70642404 economics-case-study

Business Research Methods (524)

Case Study Topic: The need & Importance of Research in Functional Areas of Business

Research of Problems of Automobile Industry in Pakistan

Acknowledgement:

All praises to Almighty ALLAH, the most merciful, and most beneficent, who guides us in darkness and helps us in difficulties, whose uniqueness, oneness and wholeness is unchallengeable. With deep emotions and gratitude we would like to thanks our course instructor’s support and guidance and further I would also like to thank him/her for providing us such a wonderful opportunity to work in a group and enhance our knowledge through conducting an unbiased research. Here I would also like to thank my whole group members for their continues support and efforts to the accomplishment of the report.

Executive Summary:Automobile industry of Pakistan is in later part of the growth stage; however, there exists a large gap between the demand and supply of the vehicles in the Pakistani market. With the help of different leasing facilities provided by the banks, the purchase of vehicles has become easier for a common consumer. In addition to this there is a need of governmental support for the betterment of this sector; the reduction in import duties has helped local companies to import vehicles from large manufacturers of the world and will help them in increasing their market share, but at the same time this will discourage the purchase of locally manufactured cars of Pakistan.

Problems of automobile industry in Pakistan


Introduction:

The automobile industry is one of the most important industries in the world, affecting not only the economy but also the cultures of the world. It provides jobs for millions of people, generates billions of dollars in worldwide revenues, and provides the basis for a multitude of related service and support industries. Automobiles revolutionized transportation in the 20th century, changing forever the way people live, travel, and do business.

The automobile has enabled people to travel and transport goods farther and faster, and has opened wider market areas for business and commerce. The auto industry has also reduced the overall cost of transportation by using methods such as mass production (making several products at once, rather than one at a time), mass marketing (selling products nationally rather than locally), and globalization of production (assembling products with parts made worldwide). Between 1886 and 1898, about 300 automobiles were built, but there was no real established industry. A century later, with automakers and auto buyers expanding globally, auto making became the world's largest manufacturing activity, with nearly 58 million new vehicles built each year worldwide.


France, 3,376

Germany, 5,469

USA, 12,272

Brazil, 1,775Korea, 3,148

Japan, 10,257

Others, 12,939Italy, 1,427

UK, 1,819

Spain, 2,855

Canada, 2,626

Source: Pakistan Association of Automotive Parts & Accessories Manufactures


USA is at the top because of its consistent policies. The industry is growing there at a fast pace and with intense competition; automakers are striving to capture consumers by offering them high quality products at low prices.

Then comes Japan with 18% share in the world market. Japanese cars are famous for being technologically sound and good quality. Quality especially gives them competitive advantage over US cars as Japanese are considered to be the forefathers in implementing quality in their manufacturing processes.

Global Automobile Giants Operating in Pakistan

Some of the automobile giants that are operating in Pakistan are discussed below:

1.1 Toyota Motor Company Limited

The Toyota Motor Co. Ltd was first established in 1937 as a spin-off from Toyoda Automatic Loom Works, one of the world's leading manufacturers of weaving machinery.

Toyota launched its first small car (SA Model) in 1947. Production of vehicles outside Japan began in 1959 at a small plant in Brazil, and continued with a growing network of overseas plants.

Today, Toyota is the world's third largest manufacturer of automobiles in unit sales and in net sales. It is by far the largest Japanese automotive manufacturer, producing more than 5.5 million vehicles per year, equivalent to one every six seconds. Toyota vehicles are widely used in Pakistan and rank’s first in its quality, efficiency, economy and service.

In fiscal 2004, Toyota further heightened its status as one of the few truly global players in the automobile industry by posting consolidated sales of more than 6.7 million Toyota, Lexus, Daihatsu, and Hino vehicles worldwide.

