyer Behavior Stimuli
Further, to study the buyer behavior stimuli aspects including the reasons to buy a
car, payment method and car fuel variant preference based on the demographic
characteristics of the car owners were examined and the influences of social,
cultural, psychological and personal factors/sources on the respondents was
analyzed. Percentage, weighted means and standard deviations were calculated for the
compact and midsize car owners under study. Chi-square test was used to find the
relationship between the factors/sources and the car purchase behavior of the
respondents. Subsequently, to test the hypothesis, t-test was used to study the
differences between the compact and midsize segment car buyers view on influences.

Finally, factor analysis was conducted as the extraction method for the six factors
from 30 items used in the survey accompanied by correlation analysis to find the
relationship between perceived risks and risk decreasing factors.

5.2.3 Reasons/Motives for Buying a Car

As per the analysis, increase in disposable income ( X = 4.18, SD = 5.335) seems to
be the most important reason for buying a car. This trend is reflected in the growth of
the per capita disposable income and consequently the growth of the Indian
automobile industry especially in the compact and midsize segment cars. Similarly,
the growing family needs ( X = 3.95, SD = 4.261) like working partners,
increasing family size ( X = 3.79, SD = 4.113) and the road infrastructure ( X =
3.12, SD = 0.901) add to the motives of buying a car. The respondents also admitted
the car purchase motive ( X = 2.86, SD = 0.798) as it suits to their lifestyle and
personality.
2
The Chi-square ( ) test was also used to control the research hypotheses. Results of
2
the test are shown in Table 5.3. As for the relationship between the car buyers
2
reasons for buying a car and their car buying decision, the value indicates
significance for increase in disposable income, family needs and increase in the
2
size of their family. However, the results, does not reveal any significant
relationship between the motives of buying a car and their purchase decision based on
better safety at roads or matching with their lifestyle and personality. Based on
information obtained from Table 5.3, it is noted that null hypotheses, H1.1, H1.2 and

142
H1.3 were rejected whereas H1.4 and H1.5 were accepted with 99 per cent confidence
level and at significance level of 0.01.

Table 5.3: Reasons/Motives for Buying a Car - Chi-square Test Results for
Hypotheses
Asymp.
Sr. Reasons Mean Std. SD D I A SA 2 Sig.
No. (N=138) Div. Value (two-
sided)
Increase in 5 17 7 28 81
1 disposable 4.18 5.335 141.28 0.000*
(3.6) (12.3) (5.07) (20.3) (58.7)
income
2 Family 3.95 4.261 13 14 9 33 69 90.116 0.000*
needs (9.4) (10.1) (6.5) (23.9) (50.0)
3 Increase in 3.79 4.113 22 9 9 34 64 75.696 0.000*
family size (15.9) (6.5) (6.5) (24.6) (46.4)
Better 23 31 21 33 30
4 safety at 3.12 0.901 4.029 0.402
(16.6) (22.5) (15.2) (23.9) (21.7)
roads
Suits the
5 lifestyle 2.86 0.798 27 34 29 27 21 3.159 0.532
and (19.5) (24.6) (21.0) (19.6) (15.2)
personality
Grand Mean 3.58 3.081
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; SD = Strongly
disagreement; D = Disagreement; I = Indifferent/Not sure; A = Agreement; and SA = Strong Agreement

5.2.4 Payment Method Preferences towards Respondents Demographic

Characteristics
To know the payment preference of consumers, the researcher asked the respondents
about their payment method while purchasing their present car. Table 5.4 presents the
cross-tabulations for the all the demographic variables (gender, marital status,
age, occupation, family income, level of education and job position) of
interest on payment method preferences. For each cross-tabulation, the results indicate
the payment method preferences of all the car buyers under study and are delineated
as below.

Cross-tabulations as depicted in Table 5.4 indicate that on preference for payment

method to purchase their cars, only 22.46 per cent of the respondents have high
preferences for purchase on cash, whereas 77.54 per cent are indifferent (i.e.
preference to buy car on EMI). Out of 138 respondents who preferred EMI based
payment, 90 are males. The results also indicate that a lower proportion of male
respondents (27 out of 117) have low preference to purchase on cash, and similarly

143
 2
the female respondents (4 out of 21). However, the results do not show any significant
relationship between the car buyers gender and their selection preferences based on the
payment method.

Table 5.4: Cross-Tabulations of Payment Method Preferences Based on

Demographic Characteristics of Car Buyers
Payment method
Distribution of preferences based on 2 Asymp.
Demographic Preferences of the the demographics df Sig.
Car Buyers Respondents (in percentage) Value
(N=138) Cash EMI (two-
sided)
Male 117 27 90
(84.78) (19.56) (65.22)
Gender 21 4 17
Female
(15.22) (2.90) (12.32)
Total 31 107 0.166 1 0.684
(22.46) (77.54)
Married 122 28 94
Marital (88.41) (20.29) (68.12)
Status Single 16 3 13
(11.59) (2.17) (9.42)
Total 31 107 0.143 1 0.705
(22.46) (77.54)
Young (<35) 22 7 15
(15.94) (5.07) (10.87)
Age Middle (35-45) 76 17 59
(55.07) (12.32) (42.75)
Elderly (>45) 40 7 33
(28.99) (5.07) (23.92)
Total 31 107 1.672 2 0.433
(22.46) (77.54)
Employee 56 7 49
(40.58) (5.07) (35.51)
Occupation Self-employed 73 19 54
(52.9) (13.77) (39.13)
Retired 9 5 4
(6.52) (3.62) (2.9)
Total 31 107 9.383 2 0.009*
(22.46) (77.54)
< 7 lakhs 73 7 66
(52.9) (5.07) (47.83)
Family 7 - 15 lakhs 51 13 38
Income (36.96) (9.42) (27.54)
> 15 lakhs 14 11 3
(10.14) (7.97) (2.17)
Total 31 107 32.519 2 0.000*
(22.46) (77.54)
Diploma or 14 4 10
below (10.14) (2.9) (7.25)
Educational Graduate 41 11 30
Qualification (29.71) (7.97) (21.74)
Post graduate or 83 16 67
above (60.14) (11.59) (48.55)
Total 31 107 1.232 2 0.54
(22.46) (77.54)
CEO 13 2 11
(9.42) (1.45) (7.97)
Job Position Department Head 101 21 80
(73.19) (15.22) (57.97)
Supervisor 24 8 16
(17.39) (5.8) (11.59)
Total 31 107 2.164 2 0.339
(22.46) (77.54)
Annotations: *p 0.01 (Asymp. Sig. (two-sided) ); df = Degree of freedom; and N = Number of
respondents

144
Further, the results show that only 28 married respondents preferred to purchase car
on cash, whereas 68.12 per cent respondents (94 out of 122) were considering EMI
2
based payment method. The results, however, reveal no significant relationship
between the buyers marital status and their selection preferences based on the
payment method. The results on the age groups indicated that 15 (out of 22) young and
33 (out of 40) elderly respondents have no preferences towards purchase on cash.
Surprisingly, 42.75 per cent of the respondents of middle age group (fifty nine out of
76) were giving high preference to their purchase on cash. However, there is no
significant relationship between the car buyers age and preference to purchase a
car based on EMI or cash method.

Regarding the consideration of occupation of car buyers, the study noticed that 38.41
per cent of the respondents, who were employed in public or private sector, prefer
EMI based payment method, but only 2.17 per cent consider cash payment in their car
purchase decisions. Interestingly, 49 out of 73 respondents who prefer to select EMI
based payment method belong to self-employed group. Surprisingly, 5 out of 9
respondents who have retired from their jobs preferred EMI based payment method
while making purchase decisions. As for the relationship between the car buyers
occupation and their payment method selection preference, the 2 value indicates
significance. The results based on their level of income indicated that 47.83 per cent of
the respondents have no preferences towards cash payment whose income is less than 7
lakhs. However, 9.42 per cent of the respondents of income level between 7 lakhs and
15 lakhs (13 out of 51) were giving high preference to purchase on cash.
The study found that there is significant relationship between the car buyers level
of income and preference to purchase a car based on EMI or cash method. The
results on the level of education of respondents indicated that 10 (out of 14) dipl oma
or below degree holders and 67 (out of 83) post-graduation or above degree holders have
no preferences towards purchase on cash. However, 7.97 per cent of the respondents who
were graduates (eleven out of 41) gave high preference to their purchase on cash.
However, there is no significant relationship between the car buyers level of
education and preference to purchase a car based on EMI or cash method.
Similarly, based on the job position of the respondents, the results indicated that 11
(out of 13) CEOs and 16 (out of 24) supervisors have no preferences towards
purchase on cash. Interestingly, 57.97 per cent of the respondents who were managers

145
(eighty out of 101) gave high preference to their purchase on EMI. However, there is
no significant relationship between the car buyers job position and preference
to purchase a car based on EMI or cash method.

Thus it may be determined that the study opposes the null hypothesis H2.1 partially,
that the demographic characteristics does not influence the payment decisions of car
buyers, as only the factors pertaining to the occupation of the respondent and the
family income were found to be significant.

5.2.5 Car Fuel Preferences towards Respondents Demographic

Characteristics
With a view to find the car fuel preference of consumers, the researcher asked the
respondents about the fuel variant used in their present car. An examination of the
data as shown in Table 5.5a reveals that, most of the consumers (78.26%) preferred
diesel variants. Only 30 respondents (21.77%) of the total sample were having a
petrol version car. Out of these 30 petrol car users, 8 preferred CNG and 3 preferred
LPG along with petrol as a fuel variant. None of the sampled respondents was using
electric car in NCR-Delhi.
Table 5.5a: Car Fuel Preferences
Sr. No. Car fuel variant Frequency Percentage
(N=138)
1 Diesel 108 78.26
2 Petrol 19 13.17
3 Petrol with CNG 8 5.8
4 Petrol with LPG 3 2.17
5 Electric 0 0
Annotation: N = Number of respondents

Further, the cross-tabulations for the all the demographic variables (gender, marital
status, age, occupation, family income, level of education and job position)
of interest on car fuel variant preferences was conducted and is presented in Table
5.5b. For each cross-tabulation, the results indicate the fuel variant preferences of all
the car buyers under study. Examinations of the data reveals that most of the
respondents who were male, married, in the age group of 35-45 years, belonging to
business community, with in the annual income of 7 lakhs - 15 lakhs, having
post-graduation or above educational degree and who were working at managerial
positions preferred diesel cars while female, unmarried and young respondents
preferred petrol cars.

146
Table 5.5b: Cross-Tabulations of Fuel Preferences Based on Demographic
Characteristics of Car Buyers
Distribution Fuel preferences based on Asym
Petrol 2
Demographic Preferences of the of the with df p. Sig.
Car Buyers respondents Petrol Diesel Value (two-
CNG/
(N=138) LPG sided)
Male 117 14 8 95
(84.78) (10.14) (5.8) (68.84)
Gender
Female 21 5 3 13
(15.22) (3.62) (2.17) (9.42)
Total 19 11 108 3.9 2 0.142
(13.77) (7.97) (78.26)
Married 122 15 (10.87) 9 98
Marital (88.41) (6.52) (71.01)
Status Single 16 4 2 10
(11.59) (2.9) (1.45) (7.25)
Total 19 11 108 2.699 2 0.259
(13.77) (7.97) (78.26)
Young (<35) 22 3 4 15
(15.94) (2.17) (2.9) (10.87)
Age Middle (35-45) 76 9 3 62
(55.07) (6.52) (2.17) (44.93)
Elderly (>45) 40 7 4 31
(28.99) (5.07) (2.9) (22.46)
Total 19 11 108 5.505 4 0.239
(13.77) (7.97) (78.26)
Employee 56 6 6 44
(40.58) (4.35) (4.35) (31.88)
Occupation Self-employed 73 8 4 61
(52.9) (5.8) (2.9) (44.2)
Retired 9 5 1 3
(6.52) (3.62) (0.72) (2.17)
Total 19 11 108 16.01 4 0.003*
(13.77) (7.97) (78.26)
< 7 lakhs 73 13 7 53
(52.9) (9.42) (5.07) (38.41)
Family 7 - 15 lakhs 51 4 3 44
Income (36.96) (2.9) (2.17) (31.88)
> 15 lakhs 14 2 1 11
(10.14) (1.45) (0.72) (7.97)
Total 19 11 108 3.417 4 0.491
(13.77) (7.97) (78.26)
Diploma or below 14 2 1 11
(10.14) (1.45) (0.72) (7.97)
Educational Graduate 41 4 2 35
Qualification (29.71) (2.9) (1.45) (25.36)
Post graduate or 83 13 8 62
above (60.14) (9.42) (5.8) (44.93)
Total 19 11 108 1.891 4 0.756
(13.77) (7.97) (78.26)
CEO 13 3 1 9
(9.42) (2.17) (0.72) (6.52)
Job Position Department Head 101 12 5 84
(73.19) (8.7) (3.62) (60.87)
Supervisor 24 4 5 15
(17.39) (2.9) (3.62) (10.87)
Total 19 11 108 8.572 4 0.073
(13.77) (7.97) (78.26)
Annotations: *p .01 (Asymp. Sig. (two-sided)); df = Degree of freedom; and N = Number of
respondents

Moreover, respondents who were married, working in public or private sector with an
annual income below 7 lakhs were considering CNG/LPG options along with petrol
2
as their car fuel variant. However, the results do not show any significant

147
relationship between the aspects including car buyers gender, marital status, age,
family annual income, level of education and job position and their selection
2
preferences based on the car fuel variant but the calculated values show significant
relationship between the car buyers occupation and their selection preference for car
fuel variant. Thus, the study partially counters the null hypothesis

H2.2 that demographic characteristics does not influence the fuel variant decisions of
car buyers as only the occupation of the respondents has found to be significant.

5.2.6 Buyers Role in the Car Purchase Decision

When respondents were asked about their role in the car purchase decision, on the
basis of their gender and marital status it was noted that approximately half of the

car buyers who were either male (52.17%) or married (48.55%) played the decisive role.
31 out of 138 respondents (22.46%) were the only decision makers. Likewise, 61.9 per
cent female respondents (thirteen out of 21) admitted that they did not play the decisive
role but were one of the decision makers. Surprisingly, 7.25 per cent of the respondents
confirmed that purchase decision about their present cars was taken
by others, out of which 4 were female respondents.

Table 5.6: Buyers Role in the Car Purchase Decision

Sr. Number of Respondents (Percentage) Total
No. Role in the car purchase Gender Marital Status (N=138)
Male Female Married Single
I was one of the decision 72 1 67 6 73
1 makers, and played the
(52.17) (0.72) (48.55) (4.35) (52.9)
decisive role
2 I was the only decision maker 28 3 26 5 31
(20.29) (2.17) (18.84) (3.62) (22.46)
I was one of the decision 11 13 21 3 24
3 makers, but not played the
(7.97) (9.42) (15.22) (2.17) (17.39)
decisive role
4 Totally decided by others 6 4 8 2 10
(4.35) (2.9) (5.8) (1.45) (7.25)
Annotation: N = Number of respondents

5.2.7 Factors/Sources Influencing Car Buyers Purchase Behavior

A list of 25 items comprising of social, cultural, psychological factors and
information sources was presented to find the factors/sources which influenced the
car purchase behavior of the sampled respondents. The influences as reported by the
respondents in the buying and brand choice of their present car are as presented in the
present section.

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5.2.7.1 Social Factors

According to the information obtained from respondents as shown in Table 5.7a, it

was observed that among social factors influencing the car buying and brand choice
decisions, family factor ( X = 3.81, SD = 3.506) had the strongest impact and factors
of social status ( X = 3.74, SD = 3.218) and reference groups ( X = 3.61, SD =
2.652) were respectively in the second and third priorities. Overall influence of social
factors was reported as Mean at 3.72 and Standard Deviation at 3.126 on the car
purchase behavior of the respondents under study.

Table 5.7a: Influence of Social Factors on the Car Purchase Behavior

Sr. Social factors Mean Std. SD D I A SA 2 P

No. (N=138) Div. Value
1 Wife 4.32 5.523 3 9 3 49 74 151 0.000*
(2.17) (6.52) (2.17) (35.51) (53.62)
2 Children 3.97 3.954 8 13 12 47 58 77.58 0.000*
(5.8) (9.42) (8.7) (34.06) (42.03)
3 Other family 3.14 1.051 19 27 33 34 25 5.478 0.242
members (13.77) (19.57) (23.91) (24.64) (18.12)
Total Mean Score 3.81 3.506
(Family)
4 My job 3.81 3.641 11 14 12 54 47 64.39 0.000*
position (7.97) (10.14) (8.7) (39.13) (34.06)
Type/Nature of 12 18 17 48 43
5 my Institution / 3.67 2.843 39.89 0.000*
(8.7) (13.04) (12.32) (34.78) (31.16)
Trade
Total Mean Score 3.74 3.218
(Social Status)
6 Friends 4.1 4.454 5 13 11 43 66 98.23 0.000*
(3.62) (9.42) (7.97) (31.16) (47.83)
7 Relatives and 3.12 0.744 21 29 28 33 27 2.73 0.605
neighbors (15.22) (21.01) (20.29) (23.91) (19.57)
8 Co-workers 3.62 2.772 14 21 13 46 44 38.01* 0.000*
(10.14) (15.22) (9.42) (33.33) (31.88)
Total Mean Score 3.61 2.652
(Reference Group)
Grand Mean Score 3.72 3.123
(Social Factors)
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Dev. = Standard Deviation; N = Number of respondents; SD = Strongly
disagreement; D = Disagreement; I = Indifferent/Not sure; A = Agreement; and SA = Strong Agreement

2
Moreover, test was used to find the relationship between the social factors and the
car purchase behavior of the respondents. The results do not show any significant
relationship between other members of family and relatives and neighbors of
reference groups and the car purchase behavior of the respondents as the calculated
2
value is less than the tabulated value. However, the values indicate significance for all
the other constituents of social factors under study. Thus the

149
study differs with the null hypothesis H3.1 that social factors do not influence the
purchase behavior of the car buyers under study.

5.2.7.2 Cultural Factors

To understand cultural factors which influence the consumer purchase preference
and whether these factors influenced the purchase behavior towards the present car
brand of the respondents under study, the identified factors were analyzed and the
results have been tabulated and presented in Table 5.7b. The factors studied were
choice of color ( X = 3.41, SD = 1.536), shape ( X = 3.36, SD = 1.428), size ( X =
3.30, SD = 1.642), design ( X = 3.26, SD = 1.029) of the car, and decision of the
head of the family ( X = 3.15, SD = 1.338).
2
The test was applied to analyze the significant influences of the cultural factors while
2
making a car purchase. The values indicated that design of the car and decision of
the head of the family could not establish significant relationship with the car
purchase behavior. However, the results revealed that color, shape and size have
a significant impact on the decision, with color being the most influential followed
2
by shape and size of the car. Based on the results of statistic (Table 5.7b), it can
be concluded that some of the cultural factors are amongst the
influencing factors while purchasing cars, thus, partially controvert the null
hypothesis H3.2.
Table 5.7b: Influence of Cultural Factors on the Car Purchase Behavior
Sr. Cultural factors Mean Std. SD D I A SA 2 P

No. (N=138) Div. Value
1 Color 3.41 1.536 17 21 29 31 40 11.71 0.020*
(12.32) (15.22) (21.01) (22.46) (28.99)
Shape of the car 19 23 26 29 41
2 (e.g. hatchback 3.36 1.428 10.116 0.039*
(13.77) (16.67) (18.84) (21.01) (29.71)
or sedan)
3 Size 3.30 1.642 23 24 16 39 36 13.377 0.010**
(16.67) (17.39) (11.59) (28.26) (26.09)
4 Design 3.26 1.029 18 27 28 31 34 5.261 0.262
(13.04) (19.57) (20.29) (22.46) (24.64)
Decision of the 22 31 18 38 29
5 head in my 3.15 1.338 8.884 0.064
(15.94) (22.46) (13.04) (27.54) (21.01)
family
Grand Mean 3.3 1.394
Annotations: *p .05 (Asymp. Sig. (two-sided)); **p .01 (Asymp. Sig. (two-sided)); Degree of
freedom (df) = 4; Mean = Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of
respondents; SD = Strongly disagreement; D = Disagreement; I = Indifferent/Not sure; A = Agreement;
and SA = Strong Agreement

150
5.2.7.3 Psychological Factors
The data pertaining to the psychological factors which influenced the purchase
behavior towards the present car brand of the respondents has been presented in Table
5.7c. The factors studied were manufacturers brand image ( X = 4.14, SD = 4.491),

model ( X = 4.01, SD = 4.256), ways the dealers sell the car ( X = 3.91, SD =
3.532), class of the car ( X = 3.85, SD = 3.684), type/form of the car ( X = 3.80, SD
= 3.549) and the previous experience ( X = 3.78, SD = 3.528) of the respondents
with the brand.
2
The test had been used to analyze the influence of the psychological factors while
2
buying cars. The values indicated that all the factors considered as psychological
influences had significant relationship with the car purchase behavior. Car
manufacturers brand image was considered the most important followed by model
2
and ways the dealers sell the car. On the basis of the results of statistic given above it
may be concluded that psychological factor have a significant influence
while purchasing cars, and hence the null hypothesis H3.3 be rejected.

Table 5.7c: Influence of Psychological Factors on the Car Purchase Behavior

Sr. Psychological Mean Std. SD D I A SA 2 P
No. factors (N=138) Div. Value
Manufacturers/
1 Brand image 4.14 4.491 3 11 13 48 63 100.12 0.000*
(e.g. Maruti (2.17) (7.97) (9.42) (34.78) (45.65)
versus Hyundai)
Models (e.g.
2 package sizes 4.01 4.256 6 15 8 (5.8) 51 58 89.899 0.000*
such as Alto (4.35) (10.87) (36.96) (42.03)
Lxi)
3 Ways to 3.91 3.532 6 14 19 46 53 61.928 0.000*
purchase (4.35) (10.14) (13.77) (33.33) (38.41)
Car class (e.g. 9 16 11 53 49
4 economy or 3.85 3.684 67.362 0.000*
(6.52) (11.59) (7.97) (38.41) (35.51)
luxury)
Car type/form 10 24 9 36 59
5 (e.g. hatchback 3.80 3.549 45.984 0.000*
(7.25) (17.39) (6.52) (26.09) (42.75)
or sedan)
Previous 9 8 26 57 38
6 experience with 3.78 3.528 61.783 0.000*
(6.52) (5.8) (18.84) (41.3) (27.54)
the brand
Grand Mean 3.91 3.840
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; SD = Strongly
disagreement; D = Disagreement; I = Indifferent/Not sure; A = Agreement; and SA = Strong Agreement

151
5.2.7.4 Information sources
The following section depicts the analysis of information sources that the car buyers
used during their purchasing process. From the data it can be observed that people
still use a lot of traditional ways to get information, such as sales staff of the dealer
( X = 3.99, SD = 4.478), advertisements on TV, radio or newspapers ( X = 3.31, SD =
2.990), brochures and car magazines ( X = 3.22, SD = 2.150), as presented in Table
5.7d. But, with the rapid development of information technology, Internet has
become one part of peoples daily life. Many people start to seek information by using

websites. Car manufacturers website ( X = 3.66, SD = 3.257) has surpassed a lot

of traditional ways to get second position for the information seeking. As the younger
people get of buying age, consumers will spend more time on internet and purchase
more and more products by internet, including cars. The surveyed respondents also
admitted that they go through the reviews of existing customers ( X = 3.10, SD =
1.855) on internet. Exchange melas and car shows like Auto-Expo ( X = 2.93, SD =
2.400) were also observed to influence the car purchase behavior of the respondents.

