cb report project 1

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Market share of two wheeler automobile

sector

5.60% 27.50%

16%

7%4%9.50%

Hero Honda

Bajaj Motors

TVS Motors

YamahaMotorsHonda Motors

Others

CHAPTER 1

INTRODUCTION TO THE INDUSTRY

Automobile is one of the largest industries in global market. Being the

leader in product and process technologies in the manufacturing

sector, it has been recognized as one of the drivers of economic

growth. During the last decade, well directed efforts have been made

to provide a new look to the automobile policy for realizing the

sector's full potential for the economy. Aggressive marketing by the

auto finance companies have also played a significant role in boosting

automobile demand, especially from the population in the middle

income group.

A Nations economy is well known from its transport system. For instant and

rapid growth in economy, a well-developed and well-networked transportation

system is essential. As India's transport network is developing at a fast pace,

Indian Automobile Industry is growing too. Also, the Automobile industry has

strong backward and forward linkages and hence provides employment to a

large section of the population. Thus the role of Automobile Industry is very

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essential in Indian economy. Various types of vehicles are manufactured by the

Automobile Industry. Indian Automobile Industry includes the manufacturing

of trucks, buses, passenger cars, defence vehicles, two-wheelers.

The two-wheeler manufacturing is dominated by companies like TVS, Honda

Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc.

The automobile industry in the country is one of the key sectors of the economy

in terms of the employment opportunities that it offers. The industry directly

employs close to around 0.2 million people and indirectly employs around 10

million people. The prospects of the industry also has a bearing on the auto-

component industry which is also a major sector in the Indian economy directly

employing 0.25 million people.

All is not well with the automobile industry the world over currently with the

slowdown that has gripped most of the major economies of the world. The gap

between the manufacturing capacity volume and the assembly volume is

growing by the day and has worried the manufacturers. This state of affairs has

triggered a lot of cutthroat competition and consolidation in the industry. Cost

reduction initiatives have come to be the in thing in the global industry today.

Towards this direction, many automobile factories are being closed down.

The Indian automobile industry is a stark contrast to the global industry

due to many of the characteristics, which are peculiar to India. The

Indian automobile industry is very small in comparison to the global

industry. Except for two wheelers and tractors segments, the Indian

industry cannot boast of big volumes vis--vis global numbers

OVERVIEW OF TWO WHEELER SECTOR

Two Wheeler Industry

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The Indian two wheeler contributes the largest volumes amongst all the

segments in automobile industry. Though the segment can be broadly

categorized into 3 sub-segments viz.; scooters, motorcycles and mopeds; some

categories introduced in the market are a combination of two or more segments

e.g. scooterettes and step-thru's. In the last four to five years, the two-wheeler

market has witnessed a marked shift towards motorcycles at the expense of

scooters. In the rural areas, consumers have come to prefer sturdier bikes to

withstand the bad road conditions. In the process the share of motorcycle

segment has grown from 48% to 58%, the share of scooters declined drastically

from 33% to 25% , while that of mopeds declined by 2% from 19% to 17%

during the year 2000-01. The Euro emission norms effective from April 2000

led to the existing players in the two- stroke segment to install catalytic

converters. All the new models are now being replaced by 4-stroke

motorcycles. Excise duty on motorcycles has been reduced from 32% to 24%,

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resulting in price reduction, which has aided in propelling the demand for

motorcycles.

Within the two-wheeler industry, motorcycle segment grew at a phenomenally

high rate of 35% as against a deceleration of 3% for scooters and 27% for

mopeds. In fact, motorcycle has been taking away the share of scooters and

mopeds in a 4.3 million two-wheeler market and surging ahead with its market

share of 68%. The increasing demand from semi-urban and rural segments may

have caused this positive shift towards motorcycles. Also, easy credit coupled

with low interest rate regime, constrained personal transport, increasing income

levels in middle class and higher aspirations of young people all seem to be the

factors responsible for such high growth in two-wheelers. The growth in two-

wheelers has been robust enough to counter the slow down and other factors

constraining the overall business activity in the country. Also, rationalization of

excise duty in the Union Budget 2002-03 had a positive impact on the demand

for motorcycles. We also expect the motorcycles to continue to lead the two-

wheeler segment like in all other Asian countries. Available forecasts suggest

that this trend would continue for another couple of years and the industry

would record nearly double-digit average annual growth up to 2006.

During the year, there have been important developments in two-wheeler

industry. The competition has strengthened though there are hardly any new

entrants into the industry. There is an increasing emphasis on price and this has

led to cost cutting efforts all across the industry, thereby, making the customer

an ultimate beneficiary. The trend also saw introduction of new motorcycles

with capacity ranging from 100 to 180cc bikes. We anticipate that many more

new models will be launched during the year and provide customers plenty of

choice at competitive prices.

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Businesses cannot consistently grow at 25-30 per cent. Each business has a

tendency to taper and plateau after attaining a particular size. An annual growth

rate of 10-12 per cent over a period of time is extremely healthy.

The TCS study rankings are conducted at the motorcycle segment-level to

provide comparisons among similar groups of motorcycles. Motorcycles

ranking highest in their respective segments for TCS are: Hero Honda CD100

SS (best standard motorcycle segment); Hero Honda Splendor (best executive

motorcycle segment); Bajaj Pulsar (best premium motorcycle segment); and

Royal Enfield Bullet Electra (best cruiser motorcycle segment). "The relatively

low score for the premium segment indicates that most manufacturers have

fallen short of meeting the high expectations of these buyers," states Mr.

Lochan." Bajaj Pulsar is one exception with segment-leading ratings across all

aspects of ownership experience, particularly on areas related to vehicle

styling."