At the end of fiscal 2004, Toyota had production bases in 26 countries and locations, a vehicle sales network covering more than 140 countries, and more than 260,000 employees worldwide on a consolidated basis. (Source: www.toyota.com)



1.2 Honda Motor Company Limited

Established in 1948, Honda Motor Co., Ltd. is one of today’s leading manufacturers of automobiles and the largest manufacturer of motorcycles in the world. The Company is recognized internationally for its expertise and leadership in developing and manufacturing a wide variety of products that incorporate Honda’s highly efficient internal combustion engine technologies, ranging from small general-purpose engines to special sports cars. Approximately 17.2 million Honda products were sold worldwide during the fiscal year ended March 31, 2004. Throughout all of its operations—from product development and manufacture to sales—Honda maintains a commitment to materialize company’s visions of “value creation”, “globalization” and “commitment to the future” with the aim of sharing the joy with customers worldwide, thus becoming a company that society wants to exist. Honda works together with numerous business partners to supply Honda products to countries worldwide. (Source: www.honda.com)

1.3 Suzuki Motor Corporation

The company is Japan's number one mini car producer as well as it is number 3 motorcycle manufacturer (behind Honda and Yamaha). Suzuki's cars and SUVs include the Aerio and the Grand Vitara; motorcycles include the Bandit, Katana, and Marauder. Suzuki's non-vehicle products include generators, outboard marine engines, and prefabricated housing. The company operates in more than 190 countries. Suzuki has partnered to make cars with General Motors and has agreed to develop motorcycles and ATVs with Kawasaki. The worldwide sales of Suzuki are mentioned in the table below:

Apart from the above-mentioned Japanese companies there are various other companies around the globe having significant market share. (Source: www.suzukiauto.com)

1.4 Mitsubishi Motors Corporation

Today, Mitsubishi Motors ranks as the worlds' 10th largest vehicle manufacturer, and one of only a few that boast a lineup that extends from mini cars to heavy trucks. Mitsubishi Motors Corporation is committed to provide its customer, the very best product and service available in the market. Mitsubishi commercial vehicles are the number one in the UAE in terms of market share and reputation.

Mitsubishi was established on April 22, 1970 and its head office is in Japan. Mitsubishi Motors Corporation has issued 1,483,438,934 shares



and is owned by 46,094 shareholders, such as DaimlerChysler AG, Mitsubishi Heavy Industries, Ltd and others.

Automobile Industry of Pakistan

Auto market is one of the largest segments in world trade. The annual size of automotive export trade in the world has grown to a massive level of over US$ 600 billion, which accounts for about 10% of the world export. Changing models, improving fuel efficiency, cutting costs and enhancing user comfort without compromising quality are the most important challenges of the auto industry in a fast globalizing world.

The first phase of automotive assembling in Pakistan started in 1950 with Bed Ford truck; followed by Ford Perfect, Ford Cortina and Dodge Dart. The indigenized parts in these vehicles did not exceed 20% with only exception of Bed Ford trucks with a deletion level of 80%. By the end of 70s practically all automobile assembling in Pakistan ceased.

The second phase of Automobile assembly started in 1983 with the introduction of FX 800 CC Suzuki Car. In 1989 Pak. Suzuki changed the Model of FX 800 CC with Mehran 800CC. Pak Suzuki thereafter in 1992 introduced Khyber 1000 CC and 1300 CC Margalla but the indigenization levels from 1983 to 1995 were not significant (i.e. Mehran 30%, Khyber 20%, and Margalla, 15%).

In 1993, Indus Motors Company Ltd., Karachi introduced Toyota Corolla. Honda Atlas cars (Pak) Ltd Lahore in 1994 introduced Honda Civic having 1300CC engine capacity. Indus Motors, Dewan Farooque Motors and Pak Suzuki introduced smaller Cars i.e. Cuore, Cultus and Santro of engine capacities 850 cc and 1000 cc in 2000. This was known as era of competitiveness.

Up to 1995, the deletion cell of MOI&P was formulating and monitoring the deletion programs. The industry specific deletion programs were formulated to specify local content requirements for cars, motorcycles, Buses, Trucks, Tractors etc.

The deletion policy finalized in 1996 has the following features:• Industry Specific Deletion program• No roll back from achieved Deletion Levels• Even handled Tariff Protection at all levels of processing

The deletion levels were finalized by the sub-committees for cars, LCVs Motorcycles and tractors etc., constituted by indigenization committee of EDB on the basis of technology levels prevalent in the engineering



industry of Pakistan. The Industry specific deletion program (ISDP) books were published and distributed amongst the stakeholders, which resulted in a significant improvement in indigenization.