Table 5.7d: Influence of Information Sources on the Car Purchase Behavior

Sr. Information Mean Std. SD D I A SA 2 p

No. Sources Div. Value
(N=138)
1 Dealer sales 3.99 4.478 11 16 3 41 67 99.536 0.000*
staff (7.97) (11.59) (2.17) (29.71) (48.55)
Car 16 24 6 37 55
2 manufacturers 3.66 3.257 52.652 0.000*
(11.59) (17.39) (4.35) (26.81) (39.86)
websites
Television/
3 Newspaper/ 3.31 2.990 18 31 7 54 28 44.391 0.000*
Radio (13.04) (22.46) (5.07) (39.13) (20.29)
advertising
Brochures/Car
magazines/ 24 27 11 46 30
4 Published 3.22 2.150 22.942 0.000*
(17.39) (19.57) (7.97) (33.33) (21.74)
consumer
reports
Reviews of
5 existing 3.10 1.855 25 31 13 43 26 17.072 0.002*
customers on (18.12) (22.46) (9.42) (31.16) (18.84)
internet
Exchange 28 41 6 39 24
6 melas/ Car 2.93 2.400 28.594 0.000*
(20.29) (29.71) (4.35) (28.26) (17.39)
shows
Grand Mean 3.37 2.855
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted Mean Score;
Std. Div. = Standard Deviation; N = Number of respondents; SD = Strongly disagreement; D = Disagreement; I =
Indifferent/Not sure; A = Agreement; and SA = Strong Agreement

2
To analyze the influences of the information sources while buying cars, test was
2
applied and the obtained values indicate that all the information sources had

152
 2
significant relationship with the car purchase behavior. Based on the results of
statistic given above it may be concluded that information sources have a significant
influence while purchasing cars, thus challenging and rejecting the null hypothesis
H3.4.

5.2.7.5 Test of Significance on the Difference of Means of Factors/Sources

Influencing Car Buyers Brand Preference

Table 5.7e: Comparing Means of Factors/Sources Influencing Purchase Behavior

between Compact and Midsize Segment Car Owners

Car owners Compact car Midsize car p value

owners owners t-
Factors/Sources (N=138) (N=71) (N=67) value (two-
tailed)
M SD M SD M SD
Family 4.15 4.734 4.47 5.103 3.81 4.343 0.82 0.414
Reference Group 3.86 3.608 4.29 4.241 3.4 2.938 1.44 0.152
Social Status 3.74 3.218 3.12 2.107 4.4 4.395 -2.161 0.033*
Social Factors 3.92 3.853 3.96 3.817 3.87 3.892 0.137 0.891
Color 3.41 1.536 3.51 1.892 3.3 1.159 0.791 0.431
Shape of the car (e.g. hatchback or 3.36 1.428 3.13 0.896 3.6 1.992 -1.77 0.08
sedan)
Size 3.3 1.642 3.42 0.964 3.17 2.360 0.806 0.423
Cultural Factors 3.36 1.535 3.35 1.251 3.36 1.837 -0.037 0.97
Manufacturers/Brand image (e.g. 4.14 4.491 3.99 3.008 4.3 6.063 -0.377 0.707
Maruti versus Hyundai)
Models (e.g. package sizes such as 4.01 4.256 3.53 2.771 4.52 5.830 -1.262 0.21
Alto Lxi)
Ways to purchase (e.g. dealers that 3.91 3.532 3.16 1.082 4.7 6.128 -2.027 0.046*
sell it)
Car class (e.g. economy or luxury) 3.85 3.684 3.05 0.984 4.7 6.545 -2.042 0.045*
Car type/form (e.g. hatchback or 3.8 3.549 3.11 1.688 4.53 5.521 -2.018 0.047*
sedan)
Previous experience with the brand 3.78 3.528 3.01 0.829 4.6 6.388 -2.04 0.045*
Psychological Factors 3.92 3.840 3.31 1.727 4.56 6.079 -1.623 0.109
Dealer sales staff 3.99 4.478 4.19 5.067 3.78 3.854 0.537 0.592
Car manufacturers websites 3.66 3.257 2.99 1.139 4.37 5.501 -2.013 0.048*
Television/Newspaper/Radio 3.31 2.991 3.67 4.151 2.93 1.760 1.377 0.172
advertising
Brochures/Car magazines/ 3.22 2.153 2.86 1.072 3.6 3.292 -1.754 0.083
Published consumer reports
Reviews of existing customers on 3.1 1.855 2.61 1.106 3.62 2.649 -2.892 0.005**
internet
Exchange melas/Car shows (Auto- 2.93 2.412 2.58 2.149 3.3 2.666 -1.741 0.084
Expo etc.)
Information Sources 3.37 2.855 3.15 2.071 3.6 3.686 -0.877 0.383
Annotations: *p .05; **p .01; Mean = Weighted Mean Score; Std. Div. = Standard Deviation; and
N = Number of respondents

Two of the factors other family members from family group and relatives and
neighbors from reference group in the social context, and design and decision
of the head in the family in the cultural context were noted insignificant in

153
influencing the car purchase behavior because the calculated 2 values of these were

less than the critical values (see Table 5.7a and Table 5.7b). Therefore, after excluding
the insignificant factors from the study, mean scores of factors/sources influencing
purchase behavior of compact and midsize segment car buyers were calculated and
analyzed using an ordinary comparison t-test. Overall, based on the
social, cultural, psychological factors and information sources, the result of the

t-test as given in table 5.7e indicated no significant differences in the purchase

behavior between the compact and midsize segment car buyers.

However, significant differences were found on some of the individual factors

belonging to social and psychological contexts and the information sources
influencing car purchase behavior. The consideration of matching the social status
with car purchase is higher in midsize segment car buyers (t-value = -2.161, p .05)
as their mean score was higher ( X = 4.40, SD = 4.395) in comparison to the mean
score of compact size car buyers, which is X = 3.12, SD = 2.107. Significant
differences were observed in four of the psychological factors including ways to
purchase, car class, car type/form, and previous experience with the brand
influencing the compact and midsize segment car buyers with the calculated t-values
as -2.027, -2.042, -2.018 and -2.040 respectively with 95 per cent confidence level
and at significance level of 0.05. It is also apparent that the midsize segment car
buyers were more concerned about how the dealer sell the car, economy or luxury
car, their previous experiences with that car brand, hatchback or sedan car, model
of the car and the car manufacturers/brand image as compared to their
counterparts under study.
Significant difference was also observed regarding the access of car manufacturers
websites between the compact and midsize segment car buyers (t-value = -2.013, p

.05) which shows that this dimension is expressed again more in midsize segment car
buyers with X = 4.37, SD = 5.501 in comparison to that of compact size car buyers
with the mean score as X = 2.99, SD = 1.139. Similarly, there is significant difference
in going through the reviews of existing customers on internet between the compact
and midsize segment car buyers (t-value = -2.892, p .01). Also, internet support is
considered more by the midsize segment car buyers with the mean score as X = 3.62,
SD = 2.649, in comparison to compact size buyers with their X = 2.61, SD = 1.106.

154
Table 5.8a: Factor Analysis (Principal components, Varimax rotation) of 30
Indicators Used for Assessing Risks as Perceived by Car Owners

Factors Statements Factor Eigen Variance Cronbachs

Score values explained Alpha
I am doubtful if the air conditioning system in the 0.72
car can hold good in these days of global warming
I am doubtful if I can get a good after sales service 0.69
Physical I am not sure about the mileage that my car can give 0.59 3.11 68% 0.87
Risks
I am afraid if I can have nationwide service outlets 0.61
I am worried I am settling for a car that does not 0.67
have ABS (Antilock braking system)
I am doubtful this car does not have a road grip 0.59
I feel that this car does not have functional option 0.61
like air bags
Functional I fear I am buying a model which people complain 0.68
of break problem 2.16 64% 0.82
Risks
I am afraid if my car would provide a great driving 0.69
experience
I am not sure that local technician can handle this 0.62
technologically superior car
I am confused if the car is worth the money I spend 0.71
I am afraid the cost of spares for this car can be 0.73
expensive
Financial I am afraid that my car can be stolen 0.62 2.73 53% 0.81
Risks
I am afraid if the price of car is within my budget 0.69
I am afraid the price of the car will come down after 0.7
I buy the car
I am not sure if I get a sense of more importance 0.65
among my friends after I own the car
I fear the audio system in my car may look 0.72
substandard
Social Risks I am afraid if the color of my car is pleasing to 0.64 1.93 57% 0.88
others
I am afraid if the shape of my car will add my social 0.59
status
I am not sure if my friends will complement me for 0.72
my decision to purchase this car
I am afraid that I will make a poor choice of a car 0.58
I am confused if the car is liked by all members of 0.63
the family
Psychologic I am buying a car that is entering the market for the 0.67
first time 2.81 66% 0.86
al Risks
I am afraid I may not be able to clean/cover the car 0.56
properly
I am worried I can easily find a buyer when I want to 0.69
dispose my car
I am worried about the waiting time to get my car 0.71
I believe I wasted a lot of time in searching the car 0.62
of my choice
I believe it will take a long time for me learn to drive 0.58
Time Risks a car 1.69 56% 0.83
I am not sure if I need to spend my time in search of 0.57
service mechanic
I am afraid if the car loan procedure will consume a 0.66
huge amount of time

155
Interestingly, advertisements were found to be considered more by the compact size
car buyers ( X = 3.67, SD = 4.151) as compared to midsize car buyers ( X = 2.93, SD =
1.760) but no statistical significant difference was found between the two groups.

On the whole, the result table indicates that social status in social context, ways to
purchase, car class, car type/form, and previous experience with the brand in
psychological context and car manufacturers websites and reviews of existing
customers on internet as the information sources have more influence on the
purchase behavior of midsize car buyers in comparison to compact size car buyers. Thus
the null hypothesis H3.5 is partially contradicted that there is no significant difference in
the compact and midsize segment car buyers view about influence of social,
cultural and psychological contexts and information sources on purchase
behavior.

5.2.8 Perceived Risks in the Purchase Decision of Car Owners Present

Car Brand
The objective of this section of the study was to assess the degree of risk that
consumers perceive and the factors that can contribute to minimize the perceived
risks. A factor analysis was used as the extraction method for the six risk factors
from 30 items used in the survey and correlation analysis to find their relationship to
each of the factors decreasing the perceived risk. Means and standard deviations

were calculated for the respondents of all the sampled car manufacturing companies
under study.
5.2.8.1 Factor Analysis
A factor analysis was used to analyze the data using principal component analysis as
the extraction method and Varimax as a technique of rotation to determine how many
factors were being measured by the instrument. As shown in Table 5.8a, it was
revealed that the following six factors account for 60.67 per cent of the variance in the
instrument: Physical risks; Functional risks; Financial risks; Social risks;
Psychological risks; and Time risks.
5.2.8.2 Correlation Analysis
The purpose of this section is to describe the results from the correlation analysis of
the risks and risk reduction related factors. Table 5.8b shows the correlations
among the factors for the entire sample (N=138). The level of significance for each

156
correlation was p .05 or p .01. The results showed that all the risks and risk
reduction related factors have a positive relationship to each other. The correlation
coefficients ranged from 0.024 to 0.279.
Table 5.8b shows that physical ( X = 3.67, SD = 3.271), financial ( X = 3.55, SD =
3.116) and psychological ( X = 3.29, SD = 2.194) risks were considered high by the
respondents followed by social ( X = 3.19, SD = 1.557), functional ( X = 3.18, SD
= 1.825) and time ( X = 3.12, SD = 1.906) risks whereas the role of sales
executives ( X = 3.97, SD = 5.010), word of mouth communication ( X = 3.76, SD
= 4.310) and test drive offered by the car dealers ( X = 3.26, SD = 1.711) are the top
three risk reduction factors/strategies, as perceived by all the respondents.

Further, on the basis of correlation analysis from the Table 5.8b it can also be inferred
that, factors like sales executives, word of mouth, and advertisements do have a
major role in the purchase decision of the respondents and serve to reduce the
perceived risk associated with the purchase. Test drive, brand, availability of
service stations, manufacturer's country of origin and free service/price
reduction/insurance have a moderate impact on the decision process and also serve to
minimize the perceived risk factors.
The results indicate that word of mouth decreases the social (r = 0.191, S = 0.024,
p .05) and time (r = 0.252, S = 0.002, p .01) risks and aids in the purchase
decision process. The role of sales executive helps to reduce physical (r = 0.195, S
= 0.021, p .05), functional (r = 0.279, S = 0.000, p .01), financial (r = 0.204, S
= 0.016, p .01), social (r = 0.266, S = 0.001, p .01) and psychological (r = 0.193,
S = 0.023, p .01) risk. As the sales executive demonstrates about the car features
and clarify the queries of the potential car buyers therefore, plays an important role in
reducing the perceived risks. The results indicate that test drive offered by dealer
also helped in pacifying physical risk (r = 0.202, S = 0.018, p .05) as perceived
by the respondents.
Car manufacturers brand and country of origin have an effect on reducing the
financial risk (r = 0.198, S = 0.019, p .05), (r = 0.191, S = 0.025, p .05) proving

that customers are willing to pay a higher premium for a recognized brand.
Advertisement is found effective in minimizing the social (r = 0.202, S = 0.018, p

.05) and time (r = 0.199, S = 0.019, p .05) risk components of perceived risk

157
because the advertisement positions the vehicle based on the target segment
and helps to reduce social risk. The availability of companys authorized
sales/service stations and the schemes like extended free service/price
reduction/insurance also have an impact on decreasing the functional risk (r =
0.184, S = 0.031, p .05), (r = 0.188, S = 0.027, p .05) as perceived by the
respondents. So it was found that all the eight risk reduction related factors play
important role in minimizing the risks as perceived by the respondents under study.
Table 5.8b: Means, standard deviations, and correlations among risks and risk
reduction related study variables (N=138)
Dealer Free
Risks/ risk Word Count service/
Std. sales Test Service
reduction Mean of Brand Advt. ry of price
Div. executi drive stations
factors mouth origin reduction
ve
insurance
Physical 3.67 3.271 r 0.121 0.195* 0.202* 0.041 0.101 0.106 0.052 0.161
Risk S 0.157 0.021 0.018 0.633 0.238 0.216 0.545 0.059
Functional 3.18 1.825 r 0.062 0.279** 0.072 0.054 0.123 0.184* 0.063 0.188*
Risk S 0.47 0.000 0.401 0.529 0.15 0.031 0.463 0.027
Financial 3.55 3.116 r 0.153 0.204* 0.099 0.198* 0.121 0.118 0.191* 0.03
Risk S 0.073 0.016 0.248 0.019 0.157 0.168 0.025 0.727
Social Risk 3.19 1.557 r 0.191* 0.266** 0.041 0.024 0.202* 0.124 0.026 0.091
S 0.024 0.001 0.633 0.78 0.018 0.147 0.762 0.288
Psychologi 3.29 2.194 r 0.152 0.193* 0.108 0.151 0.162 0.103 0.124 0.034
cal Risk S 0.075 0.023 0.207 0.077 0.057 0.229 0.147 0.692
Time Risk 3.12 1.906 r 0.252** 0.076 0.052 0.161 0.199* 0.092 0.024 0.06
S 0.002 0.375 0.544 0.059 0.019 0.283 0.78 0.485
Mean 3.76 3.97 3.26 3.04 2.9 3.06 2.74 2.53
Std. Div. 4.31 5.01 1.711 1.67 2.002 2.696 2.738 2.351
Annotations: *p .05; **p .01; r=Value of correlation coefficient; S=Significance; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; and N = Number of respondents

5.2.9 Country of Origin Effect on Car Purchase Decision

To examine the effect of the country of origin in the purchase decision of the present

car brands, all the respondents were asked to give their viewpoint. As per the analysis,
foreign car brands were considered superior in terms of quality and performance

( X = 3.91, SD = 3.465) and seems to be the most important influence on purchase

decision of the respondents. Moreover, respondents admitted to pay more to purchase a
foreign car brand because of its better quality and performance ( X = 3.64, SD =
2.959) and the countrys image ( X = 3.59, SD = 3.015). The respondents also given

the preference to the domestic car brands because of patriotism ( X = 3.12, SD =

0.917) in their purchase decisions (Table 5.9).

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Table 5.9: Country of Origin Effect
Sr. Country of Mean Std. SD D I A SA
2 p
No. origin effect Div. Value
(N=138)
Foreign car
brands are 7 13 24 36 58
1 superior in terms 3.91 3.465 59.609 0.000*
(5.07) (9.42) (17.39) (26.09) (42.03)
of quality and
performance
I will not bother
to pay more to
purchase a 13 19 14 51 41
2 foreign car brand 3.64 2.959 43.449 0.000*
(9.42) (13.77) (10.14) (36.96) (29.71)
because of its
better quality
and performance
I will not bother
to pay more to
3 purchase foreign 3.59 3.015 11 17 22 56 32 45.116 0.000*
car brands (7.97) (12.32) (15.94) (40.58) (23.19)
because of that
countrys image
I will not bother
to pay more to
4 purchase a 3.12 0.917 19 33 27 31 28 4.174 0.383
domestic car (13.77) (23.91) (19.57) (22.46) (20.29)
brand because of
my patriotism
Grand Mean 3.57 2.589
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; SD = Strongly
disagreement; D = Disagreement; I = Indifferent/Not sure; A = Agreement; and SA = Strong Agreement

2
Further, the test was also used to analyze the effect of country of origin on car
2
buying decision of the respondents. The values indicated significance for
superior quality and performance of the foreign car brands and manufacturers
2
country image. Surprisingly, the results revealed no significant influence of the
domestic car brands on purchase decision based on respondents patriotism.

5.3 Analyzing Marketing Strategies and Their Influence on Car

Buyers Brand Preferences
The Marketing Stimuli
Having described the buyer behavior stimuli, this part of the second section of the
study was to identify important marketing stimuli for the car brand preference of the
consumers. Percentage, weighted means and standard deviations were calculated for
the compact and midsize car owners under study. Chi-square test was used to identify
integrated marketing attributes as perceived important by the respondents. To test the

159
hypothesis, t-test was used to study the differences between the compact and midsize
segment car buyers view on influences of important integrated marketing attributes.

5.3.1 Importance of Product Related Attributes in the Car Brand

Preference

The purpose of this part of the study was to find the level of importance of the product
related attributes including product referent, task or outcome referent and user
surrogate referent in the car brand preference as perceived by the respondents.

5.3.1.1 Product Referent Attributes

Table 5.10a: Importance of Product Related Attributes (Product Referent) in the

Car Brand Preference
Sr. Product related Mean Std. NAI NI SI I VI 2 P

No. attributes (Product Div. Value
referent) (N=138)
Looks of the car/
1 Exterior design/ 4.04 4.322 9 11 9 46 63 92.725 0.000*
Exterior styling/ (6.52) (7.97) (6.52) (33.33) (45.65)
Attention getting
2 Advancing 3.7 2.775 13 17 21 34 53 38.232 0.000*
Technology (9.42) (12.32) (15.22) (24.64) (38.41)
3 Engine power 3.65 3.363 15 12 16 58 37 56.13 0.000*
(10.87) (8.7) (11.59) (42.03) (26.81)
4 Interior features 3.38 2.136 19 24 15 46 34 22.652 0.000*
(13.77) (17.39) (10.87) (33.33) (24.64)
5 Environment friendly 3.31 1.175 19 24 26 33 36 6.855 0.144
vehicle (13.77) (17.39) (18.84) (23.91) (26.09)
6 Creativity and 3.29 1.218 20 26 22 34 36 7.362 0.118
innovation (14.49) (18.84) (15.94) (24.64) (26.09)
7 Sportiness and fun 3.28 1.105 17 27 29 31 34 6.058 0.195
element in design (12.32) (19.57) (21.01) (22.46) (24.64)
Type of fuel
8 consumption 3.25 1.316 16 26 31 37 28 8.594 0.072
(Petrol/Diesel/CNG (11.59) (18.84) (22.46) (26.81) (20.29)
etc.)
9 Safety features (e.g. 3.19 1.105 23 29 19 33 34 6.058 0.195
airbag etc.) (16.67) (21.01) (13.77) (23.91) (24.64)
10 Colors available 3.13 1.271 26 31 16 29 36 8.014 0.091
(18.84) (22.46) (11.59) (21.01) (26.09)
11 Storage and cargo 3.01 0.751 26 31 22 33 26 2.797 0.592
capacity (18.84) (22.46) (15.94) (23.91) (18.84)
12 Length of warranty 3.01 0.562 27 31 25 24 31 1.565 0.815
(19.57) (22.46) (18.12) (17.39) (22.46)
13 Road clearance 2.96 1.044 24 29 32 34 19 5.406 0.248
(17.39) (21.01) (23.19) (24.64) (13.77)
Grand Mean 3.32 1.703
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

160
The results show that exterior design, advancing technology, engine power,
interior features, and environment friendliness were the top five most important

attributes whereas road clearance of the vehicle was perceived as the least important.
2
All thirteen product referents were considered important (Table 5.10a). However, the
results indicate that the exterior design, advancing technology, engine power, and
interior features were significantly important in the car brand preference
of the respondents.
5.3.1.2 Task or Outcome Referent Attributes
Table 5.10b: Importance of Product Related Attributes (Task or Outcome
Referent) in the Car Brand Preference
Product related
Sr. attributes (Task or Mean Std. NAI NI SI I VI 2 p
No. outcome referent) Div. Value
(N=138)
1 Safety 4.65 7.863 2 5 3 19 109 306.928 0.000*
(1.45) (3.62) (2.17) (13.77) (78.99)
Price quality 3 8 6 23 98
2 inference / Value for 4.49 6.853 233.087 0.000*
(2.17) (5.8) (4.35) (16.67) (71.01)
money
3 Ride Quality on 4.12 4.825 6 9 24 23 76 115.551 0.000*
highway (4.35) (6.52) (17.39) (16.67) (55.07)
4 Interior comfort 3.92 3.762 9 16 13 39 61 70.261 0.000*
(6.52) (11.59) (9.42) (28.26) (44.2)
5 Fuel efficiency/Fuel 3.83 3.457 11 16 12 46 53 59.319 0.000*
economy (7.97) (11.59) (8.7) (33.33) (38.41)
6 Performance 3.79 3.101 9 19 18 38 54 47.725 0.000*
(6.52) (13.77) (13.04) (27.54) (39.13)
7 Glamour and style 3.27 1.247 21 27 24 26 40 7.725 0.102
(15.22) (19.57) (17.39) (18.84) (28.99)
8 Luxury 3.27 1.064 19 24 31 29 35 5.623 0.229
(13.77) (17.39) (22.46) (21.01) (25.36)
9 Fun to Drive / 3.18 0.807 22 28 26 27 35 3.232 0.52
Delight from driving (15.94) (20.29) (18.84) (19.57) (25.36)
10 Road- 3.17 1.029 19 31 30 24 34 5.261 0.262
holding/Handling (13.77) (22.46) (21.74) (17.39) (24.64)
11 Resale value 3.14 2.660 34 11 18 51 24 35.116 0.000*
(24.64) (7.97) (13.04) (36.96) (17.39)
12 Feeling of reliability 3.02 1.144 31 17 33 32 25 6.493 0.165
/ Dependability (22.46) (12.32) (23.91) (23.19) (18.12)
Grand Mean 3.65 3.151
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

When respondents were asked to perceive importance of the product outcome

referents in the car brand preference, all the twelve attributes were considered
important. But on applying 2 test, the results depicted that safety, value for
money, ride quality, interior comfort, fuel economy, performance and resale

161
value of the car were significantly important attributes towards the brand preference

of the respondents (Table 5.10b).