The feeling of freedom and being one with the Nature comes only from riding a

two wheeler. Indians prefer the two wheelers because of their small manageable

size, low maintenance, and pricing and easy loan repayments. Indian streets are

full of people of all age groups riding a two wheeler. Motorized two wheelers

are seen as a symbol of status by the populace. Two wheelers in India are the

second largest producer and manufacturer of two-wheelers in the world. It

stands next only to Japan and China in terms of the number of two-wheelers

produced and domestic sales respectively. Indian two-wheeler industry has got

spectacular growth in the last few years. Indian two-wheeler industry had a

small beginning in the early 50's. The Automobile Products of India (API)

started manufacturing scooters in the country.

Bikes are a major segment of Indian two wheeler industry, the other two being

scooters and mopeds. Indian companies are among the largest two-wheeler

manufacturers in the world. In the initial stages, the scooter segment was

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dominated by API; it was later overtaken by Bajaj Auto. Although various

government and private enterprises entered the fray for scooters, the only new

player that has lasted till today is LML.

The motorcycle segment was initially dominated by Enfield 350cc bikes and

Escorts 175cc bike. The two-wheeler market was opened to foreign competition

in the mid-80s. And the then market leaders - Escorts and Enfield - were caught

unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint

ventures. With the availability of fuel efficient low power bikes, demand

swelled, resulting in Hero Honda - then the only producer of four stroke bikes

(100cc category), gaining a top slot. The first Japanese motorcycles were

introduced in the early eighties. TVS Suzuki and Hero Honda brought in the

first two-stroke and four-stroke engine motorcycles respectively. These two

players initially started with assembly of CKD kits, and later on progressed to

indigenous manufacturing. In the 90s the major growth for motorcycle segment

was brought in by Japanese motorcycles, which grew at a rate of nearly 25%

CAGR in the last five years.

The industry had a smooth ride in the 50s, 60s and 70s when the Government

prohibited new entries and strictly controlled capacity expansion. The industry

saw a sudden growth in the 80s. The industry witnessed a steady growth of 14%

leading to a peak volume of 1.9mn vehicles in 1990.

In 1990, the entire automobile industry saw a drastic fall in demand. This

resulted in a decline of 15% in 1991 and 8% in 1992, resulting in a productionloss of 0.4mn vehicles. Barring Hero Honda, all the major producers suffered

from recession in FY93 and FY94. Hero Honda showed a marginal decline in

1992.

The reasons for recession in the sector were the incessant rise in fuel prices,

high input costs and reduced purchasing power due to significant rise in general

price level and credit crunch in consumer financing. Factors like increased

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production in 1992, due to new entrants coupled with the recession in the

industry resulted in company either reporting losses or a fall in profits.

Evolution of Two-wheeler Industry in India:

Two-wheeler segment is one of the most important components of the

automobile sector that has undergone significant changes due to shift in policy

environment. The two-wheeler industry has been in existence in the country

since 1955. It consists of three segments viz. scooters, motorcycles and

mopeds.

India is on every major global automobile players roadmap because of the

following reasons:

1.India is the second largest two-wheeler market in the world

The auto component industry has come of age and now forms an important

component of the Indian economy. In recent years, it has grown more

impressively, fetch double-digit growth. More interestingly, it has captured

attention as well as business from leading auto makers of the world. The

industry plays a crucial role in the automobile sector. Manufacturing vehicles

typically involve assembling a large number of components out-sourced from

number of ancillaries or component manufacturers. Competitiveness with

quality as a theme has been the watchword for the Indian industry and

especially the auto component industry ever since the Indian economy was

opened up to the world in the early 1990s. While economic revival, lower

interest rates and better road infrastructure are driving domestic demand forautomobiles and, therefore, components, increasing outsourcing by global

automobile majors is creating a huge export opportunity for Indian component

manufacturers.

2. Growth Prospects and Key Drivers of the Indian Two Wheelers Industry

The growth witnessed by the Indian two wheeler industry indicates the growing

demand for low cost personal transportation solutions amongst the 300 millionIndian middle class consumers. Despite this spectacular growth rate, the two

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wheeler penetration (number of two wheelers per 1000 inhabitants) in India

remains lower than other Asian countries. This fact provides an opportunity for

continued growth in the market. India has the lowest Penetration of two

wheelers as compared to countries like Taiwan, Thailand, Malaysia, Vietnam,

Indonesia and China. In the present scenario, growth in the two wheeler

industry will be driven by several factors:

3. Rise in Indias Young Working Population

With the rising levels of per capita income of people, the Indian two wheeler

market offers a huge potential for Growth. This growth is relevant in the light

of the fact that 70 per cent of Indias population is below the age of 35 Years

and 150 million people will be added to the working Population in the next five

years. The number of women in the urban work force is also increasing; this

will lead to the Growth of gearless scooters.

4. Rise of Indias Rural Economy and Growth in Middle Income

Households

The growth prospects of the Indian rural economy offer a significant

opportunity for the motorcycle industry in India. The penetration of

motorcycles amongst rural households with income levels greater than US$

2,200 per annum has already increased to over 50 per cent. The current target

Segment for two wheelers, i.e., households belonging to the Income category of

US$ 2,20012,000 is expected to grow at a CAGR of 10 per cent.

5. Greater Affordability of VehiclesThe growth in two-wheeler sales in India has been driven by an increase in

affordability of these vehicles. An analysis of the price trends indicates that

prices have more or less stagnated in the past. This has been part of the

marketing strategy adopted by the manufacturers to gain volume, as well as

conscious efforts adopted to bring down costs. The operating expenses of

leading manufacturers have declined by around 15 per cent in the last five

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years. With greater avenues of financing, the customers capacity to own a two

wheeler has improved.

6. Rapid Product Introduction and Shorter Product Life Cycle

The last five years have witnessed a sharp increase in new product launches in

the two-wheeler industry. It is estimated that close to 50 new products have

been launched by manufacturers during this period, filling up all price points

and targeted at various consumer segments.

