GUIDED BY

PROF. KHYATI PATEL

 Acknowledgement

Apart from the efforts of me, the success of this project depends largely on the
encouragement and guidelines of many others. We take this opportunity to express
our gratitude to the people who have been instrumental in the successful
completion of this project.

We would like to show my greatest appreciation to Prof. Khyati Patel & BMS Dept
of Vartak College. We can’t say thank you enough for your tremendous support
and help. We feel motivated and encouraged every time under your guidance.
Without your encouragement and guidance this project would not have
materialized.

The guidance and support received from Prof Khyati Patel who guided us to
complete this project, was vital for the success of the project. We are grateful for
her constant support and help.
Group Members:
SURAJ JAISWAL

ARVIND PATIL

MILIND SAVLE

JYOTI SHARMA

SUDHA YADAV

TUSHAR PATEL
 INDEX

1. INTRODUCTION TO MARKET RESEARCH

2. MARKET RESEARCH PROCESS:-

STEPS INVOLVED IN MARKET RESEARCH PROCESS

3. AUTOMOBILE SECTOR:-

• INTRODUCTION
• SWOT ANALYSIS
• ROLE IN GDP

• CASE STUDY:- HYUNDAI MOTORS INDIA LTD.(HMIL)

 INTRODUCTION
American Marketing Association (AMA) defines marketing research as
"Marketing research is the function that links the consumer,
customer, and public to the marketer through information -
information used to identify and define marketing opportunities and
problems; generate, refine, and evaluate marketing actions;
monitor marketing performance; and improve understanding of
marketing as a process. Marketing research specifies the
information required to address these issues, designs the methods
for collecting information, manages and implements the data
collection process, analyzes, and communicates the findings and
their implications."

Marketing research is the research that companies do to study consumers

and other companies. Marketing research seeks to understand the best ways
to connect a consumer and a product, with the hopes that the consumer will
buy. This involved evaluating the current marketing already being done for
that product, or similar products that are created by the same company, and
determining how well the marketing campaigns are working. This also
involves studying the marketing techniques of other companies.

Marketers begin research with a problem or a question. They don't approach

research with the goal to learn more about a particular market. Instead, they
want to know why a particular market is doing well, or why it is falling and
what can be done to change that. They may also want to know why
consumers are not buying some products, but gladly purchasing similar
products. Research is then done to answer the question, and that answer can
be turned into a marketing technique that may get better results.
There are two types of marketing research. The first is consumer market
research. The goal is to study the purchasing habits of consumers. This can
be done by tallying up how much of a product is sold, through surveys or
through other means. The information gathered from consumers can be used
to analyze current marketing campaigns and to create new ones.

Marketing research is not the same as market research. Marketing research

studies how and why consumers and businesses buy, and how those sales
can be increased or why they have decreased. It involves in-depth studies
into the affect of advertisements and market conditions on consumers.
Market research is the research that may be done into a single market,
focusing on the size and trends in that market.

Consider this example. Company A sells kids' cereal. It was once really
popular, but now its sales have dropped almost 25 percent in the past year,
and it wants to know why. Marketing research is done to answer this
question.

Research reveals that Company B's kids' cereal has seen a substantial jump
in sales. The two companies sell a similar product. More research reveals
that Company B has added some vitamins to its product, changed the look of
the cereal box, and is running advertisements to promote this new
"healthier" cereal. In fact, lots of food companies are developing healthier
versions of their products, and they are all selling well. Even non-food
products, such as sports equipment and books about healthy living, are
seeing an increase in sales.

Managers need information in order to introduce products and services that

create value in the mind of the customer. But the perception of value is a
subjective one, and what customers value this year may be quite different
from what they value next year. As such, the attributes that create value
cannot simply be deduced from common knowledge. Rather, data must be
collected and analyzed. The goal of marketing research is to provide the
facts and direction that managers need to make their more important
marketing decisions.

To maximize the benefit of marketing research, those who use it need to

understand the research process and its limitations.

Marketing Research vs. Market Research

These terms often are used interchangeably, but technically there is a

difference.

Market research deals specifically with the gathering of information about a

market's size and trends. Marketing research covers a wider range of
activities. While it may involve market research, marketing research is a
more general systematic process that can be applied to a variety of
marketing problems.

The Value of Information

Information can be useful, but what determines its real value to the
organization? In general, the value of information is determined by:

• The ability and willingness to act on the information.

• The accuracy of the information.
• The level of indecisiveness that would exist without the information.
• The amount of variation in the possible results.
• The level of risk aversion.
• The reaction of competitors to any decision improved by the
information.
 • The cost of the information in terms of time and money.

The Marketing Research Process

Once the need for marketing research has been established, most marketing
research projects involve these steps:

1. Define the problem

2. Determine research design
3. Identify data types and sources
4. Design data collection forms and questionnaires
5. Determine sample plan and size
6. Collect the data
7. Analyze and interpret the data
8. Prepare the research report

1. Problem Definition

The decision problem faced by management must be translated into a

market research problem in the form of questions that define the information
that is required to make the decision and how this information can be
obtained. Thus, the decision problem is translated into a research problem.
For example, a decision problem may be whether to launch a new product.
The corresponding research problem might be to assess whether the market
would accept the new product.