5.3.1.3 User or Surrogate Referent Attributes
The respondents were also asked to opine the importance of the surrogate referents
of the product related attributes in their car brand preference. Though all the six
attributes were considered important, on applying 2 test, the results divulged that the
prestige due to car ownership, the bestselling car, high-tech appearance of the
car and premium car with best quality were the significant surrogate referents
towards the brand preference of the respondents (Table 5.10c). On the whole, the
mean score of task or outcome referent ( X = 3.65, SD = 3.151) was higher than the
product referent ( X = 3.32, SD = 1.703) and the user/surrogate referent ( X = 3.34,
SD = 1.729) attributes. Therefore, the null hypothesis H4.1 is accepted that product
referent attributes of a car brand are given lesser preference than task/outcome
referents whereas the null hypothesis H4.3 is rejected that task/outcome referent
attributes of a car brand are given lesser preference than user/surrogate referents by
the consumers. Similarly, as the mean score of user / surrogate referent ( X = 3.34,
SD = 1.729) was higher than the product referent ( X = 3.32, SD = 1.703) attributes,
the null hypothesis H4.2 is also accepted that product referent attributes of a car
brand are given more preference than user/surrogate referents by the consumers.
Table 5.10c: Importance of Product Related Attributes (User/Surrogate
Referent) in the Car Brand Preference
Product related 2

Sr. attributes (User / Mean Std. NAI NI SI I VI p
No. Surrogate Div. Value
referent) (N=138)
Status conferred on
you by ownership 8 13 32 37 48
1 of car/Prestige due 3.75 2.861 40.623 0.000*
(5.8) (9.42) (23.19) (26.81) (34.78)
to car ownership /
Gives you respect
2 The bestselling car 3.43 1.924 11 23 31 41 32 18.377 0.001*
(7.97) (16.67) (22.46) (29.71) (23.19)
3 Give a high-tech 3.36 1.619 11 29 31 33 34 13.014 0.011*
appearance (7.97) (21.01) (22.46) (23.91) (24.64)
Representative of 13 26 37 39 23
4 premium car with 3.24 1.823 16.493 0.002*
(9.42) (18.84) (26.81) (28.26) (16.67)
best quality
5 Pioneer status of 3.17 1.349 16 29 33 36 24 6.297 0.178
car (11.59) (21.01) (23.91) (26.09) (17.39)
6 The family car 3.1 0.798 21 27 34 29 27 3.159 0.532
(15.22) (19.57) (24.64) (21.01) (19.57)
Grand Mean 3.34 1.73
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

162
5.3.2 Importance of Customer Service Related Attributes (Additional
Services) in the Car Brand Preference
Five items were presented to find the importance of additional services and the
respondents perceived all the additional customer service related attributes important
in their car brand preference. However, on applying 2 test, only the information
regarding repairing and maintenance services as provided by the car
manufacturers/dealers was found significantly important towards the car brand
preference of the respondents. Whereas, aspects including providing training to
customers about new car, Information regarding service centers, car news and
other new cars were found insignificant (Table 5.11).

5.3.3 Importance of Price/Cost Related Attributes in the Car Brand

Preference
When respondents were asked to perceive importance of the price related attributes
in the car brand preference, all the three attributes initial price of the car, cost of
spare parts, and price negotiation with customer offering discounts were given
importance. However, the 2 results indicated only the initial price of the car is
significantly important towards the brand preference of the respondents (Table 5.12).
Whereas aspects like cost of spares parts and price negotiation with customers
offering discounts were observed to be insignificant.

Table 5.11: Importance of Customer Service Related Attributes (Additional

Services) in the Car Brand Preference
Customer service
Sr. related attributes Mean Std. NAI NI SI I VI 2 P
No. (additional services) Div. Value
(N=138)
Information regarding 6 13 32 38 49
1 repairing and 3.8 3.039 45.841 0.000*
(4.35) (9.42) (23.19) (27.54) (35.51)
maintenance services
Providing training to 24 27 33 23 31
2 customers about new 3.07 0.741 2.725 0.605
(17.39) (19.57) (23.91) (16.67) (22.46)
car features
3 Information regarding 2.89 0.956 29 31 24 34 20 4.536 0.338
service centers (21.01) (22.46) (17.39) (24.64) (14.49)
4 Information regarding 2.81 1.265 36 24 26 34 18 7.942 0.094
car news (26.09) (17.39) (18.84) (24.64) (13.04)
5 Informing customers 2.71 1.332 36 29 27 31 15 8.812 0.066
about new cars (26.09) (21.01) (19.57) (22.46) (10.87)
Grand Mean 3.06 1.467
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

163
Table 5.12: Importance of Price/Cost Related Attributes in the Car Brand
Preference
Sr. Price related Mean Std. NAI NI SI I VI 2 p

No. attributes (N=138) Div. Value
1 Initial price of the car/ 3.9 3.549 7 16 22 32 61 62.507 0.000*
Cost to buy (5.07) (11.59) (15.94) (23.19) (44.2)
2 Cost of spare parts 3.13 0.751 23 28 29 24 34 2.797 0.592
etc. (16.67) (20.29) (21.01) (17.39) (24.64)
Price negotiation with 29 24 27 32 26
3 customer offering 3.01 0.521 1.348 0.853
(21.01) (17.39) (19.57) (23.19) (18.84)
discounts
Grand Mean 3.35 1.607
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

5.3.4 Importance of Place/Availability Related Attributes in the Car Brand

Preference
Regarding the place related attributes in the car brand preference, all the four items were
considered important. However, the respondents were of the view that the likely delivery
time of the car should be least after the order has been placed (Table 5.13). Therefore,
waiting time post booking was perceived at the top among the four attributes by the
respondents. The 2 results also indicated this attribute significantly
important towards the brand preference of the car.

Table 5.13: Importance of Place/Availability Related Attributes in the Car

Brand Preference
Sr. Place/availability Mean Std. NAI NI SI I VI 2 p

No. related attributes Div. Value
(N=138)
1 Superior service 3.69 2.858 9 11 33 46 39 40.551 0.000*
(6.52) (7.97) (23.91) (33.33) (28.26)
2 Delivery time (post 3.36 1.790 14 21 33 41 29 15.913 0.003*
order placing) (10.14) (15.22) (23.91) (29.71) (21.01)
3 Waiting time (post 3.12 0.798 21 27 31 33 26 3.159 0.532
booking) (15.22) (19.57) (22.46) (23.91) (18.84)
4 Dealers location 2.99 0.798 31 26 27 21 33 1.189 0.88
(22.46) (18.84) (19.57) (15.22) (23.91)
Grand Mean 3.29 1.561
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

164
5.3.5 Importance of Promotion Related Attributes in the Car Brand
Preference
The respondents were presented seven items for obtaining their viewpoint about the
importance of the promotion related attributes in preferring a car brand. The
advertising image, schemes and discounts and low financing rates were considered
the three most important attributes, whereas cash rebates, festive season offer,
campaigns/exchange melas/car shows (Auto-Expo etc.) and test drive were

the moderately important promotion related attributes as perceived by the respondents

(Table 5.14). Moreover, the results obtained by applying 2 test, also confirmed that
all the seven attributes are significantly important towards the brand preference of a
car.
Table 5.14: Importance of Promotion Related Attributes in the Car Brand
Preference
Sr. Promotion related Mean Std. NAI NI SI I VI 2 P

No. attributes (N=138) Div. Value
1 Advertising image 4.12 4.384 6 4 22 41 65 95.406 0.000*
(4.35) (2.9) (15.94) (29.71) (47.1)
2 Schemes and 3.75 2.904 9 13 33 32 51 41.855 0.000*
discounts (6.52) (9.42) (23.91) (23.19) (36.96)
3 Low financing rates 3.62 2.409 15 12 29 37 45 30.261 0.000*
(10.87) (8.7) (21.01) (26.81) (32.61)
4 Cash rebates 3.57 2.323 12 15 31 43 37 26.783 0.000*
(8.7) (10.87) (22.46) (31.16) (26.81)
5 Festive season offer 3.4 2.081 18 13 41 28 38 21.493 0.000*
(13.04) (9.42) (29.71) (20.29) (27.54)
Campaigns/Exchang 19 22 29 26 42
6 e melas/Car shows 3.36 1.522 11.493 0.022**
(13.77) (15.94) (21.01) (18.84) (30.43)
(Auto-Expo etc.)
7 Test ride 3.3 2.931 12 19 39 52 16 42.652 0.000*
(8.7) (13.77) (28.26) (37.68) (11.59)
Grand Mean 3.59 2.651
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

5.3.6 Importance of Post Purchase Related Attributes in the Car Brand

Preference
Six post purchase related attributes were also presented to the respondents which
influence the consumers in their car brand preference (Table 5.15). After-sale
maintenance cost and availability of the service network were the two most
important among the six attributes under study, which were also found significantly
important towards the brand preference of a car on applying the 2 test.

165
Table 5.15: Importance of Post Purchase Related Attributes in the Car Brand
Preference
Sr. Post purchase Mean Std. NAI NI SI I VI 2 P

No. related attributes Div. Value
(N=138)
1 After-sale 4.11 4.298 5 7 19 44 63 91.71 0.000*
maintenance cost (3.62) (5.07) (13.77) (31.88) (45.65)
2 Availability of the 4.01 4.037 10 6 21 37 64 80.913 0.000*
service network (7.25) (4.35) (15.22) (26.81) (46.38)
3 Warranty schemes 3.22 0.816 21 25 28 31 33 3.304 0.508
(15.22) (18.12) (20.29) (22.46) (23.91)
Facilities available 20 23 34 31 30
4 with the service 3.2 1.001 4.971 0.29
(14.49) (16.67) (24.64) (22.46) (21.74)
station
5 After-sale service 3.17 0.971 21 26 33 24 34 4.681 0.322
(15.22) (18.84) (23.91) (17.39) (24.64)
6 Hospitality of the 2.99 0.76 25 27 33 31 22 2.87 0.58
service station (18.12) (19.57) (23.91) (22.46) (15.94)
Grand Mean 3.45 1.981
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

Other Marketing Stimuli

5.3.7 Importance of Electronic Marketing Related Attributes in the Car
Brand Preference
Table 5.16: Importance of Electronic Marketing Related Attributes in the Car
Brand Preference
Sr. Electronic Mean Std. NAI NI SI I VI 2 p

No. marketing related Div. Value
attributes (N=138)
Website use for
1 comparing price and 3.61 2.376 11 22 21 40 44 28.014 0.000*
features of (7.97) (15.94) (15.22) (28.99) (31.88)
competitors
Website use for 13 19 26 34 46
2 searching car model 3.59 2.211 24.246 0.000*
(9.42) (13.77) (18.84) (24.64) (33.33)
specifications
Website use for 17 11 40 43 27
3 comparing finance 3.38 2.385 28.232 0.000*
(12.32) (7.97) (28.99) (31.16) (19.57)
options
Online forums /
virtual brand 19 16 33 39 31
4 communities for 3.34 1.664 13.739 0.008*
consumers reviews (13.77) (11.59) (23.91) (28.26) (22.46)
and experiences
Grand Mean 3.48 2.159
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

The respondents were asked about the importance of website use for searching car
model specifications, comparing price and features of competitors, comparing
finance options and the use of online forums/virtual brand communities for
consumers reviews and experiences (Table 5.16). On applying 2 test, all the four

166
items were found significantly important while making choice of a car brand as
reported by the respondents.

5.3.8 Importance of Customer Relationship Management in the Car Brand

Preference
Table 5.17: Importance of Customer Relationship Management in the Car
Brand Preference
Customer 2

Sr. relationship Mean Std. NAI NI SI I VI p
No. management Div. Value
(N=138)
On payment,
1 customers be given 4.09 4.130 2 (8.7) 7 26 44 59 84.681 0.000*
the delivery (9.42) (23.91) (39.86) (18.12)
immediately
Car manufacturers to
provide excellent
network to facilitate 8 6 16 47 61
2 customers in 4.07 4.252 89.754 0.000*
(9.42) (18.84) (23.19) (35.51) (13.04)
accessing spare parts,
and getting their cars
serviced
Car manufacturers to
provide excellent 11 10 59 52
3 network to facilitate 4.01 4.384 6 (5.8) 95.406 0.000*
(4.35) (11.59) (34.06) (44.2)
their customers in
purchasing car
Customers feedback
regarding dealer
4 service, presale 3.96 4.057 5 9 19 59 46 81.71 0.000*
service, after sales (6.52) (11.59) (21.01) (34.06) (26.81)
service, complaints
etc.
Sales executive of the
dealer to speak about 7 13 31 39 48
5 the product and the 3.78 2.954 43.304 0.000*
(1.45) (5.07) (18.84) (31.88) (42.75)
corresponding
benefits
Dealer to act as a
6 mediator between the 3.49 3.012 12 13 33 55 25 45.043 0.000*
finance company and (4.35) (7.97) (7.25) (42.75) (37.68)
the customer
Dealers proper
7 greeting to make the 3.33 2.430 11 19 46 38 24 29.319 0.000*
customer feel (5.07) (9.42) (22.46) (28.26) (34.78)
comfortable
Option of extended
8 warranty to be 3.24 2.394 13 26 32 49 18 28.449 0.000*
provided by car (10.14) (21.01) (26.81) (27.54) (14.49)
manufacturers
Free checkup camp 12 27 40 42 17
9 facility provided by 3.18 2.288 25.986 0.000*
(3.62) (6.52) (13.77) (42.75) (33.33)
car manufacturers
24 Hour On-Road
10 Service, in case 3.15 1.795 14 29 37 38 20 15.986 0.003*
customer's car breaks (8.7) (19.57) (28.99) (30.43) (12.32)
down anywhere
Grand Mean 3.63 3.17
Annotations: *p 0.01 (Asymp. Sig. (two-sided)); Degree of freedom (df) = 4; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; N = Number of respondents; NAI = Not at All Important;
NI = Not Important; SI = Somewhat Important; I = Important; and VI = Very Important

167
Again, the respondents were presented ten items to know about the importance of
customer relationship management. The 2 results indicated all the ten items
significantly important while making choice of a car brand as reported by the
respondents. The consumers expect immediate delivery of car on payment,
excellent network in purchasing car, accessing spare parts, and getting their cars
serviced (Table 5.17). Surprisingly, customers feedback regarding dealer service,
presale service, after sales service, complaints etc. has also been viewed important
by the respondents whereas the 24 Hour on-road service provided by car
manufacturers, in case customer's car breaks down anywhere was perceived least
important by the subjects under study.
5.3.9. Test of Significance on the Difference of Means of Integrated
Marketing Attributes Influencing Car Buyers Brand Preference
Based on previous part of the study, all the product, price, place, promotion,
post-purchase, electronic marketing and customer relationship management

related attributes those found insignificant to influence brand preference of car buyers
because of the calculated 2 value less than the critical value, were excluded and only
the mean scores of significant factors/attributes influencing brand preference of
compact and midsize segment car buyers were noted as integrated marketing

attributes which were analyzed using comparison t-test. Overall, based on these
integrated marketing attributes, the result of the t-test as given in Table 5.18 indicated
no significant differences in influencing the preference of compact and midsize
segment car buyers except, comfort, engine power, electronic marketing,
high-tech appearance and resale value of a car brand.
Table 5.18 indicates the significant differences in the brand preference of the buyers
between compact and midsize segment car. The disposition of considering interior
comfort was higher in midsize segment car buyers (t-value = -2.023, p .05) as their

mean score was higher ( X = 4.77, SD = 6.592) in comparison to the mean score of

compact size car buyers, which is X = 3.12, SD = 1.091. There is significant

difference in the preference on the engine power in compact and midsize segment
buyers with the value (t-value = -2.223, p .05) which shows that this dimension is
expressed more in midsize segment car buyers with X = 4.46, SD = 5.665 in
comparison to that of compact size car buyers with the mean score as X = 2.89, SD =
1.191.

168
Table 5.18: Comparing Means of Integrated Marketing Attributes as Perceived
Important by the Buyers in Influencing Brand Preference between
Compact and Midsize Segment Car
Car buyers Compact car Midsize car p
buyers buyers
Sr. Integrated marketing (N=138) (N=71) (N=67) t- value
No. attributes (N=138) value (two-
Mean Std. Mean Std. Mean Std. tailed)
Div. Div. Div.
1 Safety 4.65 7.863 4.58 6.163 4.72 9.664 -0.1 0.92
2 Price quality inference/Value for 4.49 6.853 4.53 7.188 4.45 6.498 0.056 0.956
money
3 Ride Quality on highway 4.12 4.825 3.81 2.016 4.45 7.802 -0.65 0.517
4 After-sale maintenance cost 4.11 4.298 4.42 5.622 3.78 2.895 0.848 0.399
Looks of the car/Exterior
5 design/Exterior styling/Attention 4.04 4.322 3.69 3.026 4.41 5.695 -0.92 0.36
getting
6 Availability of the service 4.01 4.037 3.67 3.177 4.37 4.948 -0.98 0.328
network
7 Interior comfort 3.92 3.762 3.12 1.091 4.77 6.592 -2.02 0.047*
8 Initial price of the car/Cost to 3.9 3.549 4.26 4.228 3.52 2.829 1.215 0.227
buy
9 Fuel efficiency/Fuel economy 3.83 3.457 4.37 5.109 3.26 1.706 1.731 0.087
10 Information regarding repairing 3.8 3.039 3.71 2.464 3.9 3.648 -0.36 0.722
and maintenance services
11 Performance 3.79 3.101 3.62 2.925 3.97 3.288 -0.66 0.511
Status conferred on you by
12 ownership of car/Prestige due to 3.75 2.861 3.41 2.166 4.11 3.597 -1.38 0.172
car ownership/Gives you respect
13 Advancing Technology 3.7 2.775 3.56 1.088 3.85 4.563 -0.51 0.614
14 Superior service 3.69 2.858 3.42 2.189 3.98 3.567 -1.1 0.272
15 Engine power 3.65 3.363 2.89 1.191 4.46 5.665 -2.22 0.029*
16 Customer relationship 3.63 3.170 3.19 2.989 4.1 3.362 -1.68 0.096
management
17 Promotion 3.59 2.651 4.03 3.627 3.12 1.617 1.921 0.058
18 Electronic marketing 3.48 2.159 3.01 1.896 3.98 2.438 -2.6 0.011**
19 The bestselling car 3.43 1.924 3.56 2.264 3.29 1.564 0.819 0.414
20 Interior features 3.38 2.136 3.09 1.773 3.69 2.521 -1.61 0.11
21 Give a high-tech appearance 3.36 1.619 3.04 0.823 3.7 2.463 -2.09 0.040*
22 Delivery time (post order 3.36 1.790 3.49 2.099 3.22 1.463 0.881 0.38
placing)
23 Representative of premium car 3.24 1.823 3.01 0.769 3.48 2.940 -1.27 0.209
with best quality
24 Resale value 3.14 2.660 3.61 3.021 2.64 2.277 2.138 0.034*
Annotations: *p .05 (Asymp. Sig. (two-sided)); **p .01 (Asymp. Sig. (two-sided)); Mean =
Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of respondents

Similarly, significant difference on the use of electronic marketing was also found in
compact and midsize segment car buyers (t-value = -2.599, p .01). That is,
electronic marketing websites are used more by the midsize segment car buyers with
the mean score as X = 3.98, SD = 2.438, in comparison to compact size car buyers
with their X = 3.01, SD = 1.896. High-tech appearance of the car was also found

169
influencing significantly more (t-value = -2.086, p .05) the midsize segment car
buyers ( X = 3.70, SD = 2.463) compared to their compact size counterparts ( X =
3.04, SD = 0.823). However, the compact size car buyers were found more concerned
about the resale value of the car ( X = 3.61, SD = 3.021) as compared to the midsize
segment car buyers ( X = 2.64, SD = 2.277) with a significant value (t-value = 2.138,
p .05).

5.4 Brand Associations from Customer Perspective

Perceived Brand Positioning
After analyzing the buyer behavior stimuli and integrated marketing stimuli, this
last part of the second section of the study was to investigate how the respondents
associated the car brands with the features and benefits intended in the study.
Percentage, weighted means and standard deviations were calculated for the
respondents under study. Independent sample t-test was used to find the gap between
the importance given to car brand attributes and the brand associations as perceived
by the respondents for their present car brand. To test the hypothesis, a comparison of
weighted mean scores of the concrete/abstract/surrogate attributes and
functional/experimental/symbolic benefits was considered.

Consumers in general, are well informed and their opinions accurately reflect the
accumulated performance of the products that are the physical embodiment of those
brands. Based on the assumption, a positioning base comprising of a set of three
dimensions attribute positioning (consisting of concrete (4 items) and abstract
(4 items) attribute positioning); benefit positioning (consisting of direct (4 items)
and indirect (4 items) benefit positioning) and surrogate positioning (consisting of
multiple alternative bases (4 items)) in the research instrument was presented to
obtain views of the respondents about how they associate these attributes with their
present car brand. The results of main positioning bases considered in the study have
been presented in this part of the thesis.

