Please cite this Article as : , : Research Journal (Aug. ; 2012)

Faiz Ahmed Shaikh A Critical Analysis of Consumer buying behavior... Indian Streams

Volume 2, Issue. 7, Aug 2012Indian Streams Research Journal

Keywords: Two wheeler industry, Customer need, Market share, Consumer preference.

INTRODUCTION

The two wheeler industry in India is one of the largest in the world and one of the fastest growing globally. India manufacture over 18 million vehicles ( including four wheeled vehicle ) every year. [1] It is the world's second largest manufacturer of motorcycles, there are eight key players in the Indian market that produced 13.8 million units in the year 2010-11.[2] At present the dominant products of the automobile industry are two wheelers with a market share of over 75% . The industry has attained a turnover of more than USD 35 billion & provides direct and indirect employment to over 13 million people.[3].

The Indian two wheeler industry has come a long way since its humble beginning in 1948 when Bajaj Auto started importing and selling Vespa scooters in India. Since then, the customer preferences have changed in favor of motorcycles and gearless scooters that score higher on technology, fuel economy and aesthetic appeal, at the expense of metal bodied geared scooters and mopeds. [4]. These changes in customer preference have had an impact on the fortunes of the lead manufacturers. The erstwhile leaders have either perished or have significantly lost market share, whereas new leaders have emerged. The two wheeler industry consists of three segments viz., scooters, motorcycles and mopeds. With an expanding market and entry of new players over the last few years, the Indian two wheeler industry is now approaching a stage of maturity. Previously, there were only a handful of two wheeler models available in the country. Currently, India is the second largest producer of two wheelers in the world. It stands next only to China and Japan in terms of the number of two wheelers produced and the sales respectively. There are many two wheeler manufacturers in India. The major players in the two wheeler industry are Hero Motor Corp., Bajaj Auto Ltd., TVS Motor Company Ltd., The Honda motorcycle and scooter India Pvt. Ltd., Suzuki motorcycle India Pvt. Ltd., India Yamaha motor Pvt. Ltd., Ectrotherm India Ltd.(Yo bikes) accounting for

Abstract:

India is the second largest producer of two wheelers vehicle in the world. In the last two years, the Indian two wheeler industry has seen spectacular growth as majority of Indians especially youngsters prefer these as most convenient means of transport. The objective of two wheeler industry is to sustain market share through satisfying customer needs and expectations. The manufacturers therefore, have to understand the real needs, wants, belief and attitude of customer towards the product and after sales service. A strong understanding of consumer buying behavior is required for sustenance and growth of the business. To get a first hand input I have taken response of customers (actual & potential two wheeler buyers) in the questionnaire. The analysis of data was done using chi-square test. I am hopeful the present study will positively contribute to two wheeler industry to understand the attributes of the product that customer expect from the company.

ISSN:-2230-7850

A Critical Analysis of Consumer buying behavior of two wheelers (observations pertinent to

Ahmednagar city, Maharashtra)

Faiz Ahmed Shaikh

Research Student, Institute of Management Studies, Career development & Research,Ahmednagar (M.S)

Available online at www.isrj.net

ORIGINAL ARTICLE

over 93% of the sales in the domestic two wheeler market. It is noteworthy that motor bike segment share is just below 80% of the total two wheeler market in India which is dominated by Hero Honda with a market share of 59% . Scooter segment market share is about 18% which is led again by Honda motorcycle and scooter India Pvt. Ltd., with a market share of 43%. [5].

The level of technology change in the motor vehicle industry has been high but, the rate of change in technology has been medium. Consumers are very important for the survival of the motor vehicle manufacturing industry. This research paper gives insight of the two wheeler consumer preference in Ahmednagar (Maharashtra) including the different brands, competition and the trends in the domestic sales. The paper also shows the oligopolistic nature of the Indian two wheeler industry and the propensity of the major players to increase their share.

It is extremely important to analyze the state of competition to check whether a few firms may increase their dominance and also the implications of after sales services provided by the two wheeler firms to the consumers.[12]

RATIONALE OF THE STUDY

In India the growing economic well being is reflected in rising per capita GDP. This makes two wheelers more affordable. The Indian two wheeler industry is destined to grow rapidly and therefore, there is always the propensity of the key manufacturers aspiring to increase their share. The two wheeler industry in India is one of the largest in the world and also one of the fastest growing globally. With an expanding market and entry of new players over the last few years, the Industry is now approaching the stage of maturity. Every year a large variety of two wheelers are introduced into the market. In today's competitive environment, many National and Multinational two wheeler industries have gained remarkably by taking notice of consumer preferences, innovative marketing strategies and sales promotion. In two wheeler marketing, relationship with consumer is very important and their cannot be good relationship unless we understand customer preferences well. In this regard a questionnaire war prepared so as to assess the consumer needs. The ever increasing number of two wheeler models will compel the industry to take notice of consumer buying behavior. This will enable industry to fulfill the customer's desire by giving him exactly what he wants in terms of brand popularity, price range, fuel efficiency, after sales service, model and colour of the vehicle.

