2014

BUSINESS RESEARCH METHODS

RESEARCH REPORT ON PERCEPTION OF FIRST TIME BUYERS OF HATCHBACK CARS

BY: Group 11 Abhinav Pandey Animesh Raj Ravi Gupta 13A1HP039 13A3HP040 13A1HP105

Abhishek Guha Roy 13A2HP063 Akshat Sinha 13A3HP030

UNDER THE MENTORSHIP OF Dr. Bhaskar Basu

EXECUTIVE SUMMARY: THE INDIAN HATCHBACK

A hatchback is an automobile such that the boot is integrated with the cabin space. In our research, we have taken three hatchback cars divided into three different segments according to the buying behavior of first time potential buyers. A. Maruti Suzuki Wagon R B. Hyundai i10 C. Ford Figo THE B SEGMENT We have placed Maruti Suzuki Wagon R and Hyundai i10 into the B segment as the B-segment covers above entry level hatchback cars like Alto and TATA nano. These cars perform best during city drives and afford most creature comforts deemed necessary by todays customer. They usually feature 1 to 1.2 liter engines and are priced between 3 to 5 lakh rupees Hyundai i10: i10 has been a raging success, taking off from where the Santro left. It is the market benchmark for quality and practicality. It has really strengthened Hyundais position in India. Maruti Suzuki Wagon R: The Wagon R has always been hugely popular in India. With its new avatar, a new engine, new interiorsit just got better.

What drives this segment?

Dominated by Maruti, with 4 offerings in the segment including the recently launched Celerio, the B segment is a lucrative market to tap. This segment has seen quite a bit of activity recently. The keys to success remain the same as with the A segment, with fuel efficiency and reliability taking the crown. Customers look for a few creature comforts as well, and good interiors coupled with a stylish design can pull in the younger buyer. Mostly these cars find use in the city, hence ease of driving and good efficiency are a big advantage. The general absence of diesels in this segment can be one of the ways to enter the market. The bottleneck remains the cost of development and deployment for small capacity diesels

BRM report

Page 2

THE B+ SEGMENT We have placed Ford Figo into the B+ segment as the B+ segment covers the entire range of premium hatchbacks. These cars are just at home on the highway as they are in the city. Most new hatchbacks are launched in this segment. They usually feature engines above 1.2 liter and are priced between 4 to 7 lakh rupees. Undoubtedly, with the Indian buyer getting richer, the B+ segment is where all the action is. Ford Figo: Figo, Fords latest offering, has certainly created a blast in the market. The car is viewed as value for money and has been clocking more numbers than the rest of the Ford lineup combined.

What drives this segment?

The customer here is usually buying his second car, specifically for the city, or is an experienced buyer. Important factors can range from exclusivity, premium image to practicality and reliability. With a wide range of customer audience, positioning of the vehicle vis--vis the right customer bucket is essential for success. Pricing is a factor that must not be ignored.

BRM report

Page 3

TABLE OF CONTENTS BACKGROUND PROBLEM DEFINITION A. Statement of Objective B. Hypothesis RESEARCH AND DESIGN A. Secondary Data Internet Literature B. Design of collection method Questionnaire Design Survey Scaling Techniques C. Sampling process Target Population Sample Size Sampling Technique D. Sample gathering DATA PROCESSING, ANALYSIS & FINDINGS A. Data Analysis Assimilation Using Pivot Table Pie Charts CONCLUSION A. Summary B. Recommendations C. Limitations D. Appendix E. References Page. NO. 05 06 06 06 07 07 07 07 08 08 08 08 09 09 09 10 10 11 11 11 11 16 16 16 17 17 22

BRM report

Page 4

BACKGROUND For the past couple of years, Indian automobile market has achieved a special consideration among automobile manufacturers as it has been regarded as the most fruitful and rewarding automobile marketplace, especially for hatchbacks. In India, hatchback cars are considered as an average mans automobile, and it is also the segment where cars get a steady makeover, along with newer versions constantly being added to the list. Hatchback cars are those cars that have an access to the interiors once the rear door is open and also the luggage space is integrated with the passenger cabin and the rear seat can be folded or removed to increase the luggage space. The two row seater small compact cars are categorized as Hatchback cars. Due to its low pricing, better mileage, low maintenance and most importantly perfect for drive in city's heavy-traffic, it has become the most selling car segment. Hatchbacks occupy less parking space and is suitable for the metros where parking space is a major problem. Series of face lifted HATCHBACK CARS IN INDIA been launched and many more are yet to be launched. It seems the car manufacturers are aiming to revamp the entire small car or the hatchback segment. Comparing to last year, the new models of small cars has almost doubled this year. Even the car manufacturer of the luxury segment are now entering the hatchback segment.