Classification of Auto sector

The automobile industry in Pakistan can be broadly categorized into following segments:

• Cars and Light Commercial Vehicles (LCVs)• Two and Three Wheelers• Tractors• Trucks and Buses• Vendor Industry

Back Ground of the Problem:

Automobile Industry in Pakistan presents a sorry state of affairs. It is a great pity that this industry, which is considered vital for economic development and for providing a sound engineering base in any country, has suffered grave neglect in Pakistan. It was only for a brief period that importance of this industry was recognized in Pakistan. The result was that indigenization of Bedford truck and bus chassis was stepped up and as much as 70 per cent deletion was achieved in Bedford truck chassis. Seventy percent deletion was no mean achievement. Apart from other gains to the economy of the country,

The automotive industry rightly prides itself on being recognized as the mother of all industries. In its folds it carries many different kinds of vehicles to provide mobility to people and goods. While they may appear to be simple machines, their design and manufacturing have much deeper roots in all the known technologies. In-depth knowledge and skillful application of mechanical, electrical, electronics, chemical and a host of other technologies culminate in achievement and improvement of the manufacturing base of a country, by focusing on a single product the automobile. This then provides an opportunity to produce a large number of goods and services for consumption of the entire international community. Use of the word mother for automotive industry is therefore the most appropriate description to define the nature and importance of the industry.

Pakistan needs to produce half a million cars every year to become a real motorized country, a target which requires the auto assemblers to make heavy investments to enhance their production capacity and strengthen vendors and the government to continue its policy to promote this sector.



The local car-assembly industry is dominated by Japanese assemblers, with all three major names – Toyota, Honda and Suzuki – operating their own assembly plants. Korean manufacturers Hyundai and Kia are also contributing to a small chunk of the local capacity.

The auto Industry of Pakistan had the potential to meet the challenge of rising demand witnessed in the last 3-4 years. The automakers are confident that they will overcome the current shortage of automobiles in the country and the gap between demands and supply when the production will reach 160,000 units by the end of 2006.

The government of Pakistan is asked for reducing taxes on cars and duties on the import of auto parts in order to enable the industry reduce the prices. This will enable more people to purchase cars. Pakistan is in pre-motorized stage, as only eight of 1000 people own a car.

There are 18 automobiles manufacturing units in assembling business which is supported by 850 units manufacturing auto parts. The auto industry and down stream vendor industry employs more than 100,000 people. The auto industry is the fore-runner of the tremendous growth in large-scale industry. During the current fiscal year the automobile industry has registered enormous growth owing to declining interest rates, persistent inflow of home remittances, cheaper and easy availability of car financing and changes in model. The car industry registered a growth of 51.4 percent during July-April 2002-03, followed by trucks (103 percent), buses (32.7 percent), LCV’s (57.9 percent), tractors (10.5 percent) and motorcycles (48.6 percent).

All the automotive manufacturers of Pakistani automobile industry have formed an association named as Pakistan Automotive Manufacturers Association (PAMA). The objective of this association is to promote the manufacturing of automotive vehicles (cars, buses, commercial vehicles, motorcycles, farm tractors) in the country. (Source: PAMA, June 2005)

As compared to automobile manufacturers of India, Pakistani industry is miserably failed in provision of cheap vehicles to their consumers. Despite receiving heavy subsidies, they are persistently increasing the prices of their vehicles. To compensate the people, the government should at once allow the import of the reconditioned vehicles and should review the delivery and prices of the locally manufactured motorcars. The government should also provide an opportunity of the payment of customs duties to legalize the non-customs paid vehicles plying on different roads of the country.



Broad Problem Area:

Since there is a greater degree of competition regarding cost performance/specification we as a new born baby in this field face many problems to survive. We have to ensure compatibility for the larger and lasting interest of the industry. Also we have to keep a strict watch of the marketing of the commodity etc also we have to adopt ways and mean to promote easy and comprehensive sale of the vehicles through different channels and credit facilities. The automotive industry like all others was badly affected in 1972 by nationalization. The industrial stride in an ambitious direction was suddenly halted. This step threw the automotive industry in a black hole of stagnation. The assembling of public transport units was stopped while that of commercial vehicle stumbled down to a very limited scale. Such long-term policy decisions play pivotal role indecinding the after of an industry. In the case of the automotive industry it proved counter productive for an entire range of vendor industries.

