Project Report
On
“Measuring success of database new product
launches in the indian market”
Dr. APJ ABDUL KALAM TECHNICAL UNIVERSITY, LUCKNOW IN THE PARTIAL
FULFILMENT OF THE REQUIREMENT FOR THE DEGREE
OF
MASTER OF BUSINESS ADMINISTRATION
Batch(2019-2021)
|
Submitted To: Mrs. Priyanka Dalmia Assistant Professor, MIET, Meerut |
Submitted
By: VIJAY PRATAP CHAUHAN MBA
IV Semester Roll No: 1900680700122 |
MEERUT INSTITUTE OF
ENGINEERING & TECHNOLOGY,
MEERUT
Dr. APJ ABDUL KALAM TECHNICAL UNIVERSITY
LUCKNOW(U.P.)
DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION
MEERUT INSTITUE OF ENGINNEERING & TECHNOLOGY
MEERUT
-250005
CERTIFICATE BY GUIDE
This is to certify that
project regarding topic “Measuring
success of database new product launches in the
indian market mba it” is a bonafied
and genuine project Work done by “VIJAY PRATAP CHAUHAN” in partial fulfilment for
the degree of Master of Business Administration.
………………………………………
MRS.
PRIYANKA DALMIA
Department of Master of Business Administration
M.I.E.T MEERUT -250005
ACKNOWLEDGEMENT
Progress
in life, business or any projects comes through taking initiatives &
continuing to progress on new concepts & ideas. The original momentum is
not enough to keep you moving forward. Your progress will grit to halt unless
you refill your engine for inspiration with fuel of fresh ideas enthusiasm
& proper guidance. I would like to thank all those who helped me directly
or indirectly and whose diligent efforts made this project possible.
My
thanks also goes to Mrs. PRIYANKA
DALMIA(Assistant Professor) for her valuable suggestions and direction for
the project.
I
also take this opportunity to express my profound gratitude to all those
responds who made this project successfully with me.
Last
but not the least; I would like to thank
you my parents and colleagues for their kind support.
.
(VIJAY PRATAP CHAUHAN - 1900680700122)
DECLARATION
I VIJAY PRATAP CHAUHAN, Student
of MBA of Meerut Institute of Engineering & Technology, hereby declare
that the report “Measuring success of database new
product launches in the indian market
mba it” submitted to Dr. A.P.J. Abdul
Kalam Technical University, Lucknow, for the course of MASTER OF BUSINESS ADMINISTRATION, is my original work and is meant
purely for academic purpose.
The information and data given in the report is authentic to the best of
my knowledge
Date: 05-08-2021 VIJAY
PRATAP CHAUHAN
Place: MEERUT Roll
No. 1900680700122
MBA IV Semester
TABLE OF CONTENTS
1. Objectives…………………………………………………………3
2. Abstract……………………………………………………………4
3. Indian
Automobile market…………………………………………5
4. Segmentation
& Profile…………………………………………...11
4. New
product development………………………………………...21
5. New
Product: Success or failure…………………………………..23
5. Problem
of measuring success of new product……………………25
6. Critical
factors of success of new products………………………..26
7. Measuring
Success of New Products……………………………...28
8. Measuring
success for automobiles...……………………………...31
9. Market
share and product portfolio…………………...…………...34
10. Buying
Behavior………………………………………………….44
11. Satisfaction
survey………………………………………………..52
12. Awareness………………………………………………………...56
13. Advocacy………………………………………………………….57
14. Conclusion………………………………………………………...58
Annexure-
I-Questtionnaire……………………………………………61
Annexure-
II-SIAM data………………………………………………65
References…………………………………………………………………………..71
To study the
various new products launch in Indian automobile industry.
To understand various factors that affect preference of consumers while
purchasing an automobile
Critical factors responsible for the success of new product in Indian
automobile industry
The Indian auto industry, worth US$ 34 billion in
2006, has grown at a CAGR of 14 per cent over the last five years with total
sales of vehicles reaching around 9 million vehicles in 2005-06. That number is
likely to see a significant boost, given that the first half of 2006-07 has
already witnessed a staggering growth rate of 17.12 per cent.
This project deals with a critical analysis of
Indian automobile industry and its growth it has shown in past years. Even
though industry has been showing good growth in numbers it is more important to
see whether it is really moving up the ladder. The growth it shows should be in
terms of success of new product launches. So this project is to analyze the
success rate of new product launches and to see whether the growth shown in
Indian automobile industry is really due to new product launches and their
success. Due to exhaustive nature of the industry, the study would be confined
to cars only. Now the project deals with measuring success of new product launch
for cars launched in the past four years. Further, short listing of some car
models have been done to make the study more specific and effective.
History and development
The history of the automobile industry in India actually
began about 4,000 years ago when the first wheel was used for transportation.
In the early 15th century, the Portuguese arrived in China and the interaction
of the two cultures led to a variety of new technologies, including the
creation of a wheel that turned under its own power. By the 1600s, small
steam-powered engine models were developed, but it was another century before a
full-sized engine-powered automobile was created. The dream a carriage that
moved on its own was realized only in the 18th century when the first car
rolled on the streets. Steam, petroleum gas, electricity and petrol started to
be used in these cars.
On a growth path
The Indian auto industry, worth US$ 34 billion in
2006, has grown at a CAGR of 14 per cent over the last five years with total
sales of vehicles reaching around 9 million vehicles in 2005-06. That number is
likely to see a significant boost, given that the first half of 2006-07 has
already witnessed a staggering growth rate of 17.12 per cent. Domestic car
sales for the April-September 2006 period stood at an impressive 4.86 million
vehicles, including cars, two-wheelers and commercial vehicles. According to
industry experts, if
this trend continues, sales could touch 10 million
by March 2007, clocking an annual growth rate of 20 per cent. In addition, the
Government‘s announcement to cut excise duty on small cars will soon see India
emerging as the world's largest manufacturing hub for small or compact cars.
Destination India
India is
on every major global automobile player‘s roadmap, and it isn‘t hard to see
why:
India is the second largest two-wheeler market in the world Fourth
largest commercial vehicle market in the world 11th largest passenger car
market in the world Expected to be the seventh largest by 2016
Robust production
India‘s car production capacity is in for a US$ 2
billion boost. Auto majors have announced massive investment plans which will
push the country‘s car production past the psychological 2 million mark by the
end of fiscal 2006-07, up 70 per cent from 1.4 million units now. Even at 2
million, India, which stood at No.11 among global car producing nations, will
move two steps ahead, past UK (1.6 million) and Canada (1.35 million). It will
be neck and neck with Brazil‘s 2-million capacity at No.8.
The automobile industry witnessed a growth of 19.35
percent in April-July 2006 when compared to April-July 2005, as is evident from
this year‘s production trends.
Automobile Production Trends
|
|
|
|
|
|
|
|
Category |
2004-05 |
2005-06 (In no.s) |
|
|
|
|
|
|
|
|
|
M&HCVs |
214807 |
219297 |
|
|
|
|
|
|
|
|
|
LCVs |
138896 |
171781 |
|
|
|
|
|
|
|
|
|
Total CVs |
353703 |
391078 |
|
|
|
|
|
|
|
|
|
Passenger Cars |
960487 |
1045881 |
|
|
|
|
|
|
|
|
|
Utility Vehicles |
182018 |
196371 |
|
|
|
|
|
|
|
|
|
MPVs |
67371 |
66661 |
|
|
|
|
|
|
|
|
|
Total Passenger vehicles |
1209876 |
1308913 |
|
|
|
|
|
|
|
|
|
Scooters |
987498 |
1020013 |
|
|
|
|
|
|
|
|
|
Motorcycles |
5193894 |
6201214 |
|
|
|
|
|
|
|
|
|
Mopeds |
348437 |
379574 |
|
|
|
|
|
|
|
|
|
Total Two Wheelers |
6529829 |
7600801 |
|
|
|
|
|
|
|
|
|
Three Wheelers |
374445 |
434424 |
|
|
|
|
|
|
|
|
|
Grand Total |
8467853 |
9735216 |
|
|
|
|
|
|
|
Source: Society of Indian Automobile Manufacturers (SIAM)
Domestic Sales
Increased affluence, wider selection and the ready
availability of car loans is driving the Indian car market through the roof.
