Sie sind auf Seite 1von 43

Strategy Adopted by an Auto motive ancillary

company
Chapter 1
INTRODUCTION
Transportation framework is an indication of specialized ponder by mankind which fulfills a
standout amongst the most fundamental needs of the individual correctly, the portability. Vehicle
industry is a noteworthy constituent of surface transport and assumes an indispensable job in
monetary development of a nation. It is the business which makes ready for changes in outside
exchange, welcomes remote speculation and encourages presentation of a nation on an extremely
expansive worldwide stage. The vehicle business in India has for some time been perceived as a
center assembling part with the possibility to drive national monetary development and
encourage the improvement of innovative capacities through its incredible in reverse what's
more, forward linkages, and the confinement of high esteem included assembling forms inside
the residential economies. Lately, for example, Indian vehicle industry contributes around 5
percent of the GDP and it is focused to develop five-crease by 2016 and represent more than 10
percent of India's GDP (DBS Cholamandalam Securities Limited Sector Report, 2012).
Subsequently the business is perceived as one of the drivers of monetary development as it
contributes fundamentally to the general GDP of the country.

Automobile Industry in India-An Insight

The historical backdrop of the vehicle really started 5,000 years prior when the main wheel was
utilized for transportation, most likely on Mesopotamian chariots in 3200 BC. The sunrise of car
in India really returns to 4000 BC when wheel was first utilized for development in India in type
of chariots. From that point forward it has voyage far, from chariots to bullock truck, to the fly
age (The Great Idea Finder, 2005). Today, the Indian car industry contains all vehicles, including
2-3 wheelers, traveler autos and multi-utility vehicles, light and overwhelming business vehicles,
and rural tractors and other earth moving apparatuses, other than the segment section for every
one of these classes.

Car Industry in India is still in its outset however developing quickly. The openings in the car
business in India are drawing in huge names with the enormous tote and they are putting
vivaciously in framework, structure and improvement, and promoting. Notwithstanding financial
log jam, the Indian vehicle area has demonstrated high development. The traveler vehicle
showcase, which establishes around 80% of car deals, has enormous development potential as
traveler vehicle stock remained at around 18 for every 1,000 individuals in 2012. Foreseeing the
future market potential, the creation of traveler vehicle is guage to develop at a Compound
Annual Growth Rate (CAGR) of around 10% from 2009-10 to 2012-13. This took the Indian
vehicle creation from 5.3 Million Units 2001-02 to 10.8 Million Units in 2007-08 to 20.3 Million
Units 2011-12 (The Equicom, 2012).

Indian Automobile Industry

The business is portrayed by a high rate (about 80%) of 2-3 wheelers generation (Ray, 2012).
Indian car industry is home for the biggest engine cycle producer, the second biggest bike maker,
and fifth biggest business vehicle producer on the planet. The business is creating around 13
lakhs traveler vehicles, 4 lakhs business vehicles, 76 lakhs bikes and around 3 lakhs tractors for
each annum. The car business has accomplished a turnover of US $ 28 billion and the auto
segment industry has achieved a turnover of US $ 10 billion. The Indian tire industry, which is a
necessary piece of Indian car industry, has enrolled a turnover of nearly US $ 3 billion
(Automotive Mission Plan, 2006-16). India is developing as one of the world's quickest
developing traveler vehicle markets which is expanding at normal rate of 16-17 % per annum
from the year 2005. In the year 2011, the local market remained at 2.6 million vehicles and was
normal to increment to 3 million by 2012 (MBA Skool, 2012).

As per late reports India's traveler vehicle and business vehicle fabricating industry is the sixth
biggest on the planet, with a yearly generation of more than 3.9 million units in 2011. Because of
an expansion of 33.9% generation in car vehicles, India in 2010 delivered more than 3.7 million
car vehicles, making the nation the second (after China) quickest developing car showcase on the
planet. Yearly vehicle deals are anticipated to increment to 5 million by 2015 and in excess of 9
million by 2020. By 2050, the nation is required to top the world in vehicle volumes with around
611 million vehicles on the country's streets. The lion's share of India's vehicle producing
industry is based around three groups in the south, west and north with 35%, 33% and 32% of
the income share separately (Reveal, 2013).

Competitive Picture of Indian Automobile Industry

India has a few upper hands over the world in the vehicle area. The Indian market offers
unlimited conceivable outcomes for financial specialists. Interest in the innovation by the makers
has been high. As of now, India's expanding per capita dispensable salary and development in
fares is assuming a noteworthy job in the ascent and intensity of the business. The focused scene
of the business has been created utilizing the Porter's (1990) Diamond Framework by India
Brand Equity Foundation (2006) as appeared in Figure 1.2.

Being one of the quickest developing segments on the planet, the dynamic development periods
of car industry are clarified essentially of rivalry, item life cycle and buyer request.
"Industrialism" is ruling the Indian market, on account of the financial changes introduced and
the few understandings marked under the World Exchange Organization. The change is
occurring from a prevalently "merchants advertise" to a "purchasers showcase" where the
decision practiced by the shopper is impacted by the dimension of shopper mindfulness
accomplished.

India is breaking the hindrances of world as a creating state and heading towards a created state
with its reality class innovation, market, and purchaser control. India has a populace of more than
1.21 billion, the second biggest on the planet and that's only the tip of the iceberg than three
hundred million white collar class. One reason for development of vehicle industry is the higher
dispensable salaries of the white collar class and resultant increment in their expectations for
everyday comforts. In light of its expansive market, low base of vehicle possession, and flooding
economy, India has turned into a tremendous fascination for vehicle makers around the globe.
Both the Indian and worldwide car mammoths, including General Motors (GM), Volkswagen,
Honda, and Hyundai, have declared enormous development designs (Asiaecon, 2012). India is
relied upon to overwhelm China as the world's quickest developing vehicle advertise as far as the
quantity of units sold and the vehicle business is one of the quickest developing assembling
segments in India.

India is rising as a supply center point to bolster the world interest for games utility vehicles
(SUVs). The major worldwide vehicle producers are hoping to use India's cost competitive
producing rehearses and are evaluating chances to trade SUVs to Europe, South Africa and
Southeast Asia. India likewise has the biggest base to trade minimal vehicles to Europe.
Additionally, half breed and electronic vehicles are new advancements on the car canvas and
India is one of the key markets for them. Worldwide and Indian vehicle makers are centering
their endeavors to create imaginative items, advances and supply chains. The car plants of
worldwide vehicle makers in India rank among the best over the world as far as their profitability
and quality. Top auto global vehicle makers like Hyundai, Toyota and Suzuki rank their Indian
creation offices ideal over their worldwide pecking request (IBEF, 2013).

This additional conventional development of the vehicle business is for the most part because of
the central administrative changes in the Indian modern division as of late as an outcome of the
monetary change programs. This is very much upheld by the monetary conditions especially in
the monetary segment, which has assumed a major job in boosting the interest also, continuing a
long haul development in the business.

Indian Consumer and Marketing Strategies of Car Manufacturers – The Backdrop

The vehicle advertise in India is expanding significantly. India may be a quickly developing
economy, yet it's the vehicle business that will rule the Indian streets, create volumes and fortify
vehicle makers' primary concerns in future. The commercial center as of now possesses an
impressive offer of the yearly vehicle creation in India. Most players inside the vehicle business
are endeavoring to exceed each other regarding style, advancement, estimating, and innovation,
to accomplish expanded piece of the pie.