5.4.1 Concrete and Abstract Attribute Positioning

Regarding the concrete attributes as shown in Table 5.19, the study found that

Toyota ( X = 3.27, SD = 1.039) followed by Nissan ( X = 3.23, SD = 1.049) and

Skoda ( X = 3.17, SD = 0.915) were the top three brands under study which the
respondents associated with the advancing technology. However on applying test of

170
significance, Tata (t-value = -4.041, p .01), Fiat (t-value = -4.105, p .01) and
Hyundai (t-value = -2.132, p .05) were indicated significantly disassociated with
the technological leadership by the respondents. The respondents also reported
insignificant association of Fiat (t-value = -2.314, p .05) with creativity and
innovation whereas Toyota ( X = 3.82, SD = 1.494) was perceived most creative and
innovative car brand. All the car brands were associated with the engine power by
the car owners under study which indicates that all the car manufacturers understand
the importance of the engine power in a vehicle. The t-values of Toyota (t-value = -
3.615, p .01), Volkswagen (t-value = -3.769, p .01), Nissan (t-value = -3.360, p
.01) and Skoda (t-value = -2.944, p .01) were also not found significantly
associated with the initial price i.e. costs to buy a car brand.

Based on the abstract attributes, Maruti Suzuki ( X = 3.83, SD = 1.679) was

associated with performance at the top and on the other side, Tata (t-value = -2.145,
p .05) found insignificantly associated (Table 5.19). The respondents did not
associate Fiat (t-value = -2.939, p .01), Chevrolet (t-value = -2.598, p .05), Ford
(t-value = -2.896, p .01) and Maruti Suzuki (t-value = -2.324, p .05) with
glamour and style. Quality was also found insignificantly associated with the Tata
(t-value = -2.782, p .01) car brand. The respondents viewed Honda cars ( X =
3.43, SD = 1.403) highly associated with sportiness and fun element in designing.
The t-values also indicated Fiat (t-value = -3.430, p .01), Tata (t-value = -3.710, p
.01) and Skoda (t-value = -2.836, p .01) were not associated significantly with
sportiness and fun element in designing by the respondents.

5.4.2 Direct/Indirect Benefits Positioning

Further, direct (functional) and indirect (experiential/symbolic) benefits of car

brands were presented to the respondents to know how much they associate the
benefits with their present car brand. Regarding the functional benefits as shown in
Table 5.20, the study noticed that Maruti Suzuki ( X = 3.92, SD = 2.939) followed by

Tata ( X = 3.77, SD = 2.106), Nissan ( X = 3.62, SD = 1.807), Toyota ( X = 3.55, SD =

2.134) and Ford ( X = 3.50, SD = 2.099) were the top five brands under study which
the respondents associated with the fuel economy (Table 5.20).

171
However on applying test of significance, Fiat (t-value = -3.638, p .01) and Skoda
(t-value = -2.033, p .05) were indicated significantly disassociated with the fuel
economy. The respondents reported insignificant association of Tata (t-value = - 2.355, p
.05) with safety whereas Chevrolet ( X = 3.88, SD = 2.330) was perceived as the car
brand following maximum safety parameters. The t-value was also not found
significantly associated with the interior comfort of Tata (t-value = -2.045, p
.05) car brand. Moreover, all the car brands were associated with the superior service

by the car owners under study which indicates that all the car manufacturers

understand the importance of providing good service to their customers.

Based on the experiential/symbolic benefits, surprisingly, the looks/exterior style

X
of Hyundai ( = 3.88, SD = 2.247) was perceived most attention getting and on the
other side, Tata (t-value = -2.462, p .05) was reported insignificantly associated by
the car owners under study (Table 5.20). The respondents did not associate Tata (t-value =
-3.010, p .01) as a car brand with luxury. Driving fun or the delight in driving a
car was perceived associated with all the sampled car brands in the study. Moreover, the
status conferred by the Renault car ownership (t-value = -2.132, p
.01) could not be significantly associated with the respect due to the car ownership
by the respondents.

5.4.3 Surrogate Attributes

On applying the test of significance as shown in Table 5.21, it was noticed that the
respondents did not associate Tata (t-value = -3.769, p .01), Nissan (t-value = - 2.262, p
.05) and Hyundai (t-value = -2.173, p .05) with the pioneering status of car
brands and was given to Skoda ( X = 3.67, SD = 1.000) at the top. Moreover, Fiat (t-
value = -3.010, p .01) and Nissan (t-value = -2.658, p .01) were not perceived
significantly the bestselling car brands. The study could not found any significant
association of Tata (t-value = -3.066, p .01), Fiat (t-value = -3.219, p .01), Renault
(t-value = -2.758, p .05), Maruti Suzuki (t-value = -2.938, p .01) and Nissan (t-
value = -2.539, p .05) with high-tech appearance as a car brand. The
respondents viewed all the car brands under study associated with the attribute the
family car except, Tata (t-value = -3.708, p .01).

172
Table 5.19: Comparing Means (Independent Sample t-test) of the Importance of Car Brand Attributes with the Brand Associations as
Perceived by the Car Owners for their Present Vehicle

Brand Associations
Features / Importance Chevrolet Fiat Ford Honda Hyundai Maruti Nissan Renault Skoda Tata Toyota Volkswagen
Attributes (N=138) Suzuki
(N=8) (N=12) (N=14) (N=7) (N=17) (N=12) (N=13) (N=8) (N=12) (N=13) (N=11) (N=11)
Concrete Attributes
Mean 3.13 2.08 3.00 3.00 2.65 2.92 3.23 3.00 3.17 2.08 3.27 3.18
Advancing 3.70 (Std. Div.) (1.195) (1.095) (1.337) (1.610) (1.782) (1.758) (1.049) (1.014) (0.915) (1.168) (1.039) (0.825)
Technology (2.775) t-Value -1.178 -4.105** -1.634 -1.072 -2.132* -1.393 -1.254 -1.63 -1.496 -4.041** -1.096 -1.516
(p) (0.262) 0.000 (0.114) (0.315) (0.042) (0.182) (0.219) (0.125) (0.144) 0.000 (0.284) (0.139)
Creativity Mean 2.75 2.58 2.86 3.43 3.35 3.58 3.62 3.13 3.25 2.46 3.82 3.73
3.29 (Std. Div.) (0.862) (1.000) (1.337) (1.610) (1.525) (1.629) (1.663) (1.195) (1.309) (1.452) (1.494) (1.016)
and
(1.218) t-Value -1.689 -2.314* -1.155 0.226 0.156 0.602 0.698 -0.367 -0.102 -1.995 1.146 1.36
Innovation
(p) (0.129) (0.036) (0.265) (0.827) (1.218) (0.558) (0.497) (0.722) (0.920) (0.066) (0.275) (0.197)
Mean 3.00 3.08 3.64 3.57 3.88 3.38 3.92 3.25 3.58 3.15 3.64 3.45
Engine Power 3.65 (Std. Div.) (1.309) (1.446) (2.374) (1.895) (2.485) (2.046) (3.950) (1.643) (2.296) (2.046) (3.086) (2.087)
(3.363) t-Value -1.194 -1.126 -0.014 -0.103 0.344 -0.411 0.238 -0.617 -0.097 -0.786 -0.01 -0.289
(p) (0.253) (0.271) (0.988) (0.919) (0.733) (0.686) (0.815) (0.549) (0.924) (0.441) (0.992) (0.776)
Mean 3.25 3.5 3.64 3.14 3.18 3.75 2.54 2.75 2.67 3.08 2.27 2.36
Initial Price 3.90 (Std. Div.) (1.553) (2.132) (2.605) (1.388) (1.674) (1.977) (0.971) (1.553) (1.000) (1.394) (1.110) (0.912)
(3.549) t-Value -1.037 -0.583 -0.342 -1.255 -1.422 -0.232 -3.360** -1.835 -2.944** -1.671 -3.615** -3.769**
(p) (0.320) (0.567) (0.735) (0.236) (0.163) (0.818) (0.001) (1.553) (0.005) (0.105) (0.001) (0.001)
Abstract Attributes
Mean 2.88 2.25 3.07 3.57 3.00 3.83 3.08 3.25 3.33 2.62 3.91 3.09
Performance 3.79 (Std. Div.) (1.195) (1.168) (1.324) (0.984) (1.396) (1.679) (1.785) (1.643) (1.907) (1.721) (1.277) (1.277)
(3.101) t-Value -1.826 -3.596** -1.792 -0.482 -1.84 0.072 -1.265 -0.846 -0.753 -2.145* 0.257 -1.499
(p) (0.090) (0.00) (0.080) (0.637) (0.073) (0.943) (0.220) (0.416) (0.461) (0.044) (0.799) (0.148)
Mean 2.25 2.17 2.43 3.57 2.88 2.5 2.69 2.75 3.75 2.69 3.45 4
Glamour and 3.27 (Std. Div.) (1.069) (1.243) (1.010) (1.723) (1.295) (1.087) (1.053) (0.926) (1.168) (1.269) (1.016) (1.196)
Style (1.247) t-Value -2.598* -2.939** -2.896 0.454 -1.176 -2.324* -1.866 -1.51 1.357 -1.577 0.555 1.942
(p) (0.031) (0.011) (0.010) (0.664) (0.253) (0.036) (0.081) (0.166) (0.197) (0.136) (0.588) (0.076)
Mean 2.75 2.58 3.07 3.29 3.18 3.08 3.38 3.01 3.15 2.23 3.91 3.55
Quality 3.24 (Std. Div.) (0.926) (1.000) (1.436) (1.279) (1.500) (1.388) (0.753) (1.643) (1.907) (1.118) (1.622) (2.134)
(1.823) t-Value -1.352 -2.013 -0.41 0.098 -0.151 -0.372 0.538 -0.382 -0.157 -2.782** 1.305 0.468
(p) (0.204) (0.059) (0.686) (0.924) (0.880) (0.715) (0.594) (0.712) (0.877) (0.012) (0.215) (0.648)
Sportiness Mean 2.88 2.08 3.21 3.43 2.94 3.08 2.77 2.5 2.42 2.23 3.36 3.27
and fun 3.29 (Std. Div.) (1.195) (1.168) (1.599) (1.403) (1.432) (1.446) (1.333) (1.069) (1.000) (0.957) (1.886) (1.989)
element in (1.218) t-Value -0.942 -3.430** -0.181 0.259 -0.965 -0.488 -1.354 -2.015 -2.836** -3.710** 0.121 -0.032
designing (p) (0.374) (0.004) (0.858) (0.803) (0.346) (0.633) (0.197) (0.078) (0.013) (0.001) (0.905) (0.974)
Annotations: *p .05 (Asymp. Sig. (two-sided)); **p .01 (Asymp. Sig. (two-sided)); Mean = Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of respondents

173
Table 5.20: Comparing Means (Independent Sample t-test) of the Importance of Functional/Experiential/Symbolic Benefits of Car
Brands with the Brand Associations as Perceived by the Car Owners for their Present Vehicle

Direct/ Brand Associations

Importance Chevrolet Fiat Ford Honda Hyundai Maruti Nissan Renault Skoda Tata Toyota Volkswagen
Indirect
(N=138) Suzuki
Benefits
(N=8) (N=12) (N=14) (N=7) (N=17) (N=12) (N=13) (N=8) (N=12) (N=13) (N=11) (N=11)
Direct (Functional) Benefits
Mean 3.13 2.33 3.5 3.29 3.12 3.92 3.62 2.88 2.92 3.77 3.55 3
Fuel 3.83 (Std. Div.) (1.195) (1.000) (2.099) (1.403) (1.647) (2.939) (1.807) (1.195) (1.168) (2.106 (2.134 (1.719
Economy (3.457) t-Value -1.359 -3.638** -0.52 -0.89 -1.415 0.1 -0.361 -1.845 -2.033* -0.091 -0.395 -1.392
(p) (0.193) 0.000 (0.607) (0.393) (0.165) (0.921) (0.721) (0.084) (0.050) (0.927) (0.698) (0.181)
Mean 3.88 3.42 3.71 3.57 3.59 3.83 3.62 3.63 3.92 2.85 3.64 3.64
Safety 4.65 (Std. Div.) (2.330) (1.784) (2.620) (1.723) (2.535) (2.646) (2.183) (1.927) (2.939) (1.329) (2.271) (2.357)
(7.863) t-Value -0.725 -1.456 -0.97 -1.156 -1.166 -0.807 -1.141 -1.068 -0.675 -2.355* -1.054 -1.034
(p) (0.477) (0.150) (0.337) (0.258) (0.247) (0.425) (0.259) (0.295) (0.504) (0.020) (0.298) (0.308)
Mean 3.38 3.08 3.36 3.71 3.35 3.17 3.54 3.38 3.42 2.77 3.45 3.73
Comfort 3.92 (Std. Div.) (1.808) (1.758) (2.080) (2.622) (2.276) (1.896) (2.277) (1.643) (2.045) (1.666) (2.087) (2.637)
(3.762) t-Value -0.755 -1.399 -0.872 -0.201 -0.893 -1.182 -0.536 -0.814 -0.744 -2.045 -0.665 -0.221
(p) (0.466) (0.176) (0.391) (0.845) (0.379) (0.251) (0.597) (0.431) (0.466) (0.051) (0.515) (0.827)
Mean 2.88 2.67 2.79 2.86 2.94 3.08 2.92 2.63 2.75 2.92 2.91 3.00
Superior 3.14 (Std. Div.) (1.458) (1.000) (1.279) (1.388) (1.517) (1.758) (1.452) (1.285) (1.168) (1.269) (1.660) (1.196)
Service (0.971) t-Value -0.498 -1.565 -0.995 -0.527 -0.53 -0.116 -0.535 -1.104 -1.123 -0.608 -0.453 -0.378
(p) (0.633) (0.141) (0.335) (0.616) (0.602) (0.909) (0.601) (0.303) (0.282) (0.553) (0.659) (0.712)
Indirect (Experiential/Symbolic) Benefits
Mean 3.13 3.5 3.79 3.86 3.88 3.58 3.38 3.75 3.42 2.85 3.64 3.82
Attention 4.04 (Std. Div.) (1.458) (1.446) (1.500) (0.984) (2.247) (1.679) (1.394) (0.926) (1.446) (1.130) (1.559) (1.494)
Getting (4.322) t-Value -1.436 -0.97 -0.457 -0.344 -0.243 -0.755 -1.236 -0.588 -1.114 -2.462* -0.67 -0.378
(p) (0.170) (0.338) (0.650) (0.734) (0.809) (0.456) (0.223) (0.560) (0.273) (0.016) (0.508) (0.708)
Mean 2.88 2.92 3.07 3.14 3.06 3 2.77 2.75 3.25 2.38 3.09 3.18
Luxury 3.27 (Std. Div.) (0.93) (1.31) (1.39) (1.39) (1.52) (1.71) (1.26) (0.93) (1.86) (1.01) (1.43) (1.78)
(1.06) t-Value -1.148 -0.897 -0.521 -0.244 -0.554 -0.539 -1.387 -1.53 -0.036 -3.010** -0.409 -0.165
(p) (0.28) (0.39) (0.61) (0.81) (0.59) (0.60) (0.19) (0.16) (0.97) (0.01) (0.69) (0.87)
Mean 2.88 2.83 3.07 3.14 3.12 2.67 2.54 3.00 3.08 2.85 3.73 3.36
Driving Fun 3.18 (Std. Div.) (0.926) (1.168) (1.500) (1.388) (0.758) (1.000) (1.333) (1.553) (1.250) (1.201) (2.243) (1.886)
(0.827) t-Value -0.895 -1.016 -0.27 -0.075 -0.304 -1.716 -1.7 -0.325 -0.272 -0.969 0.808 0.314
(p) (0.397) (0.329) (0.791) (0.942) (0.763) (0.111) (0.113) (0.754) (0.790) (0.350) (0.437) (0.759)
Mean 2.75 2.58 3.21 3.29 3.12 2.92 3.00 2.88 3.5 2.77 3.18 3.36
Gives You 3.75 (Std. Div.) (1.553) (2.045) (1.926) (1.503) (2.045) (2.050) (1.390) (0.926) (2.256) (1.615) (1.776) (1.886)
Respect (2.861) t-Value -1.664 -1.832 -0.948 -0.744 -1.14 -1.297 -1.644 -2.132 -0.359 -1.922 -0.968 -0.63
(p) (0.013) (0.086) (0.354) (0.477) (0.265) (0.214) (0.113) (0.048) (0.724) (0.069) (0.348) (0.538)
Annotations: *p .05 (Asymp. Sig. (two-sided)); **p .01 (Asymp. Sig. (two-sided)); Mean = Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of respondents

174
5.4.5 Overall Brand Association

Further as depicted in Table 5.22, from the brand associations reported by the
respondents to their present car brands, it was revealed that Chevrolet, Fiat, Ford,
Hyundai, Maruti Suzuki, Nissan, Renault, Skoda and Tata car brands were found more
associated with the concrete attributes, whereas, Honda, Toyota and Volkswagen
were perceived more associated with abstract as compared to the
concrete attributes. Fiat, Honda, Hyundai, Maruti Suzuki, Nissan, Renault, Skoda,
Tata, Toyota and Volkswagen were given more association to concrete/abstract
attributes than the surrogate attributes.

Functional benefits were associated more with Chevrolet, Ford, Honda, Maruti
Suzuki, Nissan, Renault and Tata than the experiential / symbolic benefits whereas
Fiat, Hyundai, Skoda, Toyota and Volkswagen were associated more with the
experiential/symbolic benefits as reported by their car buyers under study. It was
also noted that all the car brands except Tata under study were more associated with
the direct/indirect benefits than the surrogate attributes. Again, all the car brands
except Honda and Toyota were found more associated with the direct/indirect
benefits than the concrete/abstract attributes.

Based on the analysis, it can be inferred that the car manufacturing companies make
efforts in considering benefits more than attributes in positioning their brands.
However, eminent features are not compromised with the benefit positioning and
associated with the car brands to create a differentiated image in the mind of
consumers.

5.4.6 Hypotheses Testing

Table 5.22 shows the overall importance of attributes/benefits and the brand
associations as perceived by the car owners under study. The findings of the study
revealed that the respondents gave more importance to the direct/indirect

benefits ( X = 3.73, SD = 3.041) than the concrete/abstract attributes ( X = 3.52,

SD = 2.287) or the surrogate attributes ( X = 3.27, SD = 1.423).

Moreover, the direct (functional) benefits were considered most important ( X =

3.89, SD = 4.013) as compared to the indirect (experiential/symbolic) benefits ( X =

3.56, SD = 2.069), concrete ( X = 3.64, SD = 2.726), abstract ( X = 3.40, SD =

175
1.847) and surrogate ( X = 3.27, SD = 1.423) attributes (Table 5.22). Therefore, the
null hypotheses H5.1, H5.3 and H5.5 were rejected that the concrete attributes as
compared to abstract attributes, direct benefits as compared to indirect benefits and
the overall benefits (direct/indirect) as compared to the attributes

(concrete/abstract) associated with a car brand were given lesser importance by the

respondents. And, the null hypotheses H5.2 and H5.4 were accepted as attributes
(concrete/abstract) and benefits (direct/indirect) as compared to the surrogate

attributes were given lesser preference by the respondents.

5.5 Analyzing Car Buyers Brand Preference, Satisfaction and

Loyalty Intention
In the last section of the study, a set of fourteen questions (twelve items for top three
brands considered while purchasing a car, nine items for point-of-purchase service
quality, eleven items for design of the car, five items for engine performance, eight
items for comfort and functionality of the car, ten items for safety, seven items for
quality of the car, seven items for brand image, thirteen items for dealer/after-sale
service quality, five items for costs of ownership, two items for value for money,
three items for brand satisfaction, three items for brand loyalty, four items for
future preference of car and an open ended questions was to seek

suggestions for the car manufacturers, if any) was analyzed. Lastly, the respondents
were asked to comment upon and/or provide with suggestion if any for the
improvement in any of the questions/items/statements included the administered
questionnaire under study.

The objectives of this part of the study were to analyze the level of satisfaction among
the car owners on ten brand satisfaction facets under study and the effect of these
facets on the respondents brand satisfaction and loyalty intention.
Percentage, weighted mean scores and standard deviations were calculated for the
compact and midsize car owners. Inter-factor correlation was used to find the
relationship between the brand satisfaction facets. To study the differences between
the compact and midsize segment car owners level of satisfaction, t-test was applied.
To test the hypotheses, three multiple regression with forward selection were
applied on the brand satisfaction facets, overall brand satisfaction and
loyalty intention of the respondents.