During the last five years (2000-05), the production of passenger cars in India
increased by more than 100 per cent. India achieved the sales of 1.11 million
vehicles last year (2005).
Domestic sales have been growing at a clipping
pace:
Passenger car sales rose by 22.84 per cent during April-September 2006,
compared to the corresponding period last year.
The cumulative growth of overall sales of passenger vehicles during
April-September of 2006-07 was 20.73 percent.
Utility Vehicle (UVs) sales grew at 12.85 per cent during the same
period. Overall, the two wheeler market grew by 15.49 per cent during the
April-September period of financial year 2006-07, over the same period last
year. Motorcycles grew by 18.53 per cent, scooters at 0.12 percent and mopeds
at about 6.53 percent over April-September 2005.
Three wheeler sales grew at 19.90 per cent. Goods
carriers grew by 26.16 per cent and passenger carriers grew at 15.78 per cent
during the April-September 2006 period, over the same period last year.
Overall, the commercial vehicles segment grew at
36.96 per cent. Growth of Medium and Heavy Commercial Vehicles was 39.92 per
cent. Light Commercial Vehicles also performed well with a growth of 32.86
percent.
Exports
India is fast emerging as a manufacturing base for
car exports. According to the Society of Indian Automobile Manufacturers
(SIAM), a total of 89,338 vehicles were exported in September 2006, a 58.07 per
cent jump as compared to the same month last year. While passenger vehicle
exports grew at 13.15 per cent, two-wheelers and commercial vehicle exports
grew at 27.80 per cent.
Investments
The Indian automobile sector has witnessed a slew
of investments in the first half of 2006, dominated by plans for new plants and
ramped up capacities. Here are some of the vehicle manufacturers dominating the
headlines with their impressive plans:
Punjab-based International Cars and Motors (ICML)
will invest US$ 223.7 million in Himachal Pradesh to set up a plant to
manufacture diesel-operated multi utility vehicles (MUVs).
Nissan is set to establish its manufacturing base
in Gujarat. The company, along with Suzuki, is planning to invest upto US$
671.2 million for a 600,000 cars per annum plant.
Toyota Kirloskar Motors is likely to set up its
second plant near its existing facility in Bidadi, Karnataka.
Hyundai Motor is set to invest an additional US$
700 million into its Indian operations based in Tamil Nadu, to expand the
company‘s passenger car capacity to 600,000 units per annum from the present
300,000, as well as in a new engine and transmission unit.
The Government is planning to set up three
dedicated corridors for automobile companies exporting to the rest of the
world. Dedicated rail corridors are proposed between Gurgaon and Mumbai port,
Pune and Mumbai including JNPT and Jamshedpur and Kolkata. A dedicated highway
for automobile movement is also being considered between Gurgaon and Delhi. The
proposal also includes creating the last-mile, road-port connectivity at all
the four ports.
Foreign players in India
Calendar 2006 has seen the entry of many high-end
brands into the country. The Indian automobile market will see at least 30 new
launches, spanning everything from affordable hatchbacks to mid-size models to
super luxury high-end cars and SUVs.
Mercedes, BMW, Porsche, Audi, Bentley and Rolls
Royce are already here. Now, the Italian marquee Lamborghini is also planning
to enter the country. The Italian marquee plans to launch the Gallardo.
German luxury car maker Audi AG is preparing to
drive into India a range of sporty, lifestyle cars like S8 and RS4 early next
year. The year 2007 will also mark Audi's entry into merchandising in Indian
car bazaar.
General Motors launched Aveo this year. GM plans to bring in a sporty
variant of the Chevy Optra to add to its existing line-up.
The automobile companies manufacturing cars in
India are :
Maruti
Udyog Limited
Tata
Motors
General
Motors
Hyundai
Motors India Limited
Toyota
Kirloskar
FIAT
Automobiles
Hindustan
Motors
Ford
Motors
BMW
Skoda Auto
Honda
Siel
Mahindra
Renault
Daimler
Chrysler
Nissan
Motors
Volkswagen
Audi
A brief about some top car companies which are
relevant with the project is mentioned. It also includes the segmentation of
the Indian market which is on the basis of length of the car.
Segmentation
of the Indian Car Market
Segmentation of cars in Indian markert is mainly done on the length of
the car or the price of the car. Segmentation on the basis of length is done
as: Passenger cars
• Segment
A1 (mini) – cars having a length of up to 3,400mm
• Segment
A2 (compact) – cars having a length of 3,401-4,000mm
• Segment
A3 (mid-size) – cars having a length of 4,001-4,500mm
• Segment
A4 (executive) – cars having a length of 4,501-4,700mm
• Segment
A5 (premium) – cars having a length of 4,701-5,000mm
• Segment
A6 (Luxury) – cars having a length of more than 5,000mm
The less than US$6,500 segment or the ‗A‘ class,
the Maruti 800 is the only model in this segment, has received a new lease of
life when most had written about its demise. The ‗B‘ segment US$6,500 to
US$10,900 is being powered by growing sales of Hyundai Santro and Maruti Wagon
R and Alto models. It is the mid-sized or the ‗C‘ segments US$10,900 to
US$21,750 and the premium or ‗D‘ segment US$21,750 and above which has
witnessed a lot of activity in the recent past. This market insight discusses a
few developments taking place in these two sub-segments.
The launch of the Skoda Octavia in late 2001
started this trend. Priced at an attractive US$21,000 to US$22,500 with a
luxury feel to it, the model gave its higher priced peers in the ‗D‘ segment
like the Honda Accord, Ford Mondeo and Hyundai Sonata a run for their money.
Within a short time, this vehicle became the largest selling model in the
premium end of the segment. It sold 6,019 units during the period April 2002 to
March 2003 – half of entire sales in the ‗D‘ segment. Following its footsteps,
General Motors India launched the Chevrolet Optra. Priced at US$17,200 it power
steering, safety airbags, and air filters are included in this purchase price.
This vehicle is aimed at beating Skoda. There is also Tata‘s mid-sized sedan
Indigo, which is priced at approximately US$10,600 and has signaled new
competition for the Maruti Esteem and Ford Ikon. It seems that price
competition will be the new mantra going forward. Price competition will be in
a segment, which many believed was relatively price inelastic. This has been
disproved by the success of the Octavia. Time will
tell whether the new launches will be able to match its success.
What will the likely success of ‗C‘ segment cars
mean for the largest selling ‗B‘ segment? Given the improving economic climate
and easy availability of credit, some customers would certainly think of
replacing their existing ‗B‘ segment cars with a competitively priced ‗C‘
segment model. However, it widely known that a large body of Indian consumers
would still prefer the low cost of ownership of a ‗B‘ segment car like Maruti
Zen. Frost & Sullivan believes that the new launches in the ‗C‘ segment
cars could also affect the fortunes of the premium end of the market. With
models like the Optra carrying a host of advanced features, some consumers
would count it as a premium class vehicle. Such a model could well be the
vehicle of choice for an owner of a premium end car.
Activity in the ‗D‘ segment is being dominated by
new model launches. After tasting success with its utility vehicle Qualis,
Toyota launched its Corolla and Camry models. General Motor launched the Vectra
in early 2003. The Mercedes ‗C‘ Kompressor priced at US$54,300 will soon be
launched. Skoda has also confirmed plans to launch its Superb priced at
approximatelyUS$70,000.
A large part of the limelight is also been shared
by new launches of sport-utility vehicles. Until recently, this segment only
had the Tata Safari as part of the lineup of vehicles. With the launch of the
Mitsubishi Pajero, the Chevrolet Forrester, and the Hyundai Terracan, this
segment seems crowded. Given the price range of these models, their
manufacturers do not expect big sales numbers. However, their launches signal
that global automakers now sense an increasing level of maturity in the Indian
market.