All industrial growth is dependent on long term policy making. Every industry required certain amount of time span to root itself in the economic climate of a country, grow into maturity and then expand. Only then it provides for any basic structure for complex yet competitively productive network of vendor industries.

Automobile production involves manufacturing thousands of vastly different components. Each and every step needs precision in specialized production functions. It is a mix of electrical, mechanical, chemical metal, plastic and glass industries. Any automobile industry, therefore, will depend on the development of the input industries. An organized network of these sub-industries plays a vital role in the overall industrial development of the automotive sector.

Government Policies – Import Duties

Import duty relaxation on automobiles has steered the number of imported cars to double as local assemblers importing themselves a significant number reflecting a sharp gap in demand and supply at the domestic market.

According to official sources in Pakistan Customs, the persistent gap in supply and demand has given significant boost to the import of new and used cars during the current fiscal year and the number of imported cars is increasing with every passing day.

According to the sources, the major import of new cars is being carried out by Dewan Motors who have re-launched the Mitsubishi brand cars in Pakistan.

Earlier Dewan had launched the BMW series in Pakistan for the first time. Nexus Automobiles has also launched the Cheverlet Optra (1600



cc) in addition to Cheverlet Classic (1000 cc) already being imported. Indus Motor Company has recently lunched the Toyota Camry, a best selling car in the US market.

Non Availability of Funds:

Financing facility on the lines of auto financing is not available from commercial banks for purchasing new vehicles. Also cars and big vehicles are not part of the Rozgar Scheme launched by the National Bank of Pakistan.

Recently state bank of Pakistan instruct all commercial banks to dispose off their auto loan schemes.

Roads & Infrastructure:

Caught in a traffic jam in some major cities of Pakistan, one feels there are too many automobiles in this country. But the fact of the matter is that our country is heavily under-motorized. This is bad considering that in developed world; the automobile industry is the second largest one after the steel and iron industry. It contributes more than 10 per cent in the total output of the manufacturing industry of the developed countries, and employs 10 per cent of their populations, plus, it develops

a whole chain of vendor industries.

Problem Statement

The research problem was to find out:

“Why Do Auto mobile industry not generating revenue?”

Why does the share of some products (Auto mobile) declines and what are the reasons of

Usage and Non-usage of a particular?

This research may be able to provide insight into the strong points of Successful Auto

mobile company and will also provide an opportunity to find out the weaknesses of Auto

mobile.



RESEARCH OBJECTIVES

Having stated the research problem, we were able to refine the problem into various

research objectives;

To study the problem we have researched on a failed to generate revenue regarding Auto

mobile. To state the reasons behind the Problems stated above we have to find out the

answers of the following questions.

• What is the attraction level of Auto mobile?

• How many people wouid like to use Auto mobile because of the company?

• How many people do not use Auto mobile because of its cost?

THE MARKET AND COMPETITION

The product is targeted to the price conscious consumers within the lower and moderate-

income group. This segment uses Auto mobile such as TOYOTA, SUZUKI.

MITSUBISHI etc.

Different Auto mobile companies are trying to get market share by trying to provide a

new design that provides bulk of vehicles that are individually of the same price range,

and they are not reducing cost.

PROMOTION

Auto mobiles are also being promoted in the print and electronic media. Most of this was

done during the launch period. This activity has decreased substantially which in turn has

lead to a severe decline in the sales of vehicles. In order to revive its position,

manufacturers should lay great stress and emphasis on the promotional activities.



Literature Review

BCG Growth-Share Matrix

The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s. It is based on the observation that a company’s business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name “growth-share”. Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage. The growth-share matrix thus maps the business unit positions within these two important determinants of profitability. (Source: NetMBA)

This framework assumes that an increase in relative market share will result in an increase in the generation of cash. A second assumption is that a growing market requires investment in assets to increase capacity and therefore results in the consumption of cash. Thus the position of a business on the growth-share matrix provides an indication of its cash generation and its cash consumption. (Source: NetMBA)

The four categories are:

Dogs: Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash.

Question Marks: Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is large net cash consumption.

Stars: Stars generate large amounts of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate; therefore the cash in each direction approximately nets out.