Thinking about couple of market realties; a lot a larger number of individuals are additionally
purchasing autos now than indeed, even couple of years back and this number is developing
exponentially. One reason is the consistently expanding pay dimension of the Indian shoppers
with the development in the national economy. This can be show by the expanded abundance of
the developing Indian working class classification (Nagaraj, 2008), finishing in an extremely
immense development in individual vehicle ownership. It is anticipated by an investigation on
Indian buyers, directed by Mckinsey Global Institute, that in the event that India's development
proceeds unabated, the ascent of more than 291 million individuals over urgent neediness line by
2025, will make it the fifth biggest shopper showcase on the planet. The reports conjecture a
monstrous ascent in the number of Indian white collar class to 583 million by 2025. The report
additionally talks about an ascent in the normal family extra cash from INR 113,744
(US$2,499.87) in 2005 to INR 318,896 (US$7008.70) by 2025 (McKinsey Global Institute,
2005).
These outcomes show an ascent in the utilization dimension of the Indian purchasers and move
in the utilization design from necessities towards optional utilization which incorporate
consumption on transportation as traveler vehicles. The discoveries of the report additionally
uncover an adjustment in ways of managing money of the rich urban family units which joins
with that of their partners in created nations what's more, their need consumption incorporates
buy of marked array, outside excursions and buy of traveler vehicles. Different reasons separated
from monetary development, refered to by the report incorporate accessibility of simple shopper
financing, inclination of the individuals to depend more on their own vehicles and decrease in the
costs of the traveler autos.

By and by most of the Indian populace comprises of youth (Here the working age is considered
between 15 years to 60 years), and with expanding expendable pay (Population commission
report, 2001) they are recognizing and are of very requesting nature, which make them an intense
nut to open for the advertisers. (CSMMBW Client Survey, 2007) estimated the demeanor of the
Indian clients towards different organizations utilizing two key measurements, client encounter
(how the clients rate the company's execution) and client devotion (degree of client's generosity a
firm appreciates) and the outcomes concluded the rising desires for the Indian buyers which the
advertisers are discovering hard to meet consistently. These outcomes were ascribed to the stir
that has occurred post advancement in the Indian economy. With the accessibility of new and
better decisions because of opening up of the Indian economy post advancement and increment
in the salary levels have prompted the ascent in buyer assumptions regarding different items and
administrations that they acquired. Furthermore, by one way or another, the failure of the
advertisers to meet the desires for its clients and the accessibility of more up to date and better
options has seen decrease in purchaser faithfulness towards different players working in the
market (CSMM-BW Client Survey, 2007).

Problem Formulation for understanding the effects of Post Liberalization Era on the
Indian automobile industry scenario, and how the Existing Marketing Strategies of Car
Manufacturers influence Consumers’ Brand Preference, Satisfaction and Loyalty

In the present world, the speed of innovative improvements in industry segment particularly in
car industry is so high and sudden that coordination and consistence with these progressions have
turned into a fundamental issue for nations and huge organizations. Never again can a nation
unhesitatingly and legitimately plan and structure in industry exceptionally, vehicle industry with
no regard for overall changes.

Strengthening worldwide rivalry in the car business and developing of pieces, also, underscoring
the survival and suitability of an industry's capacity to contend depend on its capacity to contend.
In such manner, nations are required to approach the most recent innovative discoveries,
diminish the expenses and costs, and enhance item quality.

As it were, car as a key product progressively plays an essential job in creating and enhancing
nations exchange. In other words car industry through its connections with different ventures can
be a ground-breaking main impetus for modern advancement in a nation. This industry has
dependably been considered as one of the most essential chains of mechanical advancement in
every nation. Since the vehicle industry should be encouraged from different ventures to
develop, it, thusly, causes numerous areas and enterprises to develop. In this manner, reinforcing
and supporting the car industry has turned into an inescapable need for creating nations (Khaju,
2009) like India.

India has seen a gigantic arrangement changes throughout the years. Before Indian economy was
opened up in 1991, there was far reaching protectionism crosswise over business parts bringing
about absence of rivalry, low quality products and restricted decisions for buyers. Organizations
felt little need a methodology since it was the government which settled on major vital choices
from issuing licenses to begin a business to settling on costs and from making limit
improvements to bringing in innovation (Sharma, 2007). The Indian vehicle industry has thrived
after monetary advancement in 1990s more than ever. The different duty reliefs by the
Administration of India as of late have had exceptional effects on the business. There was a
move from 'security' to the 'open' economy of the business in India.

Amid the post financial advancement time, very much coordinated endeavors have been made to
give another seek the car arrangement for understanding the division's maximum capacity for the
economy. Steps like cancelation of permitting, expulsion of quantitative confinements and
activities to acquire the arrangement structure consonance with WTO necessities have set the
business on a dynamic track. Expulsion of the prohibitive condition has helped rebuilding, and
empowered industry to assimilate new advances, adjusting itself with the worldwide
improvement and furthermore to understand its potential in the nation. The progression
arrangements have prompted persistent increment in rivalry which has eventually brought about
modernization in accordance with the worldwide benchmarks and in addition in significant cut in
costs. Forceful advertising by the automobile fund organizations have additionally assumed a
noteworthy job in boosting vehicle request, particularly from the populace in the center pay
gathering.

The Automobile Industry in India has seen a blasting stage in this period, with numerous vehicle
monsters entering the Indian market with their models, promptly accessible, absent much by way
of sitting tight time for the conveyance. Significant vehicle makers, for example, Suzuki,
Portage, Toyota, General Motors, Skoda, Hyundai, Honda, Renault, Mitsubishi, Nissan, Volvo,
Audi, BMW and Benz, set up their assembling units in India with Joint Adventure joint effort
with Indian organizations. These outside makers started to rival the local players, for example,
Hindustan Motors, Tata Motors, and Fiat India and so forth to build their piece of the pie, with
their very mechanical, imaginative what's more, alluring models of traveler vehicles. Sudden
enthusiasm of major worldwide players has made Indian vehicle industry exceptionally
aggressive, as India gives twin advantage of prepared market and ease producing base for them.
With the blast of the vehicle industry, because of its globalization and progression, vehicle
makers presented much imaginative and mechanical headway in their vehicles.

As the vehicle makers are currently open to rivalry subsequent to evacuation of confinements by
the administration on market passage and leave, limit expansion and innovation appropriation,
they are confronted every day by entire arrangements of difficulties and openings. Choice to be
made incorporates area of generation, method of section and showcasing procedures, for
instance, and all have noteworthy repercussions for promoting what's more, corporate execution.
They must be sufficiently adaptable to react quickly to rivalry and market changes, and with the
end goal to outperform their rivals, they require to make upper hand and afterward continue it
through the suitable fit business techniques. Rivalry is the beginning stage of technique. On the
off chance that there is no opposition, there is no need of technique. Purchasers, in the interim,
are presented to a plenty of household and remote items and brands, among which decisions
must be made. They have even begun reasoning to change once again to the new models of
vehicles, with related straightforwardness than previously, to suit their changing ways of life.
This shows inside a little more than 10 years and a large portion of, the vehicle business scene
has changed totally.