The objective of the research should be defined clearly. To ensure that the
true decision problem is addressed, it is useful for the researcher to outline
possible scenarios of the research results and then for the decision maker to
formulate plans of action under each scenario. The use of such scenarios can
ensure that the purpose of the research is agreed upon before it
commences.

2. Research Design

Marketing research can classified in one of three categories:

• Exploratory research
• Descriptive research
• Causal research

These classifications are made according to the objective of the research. In

some cases the research will fall into one of these categories, but in other
cases different phases of the same research project will fall into different
categories.

• Exploratory research has the goal of formulating problems more

precisely, clarifying concepts, gathering explanations, gaining insight,
eliminating impractical ideas, and forming hypotheses. Exploratory
research can be performed using a literature search, surveying certain
people about their experiences, focus groups, and case studies. When
surveying people, exploratory research studies would not try to acquire
a representative sample, but rather, seek to interview those who are
knowledgeable and who might be able to provide insight concerning
the relationship among variables. Case studies can include contrasting
situations or benchmarking against an organization known for its
excellence. Exploratory research may develop hypotheses, but it does
not seek to test them. Exploratory research is characterized by its
flexibility.
• Descriptive research is more rigid than exploratory research and
seeks to describe users of a product, determine the proportion of the
population that uses a product, or predict future demand for a product.
As opposed to exploratory research, descriptive research should define
questions, people surveyed, and the method of analysis prior to
beginning data collection. In other words, the who, what, where, when,
why, and how aspects of the research should be defined. Such
preparation allows one the opportunity to make any required changes
before the costly process of data collection has begun.

There are two basic types of descriptive research: longitudinal studies

and cross-sectional studies. Longitudinal studies are time series
analyses that make repeated measurements of the same individuals,
thus allowing one to monitor behavior such as brand-switching.
However, longitudinal studies are not necessarily representative since
many people may refuse to participate because of the commitment
required. Cross-sectional studies sample the population to make
measurements at a specific point in time. A special type of cross-
sectional analysis is a cohort analysis, which tracks an aggregate of
individuals who experience the same event within the same time
interval over time. Cohort analyses are useful for long-term forecasting
of product demand.

• Causal research seeks to find cause and effect relationships between

variables. It accomplishes this goal through laboratory and field
experiments.
3. Data Types and Sources

Secondary Data:-

Before going through the time and expense of collecting primary data, one
should check for secondary data that previously may have been collected for
other purposes but that can be used in the immediate study. Secondary data
may be internal to the firm, such as sales invoices and warranty cards, or
may be external to the firm such as published data or commercially available
data. The government census is a valuable source of secondary data.

Secondary data has the advantage of saving time and reducing data
gathering costs. The disadvantages are that the data may not fit the problem
perfectly and that the accuracy may be more difficult to verify for secondary
data than for primary data.

Some secondary data is republished by organizations other than the original

source. Because errors can occur and important explanations may be
missing in republished data, one should obtain secondary data directly from
its source. One also should consider who the source is and whether the
results may be biased.

There are several criteria that one should use to evaluate secondary data.

• Whether the data is useful in the research study.

• How current the data is and whether it applies to time period of
interest.
• Errors and accuracy - whether the data is dependable and can be
verified.
• Presence of bias in the data.
 • Specifications and methodologies used, including data collection
method, response rate, quality and analysis of the data, sample size
and sampling technique, and questionnaire design.
• Objective of the original data collection.
• Nature of the data, including definition of variables, units of measure,
categories used, and relationships examined.

PrimaryData:-

Often, secondary data must be supplemented by primary data originated

specifically for the study at hand. Some common types of primary data are:

• demographic and socioeconomic characteristics

• psychological and lifestyle characteristics
• attitudes and opinions
• awareness and knowledge - for example, brand awareness
• intentions - for example, purchase intentions. While useful, intentions
are not a reliable indication of actual future behavior.
• motivation - a person's motives are more stable than his/her behavior,
so motive is a better predictor of future behavior than is past behavior.
• behavior

Primary data can be obtained by communication or by observation.

Communication involves questioning respondents either verbally or in
writing. This method is versatile, since one needs only to ask for the
information; however, the response may not be accurate. Communication
usually is quicker and cheaper than observation. Observation involves the
recording of actions and is performed by either a person or some mechanical
or electronic device. Observation is less versatile than communication since
some attributes of a person may not be readily observable, such as
attitudes, awareness, knowledge, intentions, and motivation. Observation
also might take longer since observers may have to wait for appropriate
events to occur, though observation using scanner data might be quicker
and more cost effective. Observation typically is more accurate than
communication.

Personal interviews have an interviewer bias that mail-in questionnaires do

not have. For example, in a personal interview the respondent's perception
of the interviewer may affect the responses.

4. Questionnaire Design

The questionnaire is an important tool for gathering primary data. Poorly

constructed questions can result in large errors and invalidate the research
data, so significant effort should be put into the questionnaire design. The
questionnaire should be tested thoroughly prior to conducting the survey.

The questionnaire is a structured technique for collecting primary data in a

marketing survey. It is a series of written or verbal questions for which the
respondent provides answers. A well-designed questionnaire motivates the
respondent to provide complete and accurate information.