In the present study I have made an effort to understand the fine aspects of consumer buying behavior. I strongly believe if two wheeler industries understand and cater to the demands of consumer it will develop into a beneficial preposition for both the two wheeler industry as well as the consumers.

BJECTIVE OF THE STUDY

This study focus on identifying the most preferred two wheeler manufacturing companies, the most sellable brands /models, customer needs/ inclination and the market demand of the two wheelers. The information on aforesaid factors will help manufacturer determine its manufacturing and marketing strategies for sustaining and growth of the business.

REVIEW OF LITERATURE

In the review of literature I found that many researchers have contributed to the theme 'Consumer buying behavior of two wheeler' in India. Yet, their remain some lacuna on the part of manufacturer pertinent to the regional consumer preferences that need to be taken notice of.

(Anuj kumar Kanojia, 2011) in his article explored the impact of consumer preference on sales of two wheeler in urban areas of India. However, the study also showed that urban and rural regions have different preferences when it comes to selecting the vehicle model.

(Hemant C R, 2011) emphasized the need of continuous market research. He suggested that there is a genuine need of continuous sales analysis so as to sustain the market share.

(Rishikesha T Krishnan and Ganesh N Prabhu, 1999) suggested in their study entitled 'Creating successful new products: Challenges for Indian industry' that success of business in India will be determined by the marketing strategies targeting the rising urban middle class.

(Virupaxi Bagodi and Biswajit Mahanty, 2008) highlighted customer satisfaction as corner stone of sustainable growth in two wheeler industry.

(K Narsaimhan, 2003) this paper reviews the current marketing practices in the two wheeler industry and their impact on consumer.

(Joshi V and Little I, 1996) this paper studied the evolution of the competition structure of the two

2A Critical Analysis of Consumer buying behavior...

Indian Streams Research Journal • Volume 2 Issue 7 • Aug 2012

wheeler industry in India and stress consumer preference as an important factor in planning sales strategies.

RESEARCH METHODOLOGY

The data was collected in the first quarter of the year 2012. In the present study I have used the primary data. A group of sixty respondents (Customers) from different areas of Ahmednagar were selected. The group consisted of potential two wheeler buyers of different sex, age groups and financial status. A questionnaire with relevant multiple attributes was designed to generate the primary data. The respondents were asked to register their response in multiple options as per the nature of question. The data was tabulated as per attributes for the interpretation and analysis.

SAMPLE DESIGN

Non probability convenient sampling method is used. The potential two wheeler customers willing to respond to the questionnaire were identified. Sixty customers out of two hundred approached volunteered for the response. So the sample size is sixty and the area of work is Ahmednagar city.

RESULT ANALYSIS

The data has been presented in tabulated format. I have used chi-square test for the analysis of the data.

Inference: Hero and Honda together have a 53.32% market share & are the 2 wheeler market leaders. The remaining 5 companies together share 46.68% sales.

Inference: 48.33% of consumer prefer to buy a two wheeler in price range of Rs.41,000-50,000.

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A) Analysis on the basis of proportion. 1. Two wheeler leading companies.

Sr.No Company name Respondent Percentage 1 Hero 22 36.66 2 Honda 10 16.66 3 Yamaha 6 10.00 4 Bajaj 6 10.00 5 Suzuki 5 8.33 6 TVS 8 13.35 7 Yo bike 3 5.00

2. Preferred Price range of vehicle.

Sr.No Price (in thousands) Respondent Percentage 1 30-40 4 6.66 2 41-50 29 48.33 3 51-60 20 33.33 4 61-70 5 8.33 5 Above 70 2 3.33

3. Non-Gear / Gear two wheeler Preferred.

Sr. No Gears Respondent Percentage 1 Non gear 23 38.33 2 4 24 40.00 3 5 9 15.00 4 6 2 3.33 5 Auto. gear 2 3.33

A Critical Analysis of Consumer buying behavior...