Although sales have risen across the board, the
current spate of developments in the passenger car segment is largely
concentrated in the higher end of the market. This has coincided with the
return of the ‗feel good‘ factor in the Indian economy. Customers are feeling
more confident about the future and automakers hope to see this translate in to
greater sales of higher end cars. A brief profile of car manufacturing
companies is mentioned in the following section :
Hyundai Motor India Limited
Hyundai Motor India Limited (HMIL) is a wholly
owned subsidiary of Hyundai Motor Company, South Korea and is the second
largest and the fastest growing car manufacturer in India. HMIL presently
markets 16 variants of passenger cars in six segments. The Santro in the B
segment, Getz in the B+ segment, the Accent and Verna in the C segment, the
Elantra in the D segment, the Sonata Embera in the E segment and the Tucson in
the SUV segment.
Hyundai Motor India, continuing its tradition of
being the fastest growing passenger car manufacturer, registered total sales of
299,513 vehicles in calendar year (CY) 2006, an increase of 18.5 percent over
CY 2005. In the domestic market it clocked a growth of 19.1 percent a compared
to 2005, with 186,174 units, while overseas sales grew by 17.4 percent, with
exports of 113,339units.
HMIL‘s fully integrated state-of-the-art
manufacturing plant near Chennai boasts some of the most advanced production,
quality and testing capabilities in the country. In continuation of its
investment in providing the Indian customer global technology, HMIL is setting
up its second plant, which will produce an additional 300,000 units per annum,
raising HMIL‘s total production capacity to 600,000 units per annum by end of
2007.
HMIL is investing to expand capacity in line with
its positioning as HMC‘s global export hub for compact cars. Apart from
expansion of production capacity, HMIL plans to expand its dealer network,
which will be increased from 183 to 250 this year. And with the company‘s
greater focus on the quality of its after-sales service, HMIL‘s service network
will be expanded to around 1,000 in2007.
The year 2006 has been a significant year for
Hyundai Motor India. It achieved a significant milestone by rolling out the
fastest 300,000th export car. Hyundai exports to over 65 countries globally;
even as it plans to continue its thrust in existing export markets, it is
gearing up to step up its foray into new markets. The year just ended also saw
Hyundai Motor India attain other milestones such as the launch of the Verna and
yet another path-breaking record in its young journey by rolling out the
fastest 10,00,000th car.
FORD INDIA LIMITED
The very first mass produced vehicle was the model
T.built in 1908, in Ford plants around the world. Ever since the company has
been coming out with models with breakthrough technology. Now the company
stands tall among all automobile manufacturers and now houses some of the
world‘s most favourite brands of cars. If there is anything that‘s made this
possible its Ford‘s ―Can Do‖ philosophy. The philosophy that triggered Ford‘s
growth worldwide. In India, this is reflected in the company‘s sprawling,
350 acre manufacturing plant in Maramalai Nagar
near Chennai. A project that has been set up with a investment of Rs.1700
crore. Ford India Limited is a subsidiary of Ford Motor Company, currently Ford
has a 78% stake, which is going upto
92% soon.The Maraimalai Nagar Plant of Ford India Limited, located roughly
45k.m.from Chennai, provides employment to over
20000 people.The plant has the capacity to manufacture 1,00,000 vehicles per
annum, equipped with state-of-the-art
vehicle manufacturing technology from Ford.
Presently offering seven different models, Ford
India Limited (FIL) is catching up fast with the Indian consumer. Looks like
FIL is all set to conquer the Indian market like rest of the world.
General Motors
Founded in 1908, General Motors Corporation, the
world's largest vehicle manufacturer, designs, builds and markets cars and
trucks worldwide. GM's vision is to be the world leader in transportation
products and related services, by unveiling new products and the most exciting
lineup in its history. GM's major markets are North America, Europe, Asia
Pacific, Latin America, Africa and the Middle East. Its largest market is North
America, where it is in its 78th year as market leader.
GM cars and trucks are sold under
the following brands: Cadillac, Chevrolet, Buick, GMC, Holden, Hummer,
Oldsmobile, Opel, Pontiac, Saab, Saturn and Vauxhall.
GM, the worldwide leader in car manufacturing, has
had a long association with India – from 1928 till 1954, it used to assemble
Chevrolet cars, trucks, buses and batteries for the domestic market as well as
for exports. General Motors India was formed in 1994 as a 50:50 joint venture
between General Motors Corporation and the C.K. Birla Group of Companies. In
1999, GM bought out its partner‘s shareholding and GM India became a
fully-owned subsidiary of GM Corporation. The total investment in GMI as of
today is approximately US$ 252 million. GM India offers products under the
Chevrolet and Opel brands in the country and has a total workforce of 1,200
personnel.
GM India launched its first car model, the Opel
Astra, in 1996. The next model, Opel Corsa, was launched in 2000 and two
variants of this model have been subsequently launched – Corsa Swing in 2001
and Corsa Sail in 2003.
In 2003, the company entered the MUV segment and
launched the Chevrolet brand in India through the Forester. It also launched
the Opel Vectra and Chevrolet Optra. Vectra
and Forester were imported as CBUs while Optra was
assembled in the Halol plant. In 2004, the company has launched another MUV
model, the Tavera.
With the recent launch of its new car models and a
few others in the pipeline, GM India is on the road to breaking even and
profitability this year. The company is targeting a turnover of US$ 375 million
during the year, up by US$ 208 million from last year.
Maruti Suzuki
Maruti Udyog Limited (MUL) was
established in Feb 1981 through an Act of Parliament, as a Government company
with Suzuki Motor Corporation of Japan holding 26 per cent stake. It was
entrusted the task of achieving the following:
Modernization of the Indian Automobile Industry.
Production of vehicles in large volumes Production of fuel efficient vehicles.
Suzuki was an obvious choice because of its unparalled expertise
in small cars.
The Joint Venture agreement was
signed between Government of India and Suzuki Motor Company (now Suzuki Motor
Corporation of Japan) in Oct 1982.
The company went into production in a
record time of 13 months and the first car was rolled out from Maruti Udyog
Limited Gurgaon in December, 1983.
Market Share
Till date, over 6 million (60,00,000) Maruti cars have
rolled out from its manufacturing facilities.
At the end of 2005-06, Maruti had a market share of about
54 per cent of the Indian passenger car market. The company sold 5,61,822
vehicles in 2005-06 including exports of 34784 units. Maruti‘s cumulative
exports are over 4 lakh units.
Tata Motors
Tata Motors Limited is India's largest automobile
company, with revenues of Rs. 24,000 crores (USD 5.5 billion) in 2005-06. It is
the leader by far in commercial vehicles in each segment, and the second
largest in the passenger vehicles market with winning products in the compact,
midsize car and utility vehicle segments. The company is the world's fifth
largest medium and heavy commercial vehicle manufacturer.
Tata Motors, the first company from India's
engineering sector to be listed in the New York Stock Exchange (September
2004), has also emerged as a global automotive company. In 2004, it acquired
the Daewoo Commercial Vehicles Company, Korea's second largest truck maker. The
rechristened Tata Daewoo Commercial Vehicles Company has already begun to launch
new products.
Toyota Kirloskar
As a joint venture between Kirloskar Group and
Toyota Motor Corporation, Toyota Kirloskar Motor Private Limited (TKM) aims to
play a major role in the development of the automotive industry and the
creation of employment opportunities, not only through
its dealer network, but also through ancillary industries.
TKM's growth since inception can be attributed to
one simple, yet important aspect of its business philosophy - "Putting Customer First".
While managing growth, TKM has maintained its commitment to provide quality
products at a reasonable price and has
made every effort to meet changes in customer needs.
TKM firmly believes that the success of this
venture depends on providing high quality products and services to all valued
customers through the efforts of its team members.
TKM, along with its dedicated dealers and
suppliers, has adopted the "Growing Together" philosophy of its
parent company TMC to create long-term business growth. In this way, TKM aims
to further contribute to progress in the Indian automotive industry, realise
greater employement opportunities for local citizens, improve the quality of
life of the team members and promote robust economic activity in India.