Creating Satisfied Customers

Developing an effective marketing strategy requires the car manufacturers to consider a variety
of factors to insure that the strategy is successful. In addition to an assessment of their
capabilities, the car manufacturers must also evaluate changes in overall business conditions,
competition, regulation, and consumer buying behavior. While this is sufficiently complex when
the car manufacturers have to plan their marketing strategies to create a position that is attractive
to target customers on one hand and a good source of cash flow for their business on the other.
Achieving a certain level of market-share is the key factor in the success of a marketing strategy
and it directly depends on the strength of company’s product positioning and market effort. This
means that weak product marketing even with a strong product will fail to deliver a designed
level of market share, thus, the car manufacturers need both in order to succeed. There are many
strategies for marketing and positioning brands, and many of these can be formed into powerful
combinations. Car manufacturers have learnt to harness the power of marketing by using a
combination of two or more strategies. Some naturally go together, like features and benefits are
so close that they are inevitably combined. There are various parameters on the basis of which a
car manufacturer can create a brand identity and market the product. These parameters can be on
the basis of attributes of the product, with respect to benefits derived, price and quality,
application, product class, target market, endorsement, competitive features and even on the
basis of psychological factors. Marketing strategies are often designed to influence consumer
behavior and lead to profitable exchanges. Each element of the marketing mix can affect
consumers in different ways (Peter and Donnelly, 2004). There are individual and environmental
influences that have an impact on the choice method of consumers. Individual characteristics
represent motives, values, lifestyle, and personality; the social influences are culture, reference
teams, and family. Situational influences, like a consumer’s money condition, additionally
influence the consumption choice method. The present study has incorporated several elements,
which influence customer decision-making like values, lifestyle, temperament and culture. The
positioning decision is central to the success of a brand (Pham and Muthukrishnan, 2002; and
Punj and Moon, 2002) as it directly shapes customers’ perceptions and brand choice decisions
(Aaker and Shansby, 1982; and Carpenter, Glazer, and Nakamoto, 1994). Positioning is the act
of designing the company’s offer and image so that it occupies a distinct and valued place in the
target consumers’ minds. It starts with a product, a piece of merchandise, a service, a company,
an institution or even a person. But positioning is not what one does to the product; it is what one
does to the mind of the prospect. That is, position of the product is in the mind of the prospect.
The importance of brand positioning has risen sharply in the last few years. At the segment level,
the increase in importance is greater for the mid-size cars, indicating the relevance of brand
among the more expensive market segments. The manufacturer need to focus more on how
consumers perceive them as offering exciting cars and being committed towards them.
Contemporariness of model has a big impact on purchase decision. The perception of the car in
terms of its performance and design, quality, sales, after sales, cost of ownership, along with
brand image, all impact upon the consumer’s brand preference.

Marketing Strategies – The Literature Gaps

For the past four decades, marketing is thought to have significantly contributed to car
manufacturers’ outstanding results. Many academicians as well as industry experts strongly
believe in the strategic role of marketing in the present automobile business 16 operations and
performance. However, contribution of marketing strategy to car manufacturers’ performance,
success and, indeed, to influence car buyers’ brand preference, satisfaction and loyalty by adding
consumer value has been questioned and criticized. Many of the researchers have argued that
traditional marketing strategy is inadequate for the businesses and it lacks customer orientation
(Booms and Bitner, 1981; Gronroos, 1994; Rafiq and Ahmed, 1995; Webster, 1998; Gombeski,
1998; O’Malley and Patterson, 1998; Day and Montgomery, 1999; Lovelock, 2001; Akroush,
Shible and Khawaldeh, 2005; and Akroush, 2010). The rationale behind their argument is that
marketing needs a paradigm shift due to changing business environment and customers’ needs
and wants, unprecedented advancements in information technology, severe competition and
emerging new competitive spheres and changes in regulatory environments nationally and
globally. This stream of research has introduced relationship marketing, a paradigm shift, as an
alternative paradigm to transactional marketing which has contributed to the marginal influence
of marketing in today’s business performance (Webster, 1992; Gummesson, 1994; Morgan and
Hunt, 1994; Gronroos, 1996, 2004; Payne and Frow, 2005; and Osarenkhoe and Bennani, 2007).
Their argument is that relationship marketing should be adopted as a new marketing strategy for
businesses which should lead to achieve the intended performance levels. However, recent
empirical evidence (Hakansson and Waluszewski, 2005; Zineldin and Philipson, 2007; and
Akroush, 2010) indicates that relationship marketing and transactional marketing paradigms are
complementary paradigms rather than a paradigm shift. Among this marketing controversy,
leading marketing scholars have expressed serious concerns about marketing’s strategic role, its
identity as well as its impact on company’s performance (Day, 1992; Hunt, 1992; Srivastava,
Tasadduq and Liam, 1998; Varadarajan and Jayachandran, 1999; and Day and Montgomery,
1999). They state that there has been a considerable decline in marketing’s strategic influence in
companies and, its influence on consumers’ decisions is marginal at best. The debate continues
when a stream of researchers has approached the contribution of positioning strategy to influence
car buyers’ brand preference. They argue that despite the importance of the positioning concept,
there is lack of empirical research examining the role of positioning strategies in consumers’
categorization processes of brands. While it is well established that consumers perceive brands as
similar when they share the same (product) attributes (Tversky, 1977), it is unclear whether
brands sharing the same type of positioning strategy (i.e., positioning base) are also perceived as
similar by consumers. In fact, the question whether and to what extent positioning information
incorporated in marketing communications influences car buyers’ brand categorization processes
has not received empirical attention in the literature. In this context, car buyers may perceive a
brand as distinct or similar to other car brands due to numerous (external) criteria which are not
explicitly communicated, such as their visually accessible or inferred features, price perceptions,
appropriateness-in-use, personal goals, expertise, or prior experience with the product (Bijmolt,
Michel, Rik and Wayne, 1998; Friedmann and Lessig, 1987; Day, Shocker, and Srivastava,
1979; Dubé and Schmitt, 1997; Graeff, 1997; Lefkoff-Hagius and Mason, 1993; Ratneshwar
Lawrence, Cornelia and Melissa, 2001; and Sujan and Dekleva, 1987). A rather thorny issue in
brand positioning research concerns the question of which positioning strategy is “best”; for
example, do car brands which are positioned on tangible brand aspects (i.e., features) perform
better than the brands positioned on intangible aspects (e.g., user imagery)? Interestingly, past
empirical research has not paid much attention to this question (Keller and Lehmann, 2006; and
Pham and Muthukrishnan, 2002). In the light of this debate, the unanswered question remains:
how does car manufacturers’ marketing strategy impact consumers’ brand preference? This is an
important question for top management and marketing managers of car companies. Traditionally,
the success of marketing strategy has been evaluated by either financial outcomes such as return
on investment and market share (Buzzell and Wiersema, 1981; Leonard and Sasser, 1982;
Philips, Chang and Buzzell, 1983; Wind and Robertson, 1983; Jain and Punj, 1987; and Appiah-
Adu, 1998, 1999) or by customer outcomes such as customer satisfaction and customer loyalty
(Fornell, 1992; Anderson, Fornell and Lehmann, 1994; and Akroush et al., 2005). Such
behavioral outcomes lead into superior performance as measured by financial metrics. Although
this is well documented in literature, the contribution of marketing strategy to influence
customers’ brand preference, satisfaction and loyalty by increasing customer value is still
incomplete in Indian automobile industry.

Framework of Analysis

The post economic liberalization scenario of Indian automobile industry appears to be a critical
period for the study to understand the structure of Indian car industry and stake out its position
that is more profitable and less vulnerable to attack. Analysis of the post liberalization scenario is
intended to help the researcher to determine the strength of the Indian car industry, profitability
and competition. To meet the challenges of competition, marketing of the brands in the
respective segment became utmost important. And, therefore, for the purpose of the present
research endeavor, the concept of marketing strategies in relation to passenger car segment has
been that the marketing strategy which can understand the requirements of the customers for
their optimum satisfaction that requires continuous market research, new product designs, a
range of brands, effective positioning, aggressive but ethical advertising, competitive pricing and
selection of most viable distribution channel for after sale services. On the whole, this study aims
to analyze how the growth of automobile industry has affected the competition among car
manufacturers after economic liberalization in India and demonstrate the extent to which the
existing marketing strategies of car manufacturers affect the consumer preferences, satisfaction
and loyalty towards their products. It considers two dimensions of automobile industry in
relation to car manufacturers, namely:

 Post liberalization scenario of automobile industry, since this period plays a vital role in
determining the growth, competition and strength of automobile industry; and

 Existing marketing strategies being adopted by car manufacturers, since that contributes
to identify the reasons for the effectiveness of these marketing strategies by analyzing impact on
consumer brand preference, satisfaction and loyalty, if any.