7. Inadequate Public Transport Systems in most Urban Areas

The economic boom witnessed in the country and the increased migration to

urban areas have increased the traffic congestion in Indian cities and worsened

the existing infrastructure bottlenecks. Inadequate urban planning has meant

that transport systems have not kept pace with the economic boom and the

growing urban population. This has increased the dependence on personal

modes of transport and the two wheelers market has benefited from this

infrastructure gap.

8. Challenges faced by the industry

Despite the high growth achieved in the past and the high potential in the

future, the two-wheelers market faces some challenges.

9. Rising Customer Expectations

The growth witnessed by the Indian two wheeler industry has attracted a

number of new entrants to the market and it is expected that the Indian industry

will become more competitive in the future. The plethora of products

introduced in the past has also raised customer expectations with respect to

reliability, styling, performance and economy.

10. Environmental and Safety Concerns

The increasing demand for two wheelers will need to be managed to address

issues relating to overcrowding of roads. Another problem is the insufficient

infrastructure for inspection to ensure adherence to emission norms. As the

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industry grows, it is important to regulate the sale of used two wheelers in a

more organised manner for which a mechanism needs to be evolved.

Unregulated sale of two wheelers, especially in the rural areas, are likely to

create issues related to emissions and safety of vehicles.

11. Creation of Distribution Infrastructure

Leading companies need to ensure that on one hand they build adequate

infrastructure in terms of dealerships andservicing stations in the urban areas

and on the other ensure that their distribution infrastructure also reaches the

rural areas.

OVERVIEW OF LEADING BRANDS:

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Market share of two wheeler automobile

sector

35.60% 27.50%

16%

7%4%9.50%

Hero Honda

Bajaj Motors

TVS Motors

YamahaMotors

Honda Motors

Others


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1.HERO HONDA

Desh ki Dhadkan"Hero Honda Motors Limited, based in Delhi, India is a joint venture between

the Hero Group of India and Honda of Japan It has been referred to as the

world's biggest manufacturer of2-wheeled motorized vehicles since 2001,

when it produced 1.3 million motorbikes in a single year. Hero is the brand

name used by the Munjal brothers for their flagship company Hero Cycles Ltd.

A joint venture between the Hero Group and Honda Motor Company was

established in 1984 as the Hero Honda company, India.

During the 1980s, the company introduced motorcycles that were popular in

India for their fuel economy and low cost. A popular advertising campaign

based on the slogan 'Fill it - Shut it - Forget it' that emphasized the motorcycle's

fuel efficiency helped the company grow at a double-digit pace since inception.

Hero Honda has three manufacturing facilities based at Dharuhera and Gurgaon

in Haryana and at Haridwarin Uttarakhand. These plants together are capable

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of churning out 3.9 million bikes per year. Hero Honda's has a large sales and

service network with over 3,000 dealerships and service points across India.

Hero Honda's customer loyalty program, the Hero Honda Passport Program,

claims to be one of the largest programs of its kind in the world with over 3

million members.

The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors

ranked at 108.

FounderMunjal Brothers: Mr. Satyanand Munjal, Mr. Brijmohan Lall

Munjal and Mr. O. P. Munjal.

Year ofEstablishment

1984 (The Hero Group was established in 1956)

Mission "Its our mission to strive for synergy between technology,

systems and human resources, to produce products and

services that meet the quality, performance and price

aspirations of our customers. While doing so, we maintain the

highest standards of ethics and societal responsibilities."

- Mr Brijmohan Lall Munjal, Chairman & MD

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Foundational

Work

Before the establishment of the Hero Group in 1956, Munjal

Brothers use to manufacture bicycle components in the early

1940's.

Industry Automotive - Two Wheelers

Business

GroupThe Hero Group

Capitalization

Ratio

Hero Group - 26%

Honda Motor Co., Ltd. - 26%

Others - 48% (listing)

No. of Sales

Outlets1500+

Joint Venture The Hero Group (India) with Honda Motor Co., Ltd. (Japan)

Website www.herohonda.com

www.herogroup.com

Segment and Brands

Products Brands

Two-Wheelers Achiever CBZ CBZ Xtreme

CD100SS CD DAWN Glamour

Karizma Passion Plus* Pleasure

Splendor+* Super Splendor*

2. BAJAJ AUTO

"Inspiring Confidence"

Bajaj Auto Ltd. is the largest exporter of two and three wheelers. With

Kawasaki Heavy Industries of Japan, Bajaj manufactures state-of-the-art range

of two-wheelers. The brand, Pulsar is continually dominating the Indian

motorcycle market in the premium segment. Its Discover DTSi is also a

successful bike on Indian roads.

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Founder Jamnalal Bajaj

Year of Establishment 1926

Industry Automotive - Two & Three Wheelers

Business Group The Bajaj GroupListings & its codes BSE - Code: 500490; NSE - Code: BAJAJAUTO

Presence Distribution network covers 50 countries.

Dominant presence in Sri Lanka, Bangladesh,

Columbia, Guatemala, Peru, Egypt, Iran and

Indonesia.