BRM report

Page 5

PROBLEM DEFINITION The research is aimed to know the preference of first time buyers of hatchback cars based in Hyderabad on different parameters. The research carries the potential to analyze and determine the consumers perception and their buying behavior on the basis of different parameters like design, comfort, safety, fuel efficiency, brand preference, loyalty etc. The research also aims to dig out following benefits: Based on the different ages of employability like newly employed (22-30 years), well settled (30-60years) and retired (60plus) people, what are their perception and preferences as the first time buyers. What are the differences in the preferences of people in urban areas of Hyderabad.

a. STATEMENT OF OBJECTIVE The automobile industry in India is growing at the faster rate due to mushrooming middle class with higher disposable income. This has resulted in increase in the purchase of four wheelers particularly in the hatchback segments of automobiles. India represents a huge market in hatchback cars and the propensity to purchase is increasing day by day. The objective of this research is to analyze the preferences of middle class consumers, in the hatchback segment (Maruti Suzuki Wagon R, Hyundai i10, Ford Figo).

b. HYPOTHESIS A hypothesis is a hypothetical statement regarding the relation between two or more variables. They must be statements of the relationship between variables and they must carry clear implications for testing the stated relations. A broad hypothesis is given below from which more focused hypothesis may be derived. Buyers point of view in selecting for hatchback cars. By reducing the problem to a hypothetical statement, the problem has become more focused and the hypothesis can be tested through research methods.

BRM report

Page 6

Research and Design The scope of the research is limited to following three limitations:The research study is conducted in urban areas of Hyderabad. The preferred consumer for the study is the middle class family, mostly first time buyer. Also the preferred consumers are targeted on the basis of different ages of employability like newly employed (22-30 years), well settled (30-60years) and retired (60plus) people. The research is limited to only 3 brands of hatchback cars: Maruti Suzuki Wagon R Hyundai i10 Ford Figo

a. Secondary Data Internet Data from previous projects was gathered from the internet such as car surveys from auto magazines. The data may not be directly relevant to the topic under study but was immense value for planning out the study. Literature Collect literature and reviews to get a general overview of the car market in India. Study the existing reports undertaken to get an idea of the various car models on offer and also read articles on consumer buying behavior.

BRM report

Page 7

b. Design of Collection method Questionnaire design This involved the design of the questionnaire on the basis of potential attributes identified as part of the car selection process, preferences of first time buyers of hatchback cars in the various aspects such as price, mileage, color, family needs, after sales etc. Research problems were listed and then the information needed was identified. The questions were then prepared in order to fulfill the information requirements as identified earlier. The questions were designed with language which was easy to understand to the respondents. The questions were also designed keeping in mind that use of statistical tools such as Factor Analysis should be possible to give meaningful results and also for data reduction. Questions are given in appendix. Survey Survey method was mainly by personal interviewing of the salesperson in the car dealer showrooms of Maruti and Hyundai. Interview was conducted in campus and we also did intercept at popular places like Info city. Scaling technique Consideration should be given to the below points before attempting to formulate a scaling technique. There is no point in collecting data which cannot be analysed subsequently. Also of concern is the cost and limited time available for collecting and analyzing data. Type of information required Time and cost constraints Literary level of target respondents (for easy communication) What type of statistical tools should be used? How each question will be analysed? Expected and desired response.

BRM report

Page 8

Types of scaling used in our questionnaire design: Nominal Scale This is a very simple scale. It consists of assignment of choices to various alternative categories which are usually exhaustive as well mutually exclusive. These scales are just numerical and are the least restrictive of all the scales. It is simple and widely used when relationship between two variables is to be studied. In a Nominal Scale numbers are no more than labels and are used specifically to identify different categories of responses. This questionnaire compromised mainly nominal type as they were simple to distinguish relationship between more than one variable. LIKERT Scale A part of ordinal scale in which the respondents are asked to indicate a degree of agreement and disagreement with each of a series of statement. Each scale item has 5 response categories ranging from Extremely important to Extremely unimportant. Each degree of agreement is given a numerical score and the respondents total score is computed by summing these scored. This total score of respondent reveals the particular opinion of a person. c. Sampling Process Target Population The preferred consumer for the study is the middle class family, mostly first time buyer. Also the preferred consumers are targeted on the basis of different ages of employability like newly employed (22-30 years), well settled (30-60years) and retired (60plus) people. Sample Size It denotes the number of elements to be included in the study. Due to time constraints the sample size chosen is 200.