Focus of the Research

A number of studies have been conducted on automobile marketing strategies by the scholars but
after globalization particularly during the period of boom and recession no study has been
conducted on the subject and specifically in context of the car manufacturers in India. And,
therefore, the focus of the present study was on studying the marketing strategies adopted by car
manufacturers in the current global scenario, evaluating the effectiveness of their strategies by
analyzing the impact on consumer and to suggest the strategies for the industry for better
competitive edge in the potential market like India and that is too in midsized car segment
offered by these companies.
Chapter 2

REVIEW OF LITERATURE

With the growing competition due to the globalization of the world economy and the consequent
globalization of markets, more demanding and assertive customers, rapid advancement in
technology, and changing government policies and laws, the business environment in India has
been changing dramatically and is becoming more turbulent. Ferrell and Hartline (2007) propose
that when the external environment is constantly changing, it is important that management
understand these changes and know how to act on them. It is a fact that the Indian automobile
market, bearing the characteristics of an oligopolistic market structure, is one of those which are
affected most by these changes. Therefore, it is required to develop new behavioral skills and
marketing strategies for economic agents with respect to competition and changes in the
postliberalized Indian automobile business scenario. Cravens (2000) argues that marketing is a
major stakeholder in new product development, customer management, and value/supply-chain
management, and marketing strategy provides concepts and processes for gaining competitive
advantage by delivering superior value to the customers. Hooley, Piercy and Nicoulaud (2008)
explain that the marketing strategy is supposed to develop effective responses to changing
market environments by defining market segments and developing and positioning product
offerings for those target markets. He further argues that companies acting within a market
structure should prefer and adapt various marketing strategies to achieve their targets and to
define their competitive power. Therefore, to deal with the current challenges, the businesses
must have more distinctive and purposeful marketing strategies and they should be effectively
implemented (Cravens, Merrilees and Walker, 2000). For developing an efficient marketing
strategy, it is important to identify the driving aspects of the automobile industry, which give a
competitive edge to the car manufacturers. Hindustan Motors ruled Indian roads for four decades
with one model Ambassador till Maruti came along as an option in 1983. Soon Maruti became
the leader with its fuel efficient small car Maruti 800. But that was just the beginning of
competition which became fiercer after automotive industry was completely decontrolled in
1993 (Sharma, 2007). In the present scenario, it is crucial for car manufacturers to develop the
most profitable marketing strategy, which adapts to new competition, changing environments
and economic instability. Today's marketing people must execute more than simply set long-term
strategies and hope for the best 64 (Begley and Boyd, 2003). Ferrel and Hartline (2007)
considers the organizational structure, resources and the organization’s performance, the
consumer environment, the competition, economic growth and stability, and political trends are
the issues to be identified to develop a strategy and this is when the marketing mix is employed
in order to meet consumer's needs and wants. So far a number of studies in Indian and global
scenario have been conducted from time to time in the related areas. This section of the thesis
examines briefly the concepts of consumer buying behavior, marketing strategy, brand
positioning, and customer relationship management. The concepts are presented from the view of
various authors and writers. The researcher further looks into the contribution of some of the
experts in the area with a special focus on the car buyers and try to find the buyer related factors
and marketing strategies influencing brand preference, satisfaction and loyalty. Finally a
theoretical research framework is developed which highlights the marketing strategies essential
for the competitive market situation being adopted by the car manufactures and their impact on
consumer decision-making in India.
Consumer Buying Behavior and Significance of Marketing Strategies for Car Brand
Preference

As the wave of globalization has directly affected the automobile industry and the buyer
behavior in the car market, the study of how marketing strategies influence buyer behavior has
assumed paramount importance in the automobile industry in general, and in the Indian car
market in particular. It has thrown open several challenges to the car manufacturers in
formulating effective and competitive marketing strategies for growth and market acceptance. It
also fosters the process of understanding why a consumer or a buyer makes a car purchase.
Without such an understanding the car industry will find it very difficult to respond to the needs
and wants of the Indian consumers. It is challenging to understand how consumers respond to the
plethora of marketing tools used by marketers in the marketing of cars. If car manufacturers and
car dealers could understand the customer preferences and perceptions better than their
competitors then it is potentially a significant source of competitive advantage for the car
manufacturers. Hence the study makes an attempt to find significant reasons why the car
manufacturers spend considerable time, money and effort to learn Indian consumers’ brand
preferences. Of the basic principles governing the current competitive automobile market are
customer orientation and belief in customer-centeredness. At present, the competitive market
forced producers to produce goods based on customer needs (Tafler and Tafler, 2004). The study
of consumer buying behavior, which is briefly called consumer behavior, provides information
about consumer and his/her consumption patterns. A car manufacturer can continue to survive if
it can supply consumer needs and wants with a comprehensive understanding of them. This
shows the importance of studying consumer buying behavior (Hawkins, Best and Coney, 2006)
and requires understanding buying behavior of car buyers which is not so simple. Consumers
may not know their own deeper inner motivation or they may react to affecting factors in the last
moment and simply change their mind. However, marketers should consider their customers’
requests, intakes and buying behaviors (Kotler and Keller, 2009). Car industry has an important
role in the lives of Indian people. In today’s competitive world chance of survival of a car
manufacturer is related to continually providing its customers’ satisfaction and to attract their
loyalty and support. Knowing the factors that consciously or unconsciously affect the decision to
purchase a car can have positive effects on supplying the customers with better products.
Diversity in car production also persuades the buyer/customer to make a selection. The Indian
automobile industry has witnessed a major selling prospect during the recent times. Day by day
increasing the market density due to globalization of business and liberalized policies of the
government has also revealed the importance of marketing strategies for the car manufacturers.
Many multinational companies have entered to fray, turning the market place into a business
battlefield. Many recent studies have reviewed the scope of car market in India. According to
Sardar (2012), the primary factor driving the automobile industry is the rising household income
in India. This is fueled by the growth in the service sector. In economic terms, there is a strong
correlation between car sales and GDP growth. With lucrative jobs being available to young
people today, there is an increase in the disposable income, having more disposable income on
hand, the aspiration of Indians to own a car is highest among the developing countries.
Increasing urbanization and proportion of young people in the population coupled with
improving consumer finance facilities with the entry of banks into car finance has come as a
boon to the Indian car industry. Home car manufacturers too have started offering consumer
finance facilities. These facilities are propelled by the reducing interest rate in the economy.
Reduction in the excise duties on cars has helped reduce their prices. At present, many models
are available with the Indian car manufacturers at competitive prices and manufacturers are
reducing the prices to increase the sales volumes (Sardar, 2012). The liberalization and global
operation of automobile industry has given an opportunity to the Indian consumers to select one
out of various similar car models available in the market and they are much better equipped with
information to choose from these available options. The Indian consumers now exhibit a totally
different behavior what they used to do in a regulated market. Good understanding of customers,
competitors and the market environment are considered to be the key approaches to low cost
production and efficiency improvement (Dodgson, 1989; and Storey, 1994). Buzzell, Gale and
Sultan (1975) identified six factors for the competitiveness. They are marketing effort, relative
product quality, research and development, product innovation, relative service quality and
product availability. The most powerful of these are relative product quality, level of innovation
and marketing expenditure (Buzzell et al., 1975). According to Zairi (1994), the key elements of
competitiveness include the voice of the customer through current and future demands and the
voice of the process through establishing the organizational capability to deliver customer’s
needs and wants. The knowledge of consumer’s needs and wants is a fairly important aspect,
both from the viewpoint of the academician’s theoretical interest and the practical applicability
that it has for the marketing practitioners. In the modern concept of marketing, the only rationale
for the organizational existence is believed to be the consumer’s satisfaction that it provides. The
importance of consumer behavior was well recognized by the social and management scientist.
The father of our nation, Mahatma Gandhi recognized the importance of the customers and said,
“A customer is the most important visitor on our premises. He is not dependent on us. We are
dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an
outsider on our business. He is a part of it. We are not doing him a favor by serving him. He is
doing a favor by giving us an opportunity to do so.” Therefore, it is of vital importance that the
knowledge of "what makes the Indian consumer to think" and what consequently would
contribute to his satisfaction, is at the disposal of marketing people in car manufacturing
companies.