Identifying and developing a new product is always a messy, experimental
process. For many companies this process is more difficult and less successful
than necessary. The process of introducing new products is as risky as it is
vital to the long-term success of companies. The number of new products
introduced globally is increasing every year, but most of them fail.
Revolutionary new products often come from upstart players or companies outside
the industry whose vision is not limited by a focus on the current business and
markets. To remain successful innovators, business managers must continually
review their
companies'
to meet the three conditions for effective innovation:
• Closeness to customers – Managers must know their customers and
understand their needs and requirements well,
• Multifunctional
teamwork – Successful product innovations are almost invariably
the result of people in the company working together in teams rather
than independently, and,
• Cross-functional communications – Innovations in most companies refer to
the information flow between the key functions.
One of the most important themes in innovation
research has been an attempt to identify the factors that are associated with
new product success. Measuring new product outcomes from innovation is also
crucial for our understanding the organizational behaviors related to, and the
resource allocation provided to, new product development. Although the
importance of measuring new product success is widely recognized, its treatment
remains elusive, partly due to the multidimensional nature of such success, the
different levels of analysis that can been examined, and the multiple
stakeholders who look for different things in the new product development
product. This has resulted in the use of large number of measures in the
assessment of new product performance. There are numerous problems in measuring
new product success. Taking into consideration the importance of a new product
for business performance of enterprise as a whole, it is necessary to identify
both the critical success factors and the measures. A review of relevant
literature indicates greater simplicity in the process of critical success
factors'
identification. Logically, there are some
differences, depending on the character of innovation (for example, radical
versus incremental innovations), business model of enterprise (market-oriented
enterprises as different forms of networks versus enterprises with traditional
business models), size of enterprise (big global companies versus small and
medium enterprises), etc. However, the problems arise in identifying the system
of new product success measures. The point is not in the deficiency of
individual measures, but in imprecise definition of the subject of measures as
well as in inadequacy of result interpretation. Isolated measures that are not
integrated in the system of performance measures of enterprise as a whole,
distort the picture of efficiency and effectiveness of enterprise. This is
especially related to the new product success evaluation. Attempting to
overcome the problem, the different models for valuation have been created. The
authors first analyze the critical factors of new product success, especially
in condition of expressed connection of different participants in value chain,
and, after that, they point out some problems in selection of new product
success measures.
New
Product : Success or Failure
The experiences of a large number of enterprises
show that the failure in product development, particularly related to the
products representing the basis for the creation of a whole range of other,
so-called product platforms, originates from the phase of the product concept
definition. The risk is more pronounced in the cases of developing the products
that should create the needs of consumers. In such circumstances, when
completely new products of high risk are created, technological and marketing
uncertainties have to be studied in order to reduce or eliminate the risk of
their implementation. The enterprises that are successful in this field are
characterized by the management through projects, which enables successful
management of each individual project and a network of projects within the
enterprise, of interactions and relations among different projects and of the
relationships with the environment . The surveys of the practices of successful
companies suggest that adequate approaches (methods and
techniques) in the product creation and development should be selected
in the conditions of abrupt technology and market changes. Different approaches
may be applied.
Problems
of Measuring Success of a New Product
• Creates a clear product course map of the
enterprise where the managers, regardless of their functional location,
understand the significance of the product for the enterprise. Product maps
help in defining key priorities, in timely decision-making and in defining the
products that shall represent the grounds for further development. This enables
not only the improvement of final products but also the elimination of the lost
efforts that divert the enterprise from more important activities. The product
maps, as well as the processes that create them, are the central parts of the
total product development process;
•
Develops the product strategy
"without voids". Successful firms create a multitude of products in
order to fill up the appearing voids in the market and satisfy new needs of
their consumers. By studying the consumers and their purchasing motives, new
market opportunities are identified and competition is neutralized;
• Collects
and uses valid information from the market and cooperates in particular with
consumers and suppliers. The product creation
process includes consumers-innovators, who are the first to accept the product
and who appear in the role of referential groups, which facilitates not only a
full satisfaction of consumers but enables the realization of the desired
enterprise performances.
CRITICAL
FACTORS OF THE SUCCESS OF NEW PRODUCTS
A significant issue related to the success of
managing a new product development project is the identification of critical
factors of success. This is the basis of their selection, determination of
priorities and allocation of resources, starting from the characteristics of
the new product project, major competencies of the enterprise and features of
the market (consumers and competition, above all). Since the measures of new
product success are different and each enterprise uses its own system of
standards, the enterprise management should decide on the project selection
criteria within the framework of a complex system of business performance
measurement. Technology was formerly considered as the only factor of a new
product success. A new product was the result of a proactive research and
development and the application of science. Such approach is known as the
technology pushing. This approach is still very successful, especially in
high-technology branches, where the changes in the market are very fast and projects
are extremely expensive and risky. The development cycles of such technologies,
as well as of the products resulting from their application, are ever shorter.
The producers of high-technology products are forced to shorten the periods of
new product development and launching. The process of new product development
is progressively acquiring the characteristics of a market-managed project.
Rapid technology and market changes impose the need to coordinate
research-developmental, technological and marketing strategies.
Numerous empirical research projects show that the
critical factors of the new product success are the following:
•
Definition of a new product prior
to its development – the analysis and selection of a target market,
identification of the benefits for potentially profitable consumers;
• Integration
of consumers into the process of value creation (from the idea to the
realization of the product). This is a very complex
process, in which the most difficult part is to provide reliable information
necessary for shaping a customized offer. The application of modern information
and communication technologies and the execution of
online marketing research enable successful overcoming of limitations,
while the costs of activities in the customization process are reduced to
acceptable limits;
• The
product innovativeness;
• The
product superiority based on the quality as a strategic instrument and on the
superior
value delivered;
• Superiority based on other elements of the offer – services offered to
consumers, which eventually increase the product value;
• Controlled
cannibalization;
• Flexibility
enhancing the adjustment potentials even in the industries falling into the
group of so-called mature ones. Computerized operations are the most
flexible. In view of the situation in some industries and branches,
particularly in certain enterprises, the levels of competence in flexible
production, and therefore innovation, are varying largely. However, empirical
research points out that the organizational culture is crucial for the
enterprise transformation into a flexible system that reacts proactively to the
market requirements;
• Inter-functional coordination, technological and marketing synergy and
involvement of the top management into the process of new product development,
which contributes to more efficient time management;
• High-quality
performance of new product development activities;
• Organization
and guidance of the project of a new product development, launching and
ommercialization
by adequate strategic positioning;
• Logistic activities largely restrain successful
commercialization of a new product. It is not enough just to make a product fit
the buyer's standards. Although the activities related to the product delivery
to the buyer enlarge the value for customers, they may represent significant
limitations as well. Alongside with the development of the Internet and
electronic trade, that is of the appropriate marketing infrastructure, it
becomes easier to solve the problems of delivering value to consumers
Measuring
Success of New Products
New products are important for business success of
enterprise as a whole. Measuring new product success and its contribution to
business performance of enterprise as a whole is a very complex process. A fundamental
problem when measuring new product success lies in the meaning of such success,
as it has not been well defined. The interpretation of success is affected by
the interest groups involved in new product development (R&R, production,
marketing). Complexity of measuring comes from character of innovation -
radical, incremental, compatible and incompatible. Radical innovation has a
high probability of failure but can be more profitable than incremental
innovation. Similarly, incompatible innovation can be more profitable than
compatible one. An idea is radical if it meets one or more of three tests: it
changes customer expectations and behaviors, it changes the basis of
competitive advantage and it changes industry economics
Once you've introduced a new product or service or
developed significant improvements to existing ones, you'll naturally want to
do some follow-up to measure the success of the project. Whether the
introduction is ultimately successful or not, you need to be able to learn from
the process to achieve more success down the line.