Joint Venture Kawasaki Heavy Industries of Japan

Works Akurdi, Pune 411035

Bajaj Nagar, Waluj Aurangabad 431136

Chakan Industrial Area, Chakan, Pune 411501

E-mail [email protected]

Website www.bajajauto.com

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Segment and Brands

Products Brands

Motorcycles 4S 4S Champion Bajaj Avenger

Bajaj CT 100 Bajaj Discover Bajaj Platina

Bajaj PulsarBajaj Pulsar

DTSi

BAJAJ PULSAR DTS

FI 220

Bajaj Sonic Bajaj Wind 125 Bajaj XCD 125

Boxer Caliber Caliber115

Kawasaki Bajaj

Eliminator KB RTZ KB100

KB125

Scooters Bajaj Chetak Bajaj Kristal Dtsi

3. TVS MOTOR COMPANY

"Inspiration in Motion"

TVS Motor is the third largest two-wheeler manufacturer in India and ranks

among the top ten globally. It is the first company in the world to be honoured

with The Deming Prize for Total Quality Management. The company was the

first in India to launch 2-seater 50cc moped and 100cc Indo-Japanese

motorcycles. At present TVS Apache, TVS Victor, TVS Scooty, TVS Centra

and TVS Fiero are the popular bikes in Indian market.

Founder T V Sundaram Iyengar

Country India

Year of Establishment August 1980 (TVS Group in 1911)

Industry Manufacturing of two-wheelers and auto components

Business Group TVS Group

Website www.tvsmotor.in

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Segments and brands

TVS Apache

TVS Apache RTR FI 160

TVS Centra

TVS Fiero FX TVS Flame

TVS Scooty

Scooty pep plus

TVS Star

TVS Victor

TVS Victor GLX 125

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TVS XL Super

TVS 180 RTR Menace

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CHAPTER II

LITERATURE REVIEW

CONSUMER BEHAVIOUR

Referring to Solomon (2006, p.27) consumer behaviour is the study of the

processes involved when individuals or groups select, purchase, use or dispose

of products, services, idea or experiences. Consumer behaviour focuses on how

individuals make decisions to spend their available resources on consumption

related items. That includes what they buy, why they buy, when they buy, where

they buy it, how often they buy it how often they use it, how they evaluate it

after they purchase and the impact of such evaluations on future purchases, and

how they dispose it. [Schiffman and Kanuk (2004, p.8)]

Belch and Belch define consumer behaviour as 'the process and activities

people engage in when searching for, selecting, purchasing, using, evaluating,

and disposing of products and services so as to satisfy their needs and desires.

CONSUMER ATTITUDES

According to Ajzen (1998) the attitudes are the first determinant of behaviour

intention. In consumer behaviour context attitude is a learned predisposition to

behave in a consistently favourable or unfavourable way with respect of a given

object. There is a general agreement that attitudes are learned. This means that

attitudes relevant to purchase behaviour are formed as a result of direct

experience with the product, word-of-mouth information acquired from others,

or exposure to mass media advertising. Internet etc. (Schiffman and Kanuk,

2004, p.253) As learned predispositions, attitudes may propel consumer

towards particular behaviour or repel the consumeraway from particular

behaviour. . (Schiffman and Kanuk, 2004, p.253)

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The following literature review will critically analyse the theories associated

with the research topic. Firstly, it looks at the issues ofconsumer behaviour;

hence it highlights the factors, which influence the consumer decision-making

process, predominantly the consumer attitudes. Other articles examine more

generally models of consumer attitude formation, which might be useful

applied to the research question in this dissertation.

While the first section focuses on the aspects of consumer behaviour, the

second part of the review, as already outlined in the introduction section of

dissertation, observes the marketing issues, particularly the marketing

communication strategy within the marketing mix.

Therefore the following theories from consumer behaviour and marketing have

been outlined:

Consumer decision-making process

Consumer attitude formation and change

The marketing mix

CONSUMER DECISION-MAKING PROCESS

The consumer decision to purchase or not to purchase the product is crucial for

marketers. It can signify whether the marketing strategy has been wise,

insightful, and effective, or whether was poorly planned and missed the mark.

Hence marketers are particularly interested in such process. (Schiffman and

Kanuk, 2004, p.581)

Verbeke (2005) recognizes that at any point in time throughout the decision-

making process, judgements and choices are affected by a variety of stimuli

from environment as well as by internal process and characteristics form the

consumers themselves. Jobbers (1995) identifies the concept of influences on

consumer purchasing behaviour among which he points out the level of

purchase involvement as one of the factors that influences the consumer

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decision-making process. Referring to Kim (2005) who was investigating how

product involvement and values interact with consumers, more current research

examines consumer involvement under working assumptions that different

types of product involvement trigger different behaviour.

Lye et al. (2005), in their study of consumer decision models, advocate that the

complexity of consumer decisions is increasing. We have limited

understanding of the decision process and the models are inadequate at

predicting decision outcomes. Hence the current models, they argue, are out of

date and insufficient in providing the desired outcome.

Nevertheless, the decision-making process model will provide the author and

the reader with general overview and understanding of factors influencing on

consumers purchasing behaviour.

MODELS OF CONSUMER BEHAVIOUR

The black box model shows the interaction of stimuli, consumer characteristics,

and decision process and consumer responses. It can be distinguished between

interpersonal stimuli (between people) or intrapersonal stimuli (within people).

The black box model is related to the black box theory of behaviourism, where

the focus is not set on the processes inside a consumer, but the relation between

the stimuli and the response of the consumer. The marketing stimuli are planned

and processed by the companies, whereas the environmental stimulus is given

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by social factors, based on the economical, political and cultural circumstances

of a society. The buyers black box contains the buyer characteristics and the

decision process, which determines the buyers response.

The black box model considers the buyers response as a result of a conscious,

rational decision process, in which it is assumed that the buyer has recognized

the problem. However, in reality many decisions are not made in awareness of a

determined problem by the consumer.

BUYING DECISION PROCESS

The buying decision process follows a logical sequence of five steps

a. Need recognition : When a buyer recognizes a gap between his desired state

and the actual state, buying process starts. Such recognition may be caused

by stimuli either internal or external. At this stage, marketer should help

consumers identify their current and future problems and felt or latent needs.