Consumer Buying Behavior and the Factors Influencing Car Buyers’ Brand Preferences

1 Consumer Buying Behavior – A Conceptual Understanding

Consumer buying behavior can be defined as a process by which individuals search for, select,
purchase, use and dispose of goods and services in respect of satisfying their needs and wants
(Kotler and Armstrong, 2008).Consumer buying behavior includes a series of mental and
physical processes that continues through before and after purchase (Peer and Olson, 1999).
Studying consumer buying behavior includes the study of what, how, and why people are buying
(Khajeh-Nasiri, 2008). Consumer buying behavior indicates how consumer decisions are made,
how the goods or services are used (Mc Daniel, Charls and Joseph, 2003). Berkman and Gilson
(1981) explain consumer buying behavior as activities in which people are involved in actual or
potential use of various products of market including goods, services, ideas and environment of
the market. According to Solomon (1999), consumer behavior, with the aim of satisfying needs
and desires of people and different groups, examines the process affecting the selection, purchase
and use of products, services, ideas and experiences (Ismailpour and Ghafarieashtiyani, 2002).
Consumers’ buying behaviors are physical emotional and mental activities to satisfy the needs
and demands of the consumers when people select, buy, and use goods and services and to
discard the product (Wilkie, 1994). Consumers make four main types of purchases. Firstly,
habitual behavior looks to describe purchases that consumers make on a regular basis.
Consequently, these purchases are commodities, which require little money and hardly any
thought process. Bread, milk, newspapers and frequently consumed beverages such as tea and
coffee are examples of these (Hawkins, Best and Coney, 1995). Secondly, the behavior pattern is
characterized by the small amount of thought processing that is required before a decision is
made to purchase the product. This means that little information about the product is required to
make a decision because it is relatively easy to attain this information. This is known as limited
decision-making buying behavior (Solomon, 2006). The third type of consumer buying behavior
is caused by the impulsive sector of human emotion, and is thus entirely unpredictable. It
involves consumers irrationally purchasing a product that they do not necessarily need or
consciously desire, but suddenly buy it in response to external factors (such as advertisements). It
usually lasts for a short period of time (Hawkins et al., 1995). Finally, in the context of making a
high involvement purchase, consumers are usually aware of all the positives and negatives of
each choice in terms of brand, quality, price and innovation (Mittal, 1995). This behavior may be
observed when a consumer contemplates the purchase of a long term and possibly expensive
product, which makes this an infrequent purchase like car purchase. There is, therefore, some
risk involved and, consequently, this requires more thought processing and time, which makes
this behavior more difficult to understand and predict (Hawkins et al., 1995). Consumers attempt
to forecast the outcome of each option in order to determine which is best for that particular
situation so that they may make a reasoned decision. This type of buying behavior is called
extensive decision-making behavior. Consumers’ decision-making for high involvement
purchases such as automobiles consists of a sequential process involving problem recognition,
information search, brand evaluation and selection, purchase and post-purchase (Punj, 1987)
which provides an overview of the decision-making process as can be seen in Figure 3.1.
Previous studies have stated that consumer behavior for a product purchase is a complex problem
solving process (Quester, Neal and Hawkins, 2007). This is reflected in different product
purchase situations. These situations are likely to be characterised by (a) active information
seeking about various brands (Peterson and Merino, 2003), (b) major comparison of product
attributes (Radder and Huang, 2006), (c) special preferences for a particular brand, such as brand
loyalty (Dholakia, 2001) and (d) choices that are likely to be made with a high degree of
awareness (Greenleaf and Lehmann, 2005). For example, consumers usually require knowledge
and preparation, such as an extensive information search, to learn about the product, and enough
time to process and evaluate the available information so as to reach an appropriate product
purchase decision (Bosnjak, 2010).

2 Factors Influencing Car Buyers’ Brand Preferences

A company that is aware of consumers’ reaction to different characteristics of goods, prices and
advertisement tricks has advantage over its competitors (Kotler and Keller, 2009). Recognition
of factors affecting brand preferences is one of the issues that car manufacturers are trying to
identify in order to understand the interests and demands of their consumers and address them.
The behavior of car buyers is affected by a lot of variables, ranging from personal motivations,
needs, attitudes and values, personality characteristics, socio-economic and cultural background,
age, sex, professional status to social influences of various kinds exerted by family, friends,
colleagues and society as a whole. The combinations of these various factors produce a different
impact on each of the car buyer as manifested in their different behavior as consumers. Dorsch,
Grove and Darden (2000) studied consumer buying behavior using the five-step process (need -
information search - evaluation of alternatives - purchase - post-purchase evaluation) problem
solving paradigm or through the progression of consumer choice from a product class to brand
choice. Making a brand choice, the car buyer considers many factors classified in four
categories. The categories are personal differences, cultural influences, social influences and
psychological processes. Individual differences are aspects such as knowledge, attitude,
motivation and personal values. Environmental influences include culture, social class, family
and situation. Finally, psychological processing is about how consumers process new
information, how they learn and what attitude they have towards changes (Hooley, Piercy and
Nicoulaud, 2008). In many authentic marketing texts, these factors are categorized generally as
cultural factors, social, personal and psychological categories. Abdul, Abdul and Edwin (2006)
in their study noted that consumer behavior is influenced strongly by these factors while making
a car brand choice. However, Kotler and Armstrong (2006) state that although marketers cannot
influence many of these factors, identifying these factors is important to identify potential buyers
and make products to meet these needs. Each of these factors has a special dimension. For
instance, social factors play a special role in the decision of the buyer’s purchase (Kotler and
Armstrong, 2006).

Figure 2.2: Factors that Influence Consumer Buying Behavior


Cultural Social Personal Psychological

Culture Reference Age and life Motivation


Groups cycle stage
Perception
Sub culture Family Occupation Buyer
Economic Learning
Social class Roles and situation
Status Life style Beliefs and
Personality and Attitude
Self Concept

Source: Kotler and Armstrong, 2008

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

2.1 Cultural Factors

Perhaps the most significant factor that affects not only consumers, but also human behavior in
both social and economic environments, is the individual and personal background of a person.
Such broad factors are covered by one important term, namely culture. Cultural factors include
the set of basic values, perceptions, wants and behavior learned by a member of society from the
family and other important institutions (Abdul et al., 2006).