Cash Cows: As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate, and thus generate more cash than they consume. Such business units should be “milked”, extracting the profits and investing as little cash as possible.(Source: NetMBA)



PEST Analysis

It is useful to consider what environmental influence have been particularly important in the past, and the extent to which there are changes occurring which may make any of these more or less significant in the future for the organization and its competitors. (Value Chain Marketing Course Package)

A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm’s control and sometimes present themselves as threats. However, changes in the external environment also create new opportunities. (NetMBA Business Knowledge Centre)

Porter Five Forces ModelPorter five forces model is a means of identifying the forces which affect the level of competition in an industry, and which might thus help managers to identify bases of competitive strategy. (Value Chain Marketing Course Package)

This concept involves a relationship between competitors within an industry, potential competitors, suppliers, buyers and alternative solutions to the problem being addressed. (BRS, 20-01-05)



SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a tool for auditing an environment and its environment. It is the first step of planning. It helps marketers to focus on key issues. It is an easy tool that identifies the key issues and feeds them into marketing objectives.

Strengths and weaknesses are internal factors of a business, whereas opportunities and threats are external factors.

SWOT analysis is required in order to analyze the environment for the opportunities available and the threats that exist in that environment. And how the existing strengths can be used to avail the opportunities. It is also helpful in analyzing the problems that are faced because of the existing weaknesses.

Perceptual Mapping

Perceptual mapping has been used as a strategic management tool for about thirty years. It offers a unique ability to communicate the complex relationships between marketplace competitors and the criteria used by buyers in making purchase decisions and recommendations. Its powerful graphic simplicity appeals to senior management and can stimulate discussion and strategic thinking at all levels of all types of organizations.

Despite their high value as a decision-making tool, perceptual maps are easy to produce. Most currently popular mapping procedures utilize readily available ratings data which satisfy management’s need for a competitive score card. Despite their having been around for thirty years, perceptual maps are still viewed as an innovative technique.

The 4 P’s of Marketing

The 4 Ps of marketing are Product, Price, Place, and Promotion. Think of each of these as a variable which you control. The idea is to set these variables in such a way so that sales will take place. You cannot "make" a customer pull out her credit card, but you can certainly help her in coming to a decision by setting the "right" price, the retail location, the level of advertising and even product attributes such as color or perceived quality. These variables are all interdependent. Taken together, they constitute a certain mix. This is often referred to as the marketing



mix. In defining this mix it is also necessary to take into account your competitor's mix as well as your overall corporate goals and objectives. The idea is to come up with a mix that will clearly differentiate your products from those of your competitors while considering your corporate goals. (Source: Business Basics for Engineers, July 2005)

Problems of Automobile Industry

Automobile industry currently facing numerous hurdles hampering the manufacturing process some of them are frequent break down of electricity, law and order situation, political instability, improper communication system, strikes of labor union, increase in taxes, high inflation rate, etc. Due to these uncontrollable hurdles automobile industry in Pakistan have decreased production, and left many workers unemployed and downsizing in the organization. Still these industries are fighting for there rivalry. Government is not making serious efforts in eliminating the problems in fact government don’t have strategic plans to implement. Pakistan needs to produce half a million cars every year to become a real motorized country, a target which requires the auto assemblers to make heavy investments to enhance their production capacity and strengthen vendors and the government to continue its policy to promote this sector.

Another hurdle was import duty relaxation on automobiles has steered the number of imported cars to double as local assemblers importing themselves a significant number reflecting a sharp gap in demand and supply at the domestic market.

According to official sources in Pakistan Customs, the persistent gap in supply and demand has given significant boost to the import of new and used cars during the current fiscal year and the number of imported cars is increasing with every passing day.

According to the sources, the major import of new cars is being carried out by Dewan Motors who have re-launched the Mitsubishi brand cars in Pakistan.



Theoretical Framework

It starts typically by comparing existing industrial sector analysis (capacity technology/manufacturing capabilities) and current market environment. The comparison results in identifying competitive drivers and hence setting the objectives accordingly. Based on the objectives settings and competitive drivers, manufacturing option strategy is formulated with three types of manufacturers identified in our benchmarking exercise.