Most small companies cannot afford the complex and
costly consumer tracking studies used by larger, more sophisticated
competitors:
usage and attitude studies that examine consumer usage and attitude
about products, advertising, brand awareness, and brand image at a given point
in time trial and repeat purchase tracking studies that record weekly purchases
of similar products by target consumers, as well as the reasons for buying or
not buying the products (this type of study is sometimes called a diary panel)
simulated test marketing called "experimental primary lab
research," which is usually conducted in store malls under controlled
conditions
controlled field testing called "experimental primary field
research," which is usually conducted in a controlled group of stores
advertising awareness and recall studies that
examine the efficacy of print and electronic advertising on target buyers,
often conducted by the Burke, Starch, or AC Nielsen market research companies
But small
companies can conduct low-cost or
free qualitative research:
Talk to buyers and consumers about product
satisfaction and purchases. From a marketing research standpoint, this is
biased, qualitative research without standard interview controls. But it is
timely information and may be actionable. And it places you at
point-of-purchase, close to your buyers (e.g., retailers) and end users.
Conduct a test of advertising spending levels in
different test markets or, with a single business in one location, over
different time periods. It is relatively easy to vary introductory spending in
each market, if you are testing a number of geographical markets. However, one
should have significant spending differences of at least +/- 50 percent in each
market for each spending variable. Small companies (e.g., one store) may have
to vary spending levels over matched periods of time and compare sales results.
For example, try increasing your local newspaper advertising spending 50 percent
over the same quarter of the previous year.
Examine weekly company sales receipts for new account sales, compared to
receipts for reorders. This is an indirect, but free, way to measure initial
purchase vs. reorder sales. There are no reconciled opinions in the literature
on new product success measures.
The three most important aspects to be measured
are:
Financial
performance
Market
impact
Opportunity
window dimensions
rate of
success
percent
of sales
profitability
relative to investment
range of
technical success
influence
on sales
influence
on profit
success
in meeting sale goals
success
in meeting profit goals
profitability
relative to competition and global success.
.
Measuring
Success for automobiles
Development of a new product in case of automobiles
is a very difficult job. For different markets different conditions have to be
taken into account . It‘s important to look at the business from the customer‘s
and market‘s perspective. People are buying from you. The more you understand
your customer‘s needs and wants the more you can satisfy them. And the more you
understand how they buy — that is, their buying decision process — the greater
the likelihood your sales and marketing efforts will be successful. The measure
of success for an automobile is very difficult. Different organizations define
it in their own way. Time horizon has big say in measuring of the new product
success. The time over which you want to evaluate your product success changes
the the volume or amount you are expecting. But overall success for an
organization should fulfill these objectives:
Business acquisition/demand generation, which can include metrics such
as market share gains, lead acquisition and deal flow.
Product innovation/acceptance, which can include market adoption rates,
user attachment and affinity, loyalty and word-of-mouth.
Corporate image and brand identity, which can include growth in brand
value and financial equity, awareness and retention of employees.
Corporate vision and leadership, which can include share of voice and
discussion, retention and relevance of messaging, and tonality of coverage
. Due to exhaustive nature of the industry, the
study has been confined to cars only. The project deals with measuring success
of new product launch for cars launched in the past four years. Further, short
listing of some car models have been done to make the study more specific and
effective. Few models from varying segments and different manufacturers have
been short listed .These have been introduced in the past few years and are new
to the industry .
Few models that have been shortlisted are :
Maruti
Suzuki Swift
Toyota
Innova
Hyundai
Getz
Tata
Indigo
Ford
Fiesta
GM Aveo
There are certain parameters on the basis of which a car is evaluated in
the Indian market. Most of them include:-
1. Fitness
for purpose
2. Relevance
to the Indian market
3. Value for
money
4. Design
& styling
5. Engine,
gearbox & performance
6. Ride ,
handling & brakes
7. Driving
pleasure
8. Fuel
efficiency
9. Safety
10. Ownership
experience
In order to determine which success factors to
measure and the appropriate metrics for each, marketers must have a clear
understanding of the company's goals. A young company looking to gain traction
in the market is focused on different factors than a more established company
wanting to improve its customer relationships.
The
following parameters have been selected to measure the success of new products
in
Indian
automobile industry:
The passenger car industry was dominated by Premier
Automobiles Limited (PAL) and Hindustan Motors Limited (HM) before 1980. With
the entry of MUL in 1982, the market structure of the passenger car industry in
India changed dramatically. MUL captured a major share of the market as it
offered a better product at a lower price. Subsequent to the entry of MUL, the
market share of PAL and HM declined rapidly even as they were able to sustain
sales in volume terms. MUL continued to strengthen its dominance in the
passenger car market and faced virtually no competition till the sector was
opened up in 1993. MUL's market position was not affected even after the entry
of many foreign players as none of the new entrants targeted the small car
segment. MUL's pricing was very competitive as it had relatively higher
indigenisation levels and established vendor base besides a depreciated plant,
and none of the newer players could penetrate this segment.
However, in the late 1990s, Hyundai, Tata Motors
and Daewoo launched Santro, Indica and Matiz respectively, in the Rs. 0.3-0.4
million range. Although MUL continued to be the market leader, its share in the
total passenger car sales has been declining and stood at 50.8% in FY2003 as
against 54.5% in FY2002 accounted for by its models (Maruti 800, Omni, Zen,
Alto, Wagon R, Esteem and Baleno, Versa, Grand Vitara) across different price
ranges. The company has been able to strengthen its market share during
H1FY2004 at 50.2% (up from 48.1% in H1FY2003). In just four years since the
commencement of production, Hyundai Motors India has emerged the second largest
player in the Indian automobile market.
H1FY2005 H1FY2006
Profiles
of Select Players in the Indian Automobile Industry
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Year of |
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Indian |
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Foreign |
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Name |
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Collaborator |
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incor- |
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Partner |
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Equity |
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poration |
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DailmerChrysler |
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None |
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DailmerChrysler
AG |
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100% |
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1995 |
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India Private Ltd |
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Fiat India |
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Automobiles Pvt |
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None |
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Fiat Auto
SPA, Italy |
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100% |
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1997 |
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Limited |
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Ford India Limited |
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Mahindra & |
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Ford Motor |
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84.1% |
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195 |
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Mahindra Ltd |
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Company, USA |
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General Motors |
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- |
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General Motors |
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100% |
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1995 |
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India Limted |
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Corporation, USA |
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Hindustan Motors |
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CK Birla Group |
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None |
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100% |
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1940s |
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Honda Siel Cars |
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Honda Motor |
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Siel Limited |
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Company Limited, |
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99% |
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1995 |
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India Limited |
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Japan |
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Hyundai Motor |
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None |
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Hyundai Motor |
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100% |
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1996 |
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India Limited |
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Company, Korea |
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Maruti Udyog |
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Government |
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Suzuki Motor |
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54.2% |
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1982 |
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Limited |
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of India |
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Company, Japan |
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Tata Motors |
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Tata Group |
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None |
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- |
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1942 |
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Limited |
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Toyota Kirloskar |
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Kirloskar |
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Toyota Motor |
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88.9% |
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1997 |
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Motors Limited |
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Group |
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Corporation, Japan |
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The sales to capacity ratio for select players4 in the Indian passenger car
industry has improved from 66% in FY1999 to 73% in FY2004.
In most mature markets, there are around half a
dozen players dominating the passenger car industry. The volumes of most
players are below 100,000-150,000 units a year, the level that is considered
viable in the developing economies. With low volumes, the manufacturers are not
able to realise economies. Further, with the new environmental norms being
proposed, the cost of compliance may add to
the cost of production. Some of the critical
success factors for passenger car manufacturers in the emerging scenario are
indigenization levels, reach of dealer network, efficiency of after-sales
service, volumes, and pricing.
With the liberalization of the automobile sector in
the early 1990s, most of the international players entered the Indian market
through the joint venture (JV) route. While foreign manufacturers brought in
the latest in automobile technology, the Indian partners contributed their
understanding of the local market. This understanding of the local markets was
particularly useful in building dealership and distribution networks.
However, with the Indian JV partners not able to
pump in the requisite capital for expansion, some JVs have been converted into
wholly owned subsidiaries of the foreign parent or the foreign parent has
increased its stake in the JV significantly. Ford India and Toyota Kirloskar
Motors are cases in point. With leading international players demonstrating
increasing commitment to their Indian ventures, the market is likely to
consolidate over time.
