market research on buying behaviour of customers towards hatchback cars

MARKET RESEARCH PROJECT

ON

To Study Buying Behaviour of Customers

Towards Hatchback Cars Below 6 Lakhs

And

Analysis of The Responses

Using SPSS and Excel

Table of Contents

S.No Topic Pg. No

1 Background Study

i. Indian Automobile Industry

ii. Market share of passenger vehicles in India

iii. Hatchback market in India

iv. Looking forward

1

2 Research Methodology

i. Research Objective

ii. Methodology

a. Retailer & Distributor Survey

b. Customer Survey

5

3 Results & Analysis using SPSS & MS Excel 12

4 Conclusions 19

INTRODUCTION

India's automobile industry is one of the largest recipients of foreign direct investment

within the country and accounts for about 8 percent of the economy. The industry is not

only gaining ground as a global production hub; world- leading brands are increasingly

setting up local operations to tap India's lucrative domestic market. This has seen more

activity across the entire consumer market as global luxury automobile brands target the

country's burgeoning upper-middle class and high net worth individuals, while major

international carmakers are entering the highly competitive small car segment.

India is expected to become the world’s third largest automobile market by 2030, behind

the US and China, according to industry forecasts. This confidence is based on drivers

including low vehicle ownership within India, anticipated high levels of economic growth,

substantial government investments in infrastructure and an increasingly upwardly mobile

middle class.

Indian consumers are value-centric. Many carmakers, as a result, have focused their activity

within the economical hatchback segment. This contrasts with a preference for bigger, more

luxurious cars in developed countries. Car production in Brazil, Russia, India and China grew

with CAGR of 7.3 percent, 1.9 percent, 17.6 percent and 39.3 percent respectively from

2001 -10.

Market share of passenger vehicles in India:

Hatchback market in India

India's hatchback market can be broadly divided into three segments: micro, mini and

compact. Tata Nano is currently the only micro car in the market. Costing less than 200,000

rupees, the model was marketed as “the world’s cheapest car”. The mini segment includes a

mix of classic models such as the Maruti Suzuki Alto and Hyundai's Santro Xing, as well as

newer cars like the Hyundai Eon. They are typically priced from 100,000-200,000 rupees.

Tata launched India's first compact car with the Indica in 1998. Maruti Suzuki entered the

segment with the Swift in 2005. Since then compact cars have become one of the auto

industry's most competitive and fastest growing segments.

Competition has intensified within the hatchback sector and consumers have had a much

greater choice of models ever since international carmakers became more active within

India's auto market. While Indian consumers are very cost-focused, carmakers cannot

compete on price alone. If they could, Tata Nano would have been the bestselling car in

India, a position currently enjoyed by the Maruti Alto. Certain non-price based factors

influence the buying decisions of Indian consumers. Alto and Swift are the bestselling

models despite commanding relatively high prices. This is due to their combination of

contemporary design, fuel efficiency, after – sales service, build quality and price which

outstrips the offering of other players in the hatchback segment.

India's hatchback market comprises 12 automakers with three brands– Maruti Suzuki,

Hyundai and Tata – accounting for 80% of the market by volume. Foreign brands account for

less than 3 percent of the market.

The top four players namely Suzuki, Hyundai, Tata Motors and Mahindra & Mahindra

constitute 80 percent of the passenger car sales in India thereby making it a highly

consolidated market.

Hatchbacks have been the bestselling cars in India since they were introduced in the early

1980s. The image of small compact cars is changing from that of the ideal vehicle for budget

conscious middle –class consumers to something that is increasingly popular with wealthier

buyers, thanks to the introduction of more stylish customised models.

Maruti continues to lead the hatchback segment with a 48-percent market share, about

800,000 vehicles last year, despite the company facing major internal and external issues

related to production and labour management. While other major players such as Hyundai

and Tata lead in terms of innovation and vehicle performance, they still lag far behind in

terms of sales. International car giants including General Motors, Honda, Toyota and

Volkswagen have entered the market but have yet to gain a foothold or compete effectively

against the dominant local brands in hatchback segment.