Kurtz, Mackenzie and Snow (2009) define culture as “the values, beliefs, preferences and tastes
that are handed down from one generation to the next.” Culture is the broadest environmental
determinant of consumer behavior. The marketer needs to understand the role played by the
buyer's culture. Culture is functional according to Lamb, Hair and McDaniel (2008). Culture is
the most basic element that shapes a person’s wants and buying patterns. An example of this is
that a teenager growing up in society will acquire basic values, perceptions, preferences and
behavior through their interaction with their surroundings, family and friends. This learning
curve is achieved through socialization (Hoyer and Macinnis, 2009). In India, there are so many
different cultures, which only goes on to make the marketer's job tougher. Some of the few
cultural factors that influence buyers’ brand preference are:

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

Similarly, there are so many different cultures, and each culture exhibits different social
practices. For example, in a few villages they have common bath areas. Villagers used to buy
one Lifebuoy cake and cut it into smaller bars. This helped lifebuoy to introduce smaller 75-gram
soap bars, which could be used individually. Moreover, the male in Indian culture has always
been given the designation of key decision maker. For example, the Mukhiya’s opinion (Head of
the village), in most cases, is shared with the rest of the village. Even in a house the male head is
the final decision maker. In rural areas, this trend is very prominent. Also, the saving and
investment patterns are changing from Gold, Land, to Tractors, VCRs, LCD TVs etc.

2.2 Social Factors

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

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

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

 Family: Family members, forming the basic structure of the initial reference group, have a
great impact on buyer behavior. In everybody’s life, two kinds of families may be formed. The
first kind is a family in which someone is born and grows and religion, politics, economics and
education of that person depends directly on that family. The second kind of family in which the
buyer’s behavior is affected includes children and people under supervision (Nesaee, 2009).
Family has had a special place in a community. In fact it is a basic social unit. Norms and senses
that stabilize the family gain their references from the inclusive society which is an ideal source
of community and family stability. Effects of traditional attitudes, interests and incentives of
families not only will be evident in the developmental period, but also it may be extended in the
next generations. Family is a particular sub-group of society and at the same time implies an
important economic unit. Family is a complete and complex purchasing organization that
encompasses the needs of two generations or more. Purchasing behavior will be affected by the
nature of family and its responsibilities may create a range of reverse demands for goods and
services. The style of the family life determines its place in the society.
Several researchers studied the impact of social factors on individual and family consumption
patterns (Samadi, 2007). Banerjee, Walker and Elizabeth (2011) studied about “Car acquisition
and ownership trends of motorized vehicle owning households”. The study regarding vehicle
choice behavior recognized that household income is the chief determinant of the number and
size of cars that household possess, and that family size is a much less important factor whereas
smaller vehicles were preferred even by larger family. White (2004) discussed the factors that
affect car buyers' brand preference and comments that people expect to haggle with dealers over
price and to receive substantial rebates or incentives as well as low-interest payment plans. He
pointed out that with an increase in multi-car households, car dealers and advertisers needed to
target the right audience, taking into account the pester power of children and the importance of
life stage. Despite the fact that women are the primary buyers of most new cars, he admits that
the motor trade has traditionally been contemptuous of women's role in the car-buying process.
Jacob and Khan (2010) also reported in their studies that there is also a substantial influence of
women in the car purchase decision of the family. The trend have replicated as it can be seen
many women driving the car in the city and towns in all parts of India. Vaddae (2010) in his
study found that the consumer decision to purchase a two wheeler is based on own perception,
experience and belief. The role of friends and relatives is found to be insignificant in the
purchase decision process. The respondents have given first preference for mobility of the
vehicle, whereas the urban respondents have given their preference to cope up with busy
schedule to possess a two wheeler. Thus it was concluded that the consumer purchase decision of
a two wheeler is not based on single variable, it is multivariable decision and requires a careful
study of consumer's socioeconomic needs from time to time. Clement et al. (2009) has also
studied the peer influence in the purchase of automobile.

 Social Status: Social status of each person throughout his life depends on a family group,
clubs and organizations. Person's position within each of these groups can be defined based on
the role and status of the individual. Every role includes activities that are expected of a person.
Someone may have the role of the daughter of a family and beside her family may have the role
of a wife and a mother and she may have the role of responsible sales manager in the company
where she works. Each of these roles has special effects on purchasing behavior (Kotler and
Keller, 2009). Each role has a dignity. Dignity is the respect that society has toward that role.
Generally, people choose products which are the messengers of their social role and status in the
community (Kotler and Armstrong, 2006). When a person accepts a role, the normative pressures
have effects on the person to act in a special way. An important role in consumer behavior is
related to the decision maker; she makes the final decision about which brand to choose (Mowen
and Minor, 2009).

2.3 Personal Factors

The personal characteristics such as buyer's age, lifecycle stage, occupation, economic situation
and lifestyle influence a buyer's brand preference (Abdul et al., 2006). Mousavi (2006) in a study
considered factors such as income, location, age, sex, number of car buyers’ family members and
their jobs. Car buyers in this study were selected based on personal characteristics, social,
economic and behavioral factors. The relationship between these factors and purchasing choice
was studied. The results of this study show that at present factors such as income and its changes,
occupation, gender, income resources are more affecting than other variables on the purchase
decision of a car. A person's brand preference is further influenced by four major psychological
factors: Motivation, Perception, Learning, Beliefs and Attitudes.

2.4 Psychological Factors

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

 Product Knowledge: Product knowledge refers to the amount of information that a consumer
has stored in her or his memory about particular product classes, product forms, brands, models
and ways to purchase them. For example, a car buyer may be more informed about car in respect
of type economy or luxury (product class); hatchback or sedan (product form); Maruti versus
Hyundai (brand); and various package sizes (models) and dealers that sell it (ways to purchase).
Group, marketing and situational influences determine the initial level of product knowledge, as
well as changes. For example, a consumer may hear about a new car dealer’s showroom opening
from a friend (group influence), see an advert for it in the newspaper (marketing influence), or
see the dealer’s showroom on the way to work (situational influence). Any of these influences
would increase the amount of product knowledge; in this case a new source for purchasing the
product (Peter et al., 2004). The initial level of product knowledge may influence how much
information is sought when deciding to make a purchase. For example, if a consumer already
believes that Maruti car is the best, knows where to buy it, and knows how much it costs, the
consumer will not feel the need to look elsewhere for further information. Finally, product
knowledge influences how quickly a consumer goes through the decision-making process. For
example, when purchasing a new product of which the consumer has little product knowledge,
extensive information may be sought and more time may be devoted to the decision (Pride and
Ferrell, 2010).

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


importance of the personal relevance of an item. For example, car owners are generally highly
involved in the purchase and use of the product, brand and accessories. However, a consumer
who buys new toothbrush would likely view this as a low involvement purchase (Doyle and
Stern, 2006). Product involvement influences consumer decision making in two ways. First, if
the purchase is for a high involvement product, consumers are likely to develop a high degree of
product knowledge so that they can be confident that the item that they purchase is right for
them. Second, a high degree of product involvement encourages extensive decision-making
process (Pride et al., 2010).

Other Psychological Factors Influencing Car Buyers’ Brand Preferences

 Perceived Risk: Car buyers have a number of enduring perceptions, or images, that are
particularly relevant to the study of their brand preferences. A major factor affecting personal
relevance and motivation is perceived risk, the extent to which the car buyer is uncertain about
the personal consequences of buying, using or disposing of a car brand. If negative outcomes are
likely or positive outcomes are unlikely, perceived risk is high. Perceived risk is considered in
the present study as the uncertainty that car buyers face when they cannot foresee the
consequences of their purchase decisions. The degree of risk that car buyers perceive and their
own tolerance for risk taking are factors that influence their purchase strategies. Various types of
risks have been recognized by the earlier researchers.
Nicolas and Castillo (2008) reported the probability that a purchased product results in failure to
function as expected is a technical risk, the probability that the firm will not offer a good service
in the future is a service risk, whereas the probability that a product purchased results in the
disapproval of family or friends is a social risk. Mafe, Blas and Manzano (2009) termed the
sensation of wasting time associated with the purchase, and especially, the time that the
consumer perceives is unnecessarily spent in looking for and finding goods as the time risk.
Forsythe and Shi (2003) explained the probability that a product results in inconsistency with
self-image is a psychological risk and the probability that a purchase results in loss of money or
other resources is the financial Risk. Doolin, Dillon, Thompson and Corner (2002) defined the
risk of making a poor or inappropriate purchasing decision as product risk. Massad and Tucker
(2000) described the risk that the specific product may have problem as brand risk.

