Who drives what kind of car? · PDF fileWho drives what kind of car? 2 4 ... As the seismic wave of income growth rolls across Indian society, ... Influencing Automobile Buyers

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Who drives what kind of car?

August 2016

Who drives what kind of car? 2

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The MMS.IND Market Intelligence Platform India Data and Systems

Can we predict what model is likely to be chosen by whom?

The Indian automobile industry today is a very lucrative industry due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes. Passenger car sales increased at rates of 40% per annum in India. Further competition is heating up in the sector with a host of players all set to venture in the Indian automotive driver.

The consumer ―Wants― are unlimited and always expect more and more. Car models are no exception to this behaviour, leading to constant modifications of car models and its features coming practically every quarter into the Indian market.

As per many surveys showing, the increase in disposable income seems to be the most important reason for buying a car. This trend is reflected in the growth of the Per capita Disposable income and consequently the growth of the Indian automobile industry. Similarly, the growing family needs like working partners, increasing family size, status, etc. add to the motives of buying a car.

More than 30% of automobile buyers suggested in FY16 that affordable prices are the most important factor while purchasing a car. This is the reason for sticking to a car category till the next substantial rise in the personal disposable income.

This explains the reason for the stagnant or sudden growth just before budget and near occasions like Diwali.

How precise is it possible to predict in India somebody’s automobile purchase?

Still today, automobile companies seem to be playing on peripheral cues to stay connected with their customers and connect to potential ones. Competitors in the automobile sector in India are operating in a highly aggressive and competitive domestic market place.

However, when studied from the point of view of a customer there seems to be no major difference among the car brands in a segment as far as performance is concerned. Key highlights from car purchase survey results:

x 48% of consumers say they search for information online before visiting or consulting any offline medium

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• 87% of the consumers reconsider one purchase decision factor (brand, model, fuel type, budget, colour etc.) at the time they buy

• Sales staff at showrooms can heavily influence (73%) last minute changes in decisions and guide car buyers’ choices

(Nielson 2014)

Nevertheless, the dealer maintains a very important role in building up a brand perception of an automobile company. He will deliver the vehicle and is responsible for providing after sales services to the customers as and when required.

The highest numbers of total automobile purchases in the Indian market are hatchbacks, followed by sedans, MUV, then SUV’s.

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Change!in!Lifestyle!

The substantial changes in lifestyle patterns of Indian consumers have caused tremendous changes in market place, which is a result of globalization and integration of world economies.

For example the increase in women buying cars could reflect the growing female working population and lifestyle changes.

This clearly indicates that women car buyers are the next segment that marketers should focus on and highlights the importance of understanding gender-based automotive needs.

The measure of behaviour of consumer of current generation has become difficult to gauge as time tested marketing concepts have failed.

The preference is characterized by distinctiveness of an individual’s expectations, for multiple options, heavy tendency of abandoning brand loyalty and switching towards competitor brands, which provide higher value to the consumer.

The new generation consumers are difficult to classify by conventional demographic factors and unless their thought process and buying behaviour preferences are fully understood, decisions on product designs, product variants, branding and distribution channels are likely to be misled.


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The Up-coming Middle Class The growing Indian middle class and their consumption will drive the consumer goods market in the future. For instance, commodities such as cars and air-conditioners, which were in the past considered as luxury items, are now considered as necessities. In fact, small car ownership in India is showing a double-digit growth, annually.

With the growth of the middle class, a number of Indians have upgraded from owning two wheelers and using public transport to owning small cars. Due to the high demand in this consumer segment, there is a shift in preferences for products.

As the seismic wave of income growth rolls across Indian society, the character of consumption will change dramatically over the next years. A huge shift is underway from spending on necessities such as food and clothing to choice-based spending on categories such as household appliances, restaurants and expensive cars.

Education is a major influencer in the purchase decision. A well-educated decision maker from a middle class family is more likely to make a more informed decision instead of being just a mainstream follower.

Households that can afford discretionary consumption will grow.