The survey questionnaire should not be viewed as a stand-alone tool. Along

with the questionnaire there is field work, rewards for the respondents, and
communication aids, all of which are important components of the
questionnaire process.

Steps to Developing a Questionnaire:-

The following are steps to developing a questionnaire - the exact order may
vary somewhat.

• Determine which information is being sought.

• Choose a question type (structure and amount of disguise) and method
of administration (for example, written form, email or web form,
telephone interview, verbal interview).
• Determine the general question content needed to obtain the desired
information.
• Determine the form of response.
• Choose the exact question wording.
• Arrange the questions into an effective sequence.
• Specify the physical characteristics of the questionnaire (paper type,
number of questions per page, etc.)
• Test the questionnaire and revise it as needed.

Question Type and Administration Method:-

Some question types include fixed alternative, open ended, and

projective:

• Fixed-alternative questions provide multiple-choice answers. These

types of questions are good when the possible replies are few and
clear-cut, such as age, car ownership, etc.
• Open-ended questions allow the respondent to better express his/her
answer, but are more difficult to administer and analyze. Often, open-
ended questions are administered in a depth interview. This technique
is most appropriate for exploratory research.
 • Projective methods use a vague question or stimulus and attempt to
project a person's attitudes from the response. The questionnaire could
use techniques such as word associations and fill-in-the-blank
sentences. Projective methods are difficult to analyze and are better
suited for exploratory research than for descriptive or causal research.

There are three commonly used rating scales: graphic, itemized, and
comparative.

• Graphic - simply a line on which one marks an X anywhere between

the extremes with an infinite number of places where the X can be
placed.
• Itemized - similar to graphic except there are a limited number of
categories that can be marked.
• Comparative - the respondent compares one attribute to others.
Examples include the Q-sort technique and the constant sum method,
which requires one to divide a fixed number of points among the
alternatives.

Questionnaires typically are administered via a personal or telephone

interview or via a mail questionnaire. Newer methods include e-mail and the
Web.

Question Content:-

Each question should have a specific purpose or should not be included in

the questionnaire. The goal of the questions is to obtain the required
information. This is not to say that all questions directly must ask for the
desired data. In some cases questions can be used to establish rapport with
the respondent, especially when sensitive information is being sought.

Sensitive questions can be posed in ways to increase response likelihood and

to facilitate more honest responses. Some techniques are:

• Place the question in a series of less personal questions.

• State that the behavior or attitude is not so unusual.
• Phrase the question in terms of other people, not the respondent.
• Provide response choices that specify ranges, not exact numbers.
• Use a randomized response model giving the respondent pairs of
questions with a randomly assigned one to answer. The interviewer
does not know which question the person is answering, but the overall
percentage of people assigned to the sensitive question is known and
statistics can be calculated.

Form of Question Response

Questions can be designed for open-ended, dichotomous, or multichotomous

responses.

• Open-ended responses are difficult to evaluate, but are useful early in

the research process for determining the possible range of responses.
• Dichotomous questions have two possible opposing responses, for
example, "Yes" and "No".
• Multichotomous questions have a range of responses as in a multiple
choice test.

The questionnaire designer should consider that respondents may not be

able to answer some questions accurately. Two types of error are
telescoping error and recall loss.
 • Telescoping error is an error resulting from the tendency of people
to remember events as occurring more recently than they actually did.
• Recall loss occurs when people forget that an event even occurred.
For recent events, telescoping error dominates; for events that
happened in the distant past, recall loss dominates.

Question Wording:-

The questions should be worded so that they are unambiguous and easily
understood. The wording should consider the full context of the respondent's
situation. In particular, consider the who, what, when, where, why, and how
dimensions of the question.

For example, the question,

"Which brand of toothpaste do you use?"

might seem clear at first. However, the respondent may consider "you" to be
the family as a whole rather than he or she personally. If the respondent
recently changed brands, the "when" dimension of the question may be
relevant. If the respondent uses a different, more compact tube of
toothpaste when traveling, the "where" aspect of the question will matter.

A better wording of the question might be,

"Which brand of toothpaste have you used personally at

home during the past 6 months? If you have used more
than one brand, please list each of them."

When asking about the frequency of use, the questions should avoid
ambiguous words such as "sometimes", "occasionally", or "regularly".
Rather, more specific terms such as "once per day" and "2-3 times per week"
should be used.

Test and Revise the Questionnaire:-

The questionnaire should be pre-tested in two stages before distributing. In

the first stage, it should be administered using personal interviews in order
to get better feedback on problems such as ambiguous questions. Then, it
should be tested in the same way it will be administered. The data from the
test should be analyzed the same way the administered data is to be
analyzed in order to uncover any unanticipated shortcomings.

Different respondents will answer the same questionnaire differently. One

hopes that the differences are due to real differences in the measured
characteristics, but that often is not the case. Some sources of the
differences between scores of different respondents are:

• True differences in the characteristic being measured.

• Differences in other characteristics such as response styles.
• Differences in transient personal factors such as fatigue, etc.
• Differences in situation, such as whether spouse is present.
• Differences in the administration, such as interviewer tone of voice.
• Differences resulting from sampling of items relevant toward the
characteristic being measured.
• Differences resulting from lack of clarity of the question - may mean
different things to different people.
• Differences caused by mechanical factors such as space to answer,
inadvertent check marks, etc.