Dependent Variable

Declining Sales of Automobiles in Pakistan

Independent Variable

Prices of the Vehicles Roads and Infrastructure Lack of Government’s Interest Untrained Workers Backwardness of Industry in Pakistan

Moderating Variable

Technology Cheap Electricity Training Workshops for Workers

Intervening Variable

Unfeasible Environment for Engineers and Developers Improper Assembling of Spare Parts Shortage of Power Plants Low Wage Scale Lack of Innovative Sense

The real strength and potential of a country and society is dependent on its means of communication and fast equipments of transportation. If we study the structure and regarding evolution of a fast growing country we conclude that the above mention ingredients are a need and necessity the best example can be sighted as of Malaysia



Singapore and South Korea. The automobile industry in Pakistan has great potentials and can move the wheel of economy if the necessary incentives are given.

DIRECTION OF INDEPENDENT & DEPENDENT VARIABLES:

Price & Design Acceptability

Price &Design Acceptability

FLOW CHART SHOWING RELATIONSHIP BETWEEN

DIFFERENT VARIABLES

Independent Variable

Independent variable Intervening variable Dependent variable

Moderating Variable


• Price

• Roads and Infrastructure

• Lack of Government’s Interest

• Untrained Workers

• Backwardness of Industry in Pakistan

Market competition Declining Sales

TechnologyCheap ElectricityTraining Workshops for Workers


HYPOTHESIS

The hypothesis, which we want to test in this report, is:

“The average rating for awareness of Auto mobile is 0.84”

Null Hypotheses: H0 μ = 0.84Alternate Hypotheses: H1 μ ≠ 0.84

The following hypothesis is the awareness of general public regarding the automobiles of Pakistan. However we have derived it from conducting the research and choose the sample of those people who belongs to salaried class and some of them have their own businesses.

RESEARCH SUBJECTS

Define the Population:

Element: The element of the population was Auto mobile users.

Units: Since the unit was Auto mobile users, and this meant that the unit and the element

of the population were the same.

Time: The time period for this survey was around two months – July- August.

Specify Sampling Unit:

The sampling units were the salaried class. In some cases however, we had to include any

member of the business class. Since the survey was of the salaried class, this did not

affect the value of the information obtained.

Specify Sampling Method:

The sampling method used was the stratified random one. We divided Karachi into areas

and used random sampling within each area to obtain the information regarding Auto

mobile.



Determine Sample Size:

The determined sample size was almost 400. This was a random number chosen.

Specify Sampling Plan:

The sampling plan includes

Representatives of the sample

We wanted a sample size large enough to obtain a fairly representative sample.

Time and other restraints limit the representative of the respondents. There are a

lot of other areas that could have been included. Our objectives never included the

survey of absolutely low-income areas and therefore they were not included.

Measurement technique

We knew that the information required was very general. It had neither

embarrassing aspect nor very personal information. Since the objectives were to

obtain the perception of Auto mobile, cost, design and of those problems which

are currently facing by general public and we wanted to maintain a standard over

the sample, we choose to use the direct, structured questionnaire. The

questionnaire was prepared with an effort to have no ambiguity or biases in the

questionnaire.

Selecting data collection method

The research was directed to finding out information from consumers. The best

collection method in this scenario was to use the personal interview process. The

same result could have been achieved using telephones but there were two main

problems:

Higher rate of refusal (that is no response)

Unable to evaluate the response or to avoid the bias information therefore check the

facial expression of the respondents.



Similarly mail interviewing was not cost efficient and the time period was

insufficient for reminders and follow-ups. However in some cases we distributed

questionnaires among consumers and collected them later on. In this way this

survey can also be taken as mail surveys. But as it was done on very rare basis

therefore our basic data collection method was personal interviews.

Value of research

It would be difficult to quantitatively evaluate the value of the research.

However, speaking in purely qualitative terms, the research can provide an insight

into the perception of the consumer about the usage of Auto mobile and its cost

and competition. The exploratory nature of the research can also provide

information about any weakness in the marketing of VEHICAL. Compared to this

being nominal monetary cost, it will provide important information and validate

the research decision.

RESEARCH INSTRUMENTS

The most important part of the research process is the development of

measurement technique i.e. the questionnaires.

The following part gives details of the development of the questionnaires and the

questions.

We initially started by defining the parameters of information required. Having

knowledge of this requirement, we had to articulate it so that

• It was clear and unambiguous

• Understood by the respondents

Questionnaire is attached with the appendices.