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

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

The country of origin plays a significant role in the consumer buying behavior. Brown, Light and
Gazda (2007) analyzed the customers' attitude towards European, Japanese and the US cars.
They found that country of origin followed by brand name, lower price and distributor's
reputation plays a significant role in the consumers' behavior.
In many instances, consumers are often mistaken about products actual COO. For example,
Anderson (2007) conducted a survey and found that 33.7 percent of the subjects believed that
Lexus is an American firm, rather than a Japanese firm, whilst 55.7 per cent thought that
Hyundai was Japanese. Some researchers believe that consumers' perceptions could be more
important than the actual location where the product is actually produced or designed, or even
where the headquarters is physically located (Thakor and Kohli, 1996; Lim and O'Cass, 2001;
and Jo, Nakamoto and Nelson, 2003).

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

It is also apparent that COO influences consumers' "willingness to pay". Akaah and Yaprak
(1993) examined USA and Turkish business executives' intention to purchase specific brands of
cars, cameras and calculators made in Germany, Japan and Italy. The researcher found that COO
affected consumers' willingness to pay through the effect of perceived quality. Roth and Romeo
(1992) conducted a study on product categorization in automobile industry. He suggested that
each country possessed its own unique image towards a certain product category, so consumers
would be willing to pay higher for the product that "fits" that country's image. For example,
consumers were willing to pay more for a car from Japan, Germany and the USA; but less
willing to pay for Mexican and Hungarian automobiles.
Chapter 3

COMPANY PROFILE

Abilities was incorporated in the year 1968 by Mr. R.S. Arora. Major Products manufactured
by the company are Pistons Assemblies, Pistons, Piston Rings, high pressure die casting parts
& special coatings etc. Earlier the company catered domestic demand for replacement market
in 2 wheeler automobile segment only, till the year 1994.

The Company then became a vendor to OEM’s in 2 wheeler/ 3 wheeler segments & supplied
products to reputed companies like TVS, Greaves etc. during the same time the company also
started with its exports to Italy. Manufacturing facilities were upgraded in 1995 to meet
international quality standards and yet again in 2004 and 2010. Today Abilities exports to 35
countries and its exports are close to 65%.

Reputation earned during these years has resulted into regular flow of orders, inquiries from
corporates within the country and abroad. Encouraged by customer response.

Abilities provides a value product at a competitive price as we are OEM suppliers to China &
Japan, where quality and price, both are of utmost importance.

Abilities has been provided with financial grant by DSIR to undertake R&D work to evolve
new process of production of pistons employing pressure die casting route over gravity die
casting process, which has now been implemented successfully for supplies to US &
European OEMs.
Today Abilities India Piston and Ring Ltd. is a name that means reliability quality and value
for money to customer in India and abroad. Abilities has to its credit development of a huge
variety of models for chainsaws/brush cutters which places it in a unique position to the OEM.
Since 1993 when it bagged on export order to Italy and France its global presence has grown
to include countries in USA, Europe, Latin America, Asian and far Eastern countries.

Abilities has an eco-friendly state-of-the-art infrastructure spread over 20,000 sq m. to deliver


the highest technology standards, an extensive product range, ISO/TS 16949:2009 & ISO
14001 & 18001 Certification, talented management committed to quality and a R&D centre
with Engine Test Cell & flow analysis software.
Company details
Additional investments for increased capacity year 2014

New Piston Line Installed (Capacity increase 3 million to 3.6 million Pistons / year)
 1 CNC For Rough Turning
 2 CNC IS/RG/HF
 1 Circlip Grooving CNC
 1 Casting M/c
 2 SPM’s Made in House
 1 Stamping M/c

Piston Ring (Capacity increase


10 million Piston Rings / year)
 1 DD grinder
 1 Cam Turning
 1 Vertical Boring
 1 CNC Barrel Honing
 1 Lapping M/c
 Laser Marking M/c

Technology Focus Areas

• Have offered successful solutions to OEM customers for eliminating seizing problems in
customer’s own designed pistons
• Assisting OEM customers in developing new materials for existing piston rings &
changed design in OD profile & other parameters achieving better power & reduction in
emissions
• Introduced NPD Systems
• Product & Process Optimisation & Validation
• Engine Testing

Technical consultants

- Retired chief engineer Honda HGA, Japan with 35 years experience in Piston, Piston
Ring designs
- Helping in improving mass production quality
- Assisting in new design of Pistons & Piston Rings for high performance

HOUSE OF QUALITY

 Global data mapping for similar application for Power, torque etc.
 Optimizing from perspectives of
 Optimized design - weight, chamfers, tolerances
 Reduction in weight of Pistons by VA/VE
 Technology oriented solution
- Lean manufacturing (Single Piece Flow, Adoption of LCA, Adoption of latest
technology machines)
- Lean Machines with Lean Hydraulics, Pneumatics, Electricals & no chips / coolant on
floor
Chapter 4
METHODOLOGY OF THE STUDY
After laying down the theoretical framework, the next phase of research is to test the theory
empirically. To meet the objective, an empirical study of major car manufacturers operative in
India belonging to the domains of hatchback and sedan cars and their marketing strategies was
undertaken in NCR-Delhi. The present study proposed to make an understanding of the position
of Indian car industry in the post liberalization era and how the Indian buyer reacts towards the
marketing plans of car manufacturers about the vehicle options available with him in compact
and midsized segments, on the basis of a research framework of key variables for analyzing the
influence of social, cultural, personal and psychological contexts on consumer buying behavior,
and integrated marketing mix elements, segmentation, targeting, differentiation and positioning
along with electronic marketing and customer relationship management on car buyers’ brand
preference, satisfaction and loyalty intention. This chapter discusses the research objectives and
research procedure which includes the overall research design, the sampling procedures, the data
collection methods, the methods of data analysis, measures undertaken and statistical techniques
used for data analysis. The purpose of this chapter is to provide information regarding the
research contexts, philosophical assumptions underpinning the study, and research strategies
used.
Chapter 5
RATIONALE OF THE STUDY
The study is explorative cum descriptive cum diagnostic in nature. It is exploratory in a sense
that prior to liberalization few studies have been conducted by the scholars on marketing
strategies of car industry. The focus of these studies have been on marketing mix that is too on
positioning as there were only few players in the Indian market. After globalization the
automobile market scenario has completely changed due to the entry of large number of
multinational companies in the fray. And in this changed situation where the focus is on
customer value, in the best knowledge of the researcher based on the extant literature, no study
has been conducted on how marketing strategies of car manufacturers influence the consumers in
India, and in particular, who wants to make a mark in the domain of hatchback and sedan in
compact and midsized segment of cars among the existing car manufacturers. Descriptive
research involves gathering data that describe events and then organizes, tabulates, depicts, and
describes the data collection (Glass and Hopkins, 1996). The present study is also descriptive in
nature as the researcher made an attempt to describe the current scenario in the global
automobile sector with a focus on the players prevailing in the Indian market, the marketing
strategies being followed by these players and the researcher attempts to make a
situational/scenario analysis (SWOT analysis, Porter’s Five Forces Industry analysis, and the
PEST analysis) in the context of automobile business environment. Moreover, the problem has
been formulated and conceptualized on the basis of the description of existing literature on the
subject. The present study is also diagnostic as first it explores the marketing strategies of the
major players and then attempts to analyze the effectiveness of these strategies on Indian car
buyers’ brand preference, satisfaction and loyalty. Finally, an attempt has also been made to
recommend some more viable aspects of marketing strategies that can be implemented in the
current global environment. Survey was the predominant research methodology used in this
work. To proceed on right track and to do justice with the study, the primary sources of
information were browsed. Technical expectations as well as social expectations and obligations
were delineated in consultation with the Research Supervisor and the Marketing Personnel of car
manufacturers/dealers/financing agencies who were apt to the idea of processes and problems of
the buyer behavior and marketing strategies to influence car buyers in Indian automobile
business environment before finalizing the line of action. Thus the thrust areas were marked for
the target audience, the hatchback and sedan car owners for the compact and midsized segment
in India. A quantitative survey was chosen for the research because it is a simple and cost
effective means of gathering a large amount of information within a short timeframe.