Measurement Scales
Attributes can be measured on nominal, ordinal, interval, and ratio scales:

• Nominal numbers are simply identifiers, with the only permissible

mathematical use being for counting. Example: social security
numbers.
• Ordinal scales are used for ranking. The interval between the numbers
conveys no meaning. Median and mode calculations can be performed
on ordinal numbers. Example: class ranking
• Interval scales maintain an equal interval between numbers. These
scales can be used for ranking and for measuring the interval between
two numbers. Since the zero point is arbitrary, ratios cannot be taken
between numbers on an interval scale; however, mean, median, and
mode are all valid. Example: temperature scale
• Ratio scales are referenced to an absolute zero values, so ratios
between numbers on the scale are meaningful. In addition to mean,
median, and mode, geometric averages also are valid. Example:
weight

Attitude Measurement

Many of the questions in a marketing research survey are designed to

measure attitudes. Attitudes are a person's general evaluation of something.
Customer attitude is an important factor for the following reasons:

• Attitude helps to explain how ready one is to do something.

• Attitudes do not change much over time.
• Attitudes produce consistency in behavior.
• Attitudes can be related to preferences.

Attitudes can be measured using the following procedures:

• Self-reporting - subjects are asked directly about their attitudes. Self-

reporting is the most common technique used to measure attitude.
 • Observation of behavior - assuming that one's behavior is a result of
one's attitudes, attitudes can be inferred by observing behavior. For
example, one's attitude about an issue can be inferred by whether
he/she signs a petition related to it.
• Indirect techniques - use unstructured stimuli such as word association
tests.
• Performance of objective tasks - assumes that one's performance
depends on attitude. For example, the subject can be asked to
memorize the arguments of both sides of an issue. He/she is more
likely to do a better job on the arguments that favor his/her stance.
• Physiological reactions - subject's response to a stimuli is measured
using electronic or mechanical means. While the intensity can be
measured, it is difficult to know if the attitude is positive or negative.
• Multiple measures - a mixture of techniques can be used to validate
the findings, especially worthwhile when self-reporting is used.

5. Sampling Plan

In designing the research study, one should consider the potential errors.
Two sources of errors are random sampling error and non-sampling error.
Sampling errors are those due to the fact that there is a non-zero confidence
interval of the results because of the sample size being less than the
population being studied. Non-sampling errors are those caused by faulty
coding, untruthful responses, respondent fatigue, etc.

There is a tradeoff between sample size and cost. The larger the sample size,
the smaller the sampling error but the higher the cost. After a certain point
the smaller sampling error cannot be justified by the additional cost.
While a larger sample size may reduce sampling error, it actually may
increase the total error. There are two reasons for this effect. First, a larger
sample size may reduce the ability to follow up on non-responses. Second,
even if there is a sufficient number of interviewers for follow-ups, a larger
number of interviewers may result in a less uniform interview process.

6. Data Collection

In addition to the intrinsic sampling error, the actual data collection process
will introduce additional errors. These errors are called non-sampling errors.
Some non-sampling errors may be intentional on the part of the interviewer,
who may introduce a bias by leading the respondent to provide a certain
response. The interviewer also may introduce unintentional errors, for
example, due to not having a clear understanding of the interview process or
due to fatigue.

Respondents also may introduce errors. A respondent may introduce

intentional errors by lying or simply by not responding to a question. A
respondent may introduce unintentional errors by not understanding the
question, guessing, not paying close attention, and being fatigued or
distracted.

Such non-sampling errors can be reduced through quality control

techniques.

7. Data Analysis - Preliminary Steps

Before analysis can be performed, raw data must be transformed into the
right format. First, it must be edited so that errors can be corrected or
omitted. The data must then be coded; this procedure converts the edited
raw data into numbers or symbols. A codebook is created to document how
the data was coded. Finally, the data is tabulated to count the number of
samples falling into various categories. Simple tabulations count the
occurrences of each variable independently of the other variables. Cross
tabulations, also known as contingency tables or cross tabs, treats two or
more variables simultaneously. However, since the variables are in a two-
dimensional table, cross tabbing more than two variables is difficult to
visualize since more than two dimensions would be required. Cross
tabulation can be performed for nominal and ordinal variables.

Cross tabulation is the most commonly utilized data analysis method in

marketing research. Many studies take the analysis no further than cross
tabulation. This technique divides the sample into sub-groups to show how
the dependent variable varies from one subgroup to another. A third variable
can be introduced to uncover a relationship that initially was not evident.

Conjoint Analysis:-

The conjoint analysis is a powerful technique for determining consumer

preferences for product attributes. Conjoint analysis infers the relative
importance of attributes by presenting consumers with a set of features of
two hypothetical products and asking them which product they prefer. This
question is repeated over several sets of attribute values. The results allow
one to predict which attributes are the more important, the combination of
attribute values that is the most preferred. From this information, the
expected market share of a given design can be estimated.