To do this, marketers have to research on consumer problems and needs.

b. Information search: Assuming consumers are motivated to satisfy his or

her need, they will next undertake a search for information on possible

solutions. The sources used to acquire this information may be as simple as

remembering information from past experience (i.e., memory) or the

consumer may expend considerable effort to locate information from outside

sources (e.g., Internet search, talk with others, etc.). How much effort the

consumer directs toward searching depends on such factors as: the

importance of satisfying the need, familiarity with available solutions, and

the amount of time available to search.

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c. Evaluate Options

Consumers search efforts may result in a set of options from which a choice

can be made. It should be noted that there may be two levels to this stage. At

level one the consumer may create a set of possible solutions to their needs

(i.e., product types) while at level two the consumer may be evaluating

particular products (i.e., brands) within each solution. For example, a

consumer who needs to replace a television has multiple solutions to choose

from such as plasma, LCD and CRT television.

d. Purchase Decision

In many cases the solution chosen by the consumer is the same as the

product whose evaluation is the highest. However, this may change when it

is actually time to make the purchase. The intended purchase may be

altered at the time of purchase for many reasons such as: the product is out-

of-stock, a competitor offers an incentive at the point of- purchase (e.g.,

store salesperson mentions a competitors offer), the customer lacks the

necessary funds (e.g., credit card not working), or members of the

consumers reference group take a negative view of the purchase (e.g.,

friend is critical of purchase).

e. Post purchase Behaviour

Once the consumer has made the purchase they are faced with an evaluationof the decision. If the product performs below the consumers expectation

then he/she will re-evaluate satisfaction with the decision, which at its

extreme may result in the consumer returning the product while in less

extreme situations the consumer will retain the purchased item but may take

a negative view of the product. Such evaluations are more likely to occur in

cases of expensive or highly important purchases. To help ease the concerns

consumers have with their purchase evaluation, marketers need to be

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receptive and even encourage consumer contact. Customer service centers

and follow-up market research are useful tools in helping to address

purchasers concerns.

BUYER BEHAVIOUR PATTERNS

Classification is of 2 types

a. Degree of Involvement: Different patterns of behaviour on purchasing

different types of products and services. They buy from nearby shops and not

deliberate much on the characteristics of products. Individual decisions are

made. In case of durables they visit different shops and opinions of others and

evaluate product characteristics and benefits, their financial position, payment

scheme and then decide. The difference in the pattern of the behaviour is

because of perceived risk (higher the perceived risk higher the involvement)

and vice versa.

According to Assael, there are 4 types of behaviour based on 2 parameters.

1. Degree of buyer involvement (High/Low)

2. Degree of differences among brands.

High Involvement Low Involvement

Significant differences

among brands

Complex buying

behaviour

Variety seeking buying

behaviour

Few differences among

brands

Dissonance reducing

behaviour

Habitual buying

behaviour

Complex buying behaviour Seen in the case of purchasing Computers,

refrigerators, automobiles etc. Marketers should

Help consumers learn about the product, attributes, uses and benefits etc.

Make comparative analysis of features and benefits of products in print

media.

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Train and motivate sales personnel.

Generate WOM Advertising.

Dissonance reduces behaviour Products like carpets and furniture are

expensive but have few differences. Customers go for appearances and

performance of these products.

Markets should be intelligent in knowing probable arguments in favour and of

against the product. On what grounds product may be appreciated or

discounted, the marketers must know.

Habitual buying behaviour: Products like salt, wheat, cigarettes, paan masala

are low involvement items and low cost and are frequently purchased. Brand is

not bothered about. Customers dont postpone the purchase. Marketers need to

make consumers brand conscious. Differentiated marketing helps.

Rational and Emotional attacks

Rational make rational appeal and raise consciousness levels.

Ex: Horlicks with calcium, Pepsodent 2-in-1 action, Medimix ayurvedic beauty

soap with all ingredients.

Emotional Associate with individual emotions like love, fear, jealousy and

wisdom.

Ex: Saffola husbands health, Wills Made for each other.

Variety seeking behaviour There are a good number of brands with different

attributes and benefits. Purchasing is less expensive and frequent. Ex:

Confectionery items, ice creams etc.The consumer buys different items of same

brand or different to experience different sight, smell, sound, touch, and taste.

Brand switching occurs to try a good variety of products not because of

dissatisfaction.

THE MARKETING MIX

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The concept of the marketing mix as the combination of the major tools of

marketing was first developed by Borden in the 1950s. The idea of 4Ps

(Product, Place, Price and Promotion) was later formulated by McCarthy in

1975. The marketing mix creates an offering for the customer. Marketers need

to ensure that the marketing mix meets their customers needs and wants in

addition to that all of its components need to be consistent with each other. If

not costumers will turn away to its competitors. (Brassington, 2006)

Vignali (2001) acknowledges that for many years 4Ps have been used as the

principal foundation on which a marketing plan is based. However, with

particular attention being paid to services marketing in recent years, theorists

have identified additional variables, which could be added to the 4Ps. Fifield

and Gilligan (1996, cited by Vignali 2001) recognized the following variables

as an integral part of the marketing mix- process, physical and people. Vignali

(2001) applied 7Ps analysing the marketing mix of McDonalds in the

following way:

1. Product features, quality, quantity.

2. Place location, number of outlets.

3. Price strategy, determinants, levels.

4. Promotion advertising, sales promotion, public relations.

5. People quantity, quality, training, promotion.

6. Process blueprinting, automation, control procedures.

7. Physical cleanliness, decor, ambience of the service.Further into the promotion part of the marketing mix, the promotional mix is

a direct way in which an organization attempts to communicate with various

target audiences. It consists of five main elements:

Advertising

Public relations

Sales promotion

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Direct marketing

Personal selling(Brassington, 2006)

Laurent and Kapferer(1985) recognize that the degree of consumer

involvement in a product category has become a major factor relevant to

advertisingand promoting strategies. Solomon et al. (2006) suggests that this

might be involvement paradox; the less important is the product to consumers,

the more important are many of the marketing stimuli (e.g. packages, jingles)

that must be devised to sell it.