The Ford Fiesta has quickly climbed up the market share ladder. Within a
year of its launch, the car has become the second largest selling family sedan
in the Indian market. Ford Fiesta enjoys a market share of about 18 % in its
segment.Of course, the more popular (by a big margin) of the two models —
petrol and diesel — is the latter, and for obvious reasons. The Fiesta 1.4
TDCi, with its advanced, `fuel-frugal' common rail injection diesel technology
engine and its diesel fuel advantage is clearly the first choice amongst
fuel-efficiency conscious sedan buyers.
GM Aveo
The Aveo's big, deep-set grille, trapezoidal
headlights and strong chin give it an imposing look that makes it look bigger
than it actually is. GM has also gone all out to make the Aveo's interiors look
and feel plush. It falls short in a few areas like the handling, high speed
composure and gearshift, but still manages to come across as a value-formoney
package.The Aveo is available in two engine capacities 1.4 and 1.6 litre petrol
variants. . The sedan is priced at a nifty Rs 5.5 lakh for the base model.In
the Indian automobile market, the Aveo will give
primarily compete with the Honda City, Ford Fiesta and
Hyundai Accent. The Aveo has quickly acquired a
market share of around 5 % in a very span of time.The Aveo has given GM a push
in the Indian automobile market. This is the first
time GM entered the volume segment. GM wanted to be
seen as volume player in India and Aveo has just given them that .
Tata Indigo
Tata Engineering signaled its impending entry into
the mid-size segment with the naming of the indigenously developed Tata Indigo,
India‘s first sedan. The car derives its name from the words ‗India‘ and ‗go‘,
as it symbolizes a nation on the move and is aimed at Indians on the go wanting
to make a purposeful statement.
Tata Indigo is targeted at people who exude energy,
enthusiasm, ambition and the desire to succeed and are raring to go, undaunted
by new challenges. Powered by a 85 bhp petrol and a 62 bhp turbo-diesel engine,
the car will be launched with 14-inch wheels and
a
first-in-class independent three
link and strut type rear suspension with anti-roll bar seen only in more
premium segment cars. It has 500 litres of trunk space and 42 litres of fuel
tank capacity, more than adequate for long outstation drives with the family.
Currently it enjoys a market share of around 17 % in its segment.
Maruti Swift brings a feeling of freshness to the compact
car segment. Its appealing looks, spacious interiors, and a whole lot of
user-friendly features at once catch your attention. Maruti Swift comes in
three variants-Maruti Swift LXi, Maruti Swift VXi, and Maruti Swift ZXi.
Maruti Suzuki Swift comes with a number of safety features
such as collapsible steering column, front seatbelt pre-tensioners with load
limiters, and energy absorbing trim all around. Active safety technologies
include dual front airbags, and antilock braking system together with
electronic brake-force-distribution. Swift enjoys a share of more than 50 % in
its hatch back segment and sells around 5500-6000 units per month.As a result
it is giving tough competition to cars even in other segment due its big car
features..
Hyundai Getz
The 3810 mm long Getz is in the B plus segment in
terms of length, but is truly `smack bang' in the C class in terms of interior
room, comfort, refinement and performance. In terms of all these it is at least
a match for the Ford Ikon, the Maruti Esteem, or the Tata Indigo and even its
own sibling, the Accent. It enjoys a market share of about 20% in its segment.
Toyota Innova
Showing the way forward in though and execution as
also a new way of motoring life is Toyota with the classy and powerful Innova,
heralding a whole new category. The look is all new and refreshingly curvy and
pleasing where the boxy Qualis looked like a weightlifter on skinny legs.
Toyota has probably the best diesel engine in its class on offer, period.
Toyota's famous D4D common rail diesel engine is a proven performer, having
excelled not only in various pick-ups and SUVs in Asia but also in certain
saloons in Europe. This engine has capacity - 2494cc - to begin with, has a
strong dohc 16-valve
top end force fed by a turbocharger and the latest
generation common rail diesel injection system to make for not just a punchy
and frugal prime mover but also a very refined powerplant which effortlessly
meets the latest Euro III emission norms.It enjoys a market share of above 40 %
in the MUV segment.
Buying
behavior exhibited while purchasing an automobile
According to the primary research conducted emotive
needs such as potency, prestige, and status account for over 50% of the car
buyers in India.
The study
identifies the following six need segments in the Indian automotive market:
Contrary to the belief that prestige and status
needs are pre-dominantly among buyers of higher-end vehicles, the study clearly
reveals that needs exist across vehicle segments. While prestige and potency
related needs are the key motivators for entry luxury buyers, these needs exist
across segments, including the cheaper small cars.
The key
drivers for the six need segments in India are summarized below:
Potency buyers are motivated by a need to attract opposite sex and feel
powerful; brand image of trendy and innovative appeals to this group.
Utility buyers seek a need for basic transportation and care for family;
Value for money and cost of ownership are the benefits that these buyers
associate with. Prestige buyers are motivated by a need for prestige, indulge
self, and exclusivity; They are least price sensitive and desirous of latest/
futuristic features in cars Adventure buyers seek fun & adventure and to
increase popularity; SUV finds preference for these buyers who relate to their
cars as ―lover‖.
Status buyers want to show-off success and attract attention; Superior
craftsmanship and best technology are imagery issues that this group relates
to.
Liberation is the smallest of the six need segments
– these buyers seek increased freedom and latest technology; safety
consciousness is relatively higher among them.
It is apparent from the need segment drivers that a
majority of motives are about what a consumer desires to communicate to the
outside world based on the car he/ she uses.Therefore, it is vital to
understand these underlying drivers for consumer behavior and position brands
accordingly instead of solely focusing on rational elements of
purchase such as fuel economy and engine power.
While brands cut across different need segments due
to a similar identity, the varying degrees of ―fit‖ is determined by its soul
or persona. Needs such as adventure and liberation are more expressive, while
status need is more subdued. Similarly, potency need is about self-assertion
and more individual oriented, whereas prestige is more about affiliation and
family oriented.
The two
examples below further illustrate the essence of these differences.
Hyundai and Maruti: At a rational-level, both these
makes finds similarities on some of the rational brand drivers such as good
fuel economy, easy to maintain, practical cars, and good after-sales service
coverage. However, Hyundai‘s persona is more expressive, while Maruti‘s is more
protective. For example, increase popularity and show-off success are stronger
motivations for Hyundai, while basic transportation and fit-in socially is
higher for Maruti. Consequently, Hyundai finds a relatively better ―fit‖ with
adventure and potency as compared to utility and status for Maruti.
Honda and Toyota: Superior craftsmanship is a key
similarity for both these brands at a rational-level. However, Honda‘s
positioning is closer to the individual oriented zone of self-assertion –
reflected in one of its key motive of ―feel powerful‖. Toyota, in comparison,
falls more on the expressive and affiliative side with motives like ―feel
young‖ and ―for adventure and fun‖.
Disposable income was perceived as the key factor
driving passenger car demand. But over time, other factors included the need
for greater mobility, non-availability of public transport services,
availability of cheap finance, development of the used-car market, introduction
of new technologically superior models, increasing levels of urbanisation, and
changing consumer profiles.
Product Penetration
The penetration of passenger cars in India stood at
five per thousand persons as against 27 for two-wheelers in 2000.
Significantly, the Indian figures are lower than even those for economies like
Indonesia (14 and 62). The relatively high penetration of two-wheelers in India
reflects the population's need for mobility and their limited affordability.
Automotive Penetration (vehicles in use per thousand persons)*
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Passenger
Cars |
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Two
wheelers |
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USA |
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478 |
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14 |
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United Kingdom |
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373 |
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12 |
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Japan |
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395 |
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115 |
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Germany |
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508 |
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36 |
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China |
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3 |
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8 |
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Indonesia |
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14 |
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62 |
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South Korea |
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167 |
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59 |
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India |
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5 |
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27 |
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*Source: World Bank
Market Segmentation
Considering that affordability is the most
important demand driver in India, the domestic car market has been segmented on
the basis of vehicle price till SIAM introduced the length-based2
classification of passenger cars since FY2003. The automobile industry in India
is still concentrated around the mini and the compact segments which together
account for around 81.8% of the automobile market in terms of units sold in
FY2004.