Maruti took hold of the hatchback market in the 1980s when it introduced the Maruti 800, a

customised car aimed at India's mass market which dislodged Hindustan Motor’s

Ambassador from pole position. Hyundai Motors India in 1998 became the first carmaker to

seriously challenge Maruti’s dominance by launching the Santro, which was a runaway

success and became the segment's no .1 seller within the year it was launched. Tata Motors

announced India’s first totally homegrown passenger car, the Indica, in the same year. Its

rugged look was an instant hit. This enabled four models – Maruti Suzuki 800 and Alto, Tata

Indica and Hyundai Santro–to practically own the hatchback segment until the recent entry

of foreign players.

Looking forward

India is emerging as one of the most attractive automobile markets in the world. According

to the Department of Heavy Industries' Auto Mission Plan 2006 -16, the auto industry

should top US $145bn before the end of fiscal 2016. However, it is likely the target will now

be missed by as much as 20 percent due to current sluggish growth rates. Nevertheless, the

market still provides a huge opportunity for domestic and international players with CAGR

forecast at 8 percent for 2013-20.

RESEARCH METHODOLOGY

RESEARCH OBJECTIVE:

To study the buying behaviour of customers towards hatchback cars below 6 lakhs.

METHODOLOGY:

To evaluate the objective of the study, secondary data was collected using internet and

primary data using survey method. The data required for the study was collected from the

retailers and distributors by personal interview method using well-structured schedule and

by customers using questionnaire.

Research design: Descriptive type

Sampling unit: Geographical sample unit (Mumbai)

Sampling unit – 18 years and above men and women who own hatchback cars in the

range of 4-6 lakhs

Sample size - 30

Sampling method - Random probability sampling

DATA

Type – Primary and secondary

Data collection technique- Online Questionnaire and Personal Interview

RETAILER & DISTRIBUTOR SURVEY

Interview Details:

Details of Maruti Suzuki:

Maruti Suzuki provides a wide range of hatchback cars and is also the choice of a majority of

Indians. We visited its showroom, which is located at SV road Bandra, on 18th January 2014

at 6:30 pm. On entering the showroom, we spoke to one of the salesmen and told him that

we’ve come from ‘N L Dalmia Institute of Management Studies and Research’ and that we

are conducting a market research on the consumer buying behaviour towards hatchback

cars (4-6 lakhs). We asked him if he could answer a few questions, which would not take

more than 7-10 minutes. He readily agreed and took us to his table.

The interview took place as follows:

1. Which hatchback cars are offered by Maruti Suzuki within 4 to 6 lakhs?

Salesman: WagonR, A star, Zen Estilo, Swift, Ritz.

2. Out of these cars, which would you personally suggest to customers?

S: I would suggest WagonR, A star, Zen Estilo, Swift and Ritz because these cars provide

good performance. I would also suggest Alto to people who are looking at a lower price

range.

3. Which of these cars have recorded the most sales?

S: If you see all over India, Swift, WagonR and Alto are very popular among the customers.

4. So which aspect is given more importance?

S: It depends. If customers are going for Alto and WagonR, they rate mileage as very

important. But if the customer wants style along with performance they go for Swift.

5. Which cars have recorded low sales? And why?

S: Of all the cars mentioned, Zen Estilo and A Star have recorded low sales, if you compare it

with the sales of other Maruti Suzuki cars. These cars are not very popular with the

customers, and they also have a few complaints about their performance.

6. What is the most sought after price range?

S: Customers generally fall into the 5-6 lakhs bracket because most of them are looking for

an economical car.

7. Do customers come with a particular car in mind? Or does your opinion impact their

purchase intention?

S: Some customers do come with a particular car in mind. But most of the times, while

clarifying their doubts about specific cars and helping them make a decision , we do impact

their purchase intention.