Discriminant Analysis:-
Analysis of the difference in means between groups provides information
about individual variables, it is not useful for determine their individual
impacts when the variables are used in combination. Since some variables
will not be independent from one another, one needs a test that can consider
them simultaneously in order to take into account their interrelationship. One
such test is to construct a linear combination, essentially a weighted sum of
the variables. To determine which variables discriminate between two or
more naturally occurring groups, discriminant analysis is used. Discriminant
analysis can determine which variables are the best predictors of group
membership. It determines which groups differ with respect to the mean of a
variable, and then uses that variable to predict new cases of group
membership. Essentially, the discriminant function problem is a one-way
ANOVA problem in that one can determine whether multiple groups are
significantly different from one another with respect to the mean of a
particular variable.

A discriminant analysis consists of the following steps:

1. Formulate the problem.

2. Determine the discriminant function coefficients that result in the
highest ratio of between-group variation to within-group variation.
3. Test the significance of the discriminant function.
4. Interpret the results.
5. Determine the validity of the analysis.

Discriminant analysis analyzes the dependency relationship, whereas factor

analysis and cluster analysis address the interdependency among variables.

Factor Analysis:-
Factor analysis is a very popular technique to analyze interdependence.
Factor analysis studies the entire set of interrelationships without defining
variables to be dependent or independent. Factor analysis combines
variables to create a smaller set of factors. Mathematically, a factor is a
linear combination of variables. A factor is not directly observable; it is
inferred from the variables. The technique identifies underlying structure
among the variables, reducing the number of variables to a more
manageable set. Factor analysis groups variables according to their
correlation.

Cluster Analysis:-

Market segmentation usually is based not on one factor but on multiple

factors. Initially, each variable represents its own cluster. The challenge is to
find a way to combine variables so that relatively homogenous clusters can
be formed. Such clusters should be internally homogenous and externally
heterogeneous. Cluster analysis is one way to accomplish this goal. Rather
than being a statistical test, it is more of a collection of algorithms for
grouping objects, or in the case of marketing research, grouping people.
Cluster analysis is useful in the exploratory phase of research when there are
no a-priori hypotheses.

Cluster analysis steps:

1. Formulate the problem, collecting data and choosing the variables to

analyze.
2. Choose a distance measure. The most common is the Euclidean
distance. Other possibilities include the squared Euclidean distance,
 city-block (Manhattan) distance, Chebychev distance, power distance,
and percent disagreement.
3. Choose a clustering procedure (linkage, nodal, or factor procedures).
4. Determine the number of clusters. They should be well separated and
ideally they should be distinct enough to give them descriptive names
such as professionals, buffs, etc.
5. Profile the clusters.
6. Assess the validity of the clustering.

8. Marketing Research Report

The format of the marketing research report varies with the needs of the
organization. The report often contains the following sections:

• Authorization letter for the research

• Table of Contents
• List of illustrations
• Executive summary
• Research objectives
• Methodology
• Results
• Limitations
• Conclusions and recommendations
• Appendices containing copies of the questionnaires, etc.

Concluding Thoughts

Marketing research by itself does not arrive at marketing decisions, nor does
it guarantee that the organization will be successful in marketing its
products. However, when conducted in a systematic, analytical, and
objective manner, marketing research can reduce the uncertainty in the
decision-making process and increase the probability and magnitude of
success.

Marketing Research for Strategic Decision Making

The two most common uses of marketing research are for diagnostic
analysis to understand the market and the firm's current performance, and
opportunity analysis to define any unexploited opportunities for growth.
Marketing research studies include consumer studies, distribution studies,
semantic scaling, multidimensional scaling, intelligence studies, projections,
and conjoint analysis. A few of these are outlined below.

• Semantic scaling: a very simple rating of how consumers perceive

the physical attributes of a product, and what the ideal values of those
attributes would be. Semantic scaling is not very accurate since the
consumers are polled according to an ordinal ranking so mathematical
averaging is not possible. For example, 8 is not necessarily twice as
much as 4 in an ordinal ranking system. Furthermore, each person
uses the scale differently.
• Multidimensional scaling (MDS) addresses the problems associated
with semantic scaling by polling the consumer for pair-wise
comparisons between products or between one product and the ideal.
The assumption is that while people cannot report reliably which
attributes drive their choices, they can report perceptions of
 similarities between brands. However, MDS analyses do not indicate
the relative importance between attributes.

AUTOMOBILE SECTOR

INTRODUCTION:-

Evolution and growth of Indian auto industry The year 1898 saw the first
car rolling out, on the streets of Mumbai. Since then Indian auto industry
has witnessed a lot of change. A land of Premier Padminis, Ambassadors,
scooters, temps, trucks and autos galore, India had not seen much of
choice in vehicles. Only the affluent could think of owning a personal
four-wheeler and the clichéd image of a car followed by lots of children on
a dusty road was actually true.

Protectionism – Early 1980s

This was the pre-1980 era where the manufacturing of automobiles

especially cars was subject to strict licensing, restrictive tariff structure
and limited avenues for expansion. The advent of foreign technology
collaboration came with the inception of Maruti Udyog in collaboration
with Suzuki of Japan in the passenger car segment. Indian roads saw the
launch of Maruti 800. It was still not very easy to own a car, first was
affordability and next was a long waiting period.

Liberalization – 1990s

In the early 1990s, with liberalization, some more Japanese manufacturers

entered the two-wheeler and the commercial vehicle segment in a
collaborative arrangement. This period characterized joint ventures in
India and the market started opening up. Automobile Industry was
delicensed in July 1991 with the announcement of the New Industrial
Policy. The passenger car industry was, however, delicensed in 1993.