The following table presents various models in each
segment of the domestic passenger car market. SIAM classification of Motor
cars(Segment-Wise) is discussed in
following section
Mini Compact Mid-Size Executive
Premium
Luxury
Vehicle Length
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3401 |
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3400mm |
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to |
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4001-4500 |
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4501-4700 |
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4701-5000 |
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>5001 |
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4000 |
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Maruti Udyog Ltd. |
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800 |
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Alto Zen |
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Esteem Baleno |
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Omni |
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Wagon R |
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Altura |
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Hyundai Motor India Ltd |
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Santro |
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Accent |
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Sonata |
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Hindustan Motors Ltd. |
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Ambassador |
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Contessa |
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Contessa |
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Mitsubishi |
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Lancer |
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Fiat India Automobile Ltd. |
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Palio |
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Siena Adventure |
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General Motors India Ltd. |
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Opel Corsa |
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Opel Corsa |
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Opel Vectra |
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Sail |
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Chevrolet
Optra |
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Honda Siel India Ltd. |
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City |
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Accord |
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Ford India Ltd. |
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Ikon |
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Mondeo |
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Tata Motors |
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Indica |
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Indigo |
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Mondeo |
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DaimlerChrysler India Ltd |
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Mercedes- |
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Mercedes |
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Mercedes |
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Benz C |
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Benz E |
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-Benz S |
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Class |
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Class |
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class |
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Skoda |
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Octavia |
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Laura |
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superb |
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Toyota Kirlosker |
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Corolla |
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Camry |
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As surveyed 44% of the people would like to change
their car within 3- 5 yrs of their purchase, where as only 24 % of the people
would retain their car for next 5-7 yrs.23 % of the people will retain their
car for only next 1-3 yrs from the date of purchase. This percentage depends
upon the age group of the people and their disposable income. People with
increasing level of incomes are more willing to change their car model and
upgrade to a better one. This results from their aspiration for growth in their
lives both professional and personal. Hence,the new car they upgrade to must be
a kind of aspiration to them and must inspire to reach for it.
more than
7yrs
9% 1 to 3yrs
23%
5 to 7yrs
24%
3 to 5 yrs
44%
1 to 3yrs
3 to 5 yrs
5 to 7yrs
more than 7yrs
Also which came out as a surprise around 58 % of
the people surveyed are attracted by the styling and performance (combined) of
the car.Only 24 % people are attracted by the mileage as a first criteria for
their attraction towards a car which was considered to be the
main criteria by most of the companies. Also 18 % still think brand name
is most important to them over other parameters when they first notice an
automobile.
18% 24%
24%
34%
Mileage
Styling
Performance
Brand name
Nowadays we see the automobile manufacturers
advertising their new technological terms such as CRDI, Duratorq , turbo as a
feature of the car which they believe will attract most customers but most of
the people do not understand these terms.
21%
yes
no
79%
When we talk about the brand names most of the people rate Japanese as
better manufacturers of cars (around 36 %) where as 27 % of people still trust
Germans the
innovators & quality specialists as the best car manufacturers.
Around 16 % and 13 % of people rate Koreans and Americans (respectively)as
preferred car manufacturers. A few people still like Indians as manufacturers
of automobiles.
|
40 |
36 |
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35 |
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30 |
27 |
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25 |
|
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20 |
16 |
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15 |
13 |
|
|
|
|
10 |
8 |
|
|
|
|
5 |
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0 |
1 |
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Americans
Germans
Indians
Japnese
Korean
While choosing an automobile, styling is very
important/important to 56 % of the people, where as 68 % of the people think
mileage is very important to them. 31 % of the people still think power and
performance is important/very important to them while only 16 % of the people
think brand name is very important/important to them. 26 % people believe that
interiors and ride quality is important to them while 34 % of people believe
hat after sales service is important to them.
Satisfaction Survey , Awareness
and Repurchase as measure
As mentioned earlier satisfaction survey is one of
the method to to measure the success of a car. A survey is carried out with the
existing owners of the the products and they are asked to give their rating on
the based if their experience with the product . Customer satisfaction can help
your business achieve a sustainable competitive advantage. It's about
understanding the way a customer feels after purchasing a product or service
and, in particular, whether or not that product or service met the customer's
expectations.
Customers primarily form their expectations through
past purchasing experiences, word-of-mouth from family, friends and colleagues
and information delivered through marketing activities, such as advertising or
public relations. If the customer's expectation isn't met, they will be
dissatisfied and it's very likely they will tell others about their
experience.
Why customer satisfaction is important in
automobile industry
A high
level of satisfaction can deliver many benefits, including:
Loyalty: a highly satisfied customer is a loyal customer.
Repeat purchase: a highly satisfied customer buys more products.
Referrals: a highly satisfied customer tells their family
and friends about the product or service.
Retention: a highly satisfied customer is less likely to switch
brands.
Reduced costs: a highly satisfied customer costs less to
serve than a new customer.
Premium prices: a highly satisfied customer is willing to
pay more for the product or service.
Satisfaction surveys are an important
method for collecting information about how your customers think and feel about
your brand, product or service. In the automobile industry which is a high
involvement product there are large no. of parameters while purchasing an
automobile. Different people have different needs and they choose the product
accordingly. In a car there are large
number of factors such as mileage, engine power and performance, interiors,
mechanical components, handling , braking etc which make an automobile . So all
these components have to be equally effective or according to their weights
demanded by the customer to make an automobile successful. More over the
segmentation for the vehicle has to be clearly defined. Even though
segmentation in Indian market is done on the length it should be done on the
customer needs. Different profile or set of profile should be made and segments
should be defined accordingly.
A satisfaction survey can help you to
understand the expectations of your customers, determine whether your customers
believe you are meeting those expectations, identify new customer requirements
or trends in the market and determine what areas of your business need
investment.
A good customer satisfaction survey
will also help you to understand the causes of dissatisfaction among your
customers. Once you've identified these issues, you'll be able to implement new
practices to improve customer satisfaction.
Each owner who takes part completes a sixteen question evaluation .They
include likes and dislikes about their car, what problems they‘ve had, quality
of dealer service and a section on running costs.
Owners rate their cars using a scale of 2 to
8(2,4,6,8) – 2 represents not satisfied while 8 is very satisfied. Then the
data is divided into six categories which covers all the aspects of the car
from mechanical components to after sales service.
THE CATEGORIES EXPLAINED
Mechanical Problems - uncovers satisfaction levels with the reliability of the car‘s
engine, suspension, transmission and braking systems.
Interior Problems - explores satisfaction with the reliability of seats, heating,
air-conditioning and ventilation, sound systems, dashboard and interior.
Exterior Problems - surveys body panels, paint problems, rust and corrosion and exterior
lights.
Vehicle Performance - looks at appeal of the car‘s ride, handling, braking, engine and
transmission.
Dealer
Service - evaluates the performance of
the franchised dealer network, from the ease of booking a service to customer
care. It also looks at how competent the service department is at diagnosing
and rectifying faults.
Ownership Costs - discloses owners‘ perceptions of value for money when at the filling
station, insuring and servicing the car.
Finally the car is given an overall score. This takes every aspect of
the car into account and is influenced most by reliability and vehicle quality,
followed by vehicle appeal, then ownership costs, and finally dealer service.
This pivotal figure is then expressed as a percentage and an overall rating.
getz
indigo
aveo
innova
32
35
29
41
Series1
fiesta
39
swift
34
0 10 20 30 40 50
Findings
It has been founded that according to the
satisfaction survey Toyota Innova tops the customer satisfaction ratings. It
has achieved a highest points i.e. the 41points.This shows customers who have
purchased Innova are highly satisfied with their car taking all the factors
such as mechanical components , interiors , exteriors after sales service into
consideration. Ford Fiesta has also reached a competitive total of 39 which
sets it apart from the other vehicles in its class. Even though it got less
scores in appealing , styling and interiors it got highest in the ownership
costs since it delivers a highest mileage.