CONCLUSION

Today, people expect things to simply work. Either they can gain immediate value, or

they will move on. So its winning or losing is based on the initial user experience, and for

many organizations this user experience is directly mapped to business success. Just

imagine a department store where 75% of the customers get lost, or a coffee shop that

makes you queue three times to buy a drink. Sounds ridiculous, but many Web sites are

like this. 18

If some part of your business makes life difficult for customers, you can bet that they will

make business difficult for you. In today's business environment, a usability problem is a

business problem. Customers have increasing choice, and can easily evaluate alternatives

to satisfy their expectations. They can use the Web to get information, make comparisons

and obtain the best offering. At every stage they are influenced by their experience and,

with a click of the mouse, cast judgment.

Companies can avoid these pitfalls by understanding the needs, expectations, experience

and behavior of their users, and applying that knowledge to the design of their products.

Mapping a design to how people really think and work significantly reduces user error

and frustration. Savvy companies have discovered the benefit of tapping customer

competencies from the earliest stages. For example, Caterpillar Inc.'s successful tractor

line started with brainstorming sessions with farmers even before designers put pen to

paper.

Connecting early on with the customer can reduce development time and costs and

ensure the early detection of problems, avoiding expensive rework. Problems found

during development are typically ten times more expensive to fix than if they were

detected and resolved during the design phase of a project. And problems found after

products are released can cost as much as one hundred times more to correct.

Customer input is often solicited when it's too late to have real impact. Offerings are sent

to “test” customers to uncover last-minute defects or evaluate cost. Customer

competencies and expectations can't be incorporated unless customers are involved in the

entire process: from the basic design to manufacturing and distribution. 19



Another problem is that user research is often flawed. Focus groups, surveys and other

common research tools essentially ask customers to design products by asking about the

improvements they seek. This leads to incremental enhancements that might improve

performance but do little to satisfy ultimate customer expectations. A better strategy is to

understand users' goals and how they would like to accomplish them, and then focus

design and development on achieving those goals.

Technology has made it easier to incorporate customer expectations into product

introductions. Advanced computational capabilities can generate 2D and 3D simulations

without the expense of physical prototypes. Broadband communication enables distant

collaboration, and the Internet is reducing the costs of traditional research techniques, as

well as adding new capabilities. For example, visitors to one online company are

randomly directed to one of two similar sites. Sales and other results are compared

weekly. The weaker site is then replaced with the stronger site, and another site is

developed to test new ideas and approaches. Other companies sponsor chat rooms and

monitor dialogues for ideas. 20

Designing to satisfy customer expectations is a sound business strategy. Since a positive

user experience is critical to the success of a business, it is vital that companies deliver it.

The ones that do will stand above the crowd, transforming what could have been product

failures will into the business opportunities companies are seeking.

After the completion of the report, we derive the conclusion that Auto mobile is not being

marketed in the right manner in pakistan. Even those who have used car is reluctant to

admit it. The reason for this may be poor advertising, high cost and the fact that some of

the other brands in the market act as a status symbol. Auto mobile companies are not

given its due position in the market merely due to lack of marketing activities or may be

cost. It is unable to compete with the already existing big names in the market, even the

ones produced by its very own company. Another very usual aspect which we cannot

neglect for our research is the auto parts which we have to import from china and other

countries.



During the survey, one of the most important factors that we came across was the fact

that most of the respondents indicated their income level to be very low. But the standard

of living that they were maintaining was totally opposite to what they had responded in

the questionnaire. Most of the people used different cars. Those using Auto mobile use it

as a substitute for their most preferred brand, if it was not available. There is no brand

loyalty as such for this particular brand.

Thus, keeping the above mentioned factors in mind Auto mobile companies should

concentrate on proper allocation of resources for Auto mobiles and reduce the cost so that

this highly economic product is able to generate profits successfully.



RECOMMENDATIONS

Bearing in mind the findings and analysis of the research conducted to determine “the

consumer perception of Auto mobile”, we would like to make a few recommendations to

the company.

Firstly, the most important phenomenon lacking in this field is its promotional campaign.

Secondly, a lot of respondents were unsatisfied by the cost of Auto mobiles. They feel

that it is inconvenient. The management therefore should keep in mind this and modify

the cost of the Auto mobiles.

Thirdly, another complaint the respondents had was that they were unable to distinguish

between the different Auto mobiles due to tuff competition. We, therefore recommend to

the management to make uniqueness and reduce the cost so that the consumer is able to

differentiate 7.