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CHAPTER III

RESEARCH METHODOLOGY

Research can be defined as the search for knowledge or any systematic

investigation to establish facts. Research methodology refers to the way how a

research is conducted.

RESEARCH OBJECTIVE

The objective of the research was to study the consumer behaviour towards

two-wheeler bikes. The two main objectives of the project are:

1) To study the behavioural factors of consumers in motor bikes.

2) To analyze the impact of behavioural factors of consumers on choosing

particular brand of motor bike.

PRIMARY RESEARCH

The primary data was collected through direct interviews and well structured

questionnaire.SECONDARY RESEARCH

Secondary data are the data that are collected by others and is to be "re-used"

by the researcher. The secondary data that was collected were the various books

on marketing research including Marketing Management by Philip and Kotler,

Marketing research by Naresh K Kotla and internet sites including

www.autoindia.org.

RESEARCH DESIGN

The research design used for this study is descriptive research. The main

purpose of descriptive research is description of the state of affairs as it exists at

present. The activities were performed in the following order:

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Activity PerformedA Basic Understanding of the Project.

Collecting Data Relating to Project.

Identifying target market.

Constructing the questionnaire to study consumer behaviour of target customers.

Administration of the questionnaire to the sample.

Data analysis of the questionnaire.

Analysis of the customer behaviour and suggesting possible marketing strategy foreach of the three brands.

SAMPLING PLAN

Sampling plan consists of sample design; sample size, sample unit and sample

procedure as follows:

Sample design

Sample design is a definite plan determined before any data are actually

collected for obtaining a sample from a given population. The sample design to

be used must be decided by the researcher, taking into consideration the nature

of the inquiry and other related factors.

Sample size

Sample size refers to the number of items to be selected from the universe to

constitute the sample. As suggested by the company, a sample of 100 customers

in Delhi was surveyed.

Sample unit

The sample unit is usually the people to be surveyed. The respondents were

selected from the Delhi city only.

Sample Procedure

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Sampling procedure explains about how the survey has to be conducted.

Convenience sampling technique was undertaken for this research. Sample was

classified on the basis of location of the customers having two wheeler bikes.

South Delhi

North Delhi

West Delhi

East Delhi

QUESTIONNAIRE DESIGN

Questionnaire was used as a tool for data collection as the number of

respondents and strata are huge and the time available is comparatively less.

The questionnaire designed to survey the sample included both open ended and

close ended questions.

1. Open ended questions: In this type of questions there are no pre-

existing response categories and the respondents are permitted to answer as

they feel. They are mainly used in exploratory and qualitative research.

The open ended question helps in getting the inputs from the heads of

editorial department and in identifying any unknown variable.

2.Close ended questions: A closed-ended question is a form of question

which can normally be answered using a simple "yes" or "no", a specific

simple piece of information, or a selection from multiple choices.

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respondents are of 10,000- 15,000, 7% of respondents are of 15,000-20,000 and

remain 3% of respondents above 20,000 of income level

CLASSIFICATION BY OCCUPATION

Occupation No. of respondents Percentage (%)

Servicemen 47 47

Student 30 30

Business 12 12

Others 11 11

Interpretation

Above Chart Shows that 47% respondent are belonging Servicemen out of 100

and 30% are the students. 12% respondents are businessman.

RESPONSE TOWARDS MOTOR BIKES IN TERMS OF AGE OF THE

CONSUMER

S.No Name of thebrand

Below 30years

% Between 30-50years

%

1 Hero Honda 40 40% 45 45%

2 Bajaj 45 45% 30 30%

3 TVS 35 35% 45 45%

Interpretation:

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Regarding the age of respondents, most of the respondents are below 30 years

of age and chosen for Bajaj bikes, whereas 40 chosen for Hero Honda, but

whereas in the age group of 30-50, 45 respondents chosen for Hero Honda, For

Bajaj it is only 30 respondents Respondents above 50 years of age prefer Bajaj

bikes. The least is Hero Honda with 15 respondents.

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MEDIUM OF SOURCE OF INFORMATION

Sources No. of respondents Percentage (%)

News Paper 12 12

T.V.Advertisement 14 14Friends 26 26

Others 48 48

Interpretation:

Above graph shows that 48 % respondents are come to know from the other

sources. Then 26 % respondents are come to know from friends, 14 % & 12 %

respondents are come to know from the T.V. Advertisement & news paper.

RESPONSE REGARDING AWARENESS TOWARDS MOTOR BIKESBrand Advertisement

s

(%) Family

Members

(%

)

Friend

s

(

%

)

Hero

Honda

45 45 10 10 3 3

Bajaj 30 30 5 5 4 4

TVS 25 25 25 25 3 3

Interpretation:

Regarding awareness of the brand motor bikes, that awareness is highest

because of advertisements. It can be seen that from the above graph that, the

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awareness through advertisements is highest for Hero Honda, followed by Bajaj

and TVS. Family members are seen to be creating maximum awareness about

Hero Honda followed by TVS and Bajaj.

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VIEW OF CUSTOMERS ABOUT ADVERTISEMENTS CREATE

MORE AWARENESS OF SHOWROOM:

Response No. of respondents Percentage (%)

Yes 65 65No 15 15

Cant Say 10 10

Interpretation:

Above graph shows that the majority of customers are agreed on the

advertisement creates more awareness of showroom and very few of customers

are disagreed.