The abolition of the controls led to an avalanche of demand. The era of

controls and protection came to an end. Curbs on capacity were done
away with, decrease in customs and excise duties meant that a vehicles
started getting affordable. The entry of foreign banks with attractive auto
finance schemes helped garner a huge base of middle class population.
However the market was still ruled by the sellers.

Globalization – 2000s

Early 2000 however saw globalization of Indian auto industry. Several

policy changes were introduced with focus on boosting the auto exports.
A Core Group on Automotive Research and Development (CAR) was
established in 2003 for encouraging R&D activities. Foreign manufactures
started looking at India for sourcing auto components. The buyers started
ruling the market due to the availability of choices in the form of models,
price points and brands. A vibrant economy meant an increase in the GDP
and per capita income. These factors turned out to be significant
contributors in pushing up the domestic demand. The vast geographic
spread of India attracted foreign investments. The marquee brands from
all over the world started courting Indian consumers aggressively. The
mature markets in the developed countries paled in comparison to the
sheer numbers and the growth phase of the Indian auto industry.

For the commercial vehicles, the steady growth in Indian economy led to
demand for trucks, tempos, buses etc. The IT and BPO culture that
boosted exports and employment also pushed the sales of vehicles.
Indian economy also witnessed rapid industrialization. Factories needed
transport both for goods and for their employees. The retail boom in India
saw malls, supermarket chains mushrooming all over the urban areas,
pushed the demand for efficient logistics and that in turn increased the
number of commercial vehicles.

Growth Trajectory of Indian Auto Industry

This graphic shows the vehicle sales in India since 1980. The sharp
increase between 2001 and 2006 is the result of government initiatives,
growing economy and disbursement of loans for purchase of vehicles.
A World Bank report puts India up ahead as the fourth largest economy in
the world in terms of purchasing power parity. The sales of automobiles
have increased due to an increase in income and a rapid increase in
private final consumption expenditure.

It is estimated that India will see over Rs 30,000 crore being invested by
2010. This is because Indian auto industry is racing ahead with a healthy
growth. The graphic below shows the growth trend in the production of
automobiles in million units.

What makes the Indian Auto Market attractive?

While the markets in the developed countries reach a maturity point,

markets such as India are looking very attractive. As the second largest
populous country, with poor public transport and infrastructure, most of
the people are depending on their personal transport for comfort,
convenience and style. The consumers are being wooed by the
manufacturers with attractive finance options and with models at various
price points. There is a huge potential for the demand of cars because of
the low penetration rates of 11 cars for 1000 people. The hub and spoke
approach followed by most distributors and suppliers is pushing the
demand for commercial vehicles drastically.
The automotive sector is one of the core industries of the Indian economy.
Indian Auto industry has come of age only since the complete de-licensing
of 1991. Indian auto industry defied global economic recession and
continued to register high sales both in domestic and export markets.

In 2007, India was ranked as the 12th fastest growing market in the
world. Presently, India is the 2nd largest two wheeler market in the world
and 4th largest commercial vehicle market worldwide. India is the 11th
largest market in the passenger car segment globally which is expected
to become the 7th largest market by 2016.

India holds a total of 3% share in global four wheeler production and ranks
9th in the world in the production of cars. There is a huge potential which
needs to be tapped through an integrated effort of the government,
OEM’s and also the auto component manufacturers. India is a base for the
manufacturing of small cars and has attracted the attention of global
giants for investing in this segment.

Ernst and Young has predicted the Indian passenger car market to grow
at 12 percent annually over the next five years to touch 3.75 million units
by 2014 from 1.89 million units at present. Analysts with Ernest and
Young say that “The industry’s turnover is estimated to touch $155 billion
by 2016, this would make the Indian auto industry the seventh largest in
the world, and the third largest by 2030, behind China and the US. “

The government’s Automotive Mission Plan also envisages India emerging

as the world’s seventh largest carmaker by 2016, contributing over 10
percent to the country’s $1.2-trillion economy from under five percent at
present.
 India’s Nano (the world’s cheapest car) and other small cars are forcing
the world to go back to their drawing boards. India’s obsession with
hatchbacks has led to designs that score high on fuel and cost efficiencies
without compromising on the quality. According to Neeraj Garg,
Volkswagen India group sales director: “Car manufacturers are betting on
hatchbacks in the B+ segment. We expect the segment to constitute
nearly 75 percent of volumes in the coming years.” India’s Reva (electric
car) is very popular abroad as its environment friendly. Spark, the
compact car from General Motors, will now come in an electric version,
thanks to a tie-up with Bangalore’s Reva Electric Car Co. With such
innovations abound, Indian auto industry is all set to grow strong and
become a visible and stronger power in the Global auto industry.

SWOT ANALYSIS:-

STRENGTH WEAKNESS
Highly skilled human resource Absence of practical knowledge

Low wage structure Dearth of suitable candidates

Quality of work Less Research and Development

Initiatives taken by the Government Contribution of IT sector to India 's

(setting up Hi-Tech Parks and GDP is still rather small.
implementation of e-governance
Employee salaries in IT sector are
projects)
increasing tremendously. Low wages
Many global players have set-up benefit will soon come to an end
operations in India like Microsoft,
Oracle, Adobe, etc.
Following Quality Standards such as
ISO 9000, SEI CMM etc.