BRM report

Page 9

Sampling technique Convenience sampling was mostly done in our study as the respondents chosen were closest and depending on their availability. It is a type of non-probability sampling which involves the sample being drawn from that part of the population which is close to hand. The researcher cannot generalize the results from this type of sampling as the samples are confined to a specific location and not representative of the general population. Stratified sampling was also used in our study to obtain homogeneous sub groups from the population. We have divided the respondents on the basis of different ages of employability like newly employed (22-30 years), well settled (30-60years) and retired (60plus) people. When populations vary, it is advantageous to sample each subpopulation independently. Stratification is the process of dividing members of the population into homogeneous subgroups before sampling. A stratified survey could thus claim to be more representative of the population than a survey of simple random sampling or systematic sampling. We also used snowball sampling where existing subjects would guide us to new respondents based on their recommendation.

d. Sample Gathering A total of 150 respondents filled the questionnaire, out of 150 only 106 respondents are considered for our research. Out of the 106 respondents the ratio of business class to service class is 1:3.

BRM report

Page 10

DATA PROCESSING, ANALYSIS & FINDINGS a. STATEMENT OF OBJECTIVE Assimilate using pivot table The data gathered from the respondents were input into MS excel. The data was brought together and prepared from statistical analysis. Using pivot table function the basic data was analyzed the results were represented in pie charts as shown below. Pie Charts Q2. Below Chart shows that 63% of respondents belong to 22-30 age group category i.e. newly employed. While only 5 % are above 60 and the rest belongs to 30-60 age group. This shows that majority of people belonging to 22-30 age group category are the first time potential buyers of hatchback cars.

22-30

63 59% 19 18% 20 19% 5 5%

30-40 40-60 Above 60

Q3. Gender

MALE FEMALE

75 70% 32 30%

BRM report

Page 11

Q4. Below Chart shows that 49% of people comes under the 500000-1000000 salary bracket i.e middle income class. These people are the target customers for hatchback cars.

< 2,50,000 2,50,000-5,00,000 5,00,000-10,00,000 Above 10,00,000

6 6% 22 21% 49 46% 30 28%

Q5. Profession

Service Business Others

41 38% 33 31% 33 31%

Q6. Below Chart shows that 64% of people already have a car and remaining 36% are without car. These remaining 36% people are the first time buyers for hatchback cars

Yes No

68 64% 39 36%

BRM report

Page 12

Q7. Majority of the people who owns a car have Mid-sized hatchback cars. Remaining have their cars in other different segments.

Compact (eg.Alto) Mid-Sized hatchback (eg. Wagon R) Semi-Luxury Sedan (eg. Honda City) Luxury Sedan (eg. Honda Accord) Other

16 24% 28 41% 14 21% 9 13% 1 1%

Q8. 28% of respondents think that their car is better than car of other companies in this segment.

Q9. Below pie chart shows that around 52% people are willing to purchase a car in the next month or in a year.

BRM report

Page 13

Q10. Below pie chart indicates that people who are willing to buy a car in the next month or in year are more keen to purchase Hyundai i10 followed by Ford Figo and Maruti Suzuki Wagon R.

Maruti Suzuki Wagon R Hyundai i10 Ford figo Others

6 10% 19 33% 14 24% 19 33%

Q11. Below chart shows that people perception of buying a new car will mainly dependent on the recommendation given by others and quality.

Advertisements Recommended by others Location Quality product Others

9 13% 29 40% 2 3% 26 36% 6 8%

BRM report

Page 14

Q12-15. Responses given in these questions are framed in an cross-tabular form.

Attributes(Features) Price of the car Brand value of the company Styling and design Color/ Model Functional specifications Family needs Fuel efficiency/mileage After sales service Availability of spare parts Resale value Discounts and exchange offers Interests rates on car loans

Hyundai i10 Medium Low Medium Medium High Low Medium Medium Medium Medium Low Low

Maruti Wagon R Low High Low Low Low High High High High High High High

Ford Figo High Medium High High Medium Medium Low Low Medium Low Medium Medium

BRM report

Page 15

CONCLUSION a. Summary Age Among the potential buyers of hatchback cars in Hyderabad, 62 out of 106 respondents belongs to age group of 22-30. So this age the likely to buy a new car among all the age segment. Income 49 out of 106 respondents belong to the income segment of 5-10 lakhs per annum. So this segment is likely to buy a new car. Profession in profession we had taken three categories business, services & others. The distribution of respondents among these three segments was almost equal. So we conclude that respondents from each of these segment are likely to buy a new car. 72 out of 106 respondents are willing to buy a new car in the next month or year. Out of these 72 respondents 8 were willing to buy Marutis Wagon R, 20 were willing to buy Fords Figo & 22 each were willing to but Hyundais i10 And some other hatchback car. Among these 72 respondents majority of them were either recommended by others or they had a perception that cars from these brands were of great quality. b. Recommendations Currently hatchbacks account for over 70% of all passenger cars sold and the segment is growing at rate above 30% annually. A Segment (TATA nano, MARUTI Alto) Competitive pricing and providing the basic necessities are of key important. New launches should focus on keeping costs low, without compromising on-fuel efficiency, space and safety.