Inference: The Non-Gear two wheeler is preferred by 38.33% buyers, 40.00% buyers preferred the four gear vehicle. This observation is further clarified in the chi square test analysis which supports the hypothesis that two wheeler non gear/ gear models sales depend on gender of consumer. Non-gear two wheeler is presumably preferred by female buyers.

Inference:36.66% respondents have two wheelers with fuel efficiency in the range of 45-55kmpl.

Inference: 33.33% consumers prefer to have servicing of vehicle done once in four months.

Inference: 43.33% of consumers have two wheeler that is 1 to 5 years old. This can be co related with the chi square test analysis which supports the hypothesis that two wheeler purchase depend on age group. Thus , most of the vehicles purchased in last five years belong to young consumers.

7. Colour preference of the vehicle.

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4. Range of Fuel efficiency of two wheelers.

Sr. No Fuel efficiency of vehicle Respondent Percentage 1 25-35Kmpl 3 5.00 2 35-45Kmpl 11 18.33 3 45-55Kmpl 22 36.66 4 55-65Kmpl 18 30.00 5 Above 65Kmpl 6 10.00

5. Expected frequency of servicing / maintenance.

Sr. No Period of servicing(Month) Respondent Percentage 1 2 19 31.66 2 3 15 25.00 3 4 20 33.33 4 5 1 1.66 5 6 5 8.33

6. Consumers current two wheeler status.

Sr. No How old is vehicle (in years) Respondent Percentage 1 1-5 26 43.33 2 5-10 12 20.00 3 10-15 9 15.00 4 15-20 10 16.66 5 Above 20 3 5.00

Inference: Red 35.00% & Black 26.66% colour two wheelers are most preferred by the consumers.

Sr. No color Respondent Percentage 1 Black 16 26.66 2 Grey 2 3.33 3 White 6 10.00 4 Purple 1 1.66 5 Red 21 35.00

6 Golden 1 1.66

7 Blue 7 11.66 8 Silver 6 10.00

A Critical Analysis of Consumer buying behavior...

8. Most preferred two wheeler manufacturers.

B)Analysis on the basis of Chi Square test.

Ho: Age Group independent on vehicleH1:Age Group dependent on vehicle

÷2=∑(Oij²/Eij)-N÷2=75.88-60 =15.88Calculated ÷2=15.88 where Table ÷2=12.529As cal ÷2>Tab ÷2 hence reject Ho and accept H1.Inference: age group is dependent on vehicle i.e. there is significant relationship between two wheeler model and age group.

Ho: vehicle independent on genderH1: vehicle dependent on gender

÷2=∑(Oij²/Eij)-N÷2=68.08-60 =8.08Calculated ÷2=8.08 where Table ÷2=7.815As cal ÷2>Tab ÷2 hence reject Ho and accpt H1.

Inference: Two wheeler purchase is dependent on gender of buyer.

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8. Most preferred two wheeler manufacturers.

Inference: 25.00% consumers prefer to buy two wheeler of Hero motor corp.

Sr. No vehicle Respondent Percentage 1 Hero 15 25.00 2 Honda 11 18.33 3 Yamaha 7 11.66 4 Bajaj 7 11.66 5 Suzuki 8 13.33 6 TVS 9 15.00 7 Yo bike 3 5.00 8 Other 0 0.00

Table 1: Age group.

VEHICLE/ AGE

HERO HONDA/ Oij-Eij

HONDA / Oij-Eij

TVS/ Oij-Eij OTHERS/ Oij-Eij

TOTAL/ Oij²-Eij

18-25 12(8.81) 5(3.83) 1(2.68) 5(7.66) 23 26-40 4(5.75) 3(2.5) 5(1.75) 3(5) 15 ABOVE 40 7(8.43) 2(3.66) 1(2.56) 12(7.33) 22 23 10 7 20 60(75.88)

Table 2: Gender.

VEHICLE/ GENDER

HERO HONDA Oij-Eij

HONDA Oij-Eij

TVS Oij-Eij

OTHERS Oij-Eij

TOTAL Oij²-Eij

MALE 13(10.5) 2(5.5) 2(3.5) 13(10.5) 30(34.04) FEMALE 8(10.5) 9(5.5) 5(3.5) 8(10.5) 30(34.08) 21(21) 11(11) 7(7) 21(21) 60(68.08)

A Critical Analysis of Consumer buying behavior...