WEIGHTAGE GIVEN TO ATTRIBUTES:

Attributes Weight age

Price 381

Less maintenance 358

Style 355Durability 335

Mileage 426

Easy Driving 367

Brand Reputation 362

Color 406

Pick up 382

Total 3370

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RESPONSE REGARDING THE PREFERENCE FOR LOOKS/DESIGN

IN BIKES

Name of the brand YES (%) NO (%)

Hero Honda 35 35 65 65

Bajaj 60 60 40 40

TVS 30 30 70 70

Interpretation:

35% respondents purchase the Hero Honda Bike due to acceptance of

design/style/model, whereas 60% respondents do so for Bajaj and only 30

respondents opted for TVS Bike following acceptance of the bikes design, etc.

followed by Hero Honda and TVS. This shows that the sales of Bajaj motor

bike are more by way of its design/style/model.

RESPONSE REGARDING THE PREFERENCE FOR SPEED IN BIKES

Name of the

brand

YES (%) NO (%)

Hero honda 35 35 65 65

Bajaj 50 50 50 50

TVS 25 25 75 75

Interpretation:

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As far as speed is concerned, Bajaj is ruling the market and finding favour with

the consumers. Hero Honda and TVS are far below the expectations of the

consumers based on mileage per litre of petrol.

SALES BY PRICE OF BIKES:

Name of the Brand High (%) Medium (%)

Hero Honda 15 15 45 45Bajaj 55 55 35 35

TVS 15 15 40 40

Interpretation:

Regarding sales by price of bikes, highest is 55% respondents opined that the

price is high for Bajaj bikes, medium is 45% respondents opined for Hero

Honda bikes. 45% respondents have stated that TVS bikes are averagely priced.

SALES BY TECHNOLOGY:

Name of the

Brand

High (%) Medium (%)


Bajaj 65 65 25 25

TVS Nil Nil 40 40

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Interpretation:

45% respondents have voted for Bajaj based on its superior technology

compared to Hero Honda for which 40% respondents voted favourably based

on its technology. This shows that Bajaj technology is marginally superior

compared to Hero Honda. TVS is a poorest with 15% respondents voting for it,

as far as technology feature is concerned

RATING OF SHOW ROOM ATTRIBUTES

Attributes Excellent Very

Good

Good Average Poor

Availability 30 24 18 16 12

After Sales

response

16 35 24 15 10

Knowledge

Of Salesman

20 21 23 20 16

Service 25 18 27 19 11

Infrastructu

re

12 29 20 17 22

Total 103 127 112 87 71

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Interpretation:

Above chart shows that 30% respondents out of 100 give Weight age on

availability is excellent and second 35% respondents out of 100 give weight age

on after sales response is Very Good, 23% respondents give weight age on

Knowledge of salesman is good, 27% respondents give Weight age on services

is good, 29 %respondents give weight age on Infrastructure is Very Good.

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RESPONSE REGARDING AFTER SALES SERVICES FOR MOTOR

BIKES

NAME OF

THE BRAND

Good (%) Very good (%)


Bajaj 45 45 35 35

TVS 25 25 15 15

Interpretation:

Regarding after sales service of motor bikes, 50% respondents have responded

very good for service, followed by Bajaj with 45% respondents stating good.

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RESPONSE REGARDING THE SATISFACTION TOWARDS MOTOR

BIKES

Name Of the

Brand

YES (%) NO (%)


Bajaj 85 85 15 15

TVS 65 65 35 35

Interpretation:

Regarding satisfaction of motor bikes 85% respondents have stated that Bajaj

satisfaction is highest and the lowest is for TVS bikes i.e. 65%.

AVAILABILITY OF SPARE PARTS OF BIKES

Availiability

of spare

parts

HERO

HONDA

% TVS % BAJAJ %

Easilyavailable

100 100% 75 75% 70 70%

HardlyAvailable

0 0% 25 25% 30 30%

NotAvailable

0 0% 0 0% 0 0%

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Analysis:

The Hero Honda customers are satisfied about the availability of its spare parts.

All the respondents said that the Hero Honda spares are easily available.

CHAPTER V

CONSTRAINTS FACED

Study is restricted to state of Delhi only.

The time span of the survey was short and hence only major aspects

were considered.

Availability of the respondents amidst their busy schedule did not permit

detailed study.

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of design/style/model, whereas 45 respondents do so for Bajaj and only

20 respondents opted for TVS

Bike following acceptance of the bikes design, etc. followed by Hero

Honda and TVS. This shows that the sales of Bajaj motor bike are more

by way of its design/style/model. As far as mileage per liter of petrol is

concerned, Hero Honda is ruling the market and finding favor with the

consumers. Bajaj and TVS are far below the expectations of the

consumers based on mileage per liter of petrol. This is also due to

constant advertisements through newspapers, TV, Cable TV, hoardings,

road shows, etc. Hero Honda attained supremacy due to mileage factor.

In these hard days of price increases and poor incomes, every one is

concerned with economic use of vehicles. Naturally Hero Honda has

become favorite of the masses.

As we can see, 60% of the purchasers of Hero Honda are the students,

while 40% of the purchasers of TVS are the employees. That means Hero

Honda bike is more popular with the students, TVS is more popular with

the employees. Whereas Businessmen are opting for Bajaj as the above

data shows 45% of the purchasers of Yamaha are the Businessmen

Out of 100 respondents, 50 respondents have stated that sales of bajaj is

due to its speed followed by Hero Honda for which 35 respondents spoke

in favour based on its speed feature. 45 respondents have voted for Bajaj

based on its superior technology compared to Hero Honda for which 40

respondents voted favourably based on its technology. This shows that

Bajaj technology is marginally superior compared to Hero Honda. TVS is

a poor third with 15 respondents voting for it, as far as technology feature

is concerned.

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The study shows that 51 respondents are already user of Hero Honda

motorcycle. So Hero Honda is popular automobile company in study

region.

In current market scenario, respondents give maximum no. of weight age

to price then after they consider mileage and colors respectively.