176
Table 5.21: Comparing Means (Independent Sample t-test) of the Importance of Surrogate Car Brand Attributes with the Brand
Associations as Perceived by the Car Owners for their Present Vehicle

Brand Associations

Surrogate Importance Chevrolet Fiat Ford Honda Hyundai Maruti Nissan Renault Skoda Tata Toyota Volks-
Attributes (N=138) Suzuki wagen
(N=8) (N=12) (N=14) (N=7) (N=17) (N=12) (N=13) (N=8) (N=12) (N=13) (N=11) (N=11)

Mean 2.88 2.67 3.36 2.57 2.41 3.08 2.46 2.75 3.67 2.08 3.36 3.09
Pioneer 3.17 (Std. Div.) (0.926) (1.000) (1.381) (0.984) (1.342) (1.314) (1.053) (0.926) (1.000) (0.957) (1.886) (1.277)
status (1.349) t-Value -0.835 -1.609 0.491 -1.541 -2.173* -0.227 -2.262* -1.21 1.609 -3.769** 0.327 -0.199
(p) (0.425) (0.128) (0.629) (0.166) (0.041) (0.823) (0.038) (0.257) (0.128) (0.001) (0.749) (0.845)
Mean 3.00 2.5 3.07 2.86 3.29 4.00 2.54 2.25 2.92 3.08 3.09 2.73
The 3.43 (Std. Div.) (1.46) (0.91) (1.34) (1.40) (1.14) (1.24) (1.05) (1.55) (1.17) (0.32) (1.28) (1.11)
bestselling
(1.92) t-Value -0.795 -3.010** -0.916 -1.027 -0.435 1.445 -2.658* -2.059 -1.36 -1.884 -0.812 -1.878
car
(p) (0.448) (0.006) (0.371) (0.337) (0.666) (0.167) (0.020) (0.072) (0.191) (0.062) (0.430) (0.079)
Mean 3.00 2.33 3.43 2.57 2.94 2.42 2.54 2.38 3.42 2.31 3.18 2.82
High-tech 3.36 (Std. Div.) (1.195) (1.000) (1.550) (0.984) (1.388) (1.000) (1.053) (0.926) (2.045) (1.130) (1.719) (1.064)
appearance (1.619) t-Value -0.81 -3.219 0.16 -1.991 -1.154 -2.938 -2.539* -2.758* 0.099 -3.066 -0.335 -1.546
(p) (0.439) (0.005) (0.874) (0.082) (0.260) (0.009) (0.020) (0.020) (0.922) (0.007) (0.743) (0.144)
Mean 3.00 2.33 3.43 2.57 2.88 3.5 2.46 2.38 2.58 2.00 3.73 3.82
The family 3.1 (Std. Div.) (1.195) (1.000) (1.067) (0.984) (0.837) (1.388) (1.201) (0.926) (1.000) (1.041) (1.755) (2.105)
car (0.80) t-Value -0.233 -2.596* 1.125 -1.401 -1.027 0.984 -1.882 -2.153 -1.753 -3.708 1.18 1.128
(p) (0.821) (0.023) (0.278) (0.207) (0.316) (0.345) (0.082) (0.065) (0.104) (0.000) (0.264) (0.285)
Annotations: *p .05 (Asymp. Sig. (two-sided)); **p .01 (Asymp. Sig. (two-sided)); Mean = Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of respondents

177
Table 5.22: Overall Importance of Attributes/Benefits and the Brand Associations as Perceived by the Car Owners

Brand Associations
Attributes/ Importance Maruti
Features/ Chevrolet Fiat Ford Honda Hyundai Nissan Renault Skoda Tata Toyota Volkswagen
(N=138) Suzuki
Benefits
(N=8) (N=12) (N=14) (N=7) (N=17) (N=12) (N=13) (N=8) (N=12) (N=13) (N=11) (N=11)
Concrete Mean 3.64 3.03 2.81 3.29 3.29 3.27 3.41 3.33 3.03 3.17 2.69 3.25 3.18
(Std. Div.) (2.726) (1.230) (1.418) (1.913) (1.626) (1.867) (1.853) (1.908) (1.351) (1.380) (1.515) (1.682) (1.210)

Abstract Mean 3.4 2.69 2.27 2.95 3.47 3 3.12 2.98 2.88 3.16 2.44 3.66 3.48
(Std. Div.) (1.847) (1.096) (1.145) (1.349) (1.347) (1.406) (1.400) (1.231) (1.320) (1.496) (1.266) (1.450) (1.649)

Concrete / Total Mean 3.52 2.86 2.54 3.12 3.38 3.14 3.27 3.16 2.96 3.17 2.57 3.46 3.33
Abstract (Std. Div.) (2.287) (1.163) (1.282) (1.631) (1.487) (1.637) (1.627) (1.570) (1.336) (1.438) (1.391) (1.566) (1.430)
Direct Mean 3.89 3.32 2.88 3.34 3.36 3.25 3.5 3.43 3.13 3.25 3.08 3.39 3.34
(Functional) (Std. Div.) (4.013) (1.698) (1.386) (2.020) (1.784) (2.001) (2.310) (1.930) (1.513) (1.830) (1.159) (2.038) (1.977)
Indirect Mean 3.56 2.91 2.96 3.29 3.36 3.3 3.04 2.92 3.1 3.31 2.71 3.41 3.43
(Experiential/ (Std. Div.) (2.069) (1.216) (1.493) (1.580) (1.316) (1.642) (1.609) (1.344) (1.083) (1.703) (1.240) (1.751) (1.761)
Symbolic)
Direct / Total Mean 3.73 3.12 2.92 3.32 3.36 3.28 3.27 3.18 3.12 3.28 2.9 3.4 3.39
Indirect (Std. Div.) (3.041) (1.457) (1.440) (1.800) (1.550) (1.822) (1.960) (1.637) (1.298) (1.767) (1.200) (1.895) (1.869)
Surrogate Mean 3.27 2.97 2.46 3.32 2.64 2.88 3.25 2.5 2.44 3.15 2.37 3.34 3.12
(Std. Div.) (1.423) (1.194) (0.976) (1.334) (1.089) (1.177) (1.236) (1.090) (1.083) (1.303) (0.861) (1.659) (1.389)

Annotations: *p .05 (Asymp. Sig. (two-sided)); **p .01 (Asymp. Sig. (two-sided)); Mean = Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of respondents

178
5.5.1 Brand Preference from Customer Perspective

The respondents were asked to indicate the top three brands' which they considered
while purchasing their present car. The ranking as shown in the Table 5.23 depicts that
among the top three car brands in the respondents considerations, Maruti
Suzuki was found number one, followed by Hyundai and Tata. Surprisingly, Fiat and
Toyota were found at the sixth position before the car brands like Volkswagen, Skoda,
and Chevrolet etc. in the respondents considerations.

Table 5.23: Top Three Brands Considered by the Respondents while Purchasing
a Car

Sr. No. Brand Name Brand Preference

(N=138) Percentage
1 Maruti Suzuki 115 83.33
2 Hyundai 61 44.2
3 Tata 48 34.78
4 Honda 30 21.74
5 Ford 27 19.57
6 FIAT 21 15.22
7 Toyota 21 15.22
8 Volkswagen 20 14.49
9 SKODA 19 13.77
10 Chevrolet 18 13.04
11 Nissan 18 13.04
12 Renault 16 11.59
Annotation: N = Number of respondents

5.5.2 Perceived Level of Brand Satisfaction

Regarding the satisfaction about the car brand as shown in Table 5.24, it seems all the
respondents have the pride to car brand owned as all the respondents on all the brand
satisfaction facets were found satisfied. However, the respondents indicated
Volkswagen, Hyundai, Toyota, Ford and Honda as the top five car brands in terms of
satisfaction about the service quality at the point of purchase. Hyundai, Honda, Ford
and Renault car brand owners were highly satisfied about the design of their vehicle.
The engine performance, brand image, after-sale service quality, costs of
ownership and value for money of Maruti Suzuki were placed at the top in terms of
the respondents satisfaction as compared to the other car brands which confirms
reason for this as the most preferred car brand.

179
However, the comfort and functionality of Honda and quality of Toyota cars were
recognized at the top in terms of the respondents satisfaction. The Fiat car
owners could not establish a good level of satisfaction about the quality of the
car and value for money parameters. Similarly, quality of Tata car brand did
not provide the high level of satisfaction as indicated by the Tata car owners.
As compared to Maruti Suzuki, Hyundai car owners were found more satisfied in
terms of point-of-purchase service quality, design of the car, comfort and
functionality, safety, and quality of the car which supports Hyundai to be the
secondly preferred car brand in India. Similarly, design of the car, engine
performance, after-sale service quality, costs of ownership and value for money
are the top five reasons which increase customer satisfaction of Tata car owners and
the reason to stand at the third position as indicated by the respondents.
5.5.2.1 Test of Significance on the Difference of Means of Car Buyers Perceived
Level of Brand Satisfaction
All the brand satisfaction facets considered under study were analyzed using t-test as
shown in Table 5.25. Overall, based on these customer satisfaction attributes about
car owners present car brands, the result of the t-test indicated no significant
differences in satisfaction of compact and midsize segment car owners except,
safety and quality of a car brand.

Table 5.25 indicates the significant differences in the brand satisfaction of the
customers between compact and midsize segment car. The satisfaction about safety
features was higher in midsize segment car owners (t-value = -2.251, p .05) as their
mean score was higher ( X = 4.18, SD = 3.217) in comparison to the mean score of
compact size car owners, which is X = 3.17, SD = 1.823. There is significant
difference in the level of satisfaction about the quality of the car in compact and
midsize segment car buyers with the calculated value (t-value = -2.208, p .05) which
shows that this dimension is expressed again more in midsize segment car owners
with X = 3.89, SD = 3.018 in comparison to that of compact size car owners with the
mean score as X = 2.92, SD = 2.011.

180
Table 5.24: Mean Scores and Standard Deviations of Brand Satisfaction Facets as Perceived by the Car Owners

Brand Satisfaction
Brand Satisfaction Facets Chevrolet Fiat Ford Honda Hyundai Maruti Nissan Renault Skoda Tata Toyota Volkswagen
Suzuki
(N=8) (N=12) (N=14) (N=7) (N=17) (N=12) (N=13) (N=8) (N=12) (N=13) (N=11) (N=11)
POP service quality Mean 3.5 3.12 3.71 3.67 3.83 3.56 3.42 3.41 3.19 3.2 3.71 3.86
(Std. Div.) (2.009) (2.191) (2.625) (2.924) (2.106) (2.828) (2.068) (1.897) (1.927) (2.564) (2.969) (3.117)
Design of the car Mean 3.63 3.76 4.02 4.09 4.14 3.62 3.47 4.01 3.77 3.27 3.76 3.95
(Std. Div.) (2.162) (1.977) (2.011) (2.385) (3.056) (2.627) (1.869) (2.166) (2.829) (1.984) (2.183) (2.977)
Engine performance Mean 3.21 3.33 3.81 3.9 3.72 3.97 3.82 3.47 3.61 3.49 3.72 3.63
(Std. Div.) (2.001) (2.419) (2.922) (2.641) (2.942) (3.109) (2.929) (1.988) (2.642) (2.617) (2.828) (2.897)
Car comfort and functionality Mean 3.41 3.26 3.56 3.82 3.49 3.34 3.69 3.43 3.62 3.16 3.59 3.81
(Std. Div.) (1.659) (1.488) (2.427) (2.977) (2.815) (2.101) (2.892) (2.342) (2.168) (1.894) (2.659) (2.432)
Safety Mean 3.79 3.62 3.82 3.68 3.73 3.59 3.67 3.72 3.83 3.12 3.71 3.62
(Std. Div.) (2.857) (2.661) (2.973) (2.273) (2.828) (2.322) (2.386) (2.115) (2.193) (1.999) (2.564) (2.827)
Quality of the car Mean 3.01 2.97 3.32 3.72 3.44 3.38 3.61 3.26 3.56 2.86 3.82 3.72
(Std. Div.) (2.857) (2.661) (2.973) (2.273) (2.828) (2.322) (2.386) (2.115) (2.193) (1.999) (2.564) (2.827)
Brand image Mean 3.53 3.07 3.69 3.76 3.62 3.81 3.52 3.09 3.72 3.12 3.79 3.56
(Std. Div.) (2.896) (1.437) (2.099) (2.198) (2.684) (2.757) (2.016) (1.753) (2.568) (2.122) (2.896) (1.988)
Dealer/after-sale service quality Mean 3.51 3.16 3.36 3.42 3.67 3.72 3.57 3.23 3.38 3.59 3.62 3.64
(Std. Div.) (2.469) (1.824) (1.868) (2.094) (2.886) (2.982) (2.622) (1.743) (2.725) (2.549) (2.423) (2.248)
Costs of ownership Mean 3.72 3.6 3.56 3.34 3.47 4.02 3.11 3.52 3.06 3.61 3.82 3.39
(Std. Div.) (2.682) (2.138) (2.902) (2.169) (2.120) (3.016) (2.340) (2.927) (1.955) (2.628) (2.991) (2.032)
Value for money Mean 3.41 2.82 3.65 3.51 3.43 4.01 3.69 3.06 3.19 3.89 3.64 3.27
(Std. Div.) (2.533) (1.859) (2.711) (2.340) (2.531) (3.629) (2.626) (2.042) (2.323) (3.016) (2.872) (2.617)
Annotations: Mean = Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of respondents

181
Table 5.25: Comparing Means of Brand Satisfaction Facets between Compact
and Midsize Segment Car Owners

Car owners Compact car Midsize car p

Sr. Brand Satisfaction (N=138) owners (N=71) owners (N=67) t-value value
No. Facets (two-
Mean Std. Mean Std. Mean Std.
Div. Div. Div. tailed)
1 POP service quality 3.52 2.435 3.65 2.987 3.38 1.850 0.642 0.522
2 Design of the car 3.79 2.352 3.57 2.138 4.02 2.579 -1.112 0.268
3 Engine performance 3.64 2.661 3.41 2.009 3.88 3.352 -0.991 0.323
4 Car comfort and 3.52 2.321 3.29 1.972 3.76 2.691 -1.164 0.246
functionality
5 Safety 3.66 2.500 3.17 1.823 4.18 3.217 -2.251 0.026*
6 Quality of the car 3.39 2.500 2.92 2.011 3.89 3.018 -2.208 0.029*
7 Brand image 3.52 2.285 3.22 1.766 3.84 2.835 -1.531 0.128
8 Dealer/after-sale 3.49 2.369 3.38 2.191 3.61 2.558 -0.565 0.572
service quality
9 Costs of ownership 3.52 2.492 3.83 3.103 3.19 1.845 1.482 0.141
10 Value for money 3.46 2.592 3.73 2.966 3.17 2.196 1.265 0.208
Annotations: *p .05; Mean = Weighted Mean Score; Std. Div. = Standard Deviation; N = Number of
respondents

Similarly, design of the car, engine performance, comfort and functionality,

brand image and after-sale service was considered more by the midsize segment
car owners as compared to their compact size counterparts in terms of their level of
satisfaction. Whereas, satisfaction about the point-of-purchase service quality,
costs of ownership and value for money of the car brand was found more in
compact size car owners as compared to their midsize car counterparts (Table 5.25).
However, the study could not establish any significant difference on these brand
satisfaction facets between the compact and midsize segment car owners with 95 per
cent confidence level and at significance level of 0.05.

5.5.2.2 Correlation Analysis

The purpose of this part of the study is to describe the results from the correlation
analysis of the brand satisfaction facets. Table 5.26 shows the correlations among
the factors for the entire sample (N=138). The level of significance for each
correlation was p 0.05 or p 0.01. The results showed that all the facets have a
positive relationship to each other. The significant correlation coefficients ranged
from 0.184 to 0.472.

182
Table 5.26: Inter-Factor Correlations, Means and Standard Deviations among
Brand Satisfaction Facets (N=138)
Sr. Brand
satisfaction 1 2 3 4 5 6 7 8 9 10
No.
facets
1 POP service r 1
quality (S)
2 Design of the r NS 1
car (S)
3 Engine r NS NS 1
performance (S)
Car comfort r
4 and NS NS NS 1
functionality (S)

5 Safety r NS NS NS NS 1
(S)
6 Quality of the r NS NS NS 0.186* NS 1
car (S) (0.029)
7 Brand image r 0.184* 0.472** NS NS NS 0.267** 1
(S) (0.031) (0.000) (0.001)
Dealer/ after- r
8 sale service NS NS NS NS NS NS NS 1
quality (S)

9 Costs of r NS NS NS NS NS NS NS 0.187* 1
ownership (S) (0.028)
10 Value for r NS NS NS NS NS 0.422** 0.229** NS 0.193* 1
money (S) 0.000 (0.007) (0.023)
Annotations: *p .05; **p .01; r=Value of correlation coefficient; S=Significance; Mean = Weighted
Mean Score; Std. Div. = Standard Deviation; and N = Number of respondents

Table 5.26 shows that the comfort and functionality has a significant relationship with
the quality of the car (r = 0.186, S = 0.029, p .05). It was also noticed that the point-
of-purchase service quality (r = 0.184, S = 0.031, p .05), design of the car (r = 0.472, S
= 0.000, p .01) and quality of the car (r = 0.267, S = 0.001, p .01) establish the image
of the car brand in the mind of the customers. Similarly, after-sale service quality has a
positive significant relationship with the costs of ownership. Further, the study noticed
that quality of the car (r = 0.422, S = 0.000, p
.01), brand image (r = 0.229, S = 0.007, p .01) and the costs of ownership (r =
0.193, S = 0.023, p .05) have a significant relationship with the value for money

parameter which indicates that these three factors play important role in deciding
whether any of the car brands is considered value for money or not by the car owners
under study.

183
5.5.2.3 Multiple Regression Results Overall Brand Satisfaction and Loyalty
Intention

Multiple regression analysis with forward selection was employed to predict car
owners' brand satisfaction and loyalty from the ten brand satisfaction facets. Three
distinct multiple regression models were run to test the three hypotheses: one for car
owners' overall brand satisfaction, one for car owners' loyalty intention (Table 5.27)
and one for car owners' loyalty intention with overall brand satisfaction (Table 5.28).

Table 5.27 shows results of the multiple regressions with car owners' overall brand
satisfaction as the dependent variable and brand satisfaction facets, as the
independent variables. The overall model is significant at p < 0.05. The model
revealed a significant impact of four out of ten brand satisfaction facets (quality of
the car, brand image, costs of ownership and value for money) entered in the
model. More specifically, quality of the car, brand image, costs of ownership
2
and value for money accounted for 32.4 percentage (R = 0.324) of car owners'
overall brand satisfaction variance, F (4, 138) = 6.087, partially rejecting the null
hypothesis H6.1 that the ten brand satisfaction facets under study have no effect on car
owners' overall brand satisfaction. Conversely, point-of-purchase service quality,
design of the car ', engine performance, car comfort and functionality,
safety and dealer/after-sale service quality failed to show any significant
relationship with car owners' overall brand satisfaction.

Results of the second multiple regressions are also shown in table 5.27. The
dependent variable was car owners' loyalty intention and the ten brand satisfaction
facets were independent variables. Like the first test, the overall model is significant at
p < 0.05. Multiple regression analysis bearing on respondents' future car purchase
intention revealed that point-of-purchase service quality, dealer/after-sale service
quality and costs of ownership predicted 14.6 percentage (R2 = 0.146) of brand
loyalty variability, F (3, 138) = 2.171, partially rejecting the null hypothesis H6.2 that the
ten brand satisfaction facets under study have no effect on car owners' loyalty
intention. However, design of the car, engine performance, car comfort and
functionality, safety, quality of the car, brand image and value for money
showed no relationships.

184
Table 5.27: Regression Analysis of Brand Satisfaction Facets on Car Owners
Overall Brand Satisfaction and Loyalty Intention

Car owners overall Car owners brand

Predictors brand satisfaction loyalty intention
(N=138) (N=138)
R R
Brand satisfaction facets 0.569 0.382
POP service quality NS 0.291*
Design of the car NS NS
Engine performance NS NS
Car comfort and functionality NS NS
Safety NS NS
Quality of the car 0.279* NS
Brand image 0.314* NS
Dealer/after-sale service quality NS 0.168*
Costs of ownership 0.266* 0.243*
Value for money 0.421* NS
2 0.324 0.146
R
2 0.271 0.079
Adjusted R
Overall model: F ratio 6.087 2.171

Annotations: The dependent variables are car owners overall brand satisfaction and brand loyalty
intention; and *p .05

Table 5.28 shows results of the multiple regressions with car owners' brand
loyalty intention as the dependent variable and car owners' overall brand
satisfaction, as the independent variables. The overall model is again
significant at p < 0.05. The model revealed a significant impact of overall brand
satisfaction, entered in the model. More specifically, overall brand satisfaction
accounted for 3.9 percentage (R2 = 0.039) of car owners' brand loyalty variance,
F (1, 138) = 5.519, rejecting the null hypothesis H6.3 that the overall brand
satisfaction have no effect on car owners' brand loyalty intention.

Table 5.28: Regression Analysis of Car Owners Overall Brand Satisfaction on

Car Owners Brand Loyalty Intention

Car owners brand loyalty

Predictor intention (N=138)
R
Car owners overall brand satisfaction 0.197 0.327*
0.039
R2
Adjusted R
2 0.032
Overall model: F ratio 5.519
Annotations: The dependent variable is car owners brand loyalty intention; and *p .05

185
5.5.2.4 Customers Perception about Future Car Purchase

Table 5.29: Compact and Midsize Segment Car Owners Perception about a New
Car Purchase (Brand Loyalty)
Sr. Customer Perception (Brand Compact car Midsize car Car owners
owners (N=71) owners (N=67) (N=138)
No. Loyalty)
N % N % N %
1 Same segment, same manufacturer 13 9.42 16 11.59 29 21.01
2 Same segment, different 18 13.04 15 10.87 33 23.91
manufacturer
3 Upper segment, same manufacturer 17 12.32 16 11.59 33 23.91
4 Upper segment, different 23 16.67 20 14.49 43 31.16
manufacturer
Annotations: N = Number of respondents; % = Percentage

The analysis shows that most of the respondents when moving to upper segment
prefer a different manufacturer. And the next striking finding is that the customers
prefer both same and different manufacturers in the compact segment and there is not
much difference in the midsize segment also. This behavior is complex to understand
as these are the customers who have given whopping response for recommending
their car to their friends and relatives. It is the reason why brand perception is so
difficult to understand.

To sum up the major observations from the analysis of the data, focusing on the
aspects including demographic profile; general aspects of purchase decision making;
buyer behavior stimuli; marketing stimuli; brand perception; and customer
satisfaction and loyalty it may be inferred that there exist a significant relationship of
disposable income, family needs and family size with the car purchase decision; that
some of the demographic factors influence the payment decision of the car buyers and
the choice of fuel variant while making the purchase; that behavior of the car buyers
is somehow affected by social and cultural factors and is significantly influenced by
Psychological factors and Information sources; that task/outcome referent attributes of
a car brand are given more preference than user/surrogate referents by the consumers;
and that concrete attributes and direct benefits are given more preference when it
comes to marketing stimuli.

186
 CHAPTER - VI
SUMMARY OF FINDINGS,
RECOMMENDATIONS

AND

FUTURE RESEARCH
AVENUES
Based on the review of the extant literature and findings of the study, it has been
unanimously recognized that the Automotive Industry is globally one of the largest
industries and a key sector of the economy. Owing to its deep forward and backward
linkages, it has a strong multiplier effect and acts as one of the important drivers of
economic growth, with the gradual liberalization of the automotive sector in India
since 1991, the number of manufacturing facilities has grown progressively. It
produces a wide variety of vehicles: passenger cars, light, medium and heavy
commercial vehicles, multi-utility vehicles such as jeeps, two wheelers such as
scooters, motor-cycles and mopeds, three wheelers, tractors and other agricultural
equipment etc.

Majority of the research examining the automotive business environment has found
that automobile industry is contributing significantly and playing an important role in
the economic development. The sector has shown tremendous growth post
liberalization and economic reforms specifically in case of India. The reforms and
globalization has affected the areas of production, domestic market demands and
exports in a very positive manner.

Indian Automobile Industry has flourished like never before in the recent years. This
extraordinary growth that the Indian automobile industry has witnessed is a result of a
major factor namely, the improvement in the living standard of the middle class and
an increase in their disposable incomes. Moreover, the liberalization steps, such as,
relaxation of the foreign exchange and equity regulations, reduction of tariffs on
imports, and refining the banking policies initiated by the Government of India, have
played an equally important role in bringing the Indian automobile industry to great
heights.

At present India is poised with steady economic growth and favorable demographic
profile. The demand scenario from smaller towns and rural areas is promising, the
finances are available at competitive rates and Car manufacturers are looking forward
to India as a Global Production hub which provides the Indian automobile sector a
boost on the global arena despite the limitations on the aspects relating to the
infrastructure and legal restrictions. The increased demand for automobiles in India
has resulted in a large number of multinational auto companies, especially from
Japan, the U.S.A., and Europe, entering the Indian market. Also, the
institutionalization of automobile finance has further paved the way to sustain a long
term high growth for the industry. The other reasons attracting global auto
manufacturers to India are the country's large middle class population, growing
earning power, strong technological capability and availability of trained manpower at
competitive prices.