8. So after they have bought the car suggested by you, have there been any complaints

or are they satisfied with the performance?

S: Sometimes there are complaints registered by customers, but that is purely because of

technical issues in 1 or 2 cars and this does not mean that all the other cars also have that

problem. But once the complaints are registered, we are very fast in resolving them. So as

such the customers are satisfies with our service.

9. What time during the year do customers generally purchase a car?

S: Customers generally make a purchase during end of March because of Gudi Padwa, at the

end of the year in December, and festivals like Diwali.

10. Are there any complimentary accessories provided?

S: We provide accessories but they are not complimentary. Customers, if interested, have to

purchase them.

11. So are they interested in buying them?

S: Yes, most of them are interested in buying them since they are very economical.

12. Do customers change their purchase intention if there is a discount on some other

car?

S: Generally discounts offered are in the range of Rs 5,000-15,000 so they don’t really

matter so much to change their purchase intention.

Once the interview was over, we thanked him for removing time to answer our questions

which would definitely help us in forming our report.

Summary of the other brands:

Hyundai: The popular hatchback cars offered by Hyundai are i20, Grand i10 and Eon.

Customers are very happy about the comfort features and aesthetics provided by the grand

i10. Customers believe it is true value for money, but think that it is not as futuristic as the

i20. The i20 comes across as a premium hatchback car. Its styling, design and comfort level

are its main features. But it is viewed as slightly more expensive than the other cars. The

main features of Eon are its design and styling, as well as fuel economy.

Toyota offers Etios Liva , that is viewed as value for money. Customers are also happy about

the top class finish provided. Its main features are its quality, durability and good fuel

economy.

Chevrolet offers Beat as its hatchback car. Customers feel that it is a convenient and

economical car. Its main features include design and futuristic interior styling. It is also very

easy to maintain.

Fiat offers Punto and Palio in the price range of 6 lakhs. Customers go for these options for

style and driving comfort. These cars are spacious. Their pick up speed is good.

But mileage conscious customers don’t go for these cars. Also the maintenance cost is little

high and the availability of spare parts is a problem and also the spare parts are expensive.

Honda offers brio in the price range of 4.19-6.19 lakhs. Customers look for this car primarily

because of the brand name and the reliability that comes with it. It has got good interiors

and is fuel efficient too. The car scores well on looks as well. One more thing that appeals to

the customers is the easy and cheap availability of its spare parts. The after sales service is

also good.

The only thing disliked by the customers in Brio is its small size. The boot space is very small

and leg space at the rear side is small too.

Volkswagen offers Polo in the price range of 4.99 to 8 lakhs. Again the brand name is one

the most appealing factors to the customers. Customers go for it also due to its style and

driving pleasure. The car is sturdy and offers good stability at high speeds.

Poor mileage and poor after sales service are the reasons for which customers don’t go for

Polo.

DEPENDENT AND INDEPENDENT VARIABLES

From the interview with retailers and distributors, following dependent and independent

variables are recognized which influences people to buy Hatchback cars.

Independent variables Dependent variables

Brand Sales

Mileage Customer satisfaction

Colour

Features

Interior design and exterior looks

Price

Comfort

CUSTOMER SURVEY

Hatchback Online Questionnaire

* Required

Age: *

18 to 30

31 to 50

Above 50

Gender: *

Male

Female

Occupation: *

Student

Working

Home Maker

Annual Family Income: *

Below 5 lakhs

5 to 10 Lakhs

10 to 15 Lakhs

Above 15 Lakhs

Do you own a car? *

Yes

No

Which car do you own? *

Maruti

Hyundai

Toyota

Chevrolet

Volkswagen

Others

Number of family members: *

1

2

3

4

5

More than 5

Rank the features in the order of importance while making purchase (1_Least 7_Highest) *