Customers are satisfied about Hero Honda bike because of easy

availability of spares parts of their bike.

In terms of Looks, Bajaj ranks the first position followed by Hero Hondaand in terms of speed, Bajaj is again holding the highest rank.

In terms of sales by Price and technology, Bajaj is the market leader.

The study show that 48 respondents are come to know from others and

26 respondents are come to know from friends about bikes.

Most of the respondents rely on advertisements as a source of awareness

for all the three bikes, primarily in the case of Hero Honda Bike.

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CHAPTER VII

CONCLUSION

Predictable marketing requires an understanding of the circumstances in which

customers buy or use things. Their thought processes originate with an

awareness of needing to get something done, and then they set out to hire

something or someone to do the job as effectively, conveniently, and

inexpensively as possible. The functional, emotional, and social dimensions of

the jobs that customers need to get done constitute the circumstances in which

they buy. Companies target their products at the circumstances in which

customers find themselves, rather than at the customers themselves, are those

that can launch predictably successful products. One of the challenges

organizations face is how to strike the balance between, on the one hand,

thinking big, and on the other hand charting a path to market and then growth

that is appropriately focused and likely to succeed. Therefore, it is not only that

company manufactures its product for consumers but it is also important for thecompany to maintain the satisfaction of the customers.

Therefore, the companies should not only pay attention to promote the product

but positioning of the product according to customer needs is also important. It

is also important to pay attention to 4Ps of marketing where each P has its own

role to play and therefore, each P should be given equal importance while

marketing a product.

CHAPTER VIII

SUGGESTIONS AND RECOMMENDATIONS

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1. Focus on the price reduction: Most of the customers are of the view that the

price tag of HERO HONDA bikes as compared to other similar bikes is a bit

higher. Hence the price of the bikes especially the power range bikes like CD

DELUXE, CBZ XTREME, and KARIZMA could be reduced.

2. The customers should be provided with enough information regarding

effective maintenance of the bike so that the consumers get the best from the

bike.

3. Hero Honda has to identify those dealers who are facing the problem with

sales and take adequate measures to keep up the so far created brand image.

4. Hero Honda has to use more promotional techniques to improve the sales in

future. It has to conduct more road shows/public display by which the

consumer is given with much detailed information about the product and more

public awareness is created.

a) For organising road shows, the company can plan to stage road shows, to

display vehicles in the pavilions during various college festivals and exhibition

for product promotion.

b) Daily advertisements in leading newspapers and magazines can used to

promote the product. Leaflets at the initial stage should be distributed at railway

stations, malls, college areas and various other locations.

c) Workshops and seminars can be organized in big corporate to make people

aware about the companies past performance and product features, its

affordability and usage, vast distribution network.

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d) Hoardings, banners, neon signs are displayed at clubs, discs, outside

theatres, highways and shops to promote its brand car. Billboards

are large structures located in public places which display

advertisements to passing pedestrians and motorists. Most often,

they are located on main roads with a large amount of passing motor

and pedestrian traffic; however, they can be placed in any location

with large amounts of viewers, such as on mass transit vehicles and

in stations, in shopping malls or office buildings, and in stadiums.

e) Booklets can be distributed at showrooms, retail battery outlets, etc for the

customer to read. These booklets provide information about its company; the

products offered which suit the customers need accordingly.

f) Demo of the product should be made available to Customers, since most of

the purchase decisions are based on it.

f) Hero Honda has offered just one model (Hero Honda pleasure) for women

whereas its competitors are offering more than two so they should concentrate

on that aspect.

5. Companies should employ customer relationship management especially

Bajaj and Tvs. In this, customer care team can be established which is

accountable for the sales satisfaction index of the dealership. The customer care

team ensures that every customer is properly followed up and feedback is

recorded. Also the customer complaints are recorded and resolved as soon as

possible to the level of satisfaction. The customer care executives report to thecustomer care manager.

6. Besides these companies should employ the method of Direct Marketing to

reach put to its direct customers.

In the case of Direct Marketing the Company Officials directly contact the

Prospective buyers with the information available through various sources. For

example in case of Road Shows, Trade Fairs, Auto shows etc. Sometimes theexisting customers also provide references of prospective buyers such as their

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friends or relatives. Direct marketing is attractive to many marketers, because in

many cases its positive effect (but not negative results) can be measured

directly.

Channels through which direct marketing can be carried out:

Direct mail: The most common form of direct marketing is direct mail,

sometimes called junk mail, used by advertisers who send paper mail to

all postal customers in an area or to all customers on a list.

Telemarketing

The second most common form of direct marketing is telemarketing in

which marketers contact consumers by phone. This process may be

outsourced to specialist call centres.

Email Marketing

Email Marketing may have passed telemarketing in frequency at this

point, and is a third type of direct marketing. There are a range of e-mail

service providers that provide services for legitimate opt-in emailers to

avoid being classified as spam.

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REFERENCES

Jim Blythe, Phil Megicks(2006) Marketing Planning(1stEdition) New

Delhi: Pearson Prentice Hall

Kotler; Philip(2009) Marketing Management (13th Edition) New Delhi:

Pearson Prentice Hall

Hawkins D.I. Best, R.J. and Convey, K.A (2001) Consumer Behaviour:

Implications for Marketing Strategy,(Revised)Texas: Business

Publications, Inc.

Karsarjian H.H. and Robertson T.S. (2001). Perspectives in Consumer

Behaviour (12th Edition) Illinois SCOH Forman & Company.

Schiffman G.Leon(2001), Consumer Behaviour, New Delhi Prentice Hall

of India Pvt. Ltd

Howard John H., and Sheth, Jagdish N(2000) The Theory of Buyers

Behaviour, New York,John Wiley and Sons Inc.

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