The Future Growth Drivers are like higher GDP Growth, India's huge geographic
spread - mass transport system, increasing road development, increasing disposable
income with the service sector, cheaper (declining interest rates) and easier finance
schemes, replacement of aging four wheelers, graduating from two wheelers to four
wheelers, increasing dispensable income of rural agricultural sector, growing concept
of second vehicle in urban areas.

SECTION A: SUMMARY OF FINDINGS

The extant literature reveals that as such no prior research was conducted into the
relationship of post-economic liberalization scenario of Indian automobile industry
and the marketing strategies of car manufacturers to demonstrate the extent to which
the existing marketing strategies affect the consumer preferences, satisfaction and
loyalty intention with the growth and increased competition in this sector. On the
whole, the present study considered two dimensions of automobile industry in relation
to car manufacturers, namely, post liberalization scenario of automobile industry and
existing marketing strategies of the car manufacturers in India. The findings of the
study are as follows.

6.1. Post Liberalization Scenario of Automobile Industry

India assisted by its economic advancement, liberalization policy, entry of foreign
markets and massive marketing strategies by car manufacturers and auto finance
companies is experiencing fast growth of domestic and foreign car manufacturers
producing and selling many new car models during the recent past. Due to a wide
range of makes and models, people make choices based on their preferences and
needs when choosing which car to buy.

Indians have emerged as avid car enthusiasts sporting their prized possessions as
status symbols. Foreign car manufacturers have discovered the Indian consumer as
well as the R & D potential in the Indian technical fraternity and are setting up

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manufacturing plants right and left across the country seeking cost advantages. The
Indian automobile industry is currently experiencing an unprecedented boom in
demand for all car segments, compact and midsize in particular. This boom has been
triggered primarily by increase in disposable incomes and standards of living of
middle class Indian families; and the Indian government's liberalization measures such
as relaxation of the foreign exchange and equity regulations, reduction of tariffs on
imports, and banking liberalization has fueled financing-driven purchases.

Presently, among the car manufacturers in the Indian car industry, most are
multinational companies, who entered after the Indian economy opened up; Maruti
Suzuki is one of the few Indian manufacturers on the scene. It occupies approximately
half of the market share in the compact and midsized segment cars and is maintaining
its share despite the stiff competition from manufacturers like Hyundai and Tata
Motors, occupies over one fifth of the market share in the compact and midsized car
segment. The Indian car industry is dominated by Korean and Japanese automakers.
Western carmakers such as Ford and General Motors have not been as successful as
their Asian counterparts like Hyundai and Suzuki in the Indian market. After
understanding the Indian market and its consumers, General Motors entered in the
small car market. BMW and Volkswagen are scouting for locations in India to set-up
manufacturing facilities. The Indian car industry is still in the growth and evolution
stage and is depending on the domestic and regional market.

The study predicts high growth in car sales in the coming years, and as the market
grows and customer's purchasing abilities rise, there will be greater demand for
higher-end models which currently constitute only a tiny fraction of the market. These
trends have been encouraging and provide impetus for many multinational car
manufacturers from Japan, U. S. A., and Europe to enter the Indian market.

A situational/scenario analysis (SWOT analysis, Porters Five Forces industry

analysis and PEST analysis) was used to get an understanding of the overall scenario
of the Indian automobile industry in the post-economic liberalization era.

6.1.1 SWOT Analysis

On the basis of the SWOT analysis of the Indian Car Industry in the post liberalization
era focusing on both the internal and external factors, the study finds that development
on the internal front with Investment by Foreign Car Manufacturers;

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Increase in Passenger Vehicle Exports; Low Cost and Cheap Labor; Rising Middle
Class and Disposable Income Levels and Expertise as a Small Car Hub, makes Indian
Car Industry a strong player as against a few weaker aspects including Low Labor
Productivity; Production Costs and Regulatory Environment as compared to other
Asian countries; Localization and the Quality of Production and Poor Infrastructure.
Whereas, on the external front it faces a few threats including present Economic
Slowdown; Unskilled Labor; Diminishing Export Markets and Saturating Domestic
Urban Markets, but the future looks optimistic with positive Government Reforms,
Low Car Penetration Levels, Niche Rural Markets and Changing Demographics and
Differentiation Acceptability as inviting opportunities. Overall with strong internal
factors and sanguine prospects, the overall industry expresses a favorable environment
scenario.

6.1.2 Porters Five Forces Industry Analysis

The overall attractiveness of the Indian car industry in the present scenario with
moderate threat from new entrants; reasonably low bargaining power of suppliers;
significantly high bargaining power of buyers; ominous threat from substitutes; and
high intensity of rivalry; may be rated as moderate. Though, with the projections
pertaining to the expected growth rate in the coming years and potential in the niche
Indian rural market the axis of the attractiveness would fall on the higher side.

6.1.3 PEST Analysis

The structural transformation of the Indian industry over the last two decades, coupled
with a number of factors including intense competition, demanding consumer
preferences, tightening emission standards, and the global strategies of the various
players, has led to significant change in the industry. This has allowed the car
manufacturers to meet the challenges of the market as well as public policy
imperatives driven by environmental and other concerns. Though, in the process, the
car manufacturers have also significantly developed their capabilities, especially in
Marketing, Research and development and Manufacturing. But, the instable political
environment, volatile economic scenario, changing social demographics and
increasing sophistication and complexity in the technological environment along with
a strong and tight competition will keep on challenging for the car manufacturers to
continuously innovate in their strategic aspects in order to survive. The study further

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deduced on the basis of PEST Analysis that the macro-environmental aspects
pertaining to political and social factors are favorable and full of opportunities on one
hand, whereas, a volatile economic situation along with challenging technological
environment on the other hand proffer a significantly uncertain state of affairs for the
car manufacturers in Indian industry.

Overall, the Indian automobile industry is growing in all respects and it is also serving
as an important source of employment. Innovation and new product launches are a
major factor driving growth in sales of cars. A wide distribution and service station
network is a key to growth in India. The automobile sector is expected to witness
strong growth and improve its share in global markets too. The time ahead for Indian
automobile sector and the competent players in the markets is expected to be full of
opportunities and a tough competition and the choice of marketing and overall
business strategies of the vehicle manufacturers is going to play a very vital role in
creating the competitive advantage in the Indian market.

6.2 Marketing Strategies of Car Manufacturers

The twentieth century has borne witness to remarkable changes in the marketplace
caused by sharp changes in the buying behavior patterns of the past and present day
car buyers due to globalization. Time tested concepts of marketing are being turned
down as they fail to measure the behavior of new generation customers. Their
behavior is characterized by the distinctiveness of individual expectations, preference
for multiple options, tendency to abandon brand loyalty and switch to competitor
brands that provide higher perceived value. The new generation consumers are
difficult to classify by conventional demographic factors and unless their thought
process and buying behavior preferences are fully understood, developing marketing
strategies on product designs, product variants, pricing, branding, distribution
channels and promotion are likely to be mislaid.

Consequently, the study was conducted to determine the effectiveness of marketing

strategies being adopted by 12 car manufacturing companies over the data construed
from a set of 138 car owners who had brought the choicest brand, by analyzing
influence of these strategies in terms of brand preference, satisfaction and loyalty
intention in NCR-Delhi. All of these companies are producing hatchback and
sedan in the compact and midsize apart from other car size segments, providing both

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the petrol as well as diesel fuel variants (except Honda Brio which is available in
petrol only) and have the largest market share among the car companies operative in
India.

There are certain significant factors/features/sources which influenced the car owners
before their decision making about the present car brands. So the car manufacturing
companies have to analyze all these factors to find out the best suitable strategies for
promoting their cars in India.

6.2.1 Car Buyers Buying Behavior and Brand Preference

The study finds that hatchback/compact sized car owners group comprised of the
larger proportion of the sampled respondents who were either women or in age group
below 35 years or income level below 7 lakhs or graduation/diploma or below
degree holders or supervisors or employees or retired people whereas men or married
people or in the age group of 35 to 45 years or income level above 7 lakhs or post-
graduation or above degree holders or CEOs were the other group whose larger
proportion had the sedan/midsized segment cars.

6.2.2 Process of Purchase and Brand Choice

Customers participation in the car purchase and brand choice process was found
very high. Most of the car buyers firstly, took purchase decision about their new car
followed by making initial choices, visiting dealers and finally deciding on the
manufacturer and model of the car.

BUYER BEHAVIOR STIMULI

6.2.3 Reasons/ Motives for Buying a Car
Increase in disposable income followed by growing family needs like working
partners, increasing family size and the road infrastructure were reported the
reasons/motives of buying a car by the sampled car owners.

6.2.4 Payment Method Preferences towards Respondents Demographic

Characteristics

An examination of the payment preference of consumers revealed that more than 75 per
cent of the sampled car buyers used equated monthly installment (EMI) while purchasing
their cars. The study also finds that occupation and the level of income
of the car buyers demographics influenced their payment method preference. Those

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having family income level below 7 lakhs, employees and self-employed had a
high preference for EMI in their car buying.

6.2.5 Car Fuel Preferences towards Respondents Demographic

Characteristics

The examination of selection of car fuel variant by the car owners finds most of the
respondents (108 out of 138) having cars with diesel as fuel variants. None of the
sampled respondents was using electric car in NCR-Delhi. The study also finds that a
higher proportion of the car owners belonging to business community followed by
employees were preferring diesel cars. Retired people had an inclination towards
petrol cars.

6.2.6 Buyers Role in the Car Purchase Decision

Regarding the car buyers role in purchase decision, the study finds that 22.46 per
cent of the respondents were the sole decision makers whereas approximately half of
the total respondents who were either male or married played the decisive role. There
were 7.25 per cent respondents who confirmed that purchase decision about their
present cars was taken by others, out of which 4 were female respondents.

6.2.7 Factors/Sources Influencing Car Buyers Purchase Behavior

Social, cultural, psychological factors and information sources were presented to find
the factors/sources which influenced the car purchase behavior of the sampled
respondents.

Among social factors influencing the car buying and brand choice decisions, family
had the strongest impact and social status and reference groups were found
affecting in the second and third priorities. The results did not show any significant
relationship between other members of family and relatives and neighbors of
reference groups with the car purchase behavior.

The cultural factors (color, shape and size of the car) found influencing the consumer
purchase preference. Color was considered most important followed by shape and size
of the car. Design of the car and decision of head of family could not establish
significant relationship with the car purchase behavior.

All the psychological factors (manufacturers/brand image, model, ways the dealers
sell the car, class of the car, type/form of the car and the previous experiences of the

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buyers with that car brand) had significant relationship with the car purchase behavior.
Car manufacturers/brand image was considered most important, followed
by model and ways the dealers sell the car.

The study finds that people still use a lot of traditional ways to get information, such
as sales staff of the dealer, advertisements on TV, radio or newspapers, brochures and
car magazines. On the other hand, with the rapid development of information
technology, Internet has become one part of peoples daily life. Many people start to seek

information by using websites. Car manufacturers website has surpassed a lot of

traditional ways to get second position for the information seeking. All the
information sources had significant relationship with the car purchase behavior.

The study also finds that social status in social context, ways to purchase, car class,
car type/form, and previous experience with the brand in psychological context and
car manufacturers websites and reviews of existing customers on internet as the
information sources have more influence on the purchase behavior of

midsized car buyers in comparison to compact size car buyers.

6.2.8 Perceived Risks in the Purchase Decision of Car Owners Present
Car Brand

The study assessed the degree of risk that consumers perceive and the factors that
contribute to minimize the perceived risks. On the basis of factor correlations, it was
inferred that factors like sales executives, word of mouth, and advertisements do
have a major, and test drive, brand preference from childhood, availability of
service stations, manufacturer's country of origin and free service/price
reduction/insurance had a moderate impact on the decision process and also served to
minimize the perceived risk factors.

The results of the study show that word of mouth decreases the social and time
risks, the role of sales executive helps to reduce physical, functional, financial,
social and psychological risks, and advertisement is found effective in reducing
the social risk and time risk component of perceived risk. Brand preference form
childhood and country of origin have an effect on reducing the financial risk
proving that customers are willing to pay a higher premium for a recognized brand.
Whereas, availability of companys authorized sales/service stations and schemes

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like extended free service/price reduction/insurance also contribute in decreasing
functional risk.

6.2.9 Country of Origin Effect on Car Purchase Decision

The study finds foreign brands superior and buyers are ready to pay more to purchase a
foreign car brand because of its better quality and performance and the car
manufacturers country image. The study revealed no significant relationship between
the domestic car brands and purchase decision based on buyers patriotism.

6.3 Marketing Strategies and Their Influence on Car Buyers Brand

Preferences
MARKETING STIMULI
Having described the buyer behavior stimuli, next part of the study was to identify
marketing stimuli, which are important for the buyers when deciding about the car
purchase.

6.3.1 Importance of Product Related Attributes in the Car Brand

Preference

The results indicate exterior design, advancing technology, engine power, and
interior features as product referents, safety, value for money, ride quality,
interior comfort, fuel economy, performance and resale value of the car as task
or outcome referents and prestige due to car ownership, the bestselling car, high-
tech appearance and premium car with best quality as surrogate referents are the
significantly important attributes towards the brand preference of the car buyers.
Moreover, the study finds that task/outcome referent attributes of a car brand are
given more preference than user/surrogate referent or product referent attributes
by the car buyers.
6.3.2 Importance of Customer Service Related Attributes (Additional
Services) in the Car Brand Preference

The study finds only the information regarding repairing and maintenance services
significantly important as provided by the car manufacturers/dealers among the
customer service related (additional services) attributes towards the car brand
preference.

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6.3.3 Importance of Price/Cost Related Attributes in the Car Brand
Preference

The results indicate only the initial price or costs to buy a car significantly important
towards the brand preference in the price related attributes.

6.3.4 Importance of Place/Availability Related Attributes in the Car Brand

Preference

Regarding the place / availability related attributes in the car brand preference,
service and waiting time post booking from dealers/companies were found most
important and significant factors in the preference of a car brand.

6.3.5 Importance of Promotion Related Attributes in the Car Brand

Preference

The study finds that advertising image, schemes and discounts, low financing
rates are the three most important attributes, whereas cash rebates, festive season
offer, campaigns/exchange melas/car shows (Auto-Expo etc.) and test drive are
moderately important promotion related attributes in the preference of a car brand.

6.3.6 Importance of Post Purchase Related Attributes in the Car Brand

Preference

Among the six post purchase related attributes, after-sale maintenance cost and
availability of the service network were noted the two significant and most important
attributes towards the brand preference of a car.

OTHER MARKETING STIMULI

Two of the marketing stimuli electronic marketing and customer relationship

management were also included along with the marketing mix stimuli to find the
important integrated marketing attributes and their influence on the brand preference
behavior of compact and midsized segment car buyers.

6.3.7 Importance of Electronic Marketing Related Attributes in the Car

Brand Preference

The study finds website use for searching car model specifications, comparing price
and features of competitors, comparing finance options and the use of online

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forums/virtual brand communities for consumers reviews and experiences
significantly important while making choice of a car brand.

6.3.8 Importance of Customer Relationship Management in the Car Brand

Preference

Towards customer relationship management, car buyers expect immediate delivery of

car on payment, excellent network in purchasing car, excellent network in
accessing spare parts, and excellent network in getting their cars serviced.
Moreover, customers feedback regarding dealer service, presale service, after-
sales service, complaints etc. have also been viewed important by the respondents
whereas the 24 Hour On-Road Service provided by car manufacturers, in case
customer's car breaks down anywhere was perceived least important.

Table 6.1: Integrated Marketing Attributes as Perceived Significantly Important

by the Car Buyers in Influencing Brand Preference

Rank Integrated Marketing Attributes

1 Safety
2 Price quality inference/Value for money
3 Ride Quality on highway
4 After-sale maintenance cost
5 Looks of the car/Exterior design/Exterior styling/Attention getting
6 Availability of the service network
7 Interior comfort
8 Initial price of the car/Cost to buy
9 Fuel efficiency/Fuel economy
10 Information regarding repairing and maintenance services
11 Performance
Status conferred on you by ownership of car/Prestige due to car ownership/Gives you
12
respect
13 Advancing Technology
14 Superior service
15 Engine power
16 Customer relationship management
17 Promotion
18 Electronic marketing
19 The bestselling car
20 Interior features
21 High-tech appearance
22 Delivery time (post order placing)
23 Representative of premium car with best quality
24 Resale value

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6.3.9 Integrated Marketing Attributes Influencing Car Buyers Brand
Preference

Based on previous part of the study, a set of 24 factors/attributes belonging to the

product, price, place, promotion, post-purchase, electronic marketing and customer
relationship management related attributes found significant in influencing brand
preference of compact and midsized segment car buyers was noted as integrated
marketing attributes as presented in Table 6.1.

Overall, the study finds no significant differences in influencing the preference of

compact and midsized segment car buyers except, comfort, engine power,
electronic marketing, high-tech appearance and resale value of a car brand. The
disposition of considering interior comfort, engine power, electronic marketing
websites and high-tech appearance of the car was found higher in midsized segment
car buyers as compared to their compact sized counterparts. The compact sized car
buyers were found more concerned about the resale value of the car as compared to
the midsized segment car buyers.

6.4 Brand Associations from Customer Perspective

PERCEIVED BRAND POSITIONING
The study investigated how the car owners associated their present car brands with a
positioning base comprising of a set of three dimensions attribute positioning
(consisting of concrete and abstract attributes), benefit positioning (consisting of
direct and indirect benefits) and surrogate positioning (consisting of multiple
alternative bases).

6.4.1 Concrete and Abstract Attribute Positioning

Regarding the concrete attributes, the study found that Toyota followed by Nissan and
Skoda were the top three brands with advancing technology whereas Tata, Fiat and
Hyundai were found lacking the technological leadership. Toyota was perceived most
creative and innovative car brand and opposite to it, Fiat was not found significantly
associated with creativity and innovation. All the car brands were associated with
satisfactory engine power which indicates that all the car manufacturers understand
the importance of the engine power in a vehicle. The study could not found Toyota,

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Volkswagen, Nissan and Skoda car brands associated with acceptable initial price
i.e. costs to buy a car brand.

Based on the abstract attributes, performance of Maruti Suzuki was recognized at the
top and on the other side, Tata car brand found insignificantly associated.
Glamour and style was not found in Fiat, Chevrolet, Ford and Maruti Suzuki car
brands as reported by their car owners. Quality was not confirmed by the Tata car
brand owners. Sportiness and fun element in designing was viewed at the most in
Honda cars whereas Fiat, Tata and Skoda were lacking in sportiness and fun element.

6.4.2 Direct/Indirect Benefits Positioning

Regarding the functional benefits, the study noticed Maruti Suzuki followed by Tata,
Nissan, Toyota and Ford are the top five brands in terms of fuel economy whereas
the car owners of Fiat and Skoda car brands were not admitting the same. Chevrolet
was perceived as the car brand following maximum safety parameters. Tata car
brand was reported with minimum safety and interior comfort by their car owners.
Moreover, all the car brands were associated with providing superior service by their
car owners which indicates that all the car manufacturers understand the importance
of good service to their customers.

Based on the experiential/symbolic benefits, surprisingly, the looks/exterior style of

Hyundai was perceived most attention getting and on the other side, Tata was reported
indifferent by the car owners. The study disconfirms Tata as a car brand with luxury.
Driving fun or the delight in driving a car was perceived associated with all the
sampled car brands in the study. Moreover, the status conferred by the Renault car
ownership was not found significantly associated with the respect due to the car
ownership.

6.4.3 Surrogate Attributes

It was noticed that the respondents did not associate Tata, Nissan and Hyundai car
brands with pioneering status which was given to Skoda at the top. Moreover, Fiat
and Nissan were not perceived the bestselling car brands. The study could not found
Tata, Fiat, Renault, Maruti Suzuki and Nissan with high-tech appearance as a car
brand. The respondents viewed all the car brands under study associated with the
attribute the family car except, Tata.

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6.4.4 Overall Brand Association

From the brand associations reported by the car owners to their present car brands, it
was revealed that Chevrolet, Fiat, Ford, Hyundai, Maruti Suzuki, Nissan, Renault,
Skoda and Tata car brands are more associated with the concrete attributes, whereas,
Honda, Toyota and Volkswagen are more associated with abstract as compared to the
concrete attributes. Fiat, Honda, Hyundai, Maruti Suzuki, Nissan, Renault, Skoda,
Tata, Toyota and Volkswagen except Chevrolet and Ford are more associated to
concrete/abstract attributes than the surrogate attributes.

Functional benefits were associated more with Chevrolet, Ford, Honda, Maruti
Suzuki, Nissan, Renault and Tata than the experiential/symbolic benefits whereas
Fiat, Hyundai, Skoda, Toyota and Volkswagen were associated more with the
experiential/symbolic benefits as reported by their car owners. It was also noted that
all the car brands except Tata are more associated with the direct/indirect benefits
than the surrogate attributes. Again, all the car brands except Honda and Toyota are
more associated with the direct/indirect benefits than the concrete/abstract
attributes.

Based on the analysis, firstly, it can be inferred that the car manufacturing companies
make efforts in considering benefits more than attributes in positioning their brands.
However, eminent features are not compromised with the benefit positioning and
associated with the car brands to create a differentiated image in the mind of
consumers.

Secondly, the study finds that the car buyers give more importance to the
direct/indirect benefits than the concrete/abstract attributes or the surrogate
attributes. Moreover, the direct (functional) benefits are considered most important
as compared to the indirect (experiential/symbolic) benefits, concrete, abstract
and surrogate attributes.

Thirdly, the concrete attributes as compared to abstract attributes, direct benefits

as compared to indirect benefits and the overall benefits (direct/indirect) as
compared to the (concrete/abstract) attributes associated with a car brand are given
more importance and (concrete/abstract) attributes and (direct/indirect) benefits as
compared to the surrogate attributes are given higher preference by the car buyers.

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6.5 Analyzing Car Buyers Brand Preference, Satisfaction and
Loyalty Intention

The study also assessed the level of satisfaction among the car owners on ten brand
satisfaction facets and the effect of these facets on the car owners brand satisfaction
level and loyalty intention in the context of the Indian automobile industry.

6.5.1 Brand Preference from Customer Perspective

The study finds from the ranking of car brands in the car buyers considerations,
Maruti Suzuki, followed by Hyundai and Tata were the top three brands. Fiat and
Toyota were considered before the brands like Volkswagen, Skoda, and Chevrolet etc.