Influencing Automobile Buyers

Buyers can always be influenced—right up to the last moment of their purchase.

Three out of five car buyers said they had finalised their decision on the model, brand and fuel type before visiting the showroom.

However, when the time came to make their final purchase, a considerable number of consumers change their minds. A third of buyers who said they‘d decided about fuel type, changed their decision after talking to the salesperson, family and friends.

And it‘s not only fuel type decisions that consumers change - 44 percent changed even the car model they were thinking of buying! In fact, our studies show that car buyers also look at models that they had not even initially considered. (NIELSEN 2014)


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Who is my best customer… the most promising prospect?

Most of the car buyers – both first time and repeat – consider 3 to 5 brands from which they make their final selection.

This trend seems to be true for the last seven years covering both the high growth and difficult periods.

Clearly, the buyer goes through a detailed evaluation irrespective of the economic circumstances that he/she may be in.

However, SUV and mini-van owners tend to look for more number of brands before they make their selection as compared to consumers who consider a hatchback and sedan (Deloitte 2014).

A target group definition deploying the criteria ―female, married, teacher, age 35, average salary‖ points at a large group of socio-demographic twins which do not conform to a homogenous target group as potential model ‗X‘ buyers.

What is missing:

These socio-demographic twins as described above must be further identified by their income level in relation to their life-style segmentation / affinity, their ―mental map‖.

The female teacher living in Mumbai, Bandra or in Malad West or in Belapur will act decisively different as a consumer.

But within the life-style and neighbourhood identities, homogeneous consumer / target group subsets can be identified down to the residential home level.


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Socio-Demographic Twins

Socio-demographic twins can turn out unexpectedly as different target groups.

Common characteristics such as age, gender, education / occupation, even income, can be connected with quite different life styles and value-based orientations.

Therefore it is crucial not to evaluate a customer / prospect on any isolated values of these:

Mr. Rajkumar and Mr. Kulkarni are both 32 years old. Each has a college-degree. Both are married and have two children. Both are employed in the field of IT services.

The same target group? No: two social environments and taste worlds, two different Life-Styles.


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MMS.IND

MMS.IND supports the Indian Industry in all consumer focused vertical markets with geo-location based intelligence, micro-market focused advanced marketing and sales technologies and, further, with individual consumer data, thus enabling the industries to sustainably grow their business on empirically based, analytically controlled data.

MMS.IND is an enterprise data and analytics company that creates and uses data, analytics and software to strengthen connections between companies and their clients / prospects. MMS.IND procures, compiles, licenses and maintains proprietary computerized databases in India including updates thereto. The consumer segmentation methodology MMS.IND applies for the Indian market is similar to models such as Experian‘s Mosaic® and Nielsen‘s PRIZM®. Dr. W. H. Anders, Founder of MMS.IND, has been also the founder and General Manager of IFMS Data and Systems, later CLARITAS and developed the PRIZM® segmentation logic. He has been working on sophisticated innovations in consumer segmentation precision marketing and sales, mainly for Financial Services, Telecom, Media, Automobile and FMCG.

Based on a proprietary statistical model networking micro-market data and individual person profiles. Data applied:

x Occupation / Education levels x Family Structures x Individual Person-level / Enumeration Block-level: consumer durables / income (range and

frequency / household amenities / possessing of transport vehicles / communication – electronic devices / banking behaviour / etc.

x Monthly Per Capita Expenditure (MPCE) profiles set against lifestyle affinity segmentation x Property rates set against living cost indexing x Residential and commercial info available in various geographies x Qualitative Market Research Profiles

The MMS.IND Income and Lifestyle Affinity Segments are measurable, sizeable and reachable an as Market Intelligence Platform solidly empirically data based. No heuristic ―experiences‖ are applied.

Therefore, the MMS.IND territorial Income and Life-style Segmentation can be referenced and linked to any segmentation based on clearly defined parameters.


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Who drives what kind of car? · PDF fileWho drives what kind of car? 2 4 ... As the seismic wave of income growth rolls across Indian society, ... Influencing Automobile Buyers