Fourthly, price should not be the only criteria to position a product in the market. Focus

should also be on other factors like color, performance Design. Although these factors

have been considered, they require further emphasis in order to increase the sales.

Fifthly The roads and infrastructure of the entire country is not that much satisfactory so

the new cars are usually needs ma

Last but definitely not the least, once again Auto mobiles require to be promoted

effectively. The approach that the management has followed is highly appropriate Hence,

towards the end of our research we have tried our utmost to delve deep into the reasons as

to why Auto mobile has received a Luke warm reception. Apart from the limitations of

the study, this report gives an evenhanded insight to its reader about these various reasons

followed by the analysis.



FINDINGS:

We have tried to observe the problems of Automobile industry in Pakistan. For that we

have gathered the information and conducted a research and reached at a certain

conclusion. There are some of the areas which need to be improving for overcome the

problems and to establish our local industry at international level and compete the

market. If we compare our local industry to our neighbors we find that we are still

backward for ten years as far as local production is concern. We are still not being able to

produce spare parts for our local vehicles and we usually import the parts from china,

Korea, Taiwan and other countries. However there are certain areas which we have to

improve to regain the potential like enhancement of technology, awareness to technical

experts, development of educational sector, government interest towards a particular

industry and development of roads and infrastructure in rural and urban areas and also

needs technical as well as skilled labor. If we have a look to our neighbor country such as

India we observe that they are far away from us they started their industry in late 80’s

(NET MBA) and we have started in early 80’s but now they are manufacturing their

vehicles according to their own requirements but we are still backward and need

guidance and technology from china to fulfill our requirement. If we work for the

development of the auto mobile industry the time is not so far when we reach at the peak

because we have lot of facilities available in our country but needs to be determined.

Last but definitely not the least, once again Auto mobiles require to be promoted

effectively.



APPENDIX

Questionnaire

The objective of this questionnaire is to identify the success or failure of AUTO MOBILE regarding its cost and competition. The study is purely for educational purpose. Please take few minutes to answer the questionnaire.

Name__________________________ Occupation____________________

Age 20 and below. 21-30 31-40 41-50 51 and above

1. Specify gender:a. Maleb. Female

2. Profession:a. Businessb. Salaried Employeec. Student

3. Income (Not for Students):a. Rs.10,000 – 25,000b. Rs. 25,000 – 50,000c. Rs. 50,000 – 100,000 d. Above Rs.100,000

4. Do you own a car? (Tick Yes even if car is owned by parents or family, if not, refer to Q-12)a. Yesb. No

5. Please rate the Auto Mobile Company which you like most?a. Suzukib. Toyotac. Hyundaid. Hondae. Mitsubishif. Nissang. Fiath. Other. Please Specify

6. What attracts you when you buy a car?a. Brand Nameb. Performancec. After Sale Serviced. Coloure. Price f. Customer Relationshipg. Marketing Economical h. Shapei. Other. Please Specify

7. How willing are you to see new design of Auto mobile company? a. Very Willingb. Mightc. Not at all willing

8. Do you think our Auto Mobile Industry meets the desired customer satisfactions?

a. Yesb. No



c. Not Sure

9. What Problems do you face when you purchase a new car?

10. Which option do you prefer?a. New Carb. Used Car

11. Who makes the decision of buying a particular vehicle? (Mark more than one if applicable)a. Fatherb. Motherc. Wifed. Husbande. Childrenf. Other. Please Specify _______________

12. Which is your opinion about branded car?

13. Do you think trend of branded cars in our society has been increased? a. Yes b. No c. Not Sure

14. How often do you take your car for service and maintenance? a. Every month b. Every two month c. Other. Please Specify

15. Are you satisfied with their services? a. Yes b. No Reasons

16. Do you think cost and design of Auto mobile should be low? a. Yesb. No

17. Mark the reason/s why you have never tried to purchase car? a. You are already usingb. You don’t like the look of itc. You believe it is too costlyd. You have not heard much about its qualitye. Other. Please specify________________________

18. Total number of family members:a. Two b. Threec. Four d. Five and above. Please Specify

19. Total earners/employed in your family:a. Oneb. Twoc. Other. Please Specify d.

20. Are you satisfied with the roads and infrastructure ?a. Yesb. No



Thank you for filling this questionnaire!

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