6.5.2 Perceived Level of Brand Satisfaction

Regarding the satisfaction about the car brand, the study finds all the car owners have
the pride to car brand owned as all of them on all the brand satisfaction facets were
found satisfied. However, the car owners indicated Volkswagen, Hyundai, Toyota,
Ford and Honda as the top five car brands in terms of satisfaction about the service
quality at the point-of-purchase. Hyundai, Honda, Ford and Renault car brand owners
were highly satisfied about the design of their vehicle. Engine performance, brand
image, after-sale service quality, costs of ownership and value for money of
Maruti Suzuki were placed at the top in terms of the car owners satisfaction as
compared to the other car brands which confirms reason for this as the most preferred
car brand. However, the comfort and functionality of Honda and quality of Toyota
cars were recognized at the top in terms of the car owners satisfaction. Fiat car
owners could not establish a good level of satisfaction about the quality of the car
and value for money parameters. Similarly, quality of Tata car brand did not
provide the high level of satisfaction as indicated by the Tata car owners.

In comparison to Maruti Suzuki, Hyundai car owners were found more satisfied in
terms of point-of-purchase service quality, design of the car, comfort and
functionality, safety, and quality of the car which supports Hyundai to be the
secondly preferred car brand in India. Similarly, design of the car, engine
performance, after-sale service quality, costs of ownership and value for money
are the top five reasons which increase customer satisfaction of Tata car owners and
the reason to stand Tata car brand at the third position.

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Overall, based on the brand satisfaction facets about car owners present car
brands, the results do not show any significant difference in satisfaction of compact
and midsized segment car owners except, safety and quality of a car brand. The
satisfaction about safety features and quality of the car was significantly higher
in midsized segment car owners in comparison to the compact size car owners.
Similarly, design of the car, engine performance, comfort and functionality,
brand image and after-sale service was considered more by the midsized segment
car owners as compared to their compact size counterparts in terms of their level of
satisfaction. Whereas, satisfaction about the point-of-purchase service quality,
costs of ownership and value for money of the car brand was found more in
compact size car owners as compared to their midsized car counterparts.

The results from the inter-factor correlation of the brand satisfaction facets showed
that all the facets have a positive relationship to each other. The study shows that
comfort and functionality has a significant relationship with the quality of the car.
It was also noticed that the point-of-purchase service quality, design of the car and
quality of the car establish the image of the car brand in the mind of the customers.
Similarly, after-sale service quality has a positive significant relationship with the
costs of ownership. Further, the study noticed that quality of the car, brand image
and the costs of ownership have a significant relationship with the value for
money parameter which indicates that these three factors play important role in
deciding whether any of the car brands is considered value for money or not.

Multiple regression analysis with forward selection was also employed to predict car
owners' brand satisfaction and loyalty intention from the ten brand satisfaction facets.
The results revealed a significant impact of four out of ten brand satisfaction facets
(quality of the car, brand image, costs of ownership and value for money) on
car owners' overall brand satisfaction Conversely, point-of-purchase service
quality, design of the car ', engine performance, car comfort and
functionality, safety and dealer/after-sale service quality failed to show any
significant relationship with car owners' overall brand satisfaction.

The analysis bearing on car owners' future car purchase intention revealed that point-
of-purchase service quality, dealer/after-sale service quality and costs of ownership
has effect on car owners' loyalty intention. However, design of the car, engine
performance, car comfort and functionality, safety, quality of the car,

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brand image and value for money showed no relationships. Results of the study
also revealed a significant impact of overall brand satisfaction on car owners' brand
loyalty intention.

6.5.3 Customers Perception about Future Car Purchase

The analysis shows that most of the respondents when moving to upper segment
prefer a different manufacturer. And the next striking finding is that the customers
prefer both same and different manufacturers in the compact segment and there is not
much difference in the midsize segment also. This behavior is complex to understand
as these are the customers who have given whopping response for recommending
their car to their friends and relatives. It is the reason why brand perception is so
difficult to understand.

SECTION B: CONCLUSIONS AND RECOMMENDATIONS

In the post-economic liberalization era, India has moved to being a market that for
most foreign manufacturing companies is inevitable. The study concludes that India's
crusade to remodel into a global manufacturing hub has received an enthusiastic
response from car manufacturers hailing from diverse locations and hues. In this
situation, car manufacturers have to be committed to attain leadership through
business excellence in the car sector while upholding values and integrity to improve
the quality of life of the communities. Meeting the highest quality standards and
customers needs in India, car manufacturing companies should offer high quality

automobiles. Their aim in developing their car brands should be to be Indian leaders
in value and satisfaction. Further with the unavoidability of change, domestic car
manufacturers must learn to recognize the basis and direction of the change likely to
affect India in future, and identify new competencies and standpoint that will enable
manufacturers to respond to fast changes, efficiently and effectively.

Based on the empirical findings and theoretical grounds, the study suggests that the
car manufacturers should adopt a holistic and an integrated marketing strategic
process that leads to maximize customer value. Marketers should recognize that
customer orientation is an essential antecedent to develop a successful marketing
strategy that should be completely designed based on customers needs and wants.
Moreover, the effectiveness of marketing strategies is not only dependent on the

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marketing stimuli but consumer buying behavior and nature/composition of target
market also play vital role. Companies need to understand all those stimuli which
affect car purchase behavior and brand choice process of buyers to maneuver best
suitable strategies for promoting their cars in India.

Car buyers preference cannot be exactly predicted but can be done to a certain extent

with the help of consumer research activity. Globalization has bought along with it
competition in the compact and midsized car segments and the car manufacturers have
to concentrate on analyzing the consumer preference to satisfy and retain them in the
long run. In this line, the study assessed buyer behavior stimuli and concludes that
among social factors, family, followed by social status and reference groups,
among cultural factors, color followed by shape and size of the car and
among psychological factors, car manufacturers/brand image followed by
model and ways the dealers sell the car are dominating influential factors in car
buying and brand choice decisions of the consumers. Moreover, family and reference
groups had the strongest impact on the compact sized car buyers whereas the social
status and psychological factors influenced more the midsized car buyers. Marketers
need to understand these influences and focus their marketing strategies towards these
buyer behavior stimuli.

For instance, the effect of family members on selecting car traits should be taken into
account by car manufacturing companies, especially in advertising media such as
radio, television, newspaper. These advertisements should be designed to influence
every member of the family. Considering the fact that word of mouth advertisings is
the most effective way of advertising and that reference groups can do this kind of
advertising well, car manufacturing companies should pay more attention to these
traits in cars. Similarly, attention to social status of people in the society and
manufacturing car models appropriate with their social status can be a factor
contributing to both success and advantages of the competitive market. Increasing
diversity of car models and different colors appropriate with their dignity and
acceptable in a culture can increase profits of the car manufacturer.

The study concludes that a larger proportion of surveyed people are women having
hatchback/compact sized cars. Working woman segment is the one, which has seen a
tremendous growth in the late nineties. This segment has opened the floodgates for
the Indian car companies. The working woman today has grown out of her long-

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standing image of being the homemaker. Today, she is rubbing shoulders with men,
proving herself to be equally good, if not better. Working women have their own mind
in decision to purchase the car that appeal to them. As the number of women car
owners is increasing, using car for their office, personal and family work, this
segment is becoming an influential group, calls for the attention of car manufacturers
and marketers to focus their strategic efforts in this direction.

Increase in disposable income, growing family needs, increasing family size and the
improved road infrastructure in India are the main drivers of buying a car in compact
and midsized segments as concluded in the study. Besides the urban market, since
purchasing power of rural India has increased, the car manufacturers should also have
an eye on rural India to capture untapped rural market.

Since, TV commercials on car models and brands, sales staff of the dealer, company
brochures, car magazines and search in the manufacturers websites were the prime
sources where customers gathered information on car models and brands, marketers
might want to focus on these factors to catch the attention of the intending future
customers. In particular, as the younger people get into buying age, spend more time
on internet and purchase more and more products over internet, including accessing
information about cars, therefore, car manufacturers and dealers should increase their
budgets on internet advertising and find ways to attract potential car buyers in e-
world.

The study concludes that while purchasing a car, buyers perceive different types of
risks as it is a high involvement decision, which can discourage potential buyers from
making a choice or delaying the purchase decision. By a proper use of risk reduction
strategies the perceived risks can be reduced. Therefore, car manufacturers should
give adequate importance to factors of perceived risk and in each of their activity
should endeavor to have steps that reduce the perceived risk.
Present study finds that word of mouth decreases the social and time risks.

Positive word of mouth happens only when present users are extremely satisfied with
their cars. The results also show that the role of sales executive helps to reduce
physical, functional, financial, social and psychological risks. As the point
of contact for potential car buyer is the sales and marketing executives at the dealer
end, they should be well trained to answer all queries of customers. Car manufacturer

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through integrated marketing communication can reduce the social and time risk
components of perceived risk. Car manufacturers should make available facilities like
authorized sales/service stations all over India and schemes like extended free
service/price reduction/insurance to reduce the functional risk among the
prospective car buyers. Also, the country of origin has an effect on reducing the
financial risk proving that customers are willing to pay a higher premium for a
recognized brand. Hence the worldwide reputed car manufacturing companies should
also focus on promoting their brand image from the country of origin point of view.

Moreover, as the study finds that the foreign car brands provided a better perception.
Thus, the joint ventures with known car makers in the world such as Japanese and US
make cars might prove to be an additional image booster to the Indian car
manufacturers.

When it came to short listing cars on personal preferences based on fuel variant used,
the study concludes a sizeable number of car owners with clear preferences for diesel
cars. Also, a larger proportion of diesel car owners belong to business community.
Moreover, due to the ever increasing cost of petrol in the last few years, car owners
also preferred other options like LPG or CNG as fuel variant in their cars. The best
way to reduce fuel prices for a car user is reducing the vehicle fuel consumption.
Manufacturers might need to tackle this increasing need for fuel efficiency and
economy in their car brands. No doubt in the coming times, one of the most important
attributes for car brand choice shall remain low fuel consumption and reducing fuel
consumption by a car manufacturing company is certainly going to give an advantage
over others its competitors. It is evidently acknowledging this fact that the focus of
car manufacturers to bring out diesel version of their car models.

Moreover, as the rising fuel prices are taking a chunk out of everyone's budget, the
economic effects have pushed "green" technology into the mainstream. To reduce
dependence on expensive fuel variants like petrol and diesel, manufacturers should
also explore new energy sources such as electric cars, hybrid cars etc. in compact and
midsized segment cars.

In the category of personal preferences on payment method for a car purchase, it was
revealed that more than 75 per cent of the car buyers used equated monthly
installment (EMI) and a larger proportion of these buyers belonged to having family
income below 7 lakhs or were employees or self-employed. Therefore, easy

206
availability of bank loans in the market is the base requirement to boost up the car
sales. Marketers and Dealers need to tie up car financing agencies to make sure that
the car loans are made available on demand. It also calls for tremendous amount of
market awareness and intelligence on devising loan options for different categories of
buyers.

Indian consumers take safety as the most important attribute when deciding to
purchase a car. Car manufacturing companies should put a special focus on features
like having anti-lock brake system, air bags for driver safety, anti-theft system, pulling
forward safety belts when the brakes have severe reverse, warning system (reverse
sensor), fog light, front and rear lights, a telescoping steering shrinking during
accidents and aerodynamic shape of the car and promote safety through
marketing communication messages in Indian market. The study found value for
money as the second and riding comfort as the third most important attribute when
purchasing a car. Most of Indian families have only one car and they use their car
generally for picking-up family members, thus riding comfort is very important for
Indian people. Car buyers take after-sale maintenance cost and exterior
design/style as the fourth and fifth most important attributes while making the
purchase decision. For after-sale maintenance cost, compact sized segment
customers usually prefer to choose a car with less maintenance cost. For exterior
design/style/looks of the car/attention getting, it indicates that midsized segment
customers prefer to choose a bigger car with a good looking exterior design to show
their high status and reputation and want to get respects from others. Resale value of
a car is given least importance among all the integrated marketing attributes because
second hand car market is not well developed in India, and midsized segment
customers usually do not consider the factor of resale value when they purchase their
cars.

Further, the study concludes that exterior design, advancing technology, engine
power, and interior features as product referents, safety, value for money, ride
quality, interior comfort, fuel economy, performance and resale value of the car
as task or outcome referents and prestige due to car ownership, the bestselling car,
high-tech appearance and premium car with best quality as surrogate referents are
some of the important attributes towards brand preference of the car buyers. Moreover, the
study finds that task/outcome referent attributes of a car brand

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are given more preference than user/surrogate referent or product referent

attributes by the car buyers. Marketers need to understand these product related
attributes and also focus their marketing strategies more on task/outcome
referent attributes of a car brand.

The study noticed that car buyer perceive information regarding repairing and
maintenance services as provided by manufacturer/dealer an important aspect in their
brand choice process. Customers must be provided additional service by car
manufacturing companies to familiarize them about maintenance schedule, salient
features of their vehicle, tips for safe driving and handling of vehicle. The company
executives should demonstrate their customers how to achieve better fuel economy
and fault diagnosis and troubleshooting in order that customer develops necessary
confidence to take care of minor troubles which may immobilize the car.

Superior service through the dealer, minimum waiting time after placing of order by
the customer, minimum after-sale maintenance cost and availability of the service
network all over India are significantly important place and post purchase related
attributes in the preference of a car brand. While the mass production is still a
common practice by the car manufacturers in India, the demand of cars is also
increasing steadily. Moreover, customers tempt to switch over to competing brands
and models, if their chosen model is not readily available in the market. Therefore, car
manufacturers have to concentrate more on the reduction in waiting time post booking
of the cars. This is a major factor instilling confidence in the customers, and very
much required in order to survive in todays tense competition from all over the

world. Since distribution and sales networks are generally very complex and
complicated, there is also a need of well-organized and better equipped after-sales
service department. The car manufacturing companies should provide the highest
level of services all over India to their customers and reasonable maintenance cost to
win competition against other competitors no matter where they do their business and
no matter what products they carry to the markets.

The study finds that advertising image, schemes and discounts, low financing rates
were perceived the three most important attributes, whereas cash rebates, festive
season offer, campaigns/exchange melas/car shows (Auto-Expo etc.) and test drive
were found moderately important promotion related attributes in the preference of a
car brand. Compact and midsized car sector offers huge potential as penetration and

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consumption of these cars is very less in India compared to its population. For
promoting the product consumption, creating awareness and building strong brand
image, car companies have to use advertising campaigns to promote higher
consumption of compact and midsized cars with lots of promotional offers.

Initial price was perceived significantly important towards the car brand preference by
the buyers. Small but positive changes in car models with the aim of strengthening the
advantages and removing disadvantages of the vehicle can produce a variety of
vehicles, resulting in more sales with justified costs to buy. Hence car manufacturing
companies should have more variety in their car models. Moreover, the car
manufacturers and their dealers should consider those attributes carefully before
launching a new car or doing face-lift and evaluate which attributes are playing more
important roles than others. For example, in the present study, the disposition of
considering interior comfort, experience of engine power, accession of electronic
marketing websites and high-tech appearance of the car was found higher in midsized
segment car buyers as compared to their compact sized counterparts. The compact
sized car buyers were found more concerned about the resale value of the car as
compared to the midsized segment car buyers. Therefore, car manufactures who want
to compete on retail price to gain more compact sized segment consumers may
consider take off some unnecessary options to reduce the overall options price to get a
lower retail price.

When it comes to influence brand choice through electronic marketing, effective

website management and business-to-consumer (B2C) web strategies are vitally
important, as the online landscape evolves rapidly with the emergence of powerful
consumer-to-consumer tools like blogs, discussion forums, social networking sites
and virtual worlds. Car manufacturing companies will need to stay focused on
evolving consumer attitudes online. As with the web, the issues are dynamic and it is
still too early to determine their ultimate impact on the automobile industry.
Manufacturer/dealer collaboration in the form of effective retail integration and
integrated lead management will become more important than ever to satisfy
increasingly sophisticated and demanding consumers and to retain their online loyalty.
Companies will need to establish and maintain a true two-way dialogue with
individual consumers through personalized communication to enhance online
customer satisfaction.

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In the needs recognition phase, car manufacturers may use banner advertising,
sponsorships and interstitials which could expose customers to products and services.
In addition, car manufacturers and dealers may design some online surveys to get to
know what customers really need/want for the cars; In the information search phase,
car manufacturers and dealers may provide some online queries which could answer
consumers questions and provide useful information for consumers decision

making; In the evaluation of alternatives stage, consumers may use community

marketing, customer feedback, message boards, customer reviews and blogs to help
customers though the evaluation process toward their final purchasing goal. In the
purchase phase, car manufacturers could use gift registries, email marketing and
online dialogue functionality to help consumers make final purchase or even
additional purchases. In the post-purchase phase, car manufacturers may regularly
check the positive or negative comments and feedbacks posted on some websites
forums by some users. Additionally, car manufacturers may set up a follow-up session
on the companys website, and from it they could know consumers suggestions
and feedbacks and improve themselves from each aspect.

To retain existing relationships as well as to develop new customers, customer

relationship management has emerged as a key activity of the car manufacturers
which has also been confirmed by the present study. Car manufacturing companies
have to put more efforts not only on technical training to the employees, but also on
handling of customer grievances and dealing with customers. For instance, when a
customer walks in a car dealers showroom he should be properly greeted and made to

feel comfortable. The sales executives should speak about the product, various
features and the corresponding benefits, and then discuss the issue of price. In case the
customer wants a comparison with a product of another company, all the details
should be provided. On payment, customers should be given the delivery of car
immediately. In case the customer asks for a particular color which the dealer does not
have, then the dealer should keep in touch with the customer, and keep him informed.
Normally, most of the customers go in for finance schemes as also established in the
present study. The dealers should follow up with the finance company and ensure that
the financing is through. The dealers should act as a mediator between the finance
company and the customer. The dealer should collect

210
the application document from the prospect buyer, check the IT returns and does other
related jobs to ensure that the transaction is done fast.

Car manufacturers should ensure that the relationship with the customer does not end
with the purchase of the vehicle. Car manufacturers should make efforts to provide
excellent network to facilitate their customers in purchasing car, accessing spare parts,
and getting their cars serviced. One more important feature is the option of extended
warranty. Car companies should build up large network of showrooms, dealer
workshops, and authorized service stations to ensure their services everywhere. Some
car manufacturers provide their customers with a 24 Hour On-Road Service in

various cities across India. If a customer's car breaks down anywhere, he can call up a
mobile number for help. Car manufacturers should strengthen free checkup camp
facility for their customers. Car manufacturers should also seek feedback regarding
dealer service, presale service, after sales service, complaints etc. from their customers
in a fair manner. All these persistent efforts to improve and evolve the customer
service practices of the car manufacturers are with the expectation of a vastly satisfied
customer base.

When it comes to brand association, positioning bases seek to create associations in

car owners minds that gratify their possession either based on car traits (e.g.,
attribute positioning) or car value (e.g., benefit positioning) or car image (e.g.,
user/surrogate positioning). Based on the analysis, the study concludes that the car
owners gave more importance to the car value (direct/indirect benefits) than the car
traits (concrete/abstract attributes) or the car image (surrogate attributes) about
their present car brand. In addition, the direct (functional) benefits were considered
most important in comparison to the indirect (experiential/symbolic) benefits,
concrete, abstract and surrogate attributes. And the concrete attributes as
compared to abstract attributes, direct benefits as compared to indirect
benefits and the overall product value (direct/indirect benefits) as compared to the
traits (concrete/abstract attributes) associated with their present car brand were given
more importance whereas car value (direct/indirect benefits) and car traits
(concrete/abstract attributes) as compared to the car image (surrogate attributes)
were given more importance by the car owners.

Specifically, when car owners perceived the associations about their car brands, it was
found that benefit positioning strategies outperform feature positioning strategies

211
across all car brands except, Honda and Toyota whereas feature positioning strategies
outperform user/surrogate positioning in terms of positioning effectiveness across all car
brands except, Chevrolet and Ford. The study further concludes that direct (functional)
benefits were perceived higher with the car brands viz. Chevrolet, Ford,
Honda, Nissan, Renault and Tata than the indirect (experiential/symbolic) benefits
and the positioning on concrete attributes as compared to abstract attributes was

perceived higher in all car brands except, Honda, Toyota and Volkswagen.

Thus the car manufacturing companies should make efforts in considering product
value more than traits in positioning their brands. However, eminent features,
particularly concrete attributes, should not be compromised with the value (benefit
positioning) or image (user/surrogate positioning) and be associated with the car
brands to create a differentiated image in the mind of consumers. In simple words,
marketers should avoid using feature positioning as a dominant positioning strategy in
their advertising initiatives, at least in the compact and midsized car market.

Finally, the results of the study indicate that brand managers of the car manufacturing
companies should pay careful attention when selecting the type of positioning strategy
for their brands. While the choice of positioning strategy is driven by a number of
idiosyncratic characteristics of the firm, product, market and environmental setting,
decision makers should bear in mind that consumers respond differently to different
positioning strategies in terms of product acceptance or rejection perceptions. Hence,
the potential car buyers response should also be considered along with such factors as
the brands existing market position, the brands (positioning) life cycle stage, the
positioning used by competitors, and the desire for a new versus me-too
image when deciding which positioning strategy to employ.

In the last, about brand satisfaction, the study concludes that all the car owners have
the pride to the car brand owned as all of them were found highly satisfied for the
present cars they own. Volkswagen, Hyundai, Toyota, Ford and Honda were reported
as the top five car brands in terms of satisfaction about the service quality at the point
of purchase by their owners. Hyundai, Honda, Ford and Renault car brand owners
were highly satisfied about the design of their vehicle. Interestingly, engine
performance, brand image, after-sale service quality, costs of ownership and value for
money of Maruti Suzuki were placed at top in terms of the car owners satisfaction as
compared to the other car brands. Comfort and functionality of Honda and quality of

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Toyota cars were recognized at top in terms of customer satisfaction. Fiat car owners
could not establish a good level of satisfaction about the quality of the car and value

for money parameters. Similarly, quality of Tata car brand did not provide the

considerable level of satisfaction as indicated by Tata car owners.

Overall, the results do not show any significant difference in satisfaction of compact
and midsized segment car owners except, safety and quality of a car brand which
was confirmed higher by the midsized car owners. In general, satisfied customers are
positive and enthusiastic about the company they are dealing with. They behave in a way
desired and understood by a firm, when it comes to making decision about further
cooperation with the company. Specifically, they will be making repeat purchases. Such
behavior of satisfied customers contributes to business growth. Therefore satisfaction,
understood in such a wide context, should definitely be on the top of marketers list as it
has strong positive impact on the results of their strategies.

The results also showed quality of car correlated with comfort and functionality
whereas after-sale service quality with costs of ownership. Quality of car point-
of-purchase service quality and design of car establish the image of the car brand
in the mind of the customers. Quality of car, brand image and the costs of
ownership were found related with value for money parameter. Further, regression
conducted on the study tells that car owners' overall brand satisfaction was highly
correlated with quality of the car, brand image, costs of ownership and value for
money which explains that how important are 'quality, comfort, look, image,
cost and value for money attributes to Indian car buyers in deciding whether any
of the car brands be considered for making repeat purchase or not.