Fiesta is followed by Tata Indigo and Swift which
have achieved a score of 35 and 34 respectively.Indigo is a good car but uts
engine still needs refinement.The engine delivers good power and mileage but
has the shortcomings of a diesel engine. Swift is an excellent car with drawbacks
only with the mileage and probably the price of the car. Also being a hatchback
it should have bigger boot which it lacks. With introduction of diesel engine
in swift which maruti has recently launched its sure going to be hit. Rest
remaining are Hyundai Getz and GM Aveo which have achieved a score of 32 and 29
respectively.
Awareness
According to survey 36 % of the people come to know about the car from
their friends and relatives. It is the the word of mouth that makes a car
popular.
|
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12% |
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34% |
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36% |
|
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18% |
|
|
Advertisements |
Magazines |
Friends/Relatives |
On the Road |
So the
experience of the owner with the product has to be a satisfactory one. More
than
50 % of
the people said they were aware of the product before the actual launch. This
clearly
shows that awareness was high among them but they were just waiting for the
launch
and wanted a market review.
13%
41%
22%
convince
recommend
won't recommend
negative recommend
24%
41 % of people say they would convince a person
planning to purchase a car that they have purchased whereas 24 % say they would
only recommend only.22% say they would not recommend anyone and would not like
to influence anyone decision.13 % of people feel they would give negative
recommendation.
Conclusion
On the basis of the parameters selected it clearly
shows that Toyota Innova and Ford Fiesta have topped the rankings in the
satisfaction survey.
More than 72 % of Innova owners say they are willing to repurchase it if provided
with subsequent developments with time . They would (around 60%) convince
others to purchase this car if in the same segment.Also taking other factors
that is the market share and the sales volume of the car it is clearly a
success for Toyota
Hence Innova has topped the group with that and the
next car that closely follows it is the Ford Fiesta . Around 63 % of people owning a fiesta say they are willing
to repurchase fiesta if buying a second car or changing the car.
Hence , Fiesta is the runners-up.Also taking sales
volume and market share Fiesta is clearly not lagging behind Innova and is
sense of pride for Ford.
Next car that comes up is the Maruti Swift. Swift is an excellent car wih a
sales volume of around 5500- 6000 per month. With mileage being only drawback
and the boot it will top rankings when diesel model is introduced.Around 54 %
of people say they repurchase this car if improved mileage could be delivered.
Next car is the Tata Indigo which has a higher satisfaction score than swift but is more
in Taxi segment and had an good sales volume initially but with introduction of
Fiesta sales volume has gone down. .
In the automobile industry which is a
high involvement product there are large no. of parameters while purchasing an
automobile. Different people have different needs and they choose the product
accordingly. In a car there are large number of factors such as mileage, engine
power and performance, interiors, mechanical components, handling , braking etc
which make an automobile . So all these components have to be equally effective
or according to their weights demanded by the customer to make an automobile
successful. More over the segmentation for the vehicle has to be clearly
defined. Even though segmentation in Indian market is done on the length it
should be done on the
customer needs. Different profile or
set of profile should be made and segments should be defined accordingly.
TRENDS IN THE INDIAN PASSENGER
CAR MARKET Changing Manufacturer-Customer Relationship
With competition among firms intensifying and new
models being launched, the Indian car industry has transformed into a buyers
market. There has been an increase in the bargaining power of buyers while the
power of suppliers is on the decline. This led to the industry providing
technologically superior models at competitive prices and consumers getting
attractive finance schemes and various cars off the shelf.
Further, there are opportunities for players to
spot gaps in the market and cater to particular niches like sports utility
vehicles. The key strategies in the Indian car market will be offering
good-quality cars that provide value for money, running innovative marketing
campaigns to attract potential buyers, and providing excellent after-sales
service. Companies which have a range of vehicles in all the segments of the
market, will be at a significant advantage because of their ability to
cross-subsidise models.
Dear Respondents,
The present research work is being carried out by
the students of ICFAI Business School, Gurgaon as a part of their academic
curriculum. The objective of this research is measure
the
success of new products in Indian automobile industry
. Please
feel free in giving your response as the information provided will be kept
confidential and will be utilized only for research purpose. There is no right
or wrong answers and there is no time limit to finish but try to finish it as
soon as possible.
Please
give the following particulars:
1) Name ____________________
________________(yrs.)
Age
2) Gender
i)
Male
ii) Female
3) Occupation
i)
Service
ii) Business
iii)
Professional
iv) Student
v)
Others
4) Monthly
household income
a) Less than
Rs.5000
b)
Rs.5001-15000
c) Rs.15001-30000
d)
More than Rs.30000
( i ) Swift
( ii ) Getz
(iii)
Aveo
(iv)
Fiesta
(v)
Innova
(vi)
Indigo
2. How much
time it has been with your car ?
(i)
Less than 1 yr
(ii)
1-2 yrs
(iii)
2-3 yrs
(iv)
3-4 yrs
3. How often
do you change your car or purchase a car
?
(i)
1-3 yrs
(ii)
3-5 yrs
(iii)
5-7 yrs
(iv)
more than 7yrs
4. What is
the first thing that attracts you towards a car ?
(i)
Mileage
(ii)
Styling & looks
(iii)
Power, performance & ride
quality
(iv)
Brand name
5. How
important to you are the following while purchasing a car :
|
Very Important |
Important |
Less Important |
Not
Important |
|
|
Styling(looks) |
___ |
___ |
___ |
___ |
|
Mileage |
___ |
___ |
___ |
___ |
|
Price |
___ |
___ |
___ |
___ |
|
Brand
Name |
___ |
___ |
___ |
___ |
|
Technology |
___ |
___ |
___ |
___ |
|
Ride
Quality & |
___ |
___ |
___ |
___ |
|
Interiors |
|
|
|
|
|
Power
& |
|
|
|
|
|
Performance |
___ |
___ |
___ |
___ |
|
After
sales service |
___ |
___ |
___ |
___ |
6.
Rank these car manufacturers in
the order you feel think they are better than the others?
(i)
Americans
(ii)
Germans
(iii)
Indians
(iv)
Japnese
(v)
Korean
7.
Do you understand the
technological terms such as CRDI, Duratorq, DICOR, Turbo etc.
(i)
Yes
(ii)
No
8. Where did
you first saw/spotted or came to know about the car you are owning ?
(i)
Advertisements
(ii)
Magazine reports
(iii)
Friends/ Relatives
(iv)
On the road
9.
How much you are satisfied with
the mechanical components(engine, suspension, Transmission etc) of the car ?
Very
Satisfied
Satisfied
Less Satisfied
Not satisfied
___
___
___
___
10. How much you are satisfied with the interiors (seats, air conditioning
,dash board, ventilation etc) of the car ?
Very
Satisfied
Satisfied
Less Satisfied
Not satisfied
___
___
___
___
11. How much
you are satisfied with the exterior (styling , body panels ,paint , rust
& corrosion prob. , exteriors lights etc) of the car ?
Very
Satisfied
Satisfied
Less Satisfied
Not satisfied
___
___
___
___
12. How much you are satisfied with the vehicle performance (car ride
,handling braking etc) of the car ?
Very
Satisfied
Satisfied
Less Satisfied
Not satisfied
___
___
___
___
13. How much you are satisfied with the after sales service(dealer
network,spares etc) of the car ?
Very
Satisfied
Satisfied
Less Satisfied
Not satisfied
___
___
___
___
14. How much you are satisfied with the ownership costs(mileage, insurance,
spare costs,servicing etc) of the car ?
Very
Satisfied
Satisfied
Less Satisfied
Not satisfied
___
___
___
___
15. A friend or relative of yours purchasing a car in the same segment as of
your car you would :
(i)
Convince him
(ii)
Recommend him
(iii)
Won‘t recommend
(iv)
Negative recommendation
16. If purchasing a second car or changing your car would you like to go for
your current car again ?
(i)
Yes
(ii)
No
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