Data Sources
The present work is an empirical research based on both primary and secondary data. The theory
is basically developed from secondary sources of information and a thorough study of various
academic works in the field has been attempted. Various sources used for the purpose are the
records of the sampled auto organizations, auto magazines, books, articles that appeared in
journals and newspapers, study reports etc. on the subject particularly for formulation of the
problem and also to compare the respondents’ perception about the influence of strategies and
the buyer preference, satisfaction and loyalty. Self-administered questionnaire was the main
source of colleting the primary data which include items on demographic information of
respondents, the car manufacturers’ marketing strategies and their impact on brand preference,
satisfaction and loyalty. It also included some open ended questions to give the chance to
respondents for expressing their view point on various aspects of the problem. However,
personal interviews were also conducted of the subjects in the light of same questionnaire. An
analysis of the automobile marketing strategies documentation was conducted prior to the
commencement of the survey. Perceptual inputs in the form of documentation were collected by
personal visits to the senior level marketing managers and marketing professionals of the car
manufacturers, dealers and financing agencies under study.

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

Twelve dealers of the car companies in NCR-Delhi were selected on the basis of judgment
sampling for inclusion in the sample. A preliminary discussion was held with the concerned
manager of each of the car dealers under study located in NCR-Delhi who were asked to supply
the list of those customers who had bought the cars for more than a 118 year. Of this list, 240
subjects were randomly selected for giving a personal telephonic call for participating in this
survey.
Chapter 6
OBJECTIVE OF THE STUDY

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

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

2. To study the effectiveness of these marketing strategies by analyzing the impact on consumer
in terms of their brand choice, satisfaction and loyalty intention.

3. To explore and suggest marketing strategies in regard to the current scenario for the car
manufacturers and marketers.
Chapter 7
SCOPE OF THE STUDY

By brining to fore the impact of marketing strategies on car buyers, the car manufacturers will be
in a better position to take initiatives for improving effectiveness of their marketing strategies.
This study on the marketing strategies in the post liberalization era will be of interest to the
academicians and researchers on one hand, and the senior marketing executives and marketing
professional of the car manufacturers in India on the other who are concerned with implementing
marketing plans at their organizations. To the academics, it highlights the role played by the
various marketing strategies towards customer’s perception, attitude and ultimate buying
behavior. Clearly, this study should help the senior marketing executives and marketing
professional of car manufacturers in general and those of the selected companies investigated in
this study, in particular in resolving a series of problems such as selection of appropriate
marketing strategies and innovating in terms of product and marketing techniques from time to
time. Both established and new entrants might use the synthesis to review efforts underway in
both the multinational and domestic car companies. The purpose of the present study is to
document the experiences of selected car manufacturers, as well as experiences of car 135
buyers. Analysis of such documented information at least gives some idea of strength of the
brand and the effect of the marketing strategy on consumer’s perception. Moreover, in the post-
liberalization scenario of Indian market it is evident that there is huge growth potential for car
manufacturers, as both domestic and multinational manufacturers, are presented with great
challenges and opportunities in the near future. Industry body SIAM had lowered the growth
projections for auto sales in fiscal year 2012, due to high fuel prices, interest rates and slowing
economic growth which continue to defer buyers from car purchases. Thus it is very helpful to
determine the car consumer preferences to determine which segment of the potential consumer
market prefers which model/brand of a car. Armed with a greater knowledge and understanding
of the post liberalized automobile industry environment, the findings of this study should prove
useful to both marketers and car manufacturers to have a few detailed insights into the factors
influencing consumer preference and choice as the inflation is not under control and the cost of
vehicle ownership is high.
Chapter 8
RESEARCH METHODOLOGY

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

Research Design

The study is explorative cum descriptive cum diagnostic in nature. It is exploratory in a sense
that prior to liberalization few studies have been conducted by the scholars on marketing
strategies of car industry. The focus of these studies have been on marketing mix that is too on
positioning as there were only few players in the Indian market. After globalization the
automobile market scenario has completely changed due to the entry of large number of
multinational companies in the fray. And in this changed situation where the focus is on
customer value, in the best knowledge of the researcher based on the extant literature, no study
has been conducted on how marketing strategies of car manufacturers influence the consumers in
India, and in particular, who wants to make a mark in the domain of hatchback and sedan in
compact and midsized segment of cars among the existing car manufacturers. Descriptive
research involves gathering data that describe events and then organizes, tabulates, depicts, and
describes the data collection (Glass and Hopkins, 1996). The present study is also descriptive in
nature as the researcher made an attempt to describe the current scenario in the global
automobile sector with a focus on the players prevailing 116 in the Indian market, the marketing
strategies being followed by these players and the researcher attempts to make a
situational/scenario analysis (SWOT analysis, Porter’s Five Forces Industry analysis, and the
PEST analysis) in the context of automobile business environment. Moreover, the problem has
been formulated and conceptualized on the basis of the description of existing literature on the
subject. The present study is also diagnostic as first it explores the marketing strategies of the
major players and then attempts to analyze the effectiveness of these strategies on Indian car
buyers’ brand preference, satisfaction and loyalty. Finally, an attempt has also been made to
recommend some more viable aspects of marketing strategies that can be implemented in the
current global environment. Survey was the predominant research methodology used in this
work. To proceed on right track and to do justice with the study, the primary sources of
information were browsed. Technical expectations as well as social expectations and obligations
were delineated in consultation with the Research Supervisor and the Marketing Personnel of car
manufacturers/dealers/financing agencies who were apt to the idea of processes and problems of
the buyer behavior and marketing strategies to influence car buyers in Indian automobile
business environment before finalizing the line of action. Thus the thrust areas were marked for
the target audience, the hatchback and sedan car owners for the compact and midsized segment
in India. A quantitative survey was chosen for the research because it is a simple and cost
effective means of gathering a large amount of information within a short timeframe.

Universe and Survey Population

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

The present work is an empirical research based on both primary and secondary data. The theory
is basically developed from secondary sources of information and a thorough study of various
academic works in the field has been attempted. Various sources used for the purpose are the
records of the sampled auto organizations, auto magazines, books, articles that appeared in
journals and newspapers, study reports etc. on the subject particularly for formulation of the
problem and also to compare the respondents’ perception about the influence of strategies and
the buyer preference, satisfaction and loyalty. Self-administered questionnaire was the main
source of colleting the primary data which include items on demographic information of
respondents, the car manufacturers’ marketing strategies and their impact on brand preference,
satisfaction and loyalty. It also included some open ended questions to give the chance to
respondents for expressing their view point on various aspects of the problem. However,
personal interviews were also conducted of the subjects in the light of same questionnaire. An
analysis of the automobile marketing strategies documentation was conducted prior to the
commencement of the survey. Perceptual inputs in the form of documentation were collected by
personal visits to the senior level marketing managers and marketing professionals of the car
manufacturers, dealers and financing agencies under study.