B Segment (Hyundai i10, Maruti Suzuki Wagon R) New launches can look to differentiate themselves on features, practicality and comfortable ownership, apart from maintaining competitive price points.

BRM report

Page 16

B+ Segment (Ford Figo) Higher than expected sales speak for the acceptability of the premium hatch. New launches must come across as viable alternatives to sedans. Suitability for city driving along with the advantages of sedan like space. More customers are looking for safety features. Focus should be on either premium or practicality. Good quality and performance at a reasonable high price is accepted by a niche but ever-growing customer base. Value-for-money and practicality will continue to be of prime importance to the majority of Indian buyers.

c. Limitations Since this project was intended to elucidate the techniques of Business Research Methods. The scope of the project was limited to learning the concept of Research design. There have been a number of limitations because of which the survey may not be truly representative as mentioned below. - The sample size used for the research was small. - The sample consisted of students/potential first time buyers. - The area was limited to college campus, car showrooms and the shopping places. - The responses obtained might be inaccurate or biased. - The sample of the respondents chosen for the study might not be representative. - Analysis of the data might differ depending on the statistical tools and techniques used. d. Appendix: Questionnaire
1. Your Age 22-30 30-40 40-60 Above 60

BRM report

Page 17

2. Gender MALE FEMALE

3. Total Family Income

<2,50,000 2,50,000-5,00,000 5,00,000-10,00,000 Above 10,00,000

4. Profession Service Business Others 5. Do you own a car? (IF NO PLEASE GO TO QUESTION NO. 8) Yes No

6.

Which segment does your car belong to? Compact (eg.Alto)

Mid-Sized hatchback (eg. Wagon R) Semi-Luxury Sedan (eg. Honda City) Luxury Sedan (eg. Honda Accord) Other

7. Your car manufacturer: Maruti Suzuki Ford Hyundai Honda Tata Others (Mahindra, Fiat, Skoda, Nissan etc.) BRM report Page 18

8. Do you think that your car is better than cars of others companies in this segment?
(SKIP QUESTION NO.8 & 9)

Yes 9.

No

May Be

Do you intend to buy a hatchback car in the next month or in a year. If YES please choose from the list which car do you want to buy? YES Maruti Suzuki Wagon R Hyundai i10 Ford figo Others NO

10. What was that single most important reason for initially buying the car of this brand or from this dealer? Advertisements Recommended by others Location Quality product Others 11. Rate the factors you consider before buying a car according to their importance.(Hyundai i10) Extremely unimportant Price of the car Brand value of the company Styling and design Color/ Model Functional specifications Family needs Fuel efficiency/mileage After sales service Availability of spare BRM report Page 19 Not Important Average Important Extremely Important

parts Resale value Discounts and exchange offers Interests rates on car loans 12. Any other factor that you consider important ? ____________________________________________ 13. Rate the factors you consider before buying a car according to their importance.(Maruti Wagon R) Extremely unimportant Price of the car Brand value of the company Styling and design Color/ Model Functional specifications Family needs Fuel efficiency/mileage After sales service Availability of spare parts Resale value Discounts and exchange offers Interests rates on car loans 14. Any other factor that you consider important ? Not Important Average Important Extremely Important

BRM report

Page 20

15. Rate the factors you consider before buying a car according to their importance.(Ford figo) Extremely unimportant Price of the car Brand value of the company Styling and design Color/ Model Functional specifications Family needs Fuel efficiency/mileage After sales service Availability of spare parts Resale value Discounts and exchange offers Interests rates on car loans 16. Any other factor that you consider important ? ____________________________________________ Not Important Average Important Extremely Important

BRM report

Page 21

e. References Questionnaires and instruments Page 361, Donald R Cooper Scaling Techniques Measurement Scales Page 331, Donald R Cooper Sampling -Sampling and Fieldwork, Page 418, Zikmund Hypothesis Testing Page 525, Zikmund http://www.zigwheels.com/newcars/Ford/Figo Varun Motors, Banjara Hills & Talwar Hyundai, Banjara Hills. http://www.india.ford.com/cars/figo/features/smart http://www.marutisuzuki.com/wagonr/ http://www.hyundai.com/in/en/Showroom/Cars/i10/PIP/index.html#contents_feat ure http://www.thehindubusinessline.com/features/smartbuy/automobiles/hyundaii10-review/article5112440.ece http://www.autocarindia.com/auto-reviews/ford-figo-facelift-review-test-driveand-video-320369.aspx http://www.autocarindia.com/auto-reviews/new-maruti-wagon-r-269286.aspx http://www.slideshare.net/RohitJadhav2/trends-in-automobile-industry-in-india http://www.oracle.com/us/corporate/profit/archives/opinion/102910-banks190918.html http://businesstoday.intoday.in/story/2013-roundup-how-automakers-fare-newlaunches/1/201682.html

BRM report

Page 22