Ho: vehicle independent on annual incomeH1: vehicle dependent on annual income

÷2=∑(Oij²/Eij)-N÷2=64.38-60 =4.38Calculated ÷2=4.38 where Table ÷2=16.919As cal ÷2>Tab ÷2 hence accept Ho.Inference: Two wheeler vehicle is independent of annual income of consumer.

CONCLUISION

The analysis of data on the basis of proportion and chi square test indicates that Hero Motor Corp. and Honda Motorcycles and Scooters India Pvt. Ltd. are the most preferred manufacturers and therefore the market leaders in the two wheeler segment. The sales are strongly correlated with age group of the consumers. Interestingly the purchase of two wheeler is independent of the annual income of buyer, this could perhaps be due to the easy loan available and customer friendly marketing strategies adopted by the dealers. A significant proportion of the population, 48.33% customers prefer to buy a two wheeler in the range of Rs. 41,000-50,000/- having fuel efficiency of 45-55 Kmpl. The non gear model is preferred by 38.33% and with gear (4 gears) model is preferred by 40.00% consumers. The data is further correlated with the gender of consumer. Presumably females and aged males prefer non gear vehicle where as male in general prefer vehicle with gear. As for maintenance of vehicle is concerned the general concenses among consumers indicate they prefer servicing the vehicle once in four months. Further, 43.33% consumers happen to have vehicle that is 1 to 5 years old indicating old two wheeler vehicles are rapidly being replaced. Finally the colour of vehicle seems to play an important role in consumer preference. The observations indicate a strong affinity for the red colour (35.00%) followed by black (26.66%) and blue (11.66%) colour of the vehicle.

The research findings indicate the various characteristics of two wheeler consumer behavior in the Ahmednagar city, Maharashtra. These observations if taken into consideration by the manufacturers will positively influence the sales as it would cater to the needs of the potential two wheeler consumers.

REFERENCES

1. http:// www.imaginemore.com/automobileindustryindia.html2. Automotive Component Manufacturers Association of India (ACMA). 1998. Automotive Industry inIndia, Facts and Figures 1997-1998. Mumbai.3. www.fadaweb.com/two_wheeler_industry.html

5. Anuj Kumar kanojia (2011), Analyzing the state of competition in Indian two wheeler industry. A report submitted to Competition Commission of India, New Delhi6. Anuj Kumar kanojia (2011), Analyzing the state of competition in Indian two wheeler industry. A report submitted to Competition Commission of India, New Delhi7. Hemant C R (2011) A project report on customer satisfaction of two wheelers industry with special reference to Yamaha motors.

8. Rishikesha T. Krishnan & Ganesh N. Prabhu,(1999) Creating Successful New Products:

4. http://www.researchandmarkets.com/reports/1054677/indian_two_wheeler_industry.pdf

http://www.slideshare.net/hemanthcrpatna/a-project-report-on-customer-satisfaction-of-two-wheelers-industries-with-special-reference-to-yamaha-motors

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Table 3: Annul income

VEHICLE/ INCOME GROUP.

HERO HONDA Oij-Eij

HONDA Oij-Eij

TVS Oij-Eij

OTHERS Oij-Eij

TOTAL Oij²-Eij

<1 LAC 9(7.66) 3(3.33) 2(2.33) 6(6.66) 20(20.38) 1-2 LAC 5(6.9) 2(3) 3(2.1) 8(6) 18(19.89) 2-4 LAC 6(6.51) 4(2.83) 2(1.98) 5(5.6) 17(17.6) ABOVE 4 LAC

3(1.91) 1(0.83) 0(0.58) 1(1.66) 5(6.51)

23(22.98) 10(9.99) 7(6.99) 20(19.92) 60(64.38)

A Critical Analysis of Consumer buying behavior...

Challenges for Indian Industry 9. Virupaxi Bagodi, Biswajit Mahanty, (2008) "Two-wheeler service sector in India: factors of importance for sustainable growth", Journal of Advances in Management Research, Vol. 5 Iss: 1, pp.21 – 2710. K. Narasimhan, (2003) "Quality from Customer Needs to Customer Satisfaction", The TQM Magazine, Vol. 15 Iss: 6, pp.430 – 43111. Joshi, V., Little, I. 1996. India's Economic Reforms: 1991-2001. New Delhi, Oxford University Press. 12. Alan Smith (2006) CRM and customer service: strategic asset or corporate overhead?

Volume: 7

http://www.iimb.ernet.in/~rishi/epwcsnp.pdf

Handbook of Business Strategy Issue: 1

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Indian Streams Research Journal • Volume 2 Issue 7 • Aug 2012

A Critical Analysis of Consumer buying behavior...