English-speaking professionals

Cost competitiveness

Quality telecommunications
infrastructure

Indian time zone (24 x 7 services to

the global customers). Time
difference between India and
America is approximately 12 hours,
which is beneficial for outsourcing of
work.

OPPORTUNITY THREATS
High quality IT education market Lack of data security systems

Increasing number of working age Countries like China and Philippines

people with qualified workforce making
efforts to overcome the English
India 's well developed soft
language barrier
infrastructure
IT development concentrated in a few
Upcoming International Players in the
cities only
market
Role of automobile sector in GDP:-

The Role of Automobile Industry in India GDP has been phenomenon. The
Automobile Industry is one of the fastest growing sectors in India.

The increase in the demand for cars, and other vehicles, powered by
the increase in the income is the primary growth driver of the
automobile industry in India. The introduction of tailor made finance
schemes, easy repayment schemes has also helped the growth of the
automobile sector.

Automobile Industry in India GDP-Facts:-

• India has become one of the international players in the automobile

market
• In the year 2006-07, the Indian Automobile Industry produced 2.06
million four wheelers and 9 million two and three wheelers
• The four wheelers include passenger cars, multi-utility vehicles, sports
utility vehicles, light, medium and heavy commercial vehicles, etc
• The three wheelers include mopeds, motor-cycles, scooters, and three
wheelers
• India ranks 2nd in the global two-wheeler market
• India is the 4th biggest commercial vehicle market in the world
• India ranks 11th in the international passenger car market
• India ranks 5th pertaining to the number of bus and truck sold in the
world
 • It is expected that the Automobile Industry in India would be the 7th
largest automobile market within the year 2016

Role of Automobile Industry in India GDP-Growth:-

• The growth rate of the Passenger Cars in the year 2007 is 13.50%
• The growth rate of the Utility Vehicles in the year 2007 is 10.10%
• The growth rate of the Multi Purpose Vehicles in the year 2007 is
24.40%
• The growth rate of the Light Commercial Vehicles in the year 2007 is
16.05%
• The growth rate of the Commercial Vehicles in the year 2007 is 3.43%
• The Maruti Udyog Ltd is the largest car manufacturer in the country
and the rate of growth in the year 2007 was 20.7%
• The Mahindra & Mahindra Ltd's cumulative sales for the year 2007 was
1,06,094 units and the rate of growth was 35.8%
• The Honda Siel Cars India Ltd, the leaders in India pertaining to the
manufacturing of premium cars, registered a growth of 16.1 % during
the year 2007 and sold 41,638 units
• The Daimler Chrysler sales for the year 2007 was 1,681 units in India
and the growth rate was more than 22%
• The General Motors India, registered a 114% increase in the national
sales in the August of 2007
• The Hero Honda sold more than 2 million units in the Jan-Aug period of
the year 2007
• The export pertaining to the motorbikes was 3,21,321 units in the year
2007
• It is estimated that in the year 2007-08 the motorcycle sales would be
7 million, the car sales would be 1.55 million, and the two-wheelers
sales would be 8.3 million

Role of Automobile Industry in India GDP-Foreign Investments:-

 • The Indian Automobile industry is at present engaged in mergers and
acquisitions on the international scale
• The Indian automobile industry's foreign sector worth US$ 515 million
• The Mahindra and Mahindra company will be establishing a utility
assembly plant in collaboration with Bramont, a local company at
Manuas, in North Brazil
• In Egypt, the Mahindra and Mahindra company has set up assembly
plants in collaboration with the Bavarian Motors
• The Tata Motors have entered the passenger car market in Saudi
Arabia with the launch of
• Tata Indigo, Tata Indica, and Tata Indigo Marina
• The TVS Motor Company has established a two-wheeler manufacturing
unit at Karawang, in Indonesia
• The Maruti Udyog Ltd has captured nearly 60% of the small car market
in Indonesia
• The Nissan Motor facility in South Africa was acquired by the Tata
Motors to manufacture Tata vehicle for European and South African
market
• The Jaguar and Land Rover companies owned by the Ford Motor
Company was acquired by the Tata Motors Ltd for estimated price of
US$ 1.5 billion

Role of Automobile Industry in India GDP-Sales Trends:-

• In the year 2006-07 the number of Passenger Car sold were 10,76,408
• In the year 2006-07 the number of Passenger Vehicles sold were
13,79,698
• In the year 2006-07 the number of Commercial Vehicles sold were
4,67,882
• In the year 2006-07 the number of Three Wheelers sold were 4,03,909
 • In the year 2006-07 the number of Two Wheelers sold were 78,57,548
• In the year 2006-07 the number of automobile sold were 1,01,09,037

Segmentation in Automobiles:

The non-demographic segmentation of the automobile market is more

complex than that of the watch market. The segments crisscross, forming
intricate patterns. Their dynamics must be seen clearly before automobile
sales can be understood. Segmentation analysis leads to at least three
different ways of classifying the automobile market along non-demographic
lines, all of which are important to marketing planning.
Value Segmentation: The first mode of segmentation can be compared to
that in the watch market–a threefold division along lines which represent
how different people look at the meaning of value in an automobile:
1. People who buy cars primarily for economy. Many of these become owners
of the Falcon, Ford, Rambler, American, and Chevrolet. They are less loyal to
any make than the other segments, but go where the biggest savings are to
be found.
2. People who want to buy the best product they can find for their money.
These prospects emphasize values such as body quality, reliability,
durability, economy of operation, and ease of upkeep. Rambler and
Volkswagen have been successful because so many people in this segment
were dissatisfied.
3. People interested in "personal enhancement" (a more accurate description
than "prestige"). A handsomely styled Pontiac or Thunderbird does a great
deal for the owner's ego, even though the car may not serve as a status
symbol. Although the value of an automobile as a status symbol has
declined, the personal satisfaction in owning a fine car has not lessened for
this segment of the market. It is interesting that while both watches and cars
have declined in status value, they have retained self-enhancement value for
large portions of
the market. Markets can change so swiftly, and the size of key segments can
shift so rapidly, that great sensitivity is required to catch a trend in time to
capitalize on it. In the automobile market, the biggest change in recent years
has been the growth in… (heterogeneity across segments), it is
homogeneous within the segment (exhibits common attributes); it responds
similarly to a market stimulus, and it can be reached by a market
intervention.

Market segmentation is the process of classifying a market into distinct

subsets (segments) that behave in similar ways or have similar needs. The
segmentation process in itself consists of segment identification, segment
characterization, segment evaluation and target segment selection. If each
segment is fairly homogeneous in its needs and attitudes, it is likely to
respond similarly to a given marketing strategy. That is, they are likely to
have similar feelings and ideas about a marketing mix comprising a given
product or service, sold at a given price, and distributed and promoted in a
certain way.

Broadly, markets can be divided according to a number of general criteria,

such as by industry or public versus private sector. Generally segmentation
is conducted using demographic, geographic, attitudinal or behavioral data.
Small segments are often termed niche markets or specialty markets.
However, all segments fall into either consumer or industrial markets.
Although industrial market segmentation is quite different from consumer
market segmentation, both have similar objectives.

The process of segmentation is distinct from targeting (choosing which

segments to address) and positioning (designing an appropriate marketing
mix for each segment). The overall intent is to identify groups of similar
customers and potential customers; to prioritize the groups to address; to
understand their behaviour; and to respond with appropriate marketing
strategies that satisfy the different preferences of each chosen segment.
Revenues are thus improved.

Improved segmentation can lead to significantly improved marketing

effectiveness. Distinct segments can have different industry structures and
thus have higher or lower attractiveness (Porter). With the right
segmentation, the right lists can be purchased, advertising results can be
improved and customer satisfaction can be increased.

CASE STUDY: HYUNDAI MOTORS

INDIA LTD.

On January 10, 2008, Hyundai Motor India Ltd's (HMIL) i10

was awarded the 'Car of the Year Award 2008' in the
seventh edition of the CNBC-TV18 Autocar Auto Awards.
The i10 was described as a great success with the
company claiming that 25,000 units had been sold since
the time it was launched in 2007. Hyundai posted a
growth of 39 percent in sales in the Indian market due to
good sales of the i10 in 2007. The growth witnessed at
HMIL was in the face of a drop in the sales of its rival
Maruti Suzuki India Ltd.'s, entry level car M800 from 7,021
to 5,470 units (22 percent drop).
HMIL is India's largest exporter of passenger cars and had
shipped more than 125,000 cars in 2007 and accounted
for about two thirds of India's annual exports. In July 2008,
Hyundai emerged as the second largest passenger vehicle
manufacturer in India with a market share of 16.91%.

HMIL was incorporated in India in the year 1996 and its

first car, the Santro, was launched in the year 1998. At
the time of the Santro's launch, Hyundai was an unknown
brand in India and Korean products were associated with
inferior quality in the minds of the Indian consumers.

After an in depth study of the Indian market and the

Indian consumer's psyche, HMIL signed up Shahrukh
Khan, an Indian cinema star, as its brand ambassador to
promote the Santro. According to analysts, HMIL also
reduced the engine output of Santro to provide better fuel
efficiency, priced its spares reasonably, and modified the
product specifications to suit Indian conditions.

The car went on to become a great success and provided

HMIL with a firm foothold in the Indian automobile
industry. Analysts felt that it was HMIL's strategy of
providing state of the art technology cars coupled with
aggressive pricing which ensured its success.

The Santro was followed by a range of cars such as the

Accent, the Elantra, the Getz, the Sonata, the Verna, the
Terracan, and the Tucson, each positioned in a different
customer segment and at a different price point. The
range of cars introduced by HMIL enabled it to ensure its
presence in almost all the segments of the market and to
capture market share.

According to analysts, Hyundai Motor Company's strategy

with reference to India as of 2008 was to convert its
Indian operations into a key design, manufacturing, and
export hub for its global operations while expanding its
presence in India. This strategy was expected to enable
the company to capture a large share of the global car
market.

In February 2008, HMIL opened a second manufacturing

plant near Chennai. The new plant increased the
company's production capacity to 600,000 cars a year.6
The opening of the plant made Hyundai Motor Company's
Indian production base the biggest outside South Korea.

The company aimed to make its Indian operations the

global manufacturing hub for all of its small car models.