1 2 3 4 5 6 7

Mileage

Price

Safety

Brand name

Comfort

Interior &

Exterior Design

Fuel Efficiency

Who/what influences your buying decision? *

Family

Friends

Advertisements

Sales Staff

Internet (Blogs, Facebook Groups, etc)

How important are discounts and credit facilities? *

Not Important

Neutral

Somewhat Important

Very Important

Would you be willing to pay a higher price for a more popular brand? *

Yes

No

Depends

When would you typically make a purchase? *

Beginning of year

End of year

Festivals or special occasions

Anytime

Rate according to your car engine preference (1_Least 4_Highest) *

1 2 3 4

Petrol

Diesel

CNG

LPG

Please associate the automobile brand with the matching taglines. *

Maruti Hyundai Toyota Chevrolet Volkswagen

Wide Service

Network

Availability of

Parts

Value for

Money

ANALYSIS OF THE RESPONSES USING SPSS & EXCEL:

1. Age

Age:

Frequency Percent Valid Percent

Cumulative

Percent

Valid 18 to 30 12 40.0 40.0 40.0

31 to 50 16 53.3 53.3 93.3

Above 50 2 6.7 6.7 100.0

Total 30 100.0 100.0

The Age options provided were: 18-30, 31-50, above 50. Out of the total people surveyed,

12 (40%) belonged to the group 18-30, 16 (53.3%) to 31-50 and 2 (6.7%) above 50. This

shows that majority of the people buying hatchback cars are between 18-30 years.

2. Gender

Gender:

Frequency Percent Valid Percent

Cumulative

Percent

Valid Female 11 36.7 36.7 36.7

Male 19 63.3 63.3 100.0

Total 30 100.0 100.0

Out of the total people surveyed, the number of males was higher than the number of

females i.e. 63.3% males and 36.7% females.

3. Rank the features in the order of importance while making purchase (1_Least

7_Highest)

Rank

Features 1 2 3 4 5 6 7 Total

Mileage 0 0 1 2 1 13 13 30

Price 3 3 0 5 9 5 5 30

Safety 1 7 14 3 2 1 2 30

Brand Name 1 0 1 15 8 3 2 30

Comfort 5 14 10 0 0 0 1 30

Interior & Exterior Design 19 4 3 3 1 0 0 30

Fuel Efficiency 1 2 1 2 9 8 7 30

The respondents ranked Interior & Exterior Design as the most important attribute

influencing their purchasing decision. The next important attributes are Comfort, Safety and

Brand Name.

4. Please associate the automobile brand with the matching taglines.

Wide Service Network

Frequency Percent Valid Percent Cumulative Percent

Valid Chevrolet 10 33.3 33.3 33.3

Hyundai 6 20.0 20.0 53.3

Maruti 5 16.7 16.7 70.0

Toyota 8 26.7 26.7 96.7

Volkswagen 1 3.3 3.3 100.0

Total 30 100.0 100.0

0

2

4

6

8

10

12

14

16

18

20

1 2 3 4 5 6 7

Mileage

Price

Safety

BrandName

Comfort

InteriorExteriorDesign

FuelEfficiency

Rank of the features in the order of importance 1-Least 7-Highest

Frequency

Availability of Parts


Valid Chevrolet 1 3.3 3.3 3.3

Hyundai 15 50.0 50.0 53.3

Maruti 12 40.0 40.0 93.3

Toyota 2 6.7 6.7 100.0

Total 30 100.0 100.0

Value for Money


Valid Hyundai 5 16.7 16.7 16.7

Maruti 20 66.7 66.7 83.3

Volkswagen 5 16.7 16.7 100.0

Total 30 100.0 100.0

Frequency Table



Value for Money

Maruti 5 12 20

Hyundai 6 15 5

Toyota 8 2 0

Chevrolet 10 1 0

Volkswagen 1 0 5

Out of the total people surveyed:

Respondents associated Maruti with the tagline Value for Money: 20 (66.67%)