Another regression bearing on car owners' future car purchase intention revealed that
point-of-purchase service quality, dealer/after-sale service quality and costs of
ownership have strong effect on car owners' loyalty intention which explain that
dealers play key role in building up the brand perception of the cars. Since dealers are the
connecting link between the customers and the manufacturers thus becoming the most
important link in joining the company to its customers as he is the person who will sell the
product, will deliver it and will keep on providing the after sales services to the customers
as and when required. So, it becomes necessary automatically to focus dealer as a part of
customers satisfaction and loyalty journey with the car brand in a car manufacturers
marketing strategy. Car dealers proximity to the customers,

213
the service provided by them and the relationship maintained by them with the
customers helps the car manufacturing companies to establish and reinstate the brand
image communicated by them to the customers.

Further, loyal customers lie in category of customers who were satisfied with the costs
of a car brand ownership. This implies that costs incurred with respect to the car brand
also tend to increase customers loyalty. It may be easy to point out that customer
satisfaction increases their loyalty as the present study also confirmed, but the results
showed that when moving to upper segment, customer were preferring a different
manufacturer which explains that there are also many satisfied customers who are not
loyal to that particular brand. Thus, paying attention to satisfaction and loyalty at the
same time is to be a critical and also a challenging task for a car manufacturing
company in the Indian context. Therefore there are not the point-of-purchase
service quality, dealer/after-sale service quality and costs of ownership but
also quality of the car, brand image and value for money attributes that
should be taken into account when implementing loyalty improvement strategies by
the car manufacturers in India.

SECTION C: FUTURE RESEARCH AVENUES

The market is growing at very fast pace for the last decade. In the highly price
sensitive market, reduction of prices because of lower duties and taxes and
progressive indigenization, and rising middle class incomes are likely to further
increase industry growth rate. Penetration in rural and semi urban areas is extremely
low and could provide fresh markets. New entrants will have to deal with uncertainty
of demand; different and evolving customer needs; a relatively poor supplier base; a
market crowded with competition; and industry wide capacity shortages. The
researcher suggest that further study can be conducted to find out if there is a shakeout
as many analysts expect and whether further opportunities for survivors will open up
or not. Another study could be conducted to know if India could emerge as a
significant manufacturing base for exports.

Also, the current research design did not study the psychographics of the consumers.
Understanding psychographics of the consumers is very important to understand the
inner feelings, and tendency of the customers buying preference. The changing
demographic profile of the population like education, income, size of family are

214
necessary by what's going to be changed in days to come regarding understanding
psychographics of customers as to how they feel, assume or behave. Marketers are
required to constantly monitor and identify the core psychographics to map the sectors
movement and review what ought to be done, by adding value that motivates
consumers to opt from the companys product range which may influence the long
term business structure and market share. Moreover, this study did not measure or
control for the possible effects of social desirability bias in the questionnaire for the
respondents.

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 APPENDIX - I
QUESTIONNAIRE
 Code No.______

QUESTIONNAIRE

Dear Respondent,

Please note that this questionnaire has no room for you to put your name, or the
dealership from where you purchased the car. Therefore you can be assured that your
answers are completely confidential. Your completed questionnaire will be used solely
by the researcher as part of the dissertation.

The researcher is concerned with appraising the kind of marketing strategies

that are prevalent in the Indian automobile industry, impact of these strategies on car
buyers and consumers expectations from the car manufacturers. Marketing strategies
in this study refers to all the marketing efforts/plans that are to place the product in the
hands of the buyers and to satisfy them to the extent of loyalty. Current evidences
suggest that there are positive or negative effects of marketing strategies of car
manufacturers on the expectations of their stakeholders for the car brand preferences.
However, the reasons for these effects are not yet fully understood. Completion of the
enclosed questionnaire will assist towards developing an understanding of the nature
of these different outcomes.

Completion of the questionnaire should only take you a few minutes, and will
help enormously with the research. Kindly be sure how important or un-important the
attribute/ factor/ parameter is to you or how strongly you agree or disagree with the
statement and then mark the appropriate response category with a tick in the
appropriate box. Most of the statements included in the schedule are measured on a
five-point response scale as under:
1 NAI: Not at All Important SD: Stands for Strong Disagreement HD: Stands for High Dissatisfaction
2 NI: Not Important D: Stands for Simple Disagreement D: Stands for Dissatisfaction
3 SI: Somewhat Important OR I: Stands for Indifferent/Not sure OR N: Stands for Neutral
4 I: Important A: Stands for Simple Agreement S: Stands for Satisfaction
5 VI: Very Important SA: Stands for Strong Agreement HS: Stands for High Satisfaction

For the successful completion of the study your cooperation is very important,
therefore, it is requested to answer each statement included in the schedule correctly
after due consideration.

(JEANNIE)
Research Scholar,
Faculty of Management Sciences,
M. D. University, Rohtak.
In case you have owned a car within a year, please () in the suitable box where asked to indicate
your answer otherwise return back this questionnaire.

Section 1: About you

1. Gender:
Male O Female O
2. Age:
< 35 years O 35-45 years O
> 45 years O
3. Educational qualification:
Diploma or below O Graduate O
Post graduate or above O
4. Occupation:
Employee O Self-employed O
Retired O
5. Marital status:
Single O Married O
6. Family income:
< 7 lakhs 7 lakhs - 15 lakhs
O O
> 15 lakhs
O

7. Job position (In case, you are retired, please tick your ex-job position/In case,
you are in family/partnership business, please tick the level of your position in
the business):
Top management (e.g. CEO) O
Middle management (e.g. Department head) O
Support staff (e.g. Supervisor) O
Section 2: Car buyers buying behavior and brand preference

8. Please write name of the brand and model of car, you bought recently
(within last 12 months).
(e.g. Maruti SX4)__________________________________________________

9. Please indicate each of the activity you participated in, during the process of
purchase and brand choice.

Sr. No. Activities in purchase decision Participation of buyers

1 Purchase decision of a new car O
2 Decision of the budget O
3 Initial choices of brands and models O
4 Contact car dealers O
5 Collecting information about the brands and models O
6 Visit dealers O
7 Test drive O
8 Price bargaining O
9 Final decision on maker and model O

Part A Buyer behavior stimuli

10. I bought my present car because of:

Sr. No. Parameters Criterion

1 Increase in my disposable income SD D I A SA
2 Better safety at roads SD D I A SA
3 My family needs SD D I A SA
4 Increase in my family size SD D I A SA
5 Suits my lifestyle and personality SD D I A SA

11. Please indicate the payment method used for purchasing your present car.

O Cash O EMI

12. Type of fuel used in your present car is (Please tick more than one, if
required).

O Petrol O CNG O LPG O Diesel O Electric

13. Your role in the car purchase:

O I was the only decision maker
O I was one of the decision makers, and played the decisive role

O I was one of the decision makers, but not played the decisive role
O Totally decided by others
14. Please report your opinion on the factors/sources that influenced your
present car purchase decision and brand choice.
Sr. No. Factors/sources Criterion
1 Friends SD D I A SA
2 Relatives and neighbors SD D I A SA
3 Co-workers SD D I A SA
4 Wife SD D I A SA
5 Children SD D I A SA
6 Other family members SD D I A SA
7 My job position SD D I A SA
8 Type/nature of my institution/ trade SD D I A SA
9 Color SD D I A SA
10 Size SD D I A SA
11 Design SD D I A SA
12 Shape of the car (e.g. hatchback or sedan) SD D I A SA
13 Decision of the head in my family SD D I A SA
14 Car class (e.g. economy or luxury) SD D I A SA
15 Car type/form (e.g. hatchback or sedan) SD D I A SA
16 Manufacturers/Brand image (e.g. Maruti versus Hyundai) SD D I A SA
17 Models (e.g. package sizes such as Alto Lxi) SD D I A SA
18 Ways to purchase (e.g. dealers that sell it) SD D I A SA
19 Previous experience with the brand SD D I A SA
20 Car manufacturers websites SD D I A SA
21 Reviews of existing customers on internet SD D I A SA
22 Brochures/Car magazines/Published consumer reports SD D I A SA
23 Television/Newspaper/Radio advertising SD D I A SA
24 Dealer sales staff SD D I A SA
25 Exchange melas/car shows (Auto-Expo etc.) SD D I A SA

15. Please report your opinion on the risk factors you perceived on the following
dimensions about your purchase decision of your present car brand.
Sr. No. Perceived Risks Criterion

1 I feel that this car does not have functional option like air bags SD D I A SA
2 I fear the audio system in my car may look substandard SD D I A SA
I fear I am buying a model which people complain of break SD D I A SA
3
problem
4 I believe it will take a long time for me learn to drive a car SD D I A SA
5 I believe I wasted a lot of time in searching the car of my choice SD D I A SA
I am worried I can easily find a buyer when I want to dispose SD D I A SA
6
my car
I am worried I am settling for a car that does not have ABS SD D I A SA
7
(Antilock braking system)
8 I am worried about the waiting time to get my car SD D I A SA
I am not sure that local technician can handle this SD D I A SA
9
technologically superior car
I am not sure if my friends will complement me for my decision SD D I A SA
10
to purchase this car
I am not sure if I need to spend my time in search of service SD D I A SA
11
mechanic
I am not sure if I get a sense of more importance among my SD D I A SA
12
friends after I own the car
13 I am not sure about the mileage that my car can give SD D I A SA
 14 I am doubtful this car does not have a road grip SD D I A SA
15 I am doubtful if the air conditioning system in the car can hold SD D I A SA
good in these days of global warming
16 I am doubtful if I can get a good after sales service SD D I A SA
17 I am confused if the car is worth the money I spend SD D I A SA
18 I am confused if the car is liked by all members of the family SD D I A SA
19 I am buying a car that is entering the market for the first time SD D I A SA
20 I am afraid the price of the car will come down after I buy the SD D I A SA
car
21 I am afraid the cost of spares for this car can be expensive SD D I A SA
22 I am afraid that my car can be stolen SD D I A SA
23 I am afraid that I will make a poor choice of a car SD D I A SA
24 I am afraid if the shape of my car will add my social status SD D I A SA
25 I am afraid if the price of car is within my budget SD D I A SA
26 I am afraid if the color of my car is pleasing to others SD D I A SA
27 I am afraid if the car loan procedure will consume a huge SD D I A SA
amount of time
28 I am afraid if my car would provide a great driving experience SD D I A SA
29 I am afraid if I can have nationwide service outlets SD D I A SA
30 I am afraid I may not be able to clean/cover the car properly SD D I A SA

16. Please report your opinion on the following factors that can decrease the risk
you perceived about your purchase decision of your present car brand.
Sr. No. Risk decreasing factors Criterion

1 Word of mouth (my friends own a similar car) helped a lot in SD D I A SA

reducing the level of risk in my purchase decision
SD D I A SA
2 The sales executive of the dealer helped a lot in reducing
the level of risk in the purchase of my car
SD D I A SA
The test drive offered by the dealer helped a lot in
3 reducing the level of risk in my purchase decision
My preference for this brand right from my childhood SD D I A SA
4
The frequent advertisements that I saw in television helped a SD D I A SA
5 lot in reducing the level of risk in my car purchase decision
The availability of company authorized Sales/service stations SD D I A SA
6 contributes in decreasing the level of risk in purchase decision
The chosen car manufacturers' country of origin contributes in SD D I A SA
7 decreasing the level of risk in purchase decision
The announcement of extended free service/price reduction/ SD D I A SA
insurance contributes in decreasing the level of risk in car
8 purchase decision

17. Please report your opinion on how the country of origin influenced your
purchase decision of your present car brand.
Sr. No. Country of origin effect Criterion

Foreign car brands are superior in terms of quality and SD D I A SA

1
performance
I will not bother to pay more to purchase a domestic car brand SD D I A SA
2
because of my patriotism
I will not bother to pay more to purchase a foreign car brand SD D I A SA
3
because of its better quality and performance
I will not bother to pay more to purchase foreign car brands SD D I A SA
4
because of that countrys image
 Part B Marketing stimuli

18. How important is each of the following product related attributes to you
while making a car purchase decision?
Sr. No. Product related attributes Criterion
Product referent
1 Type of fuel consumption (Petrol/Diesel/CNG etc.) NAI NI SI I VI
2 Storage and cargo capacity NAI NI SI I VI
3 Sportiness and fun element in design NAI NI SI I VI
4 Safety features (e.g. airbag etc.) NAI NI SI I VI
5 Road clearance NAI NI SI I VI
6 Looks of the car/Exterior design/Exterior styling/Attention NAI NI SI I VI
getting
7 Length of warranty NAI NI SI I VI
8 Interior features NAI NI SI I VI
9 Environment friendly vehicle NAI NI SI I VI
10 Engine power NAI NI SI I VI
11 Creativity and innovation NAI NI SI I VI
12 Colors available NAI NI SI I VI
13 Advancing Technology NAI NI SI I VI

Task or outcome referent

1 Safety NAI NI SI I VI
2 Price quality inference/Value for money NAI NI SI I VI
3 Ride Quality on highway NAI NI SI I VI
4 Interior comfort NAI NI SI I VI
5 Fuel efficiency/Fuel economy NAI NI SI I VI
6 Performance NAI NI SI I VI
7 Glamour and style NAI NI SI I VI
8 Luxury NAI NI SI I VI
9 Fun to Drive/Delight from driving NAI NI SI I VI
10 Road-holding/Handling NAI NI SI I VI
11 Resale value NAI NI SI I VI
12 Feeling of reliability/Dependability NAI NI SI I VI

User/Surrogate referent
1 The family car NAI NI SI I VI
2 The bestselling car NAI NI SI I VI
3 Status conferred on you by ownership of car/Prestige due NAI NI SI I VI
to car ownership/Gives you respect
4 Representative of premium car with best quality NAI NI SI I VI
5 Pioneer status of car NAI NI SI I VI
6 Give a high-tech appearance NAI NI SI I VI

Customer service related attributes (additional services)

1 Informing customers about new cars NAI NI SI I VI
2 Information regarding service centers NAI NI SI I VI
3 Information regarding repairing and maintenance services NAI NI SI I VI
4 Providing training to customers about new car features NAI NI SI I VI
5 Information regarding car news NAI NI SI I VI
19. How important is each of the following attributes to you while making a car
purchase decision?
Sr. No. Price related attributes Criterion
1 Initial price of the car/ Cost to buy NAI NI SI I VI
2 Cost of spare parts etc. NAI NI SI I VI
3 Price negotiation with customer offering discounts NAI NI SI I VI

Place/availability related attributes

1 Dealers location NAI NI SI I VI
2 Superior service NAI NI SI I VI
3 Waiting time post booking NAI NI SI I VI
4 Facilities available with the dealer NAI NI SI I VI

Promotion related attributes

1 Cash rebates NAI NI SI I VI
2 Low financing rates NAI NI SI I VI
3 Schemes and discounts NAI NI SI I VI
4 Festive season offer NAI NI SI I VI
5 Campaigns/Exchange melas/Car shows (Auto-Expo etc.) NAI NI SI I VI
6 Test ride NAI NI SI I VI
7 Advertising image NAI NI SI I VI

Post purchase related attributes

1 After-sale service NAI NI SI I VI
2 Availability of the service network NAI NI SI I VI
3 Cost of maintenance NAI NI SI I VI
4 Likely cost of repairs and maintenance NAI NI SI I VI
5 Warranty schemes NAI NI SI I VI
6 Hospitality of the service station NAI NI SI I VI
7 Facilities available with the service station NAI NI SI I VI

Part C Other marketing stimuli

20. How important is each of the following attributes to you when choosing a
new car?

Sr. No. Electronic marketing Criterion

1 Website use for searching car model specifications NAI NI SI I VI
2 Website use for comparing price and features of competitors NAI NI SI I VI
3 Website use for finding finance options NAI NI SI I VI
4 Online forums/ virtual brand communities for consumers NAI NI SI I VI
reviews and experiences
Customer relationship management
1 Dealers proper greeting to make the customer feel NAI NI SI I VI
comfortable
2 Sales executive of the dealer to speak about the product and NAI NI SI I VI
the corresponding benefits
3 On payment, customers be given the delivery immediately NAI NI SI I VI
4 Dealer to act as a mediator between the finance company and NAI NI SI I VI
the customer
5 Car manufacturers to provide excellent network to facilitate NAI NI SI I VI
their customers in purchasing car
Car manufacturers to provide excellent network to facilitate
6 customers in accessing spare parts, and getting their cars NAI NI SI I VI
serviced
7 Option of extended warranty to be provided by car NAI NI SI I VI
manufacturers
 8 24 Hour On-Road Service, in case customer's car breaks NAI NI SI I VI
down anywhere
9 Free checkup camp facility provided by car manufacturers NAI NI SI I VI
10 Customers feedback regarding dealer service, presale service, NAI NI SI I VI
after sales service, complaints etc.

Part D Perceived Brand Positioning - Brand Association

21. How much do you agree/disagree with the association of the

features/attributes given below with your present car brand?
Sr. No. Brand association attributes Criterion
1 Advancing Technology SD D I A SA
2 Creativity and Innovation SD D I A SA
3 Engine Power SD D I A SA
4 Initial Price SD D I A SA
5 Performance SD D I A SA
6 Glamour and Style SD D I A SA
7 Quality SD D I A SA
8 Sportiness and fun element in designing (youth oriented) SD D I A SA
9 Fuel Economy SD D I A SA
10 Safety SD D I A SA
11 Comfort SD D I A SA
12 Superior Service SD D I A SA
13 Attention getting SD D I A SA
14 Luxury SD D I A SA
15 Driving fun SD D I A SA
16 Gives you respect SD D I A SA
17 Pioneer Status SD D I A SA
18 The bestselling car SD D I A SA
19 High-tech appearance SD D I A SA
20 The family car SD D I A SA

Section 3: Car buyers brand preference, satisfaction and loyalty

22. Which of the following brands you considered, in top three, while purchasing
your present car?

Chevrolet Fiat Ford Honda Hyundai Maruti Suzuki

Nissan Renault Skoda Tata Toyota Volkswagen
23. Please rate the level of your satisfaction at the time of purchase of your
present car in terms of following parameters.
Sr. No. Point of purchase service quality Criterion
1 Professionalism of the sales representative HD D N S HS
2 Kindness and good manners of the sales representative HD D N S HS
3 Sales rep willingness to inform customer HD D N S HS
4 Ease of contact with the sales rep HD D N S HS
5 Atmosphere in the showroom HD D N S HS
6 Wide range of product offer HD D N S HS
7 Availability of additional services (financing, test drives etc.) HD D N S HS
8 Promptitude of service realization HD D N S HS
9 Abidance of timing of the service HD D N S HS

Design of the car

1 Exterior styling HD D N S HS
2 Quality of workmanship HD D N S HS
3 Shininess or smoothness HD D N S HS
4 Seats design HD D N S HS
5 Leg Room HD D N S HS
6 Dash Board HD D N S HS
7 Interior Color HD D N S HS
8 Music System HD D N S HS
9 Adjustable Front seat Headrest HD D N S HS
10 Modernity of design HD D N S HS
11 Uniqueness of design HD D N S HS

Engine performance
1 Fuel Consumption HD D N S HS
2 Mileage (Km/liter) HD D N S HS
3 Pick Up HD D N S HS
4 Stability at higher speed HD D N S HS
5 Top speed HD D N S HS
Comfort and functionality of the car
1 Seats comfort HD D N S HS
2 Visibility from drivers seat HD D N S HS
3 Functionality of steering elements HD D N S HS
4 Interior space HD D N S HS
5 Possibilities of interior space management (folding, removing HD D N S HS
seats etc.)
6 Boot capacity HD D N S HS
7 Communication systems (radio, navigation etc.) HD D N S HS
8 Air-conditioning/ventilating systems HD D N S HS

Safety
1 Crossbar under Dashboard HD D N S HS
2 Air Bags for driver safety HD D N S HS
3 Anti-Lock Breaking System HD D N S HS
4 Aerodynamic Shape HD D N S HS
5 Intensity of front lights HD D N S HS
6 Antitheft system HD D N S HS
7 Seat belts HD D N S HS
8 Pulling forward safety brakes during severe accidents HD D N S HS
9 Reverse warning system (reverse sensor) HD D N S HS
10 Fog lights HD D N S HS
Sr. No. Quality of the car Criterion
1 Reliability of the car HD D N S HS
2 Quality of exterior painting HD D N S HS
3 Quality of interior materials and finishing HD D N S HS
4 Quality of the upholstery (fabric, furniture, wooden frame HD D N S HS
etc.)
5 Driving quality (driving and steering systems) HD D N S HS
6 Suspension quality HD D N S HS
7 Breaking quality HD D N S HS

Brand image
1 Assurance of safety when driving HD D N S HS
2 Stable position of the brand on the market HD D N S HS
3 Technological leadership of the brand HD D N S HS
4 Brand involvement in environmental protection HD D N S HS
5 Brand involvement in making drivers lives easier HD D N S HS
6 Brand involvement in customers satisfaction improvement HD D N S HS
7 Brand involvement in promotional events (trades, advertising HD D N S HS
campaigns, sponsoring etc.)
Dealer/after-sale service quality
1 Distance ( Proximity) HD D N S HS
2 Advertisements (Promotions) HD D N S HS
3 Technical Facilities HD D N S HS
4 Cost of Service HD D N S HS
5 Availability of spare parts HD D N S HS
6 Professionalism of the after-sales representative HD D N S HS
7 Sales rep willingness to inform customer HD D N S HS
8 Service Time HD D N S HS
9 Charges HD D N S HS
10 Car Handling ( Delivery & service) HD D N S HS
11 Ambience of the dealer showroom/ Service Center HD D N S HS
12 Promptitude of service realization HD D N S HS
13 Abidance of timing of the service HD D N S HS

Costs of ownership
1 Fuel usage HD D N S HS
2 Insurance costs HD D N S HS
3 After-sales service costs HD D N S HS
4 Repairing costs HD D N S HS
5 Spare parts exchange costs HD D N S HS

Value for money

1 Quality with respect to the price of the car HD D N S HS
2 Price with respect to the quality of the car HD D N S HS

Overall brand satisfaction

1 With usage of the car HD D N S HS
2 With the car compared to expectations at the time of purchase HD D N S HS
3 Overall customer satisfaction HD D N S HS

Brand loyalty intention

1 This car brand is my first choice SD D I A SA
2 I will recommend my car brand to my friends/relatives/others SD D I A SA
I will recommend the dealer to others from where the vehicle SD D I A SA
3
was purchased
24. If you are going to buy a new car, will you buy in the

O Same segment, same manufacturer

O Same segment, different manufacturer

O Upper segment, same manufacturer

O Upper segment, different manufacturer

25. Any other Suggestions for car manufacturers:

26. Do you have any comment/suggestion on this questionnaire? If any

question(s) are difficult to understand or to answer, please mention them.

=================================
=================

Thank you for your time and kind cooperation.

APPENDIX - II
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