Respondents associated Hyundai with the tagline Availability of Parts: 15 (50.00%)

Respondents associated Chevrolet with the tagline Wide Service Network: 10 (33.33%)

0

5

10

15

20

25



Value for MoneyFrequency

5. Who/what influences your buying decision?


Valid Advertisements 9 30.0 30.0 30.0

Family 14 46.7 46.7 76.7

Friends 6 20.0 20.0 96.7

Internet (Blogs,FB Groups,etc) 1 3.3 3.3 100.0

Total 30 100.0 100.0

Out of the total people surveyed, it is seen that for almost 50% of the respondents, Family

played a major role while buying a hatchback car followed by the influence of

advertisements which was almost 30%.

6. Number of Family members:


Valid 3.0 10 33.3 33.3 33.3

4.0 15 50.0 50.0 83.3

5.0 5 16.7 16.7 100.0

Total 30 100.0 100.0

For the total people surveyed, the family size of the respondents was mostly of 3 to 4

people i.e. 83%. This shows hatchback cars are mostly preferred by small families.

7. How important are discounts and credit facilities?


Valid Neutral 7 23.3 23.3 23.3

Not Important 1 3.3 3.3 26.7

Somewhat Important 21 70.0 70.0 96.7

Very Important 1 3.3 3.3 100.0

Total 30 100.0 100.0

Out of the total people surveyed, for 70% of the respondents discounts plays an role while

buying the hatchback cars.

8. Cross Tabulation - [Annual Family Income * Which car do you own?]

Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent

Annual Family Income: *

Which car do you own? 30 100.0% 0 0.0% 30 100.0%

Chi-Square Tests

Value DF

Asymp. Sig.

(2-sided)

Pearson Chi-Square 28.152a 10 .002

Likelihood Ratio 24.440 10 .007

N of Valid Cases 30

a. 16 cells (88.9%) have expected count less than 5. The minimum

expected count is .10

Annual Family Income: * Which car do you own? Crosstabulation

Which car do you own?

Total 1 2 3 4 5 6

Annual

Family

Income:

1 Count 6 2 0 0 0 1 9

% within Annual Family

Income: 66.7% 22.2% 0.0% 0.0% 0.0% 11.1%

100.0

%

2 Count 4 9 0 3 2 0 18


Income: 22.2% 50.0% 0.0% 16.7% 11.1% 0.0%

100.0

%

3 Count 0 0 1 0 2 0 3


Income: 0.0% 0.0% 33.3% 0.0% 66.7% 0.0%

100.0

%

Total Count 10 11 1 3 4 1 30


Income: 33.3% 36.7% 3.3% 10.0% 13.3% 3.3%

100.0

%

Directional Measures

Value

Asymp.

Std. Errora

Approx.

Tb

Approx.

Sig.

Nominal by

Nominal

Lambda Symmetric .323 .153 1.806 .071

Annual Family

Income: Dependent .333 .236 1.181 .238

Which car do you

own? Dependent .316 .138 2.023 .043

Goodman and

Kruskal tau

Annual Family

Income: Dependent .378 .109 .015c

Which car do you

own? Dependent .187 .072 .002c

The objective of this tabulation is to find the break-up between the percentages of people

within a particular Annual income category owning a particular car. Our findings are as

follows:

Annual Family Income Car Owned (% of respondents)

Below 5 lakhs Maruti (66.7%)

5 to 10 lakhs Hyundai (50%)

10 to 15 lakhs Volkswagen (66.7%)

Above 15 lakhs None

Chi-Square test revealed that there is a significant correlation between the annual family

income and the brand of car owned by them.

Which car do you own? 1 - Maruti 2 - Hyundai 3 – Toyota 4 – Chevrolet 5 – Volkswagen 6 - Others

Annual Family Income: 1 - Below 5 lakhs 2 – 5 to 10 lakhs 3 – 10 to 15 lakhs 4 – Above 15 lakhs

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